Document:

LEASE

         This Lease is entered  into and made as of the 28th day of April,  2000
by and between Michael A. and Diane L. Edwards (hereinafter together referred to
as  "Landlord"),   and  Adept  Technology,  INC.,  a(n)  California  corporation
(hereinafter  referred  to as  "Tenant"),  who, in  consideration  of the mutual
covenants  and  agreements  set  forth  below,  mutually  covenant  and agree as
follows:

         1.  Lease of  Premises.  In  consideration  of the rents and  covenants
hereinafter  set forth,  Landlord  hereby  leases to Tenant,  and Tenant  hereby
accepts and leases from  Landlord,  the real property  commonly known as 2575 N.
Dragoon,   Tucson,   Arizona  85745  together  with  all  improvements   thereon
(collectively,  "Premises"),  which are legally  described on Exhibit A attached
hereto and made a part hereof.

         2. Term.  The term of this Lease ("Term") shall be for a period of five
(5) years  commencing  April 28, 2000 and expiring  April 28, 2005 unless sooner
terminated as provided herein.  Upon the termination or sooner expiration of the
Term,  all  improvements  to the Premises  made by Tenant  during the Term shall
become Landlord's property. At any time up until 90 days prior to the expiration
of this Lease, the Landlord grants to Tenant one option to extend the Lease Term
for one period of five (5) years upon terms to be  negotiated at the time of the
option request from the Tenant.

         3. Rent. Tenant shall pay to Landlord at the office of Landlord,  or to
such  other  person or at such  other  place as  Landlord  may from time to time
direct in writing,  in lawful money of the United  States of America,  an annual
rental  ("Base  Rent") of One Hundred  Thirty Six Thousand  Nine Hundred  Twenty
Dollars ($136,920) payable in equal monthly  installments  ("Monthly Base Rent")
of Eleven  Thousand  Four Hundred Ten Dollars  ($11,410) in advance on or before
the first day of each and every calendar month of the term of this Lease. If the
Term of this  Lease  commences  on a day other  than the first day of a calendar
month,  or ends on a day other than the last day of a calendar  month,  then the
Monthly Base Rent for such fractional  month shall be prorated on the basis of a
365-day  year.  If default  shall be made in the due and punctual  payment of an
installment  of rent, the amount of the  installment  due and payable shall bear
interest at the rate of eighteen percent (18%) per annum from the due date until
paid.

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         4. Rent Adjustment. For the lease period of April 28, 2000 to April 28,
2005, there shall be no annual rent adjustment made.

         5.  Condition of Premises.  Tenant's entry and possession of all or any
part of the Premises  shall be  conclusive  evidence as against  Tenant that the
Premises  are  in  good  order  and  satisfactory  condition  when  Tenant  took
possession  thereof.  No promise of Landlord or its agents to alter,  remodel or
improve the  Premises or any  improvements  on or  comprising  the same,  and no
representation  respecting the condition of the Premises or the  improvements on
or comprising the same, have been made by Landlord or its agents to Tenant,  and
Tenant accepts the same "as is".

         6. Use. Tenant shall use and occupy the Premises for the purpose of the
engineering,  design, and fabrication of equipment only and for no other purpose
whatsoever.  Tenant  shall not allow the  Premises  or the  equipment  contained
therein to be used for any purpose  which may  materially  increase  the rate of
insurance  thereon.  Tenant shall not permit any transfer by operation of law or
otherwise of its interest in the Premises  acquired through this Lease, and will
not permit the Premises to be used for any unlawful purpose,  or for any purpose
which may injure the  reputation  of the Premises or increase the fire hazard of
the same or disturb other tenants or members of the  neighborhood.  Tenant shall
not allow any signs, cards or placards to be posted or placed on the Premises or
permit any  alteration  of or  addition to any part  thereof,  without the prior
written consent of Landlord first had.

         7. Alterations, Mechanics' Lien. Tenant may not perform any alterations
to or for the  benefit of the  Premises  or any part  thereof  without the prior
written consent of Landlord first had which will not be  unreasonably  withheld.
Landlord's  consent  to any such  alterations  shall be  conditioned  upon  such
requirements as Landlord deems appropriate  including,  without limitation,  the
submission of detailed plans and  specifications  therefor and to require Tenant
to furnish to Landlord  satisfactory security for the payment of all costs to be
incurred in  connection  with any such  alterations.  Furthermore,  Tenant shall
furnish Landlord with contractors' affidavits and full and final waivers of lien
covering all labor and materials  expended and used in connection  with any such
alterations.  Tenant shall not permit any mechanic's  lien or liens to be placed
upon the Premises thereon during the Term hereof, and in the event of the filing
of such lien,  Tenant shall  promptly pay and remove the same. If default in the
payment and release of such lien shall  continue for ten (10) days after written
notice thereof from Landlord to Tenant, Landlord

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shall have the right and  privilege at  Landlord's  option of paying the same or
any portion thereof without inquiry as to the validity thereof,  and any amounts
so paid, including expenses and interest, shall be additional rent hereunder due
from Tenant to Landlord and shall be repaid to Landlord immediately on rendition
of a statement therefor.

         8.  Indemnity.  Tenant  covenants  and agrees  that it will  indemnify,
protect,  defend and hold  Landlord  harmless  against  and from any  penalty or
damages or charges imposed for any violation of any laws or ordinances,  whether
occasioned by the act or neglect of Tenant or those  holding  under Tenant,  and
that Tenant shall at all times protect,  indemnify, defend and hold Landlord and
its  officers,  directors,  shareholders,  partners and  beneficiaries  harmless
against and from any and all claims,  including workmen's  compensation  claims,
losses,  costs,  damages or  expenses  arising out of or from or relating to any
occurrence  on or about the Premises  causing  injury to any person or damage to
property whomsoever or whatsoever; and shall protect, indemnify, defend and hold
all of them  harmless  against  and from any and all claims and against and from
any and all losses,  costs,  damages and expenses  arising out of any failure of
Tenant in any  respect  to  comply  with or  perform  all the  requirements  and
provisions  hereof,  and Tenant  shall  defend at its  expense  any such  claims
against said persons and entities.

         9. Non-Liability of Landlord.  (a) Landlord shall be not liable for any
damage occasioned by failure to keep the Premises in repair,  nor for any damage
done or occasioned by or from plumbing,  gas, water,  sprinkler,  steam or other
pipes or  sewerage  or the  bursting,  leaking or running of any pipes,  tank or
plumbing  fixtures,  in,  above,  upon or  about  Premises  or any  building  or
improvement thereon, nor for any damage occasioned by water or ice being upon or
coming through the roof, skylights, trap doors or otherwise, nor for any damages
arising from act or neglect of any owners or occupants of adjacent or contiguous
property.

         (b) The term  "Landlord"  as used  herein  shall mean only the owner or
owners at the time in  question  or at issue of the fee title to, or a  lessee's
interest  in a ground  lease of,  the  Premises.  Except as  otherwise  provided
herein,  in the event of a transfer of such title or interest,  Landlord  herein
named  (and in case of any  subsequent  transfers,  the then  grantor)  shall be
relieved from and after the date of such transfer of all liability  with respect
to Landlord's obligations thereafter to be observed or performed,  provided that
any funds in the possession of Landlord, or the then grantor at the time of such
transfer, in which Tenant has an interest, shall be delivered or credited to

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the grantee. The obligations contained in this Lease to be performed or observed
by Landlord shall, subject to the foregoing, be binding on Landlord's successors
and assigns, but only during their respective periods of ownership.

         10. Taxes,  Utilities and Operating Expenses. (a) Tenant shall contract
for and pay to  either  Landlord  on  demand or the  governmental  entities  and
utility companies  directly,  in addition to the Base Rent above specified,  all
real estate taxes and  assessments  of every kind and nature  whatsoever,  water
rents, gas, electric,  light and power bills taxed, consumed by Tenant or levied
or charged against the Premises during the Term of this Lease;  and in the event
said real estate taxes and assessments, water rents and bills for gas, electric,
light and power and such other  costs and  expenses  shall not be paid when due,
Landlord shall have the right,  but not the obligation,  to pay the same,  which
amounts so paid, together with any sums paid by Landlord to keep the Premises in
a clean and healthy  condition as required  hereby,  shall be so much additional
Base Rent and shall be payable  with the  installment  of Monthly Base Rent next
due thereafter.

         (b) Tenant shall pay to Landlord,  or reimburse  Landlord for, specific
or general  taxes or  excises on rents or other  income  from the  Premises  and
specific or general  gross  receipts  taxes or excises on rents or other  income
from the Premises.

         (c) Tenant  acknowledges and agrees that this Lease is intended to be a
so-called  "net  lease" in that it is to be  completely  carefree  to  Landlord,
except  as  expressly  stated  otherwise  herein;   and  that  Landlord  is  not
responsible during the Term for any costs,  charges,  expenses or outlays of any
nature  whatsoever  arising  from or  relating  to the  Premises,  or the use or
occupancy thereof,  or the contents thereof, or the business carried on therein;
and furthermore,  Tenant shall pay all charges,  expenses, costs, and outlays of
every nature and kind  relating to the Premises,  except as otherwise  expressly
stated in this Lease.

         (d) Prior to Tenant  entering into any  agreement  with any third party
for any  maintenance or repair of any part of the Premises,  Tenant shall submit
the  name  thereof  to  Landlord  for  its  prior  written  approval  not  to be
unreasonably withheld.

         11.  Access to  Premises.  Tenant  shall allow  Landlord  access to the
Premises at all times during normal  business hours for the purpose of examining
or exhibiting the same, or to make any

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repairs Landlord so elects or alterations  thereto which Landlord may reasonably
see fit to make.

         12. Holding Over. Tenant shall, at the expiration or sooner termination
of this Lease by lapse of time or  otherwise,  yield up immediate  possession of
the Premises to Landlord,  and failing to do so, shall pay as liquidated damages
for the whole time such possession is withheld,  the sum of Five Hundred Dollars
($500) per calendar day;  provided,  however,  the  provisions of this paragraph
shall  not be  held  as a  waiver  by  Landlord  of any  right  of  re-entry  as
hereinafter  set forth;  nor shall the receipt of said rent or any part thereof,
or any other act in apparent  affirmance of tenancy,  operate as a waiver of the
right to terminate  this Lease and the Term hereby  granted for the period still
unexpired for a breach of any of the covenants contained herein.

         13. Fire and  Casualty.  In the event the  Premises or any part thereof
shall be rendered  untenantable  during any portion of the Term of this Lease by
fire or other  casualty,  Landlord,  at its option,  may terminate this Lease or
require  Tenant,  at is cost and  expense,  to repair  the same  within 180 days
thereafter.  If Tenant is  required  to repair the  Premises,  this Lease  shall
remain in effect,  provided  such  repairs are  completed  within said time.  If
Tenant shall not repair the Premises  within said time,  then at the end of such
time,  the Term hereby created shall  terminate.  If this Lease is terminated by
reason  of fire or other  casualty  as  herein  specified,  Base  Rent  shall be
apportioned and paid to the date of such fire or other casualty.

         14.  Signs.  Tenant may place  signs on or about the  Premises  and may
remove  the  same;  provided,   however,   that  Tenant  receives  any  required
governmental  approvals therefor and the placement of such signs shall in no way
impair or damage any  structure of the  Premises.  All signs shall be removed by
Tenant,  without damage to the Premises, and at its cost, upon the expiration of
the Term or the  termination of this Lease.  Tenant shall comply with all codes,
zoning and other  applicable  ordinances and all other laws and regulations with
respect  to the  size,  placement  and  appearance  of such  signs  prior to the
installation thereof.

         15. Repairs.  Except as otherwise provided herein,  Landlord shall have
no obligation to perform any repairs or replacements to or of the Premises or to
incur any expense for replacing or repairing any  improvements  on or comprising
the  Premises.  Tenant  shall keep the  Premises,  including  all  improvements,
fixtures and appurtenances  thereon and therein,  in good repair,  replacing all
broken  glass with glass of the same size and quality as that  broken,  and will
replace all damaged equipment and fixtures with

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others  of equal  quality,  and shall  keep the  Premises,  including  adjoining
alleys,  if any, in a clean and healthful  condition and in compliance  with all
conditions, covenants and restrictions affecting the Premises and all applicable
municipal zoning codes and ordinances, governmental regulations and laws, all at
Tenant's  sole  cost and  expense.  Upon the  expiration  of the Term or  sooner
termination  of this Lease,  Tenant  shall yield up the  Premises to Landlord in
good condition and repair, loss by ordinary wear excepted, and shall deliver the
keys therefor at the place of payment of Monthly Base Rent.  Except as otherwise
provided herein,  Tenant hereby assumes the full and sole responsibility for all
repairs to, and for any condition, operation, maintenance and management of, the
Premises as of the date hereof and throughout the Term of this Lease.  If Tenant
does not make repairs as required  hereunder  promptly and adequately,  Landlord
may, but is not obligated to, make such repairs and pay the costs  thereof,  and
such  costs  shall be so much  additional  Base  Rent  immediately  due from and
payable by Tenant to Landlord upon demand therefor.

         16.  Environmental  Concerns.  (a) As used herein,  the term "Hazardous
Material"  shall mean any substance or material which has been determined by any
state, federal or local governmental authority to be capable of posing a risk of
injury to health,  safety or  property,  including  all of those  materials  and
substances  designated as hazardous or toxic by the county in which the Premises
are located,  the U.S.  Environmental  Protection  Agency,  the Consumer Product
Safety Commission, the U.S. Food and Drug Administration, the Arizona Department
of  Environmental  Quality,  or any other  governmental  agency now or hereafter
authorized to regulate materials and substances in the environment.

         (b) Tenant  agrees not to introduce  any  Hazardous  Material in, on or
adjacent  to  the  Premises  without  (i)  obtaining  Landlord's  prior  written
approval,  (ii) providing Landlord with thirty (30) days prior written notice of
the exact amount,  nature and manner of intended use of such Hazardous Material,
and (iii) complying with all applicable  federal,  state and local laws,  rules,
regulations, policies and authorities relating to the storage, use, disposal and
clean up of Hazardous Material,  including, but not limited to, the obtaining of
all proper permits.

         (c) Tenant shall  immediately  notify  Landlord of any  inquiry,  test,
investigation or enforcement proceeding by, against or directed at Tenant or the
Premises concerning any Hazardous  Material.  Tenant acknowledges that Landlord,
as the owner of the Premises, shall have the right, at its election, in

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its own name or as Tenant's agent, to negotiate, defend, approve, and appeal, at
Tenant's  expense,  any action  taken or order issued with regard to a Hazardous
Material by any applicable governmental authority.

         (d) If Tenant's storage,  use or disposal of any Hazardous Material in,
on or adjacent to the Premises results in any contamination of the Premises, the
soil, surface or groundwater thereunder or the air above and around the Premises
(i) requiring  remediation under federal,  state or local statutes,  ordinances,
regulations or policies,  or (ii) at levels which are  unacceptable to Landlord,
in  Landlord's  sole  and  absolute   discretion,   Tenant  shall  clean-up  the
contamination  immediately,  at Tenant's sole cost and expense.  Tenant  further
agrees to indemnify, defend, protect and hold Landlord harmless from and against
any claims, suits, causes of action, fines, penalties,  costs, damages, loss and
fees,  including attorneys' fees and costs, arising out of or in connection with
(i) any clean-up work, inquiry or enforcement  proceeding  relating to Hazardous
Material  currently  or hereafter  used,  stored or disposed of by Tenant or its
agents, employees, contractors,  licensees or invitees on or about the Premises,
and (ii) the  use,  storage,  disposal  or  release  by  Tenant  of its  agents,
employees,  contractors,  licensees or invitees of any Hazardous  Material on or
about the Premises.

         (e)  Notwithstanding any other right of entry granted to Landlord under
this  Lease,  Landlord  shall  have the right to enter the  Premises  or to have
consultants  enter the Premises  throughout the Term at reasonable  times during
business hours for the purposes of determining:  (1) whether the Premises are in
conformity with federal, state and local statutes,  regulations,  ordinances and
policies,  including  those  pertaining  to the  environmental  condition of the
Premises; (2) whether Tenant has complied with all of its obligations hereunder;
and (3) the corrective  measures,  if any, required of Tenant to ensure the safe
use, storage and disposal of Hazardous Material. Tenant shall provide access and
reasonable  assistance for such inspections.  Such inspections may include,  but
are not limited to,  entering the  Premises  with  machinery  for the purpose of
obtaining  laboratory  samples.  Landlord  shall not be limited in the number of
such inspections during the Term. If, during such inspections,  it is found that
Tenant's use of Hazardous Material constitutes a violation of this Lease, Tenant
shall reimburse  Landlord for the cost of such inspections  within ten (10) days
of receipt of a written demand therefor.  If such consultants determine that the
Premises  are  contaminated  with  Hazardous  Material  or in  violation  of any
applicable  environmental law, Tenant shall, in a timely manner, at its expense,
remove such Hazardous Material or otherwise comply with the recommendation of

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such  consultants to the reasonable  satisfaction of Landlord and any applicable
governmental  agencies.  If  Tenant  fails  to do  so,  Landlord,  in  its  sole
discretion,  may, in addition to all other remedies  available to Landlord under
this Lease and at law and in equity,  cause the violation or contamination to be
remedied at Tenant's sole cost and expense. The right granted to Landlord herein
to inspect the Premises  shall not create a duty on  Landlord's  part to inspect
the Premises,  or liability of Landlord for Tenant's use, storage or disposal of
Hazardous Material, it being agreed and acknowledged that Tenant shall be solely
responsible for all liability in connection therewith.

         (f) Tenant shall surrender the Premises to Landlord upon the expiration
or  earlier  termination  of this  Lease  free of  Hazardous  Material  and in a
condition which complies with all governmental statutes, ordinances, regulations
and policies,  recommendations of consultants hired by Landlord,  and such other
reasonable requirements as may be imposed by Landlord.

         (g) Tenant's obligations hereunder and all indemnification  obligations
of Tenant under this Lease shall survive the  expiration or earlier  termination
of this Lease.

         17.  Insurance.  (a) Tenant  covenants  and agrees that it shall at all
times  during  the Term of the  Lease,  at its own cost and  expense,  carry and
maintain general liability insurance, including contractual liability insurance,
and property damage insurance for personal injury,  death or property damage, or
destruction of property,  occurring in, on or about the Premises with limits not
less than One Million Dollars  ($1,000,000.00) per occurrence or in such greater
amounts as Landlord may reasonably  require from time to time. Tenant shall also
carry  workmen's  compensation  insurance  as  required  by law and  such  other
insurance in such amounts as Landlord may reasonably require from time to time.

         (b) Tenant, at its expense,  shall at all times during the Term of this
Lease keep the Premises and insured  against loss by fire or any other casualty,
with extended  coverage,  for 100% of the full  replacement  cost therefor,  and
vandalism and malicious mischief coverage,  and shall keep all such insurance in
full force and effect during the entire Term of this Lease.

         (c) The  foregoing  insurance  shall be in companies  authorized  to do
business in the State of Arizona and in form,  substance  and amount  (where not
stated  above)  satisfactory  to Landlord and any  mortgagee or  beneficiary  of
Landlord.  The foregoing  insurance  shall  specify  Landlord,  its  successors,
mortgagee, trustee, beneficiary and assigns as additional

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insureds or payment of loss thereunder to Landlord,  its successors,  mortgagee,
trustee,  beneficiary  or assigns.  Policies  or  certificates  evidencing  such
insurance  shall be  delivered  to  Landlord  within  thirty (30) days after the
execution of this Lease, and renewals thereof shall be delivered to the Landlord
at least  thirty  (30)  days  prior to the  expiration  dates of the  respective
policies.  In the event  Landlord  at any time shall cause a mortgage or deed of
trust to be placed against the Premises,  Landlord shall be entitled to have all
appropriate insurance policies called for in this Lease endorsed with a standard
mortgagee loss payable clause,  making losses,  if any, payable to the mortgagee
or trustee or beneficiary as their  interests may appear.  Each of said policies
shall provide that Landlord be provided with thirty (30) days' advance notice of
intent to cancel the same.

         (d) In the event  Tenant  shall at any time fail,  neglect or refuse to
procure  insurance  required  hereunder or pay the premium costs as hereinbefore
provided therefor, or to provide Landlord upon demand with evidence of insurance
as required  herein,  then Landlord may at its discretion  procure or renew such
insurance, and any amounts paid therefor by Landlord shall be so much additional
rent due from Tenant to Landlord to be paid along with the next  installment  of
Monthly Base Rent hereunder, with interest at the rate of eighteen percent (18%)
per annum  from the date of  payment  thereof by  Landlord  until the  repayment
thereof to Landlord by Tenant.

         (e) Notwithstanding the foregoing, Landlord may during the Term of this
Lease keep the  improvements of the Premises insured against loss by fire or any
other  casualty with such extended  coverage and in such amounts as Landlord may
reasonably  deem  necessary  from time to time. In such event,  Tenant shall pay
Landlord upon demand the annual premium costs for such insurance.

         18.  Assignment  or  Subletting.  Tenant  shall not  transfer,  convey,
assign, encumber or hypothecate any interest in this Lease or in the Premises or
sublease all or any part thereof,  or allow any other person or entity to occupy
or use all or any part of the Premises without first obtaining  Landlord's prior
written consent,  which may be withheld by Landlord in its sole discretion.  Any
transfer or a series of  transactions  resulting  in the  transfer of control of
Tenant,  other than by reason of death,  shall be deemed to be an assignment and
transfer of Tenant's  interest under this Lease for purposes of this Section 19.
The term  "control",  as used  herein  shall  mean  the  power  to  directly  or
indirectly  direct,  or cause a direction  of, the  management  and  policies of
Tenant.

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         19.  Condemnation.  (a) If the whole of the Premises  shall be taken or
condemned for a public or quasi-public use or purpose by a competent  authority,
or if a portion of the Premises  shall be so taken that as a result  thereof the
balance of either cannot be used for the same purpose and with substantially the
same utility to Tenant as immediately  prior to such taking, or if the taking is
material and  substantial  and Landlord elects to terminate this Lease (Landlord
is hereby given such right to terminate), which election shall be made by giving
written  notice  thereof to Tenant  within  thirty  (30) days after  delivery of
possession to the condemning authority,  then in any of such events, the Term of
this Lease  shall  terminate  upon  delivery  of  possession  to the  condemning
authority,  and any award,  compensation or damages (hereinafter  referred to as
the "Award") shall be paid to and be the sole property of Landlord,  whether the
Award shall be made as compensation for diminution of the value of the leasehold
estate or the fee of the Premises or  otherwise;  and Tenant  hereby  assigns to
Landlord all of Tenant's right, title and interest, if any, in and to the Award.
Tenant shall continue to pay rents and other charges  hereunder  until the Lease
is terminated and any  impositions and insurance  premiums  prepaid by Tenant or
any unpaid  impositions  or other rents and charges  which  accrue  prior to the
termination,  shall be adjusted between the parties hereto.

         (b)  Notwithstanding  anything to the contrary set forth in this Lease,
in the event that one or more of the following  are taken through  condemnation,
Tenant may terminate  this Lease upon thirty (30) days' prior written  notice to
Landlord:

         (i)  ten  percent  (10%)  or  more  of the  usable  square  feet of the
Premises; or

         (ii) a lesser portion of the Premises that, if taken,  would materially
and adversely affect Tenant's use and occupancy of the Premises for the uses set
forth in Paragraph 6 hereof.

         (c)  Notwithstanding  anything to the contrary set forth in this Lease,
if any  part of the  Premises  is taken by  condemnation  and this  Lease is not
terminated, Rent shall be proportionately reduced, Landlord shall, at Landlord's
sole expense,  accomplish all necessary  restoration  to the Premises  resulting
from the  Condemnation and Rent shall be abated for the portion of the remaining
Premises not usable by Tenant until Landlord completes the restoration.

         20. Default.  (a) The following events are hereby defined as "Events of
Default":

                  (1) The failure of Tenant to pay an  installment of rent or to
make any other  payments or deposits of money as required  hereunder when due if
the failure continues for five (5)

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days after written notice of the failure from the Landlord to the Tenant; or

                  (2) The  failure of Tenant to  perform  or observe  any of the
other  covenants,  conditions and agreements of this Lease on the part of Tenant
to be performed or observed, and the continuance of such failure for a period of
twenty (20) days after notice in writing thereof (which notice shall specify the
respect in which Landlord  contends that Tenant has failed to perform or observe
any of such covenants, conditions and agreements) from Landlord to Tenant; or

                  (3) (i) The  filing  of an  application  by Tenant  for,  or a
consent to, the appointment of a receiver, trustee or liquidator of itself or of
all its assets; or

                  (ii)     The  filing  by  Tenant of a  voluntary  petition  in
                           bankruptcy  or the filing of a pleading  in any court
                           of record  admitting in writing its  inability to pay
                           its debts as they come due; or

                  (iii)    The making by Tenant of a general  assignment for the
                           benefit of creditors; or

                  (iv)     The  filing  by Tenant  of an  answer  admitting  the
                           material  allegations  of, or its  consenting  to, or
                           defaulting in answering a petition  against it in any
                           bankruptcy proceeding; or

                  (4) The entry of an order,  judgment or decree by any court of
competent jurisdiction adjudicating Tenant a bankrupt, or appointing a receiver,
trustee, or liquidator of it or all of its assets; or

                  (5) The  abandonment  or vacation of the Premises by Tenant or
the failure of Tenant to carry on its  business at the  Premises for a period of
five (5) consecutive days.

         (b) Landlord may treat any one or more Events of Default  defined above
as a breach of this Lease and  thereupon,  at its option,  Landlord may have and
exercise,  in addition to all other remedies  provided by law or in equity,  any
one or more of the following remedies:

                  (1)      Landlord  may  terminate  this  Lease  and  the  Term
                           created  hereby in which event Landlord may forthwith
                           repossess the Premises and be entitled

Lease for 2575 N. Dragoon,  Tucson, AZ
Page 11

<PAGE>

                           to recover  forthwith as damages a sum of money equal
                           to the value of the rent and other sums  provided  to
                           be paid by Tenant due and owing  prior to the date of
                           such  termination,  and any  other  sum of money  and
                           damages due or to become due to Landlord from Tenant;
                           or

                  (2)      Landlord may terminate  Tenant's  right of possession
                           only and may repossess the Premises by forcible entry
                           and detainer  suit, or otherwise,  without  demand or
                           notice of any kind to Tenant  (except as  hereinabove
                           expressly  provided)  and  without  terminating  this
                           Lease,  in which  event  Landlord  may,  but shall be
                           under no  obligation  so to do, relet all or any part
                           of the  Premises for such rent and upon such terms as
                           shall be  satisfactory  to  Landlord  (including  the
                           right to relet the  Premises  for a term  greater  or
                           lesser  than  that  remaining  under the Term of this
                           Lease and the right to relet the  Premises  as a part
                           of  a  larger  area  and  the  right  to  change  the
                           character  or use  made  of the  Premises).  For  the
                           purpose  of such  reletting,  Landlord  may make such
                           repairs,  changes,  alterations or additions in or to
                           the Premises which may be necessary or convenient. If
                           Landlord  shall fail or refuse to relet the Premises,
                           then  Tenant  shall pay to  Landlord as damages a sum
                           equal  to the  amount  of the rent  reserved  in this
                           Lease for such period or periods. If the Premises are
                           relet and a sufficient sum shall not be realized from
                           such  reletting  after  paying  all of the  costs and
                           expenses  of  repairs,   changes,   alterations   and
                           additions and the expense of such reletting,  and the
                           collection of the rent accruing therefrom, to satisfy
                           the rents  and other  charges  above  provided  to be
                           paid,   Tenant   shall   satisfy  and  pay  any  such
                           deficiency  upon demand  therefor  from time to time;
                           and  Tenant  agrees  that  Landlord  may file suit to
                           recover any sums  falling due under the terms of this
                           paragraph  and any other  sums due under  this  Lease
                           from time to time,  and that any suit or  recovery of
                           any  portion  due  Landlord  hereunder  shall  be  no
                           defense  to any  subsequent  action  brought  for any
                           amount not  theretofore  reduced to judgment in favor
                           of Landlord.

         (c) Each right, power and remedy of Landlord provided for in this Lease
shall be cumulative and concurrent and shall be in

Lease for 2575 N. Dragoon, Tucson, AZ
Page 12

<PAGE>

addition to every other right,  power or remedy now or hereafter existing at law
or in equity or by statute or otherwise, and the exercise or commencement of the
exercise  by  Landlord  of any one or more of the  rights,  powers  or  remedies
provided for in this Lease or now or hereafter  existing at law or in equity, or
by statute or otherwise,  shall not preclude the  simultaneous or later exercise
by Landlord of any or all such other rights, powers or remedies.

         21.  Subordination.  (a) This Lease,  at  Landlord's  option,  shall be
subordinate  to any  ground  lease,  mortgage,  deed  of  trust,  or  any  other
hypothecation  for security now or hereafter placed upon the Premises and to any
and  all  advances   made  on  the  security   thereof  and  to  all   renewals,
modifications,  consolidations, replacements and extensions thereof. If Landlord
or any mortgagee,  trustee or ground lessor shall elect to have this Lease prior
to the lien of a  mortgagee,  deed of trust or  ground  lease,  and  shall  give
written  notice  thereof to Tenant,  this  Lease  shall be deemed  prior to such
mortgage,  deed of trust or ground  lease,  whether this Lease is dated prior or
subsequent  to the date of said  mortgage,  deed of trust or ground lease or the
date of recording thereof.

         (b) Tenant shall  execute any  documents  required to  effectuate  such
subordination  or to make this Lease prior to the lien of any mortgage,  deed of
trust or ground lease,  as the case may be  (including,  without  limitation,  a
Subordination,  Non-Disturbance  and  Attornment  Agreement in the standard form
used by  Landlord's  lender),  and  failing  to do so within ten (10) days after
written demand therefor,  does hereby make, constitute,  and irrevocably appoint
Landlord as Tenant's  attorney in fact and in Tenant's name, place and stead, to
do the same. Upon Tenant's  written request to Landlord,  Landlord shall request
that its lender issue to Tenant a  non-disturbance  agreement  on such  lender's
standard  form;  provided,  however,  the  failure  of such  lender  to  issue a
non-disturbance agreement shall in no way affect Tenant's obligations under this
Lease.

         22.  Notices.  Notices  and  demands  required  or  desired to be given
hereunder  shall be given by  personal  delivery or be sent by  certified  mail,
postage prepaid,  return receipt requested,  addressed,  if to Landlord,  at the
address at which the last rental payment was made or required to be made, and if
to Tenant,  addressed to Tenant at the  Premises,  or such other  address as was
last specified respectively by notice by Landlord or Tenant. Notices and demands
shall be deemed to have been given when mailed or, if made by personal delivery,
then upon such delivery.

Lease for 2575 N. Dragoon, Tucson, AZ
Page 13

<PAGE>

         23. Estoppel Certificate by Tenant.  Tenant agrees at any time and from
time to time,  upon not  less  than  five (5)  days  prior  written  request  by
Landlord, to execute, acknowledge and deliver to Landlord a statement in writing
in form and content  requested by Landlord or its lender or potential  purchaser
of the Premises  certifying  that this Lease is  unmodified  and that no default
exists  hereunder  (except as shall be specified and which are known to Tenant),
and also  certifying  the dates to which the rents and other  charges  have been
paid in advance, if any, and such other matters so requested;  it being intended
that any such statement delivered pursuant to this section may be relied upon by
any  prospective  purchaser of the fee or a mortgagee,  trustee,  beneficiary or
assignee of the Premises.

         24.  Mortgagee  Protection.   (a)  If,  in  connection  with  obtaining
financing  for the  Premises or any portion  thereof,  Landlord's  lender  shall
request reasonable modifications to this Lease as a condition to such financing,
Tenant  shall not  unreasonably  withhold,  delay or defer its  consent  to such
modifications,  provided such modifications,  do not materially adversely affect
Tenant's rights under this Lease.

         (b). Tenant shall give to any trust deed or mortgage holder ("Holder"),
by prepaid certified mail, return receipt  requested,  at the same time as it is
given to Landlord,  a copy of any notice of default given to Landlord,  provided
that prior to such  notice  Tenant has been  notified,  in  writing,  (by way of
notice of assignment  of rents and leases,  or otherwise) of the address of such
Holder.  Tenant  further  agrees that if Landlord shall have failed to cure such
default  within the time provided for in this Lease,  then  notwithstanding  any
other terms or conditions  hereof,  the Holder shall have an  additional  thirty
(30) days after the  expiration of such period,  or after receipt of such notice
from  Tenant (if such  notice to the Holder is  required  by this  Section  38),
whichever  shall later  occur,  within  which to cure such  default,  or if such
default cannot be cured within that time,  then such  additional  time as may be
necessary  if within  such  thirty (30) days,  any Holder has  commenced  and is
diligently pursuing the remedies necessary to cure such default (including,  but
not limited to, commencement of foreclosure proceedings, if necessary, to effect
such cure), in which event this Lease shall not be terminated.

         25. Joint and Several  Obligation.  In the event more than one party or
person is the "Tenant" under this Lease,  the obligation to pay rent and perform
and observe all of the other covenants,  conditions and provisions of this Lease
shall be deemed to be the joint and several obligation of all of said parties.

Lease for 2575 N. Dragoon, Tucson, AZ
Page 14

<PAGE>

         26.  Captions and Headings.  The captions and headings  throughout this
Lease are for  convenience  and reference  only,  and shall in no way be held or
deemed to define, limit or construe any of the provisions of this Lease.

         27. Entire  Agreement.  This Lease  supersedes  any and all  agreements
between the parties  hereto  regarding  the  Premises  and sets forth the entire
agreement  between  the  parties  hereto  with  respect to the same and shall be
binding upon and inure to the benefit of the parties hereto and their respective
legal representatives, heirs, successors and assigns.

         28.  Amendments.  None of the  provisions  of this  Lease  shall in any
manner be altered,  waived,  modified,  changed or abandoned except by a written
instrument executed by each of the parties hereto.

         29. No Rent Deduction or Set Off. Tenant's covenant to pay Base Rent is
and shall be independent of each and every other covenant of this Lease.  Tenant
agrees that any claim by Tenant against Landlord shall not be deducted from Base
Rent nor set off against any claim for Base Rent in any action.

         30.  Rent After  Notice or Suit.  It is further  agreed by the  parties
hereto that after the service of notice,  or the commencement of a suit or after
final judgment for possession of the Premises,  Landlord may receive and collect
any rent  due,  and the  payment  of said rent  shall  not waive or affect  said
notice, suit, or judgment.

         31. Plurals;  Successors.  The words  "Landlord" and "Tenant"  wherever
herein used shall be construed to mean  "Landlords"  and  "Tenants" in the event
more than one person or entity  constitutes  either party to this Lease; and all
the covenants and agreements  contained  herein shall be binding upon, and inure
to the benefit of, their respective successors, heirs, executors, administrators
and assigns. In the event Landlord or any successor owner of the Premises or the
Project  shall  convey or  otherwise  dispose of all or any  portion  thereof to
another  person or  entity,  such other  person or entity  shall in its own name
thereupon be and become the  "Landlord"  hereunder and shall assume fully and be
liable for all  liabilities  and  obligations  of this Lease to be  performed by
Landlord  that  first  arise  after the date of  conveyance,  and such  original
Landlord or successor  owner shall,  from and after the date of  conveyance,  be
free of all liabilities and obligations not then incurred.

         32. Landlord's Lien.  Landlord shall have a first lien upon any and all
rents from permitted subtenants or assignees of

Lease for 2575 N. Dragoon, Tucson, AZ
Page 15

<PAGE>

Tenant,  if any,  upon the  interest of Tenant  under this  Lease,  and upon all
personal  property and fixtures of Tenant  located in or upon the  Premises,  to
secure the payment of all rent and other obligations due under this Lease.

         33.  Rules  and  Regulations.   Tenant  shall  observe  all  rules  and
regulations  reasonably  promulgated  by  Landlord  from  time to time,  and all
changes thereto upon notice thereof.

         34.  Landlord's  Expenses.   Tenant  shall  pay  on  demand  Landlord's
expenses,  including  reasonable  attorney's fees,  expenses and  administrative
hearing and court costs incurred  either directly or indirectly in enforcing any
obligation  of  Tenant  under  this  Lease,  in  curing  any  default  by Tenant
hereunder, in connection with appearing, defending or otherwise participating in
any  action or  proceeding  arising  from the  filing,  imposition,  contesting,
discharging  or  satisfaction  of any lien or claim for lien,  in  defending  or
otherwise  participating in any legal  proceedings  initiated by or on behalf of
Tenant wherein Landlord is not adjudicated to be in default under this Lease, or
in connection with any investigation or review of any conditions or documents in
the event Tenant requests Landlord's approval or consent to any action of Tenant
which may be desired by Tenant or required of Tenant hereunder.

         35: Ownership, Authority and Quiet Enjoyment.  Notwithstanding anything
to the contrary set forth in this Lease,  Landlord  represents and warrants that
it is the true and  lawful  owner of the  Building,  the  Premises  and the real
property upon which the Building is located, that Landlord is lawfully empowered
to enter  into  this  Lease  and that so long as  Tenant  shall  perform  all of
Tenant's covenants and obligations hereunder,  Tenant shall have and enjoy quiet
and peaceable  possession of the Premises from and after Landlord's  delivery of
the Premises to Tenant and until the end of the Lease Term.

         36:  Ownership  of  Alterations.  Tenant may  remove  any  alterations,
improvements,  signs, fixtures or equipment that it installs or places in, on or
about  the  Premises  from  time  to  time.  Tenant  shall  be  entitled  to all
depreciation,  amortization and other tax benefits with respect thereto.  Tenant
must repair any damage to the Premises caused by that removal. By written notice
to Tenant at least either sixty (60) days before expiration of the Lease Term or
fifteen  (15) days after any earlier  termination  of this Lease,  Landlord  may
require Tenant, at Tenant's sole expense,  to remove any alterations that cannot
be used for ordinary  general office  purposes and restore the Premises to their
configuration  and condition  before the alterations  were made (unless Landlord
previously notified Tenant

Lease for 2575 N. Dragoon, Tucson, AZ
Page 16

<PAGE>

that such  removal  would not be  required).  If Tenant  fails to complete  that
restoration  before  expiration  of the Lease  Term or,  in the case of  earlier
termination,  within  fifteen  (15) days  after  written  notice  from  Landlord
requesting  the  restoration,  Landlord  may do so and  charge  the  cost of the
restoration to Tenant. On the written request of Tenant, Landlord shall promptly
inform Tenant in writing whether Landlord  considers a particular  alteration or
proposed alteration to be usable for ordinary general office purposes.

         37: Landlord  Indemnity.  Notwithstanding  anything to the contrary set
forth in this  Lease,  Landlord  shall  (i) be  liable  for any and all  injury,
interference,  cost, expense, loss and/or damage caused to Tenant and/or any one
of  Tenant's  agents,  employees,  representatives  or  invitees  as a result of
Landlord's  (a)  negligent  acts or  omissions,  (b) willful  misconduct  or (c)
repairs,  restorations or maintenance  which materially and adversely  interfere
with  Tenant's use of the Premises and (ii)  indemnify and hold harmless each of
Tenant and/or any one of Tenant's agents, employees, representatives or invitees
for all such injury, interference, cost, expense, loss and/or damage.

         38. Hazardous  Material.  Notwithstanding  anything to the contrary set
forth in this Lease,  Landlord  warrants and  represents  to Tenant that, to the
best  of  Landlord's  actual  knowledge  without  independent  investigation  or
inquiry,  as of the effective  date of the Lease:

         (a)  there  has been no  release  onto or  under  the  Premises  of any
Hazardous Material;

         (b) the Premises contain no PCBs, PCB-contaminated electrical equipment
or asbestos- containing materials; and

         (c)  Landlord  has  received no notice of any  inquiry,  investigation,
proceeding  or claim by any  government  agency or other  person  regarding  the
presence of Hazardous Material on, under or about the Premises.

Notwithstanding anything to the contrary set forth in this Lease, if, during the
Lease Term (including any  extensions),  either Landlord or Tenant becomes aware
of (a) any actual or threatened  release of any Hazardous  Material on, under or
about the Premises or (b) any inquiry, investigation1 proceeding or claim by any
government  agency or other person regarding the presence of Hazardous  Material
on, under or about the  Premises,  that party shall give the other party written
notice of the release or investigation within five (5) days after learning of it
and shall  simultaneously  furnish  to the  other  party  copies of any  claims,
notices of violation,  reports or other writings received by the party providing
notice that concerns the release or investigation.

Lease for 2575 N. Dragoon, Tucson, AZ
Page 17

<PAGE>

         39. Hazardous  Material.  Notwithstanding  anything to the contrary set
forth in this Lease, Landlord and Tenant shall, at that party's sole expense and
with counsel  reasonably  acceptable to the other party,  indemnify,  defend and
hold  harmless the other party and the other  party's  shareholders,  directors,
officers, employees, partners, affiliates, agents and successors with respect to
all  losses  arising  out of or  resulting  from the  release  of any  Hazardous
Material  in or  about  the  Premises  by that  party  or that  party's  agents,
assignees,  sublessees,  contractors or invitees. This indemnification  includes
all  losses,  costs of  characterization,  costs of removal,  remedial  actions,
repairs, liabilities,  obligations, penalties, fines, claims, actions (including
remedial  or  enforcement  actions of any kind and  administrative  or  judicial
proceedings, orders or judgments), damages (including consequential and punitive
damages) and costs (including attorney, consultant and expert fees and expenses)
resulting from the release. This indemnification shall survive the expiration or
termination of this Lease.

         40: Tenant Repairs.

Subject to anything else to the contrary set forth in this Lease,  Tenant shall,
at  Tenant's  sole  expense,  repair and  maintain  in good order and  condition
(reasonable  wear and  tear  excepted):

         (a) the  nonstructural  portions of the Premises but including  parking
lot surfaces;

         (b) all  portions of the  Premises,  including  those  listed under the
responsibility  of the  Landlord  that were  damaged by the  Tenant or  Tenant's
employee, agent, or visitor.

         (c) all Premises Systems (as below defined).

"Premises Systems" means all systems and equipment that serve only the Premises.

         41: Landlord Repairs.

Subject to  anything  else to the  contrary  set forth in this  Lease,  Landlord
shall,  at  Landlord's  sole  expense,  repair  and  maintain  in good order and
condition (reasonably wear and tear excepted):

         (a) the structural  portions of the Premises  except as those described
in Paragraph 40(b);

         (c) the exterior  portions of the real  property  and the  improvements
collectively  constituting  the Premises  except as those described in Paragraph
40.

Lease for 2575 N. Dragoon, Tucson, AZ
Page 18

<PAGE>

         42.  Governing  Law. The laws of the State of Arizona  shall govern and
control the validity, construction, performance and enforcement of this Lease.

         43. Severability.  Wherever possible each provision of this Lease shall
be interpreted in such manner as to be effective and valid under applicable law.
In the event any  provision of this Lease shall be prohibited by or held invalid
or  unenforceable  under  applicable law, such provision shall be ineffective to
the  extent  of  such  prohibition,  invalidity  or  unenforceability,   without
affecting  the remainder of such  provision or the remaining  provisions of this
Lease.

         44. Official  Notice.  Tenant shall promptly deliver to Landlord copies
of any and all  notices  received  from any  governmental  authority  or  agency
relating to or affecting the Premises.

         45.  Termination  of Prior  Leases.  Any and all  prior  leases  by and
between  Landlord  and  Tenant  (or any  predecessor  thereof)  relating  to the
Premises are hereby terminated and are no longer of any force or effect.

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

"LANDLORD"                              "TENANT"

/s/ Michael A. Edwards
----------------------------            Adept Technology, Inc. a
Michael A. Edwards                      California corporation

/s/ Diane L. Edwards                    By: ???????????
----------------------------                -----------------------
Diane L. Edwards
                                        Title: CFO
                                               --------------------

Lease for 2575 N. Dragoon, Tucson, AZ
Page 19

<PAGE>

                                   EXHIBIT A

The premises is a free-standing building and grounds located at 2575 N. Dragoon,
Tucson, Pima County, Arizona with a legal description of: LOT 9 OF CENTER POINTE
COMMERCE  CENTER  ACCORDING  TO THE MAP  RECORDED  IN BOOK 49 OF MAPS,  PAGE 84,
RECORDS OF PIMA COUNTY, ARIZONA

Lease for 2575 N. Dragoon, Tucson, AZ
Page 20Net, Net, Net
                                     LEASE

         THIS  LEASE  dated May 19,  2000 for  reference  purposes  only is made
between the Lessor and the Lessee  named  below,  effective  on the later of the
dates set forth under their respective signatures.

                             BASIC LEASE PROVISIONS

1.  Premises:                As depicted on Exhibit A.

    Premises Address:        70 Santa Felicia
                             Goleta, CA 93117

    Use of Premises:         Lessee shall use the  premises for general  office,
                             manufacturing,  research and development,  shipping
                             and receiving. The use of the premises shall comply
                             with  the  Santa  Barbara   County  zoning  on  the
                             property of MR-P.

2.  Leased Area:             As depicted on Exhibit A.

          Square Feet:       11,880 square feet

3.  Lessee's Percentages:

          Building:          100%

          Common Area:       100%

4.  Initial Monthly Rent:    $17,226 NNN ($1.45 per square foot per month)

    Prepaid Rent:            $17,226  (Representing the first month's rent to be
                             paid upon execution of the Lease)

    Rent Adjustment:         As provided in Section 3 of this Lease.

5.  Term:                    Five (5) years and _ month.

6.  Commencement
    Date:                    May 15, 2000

<PAGE>

    Rent Commencement
    Date:                    June 1, 2000

    Termination Date:        May 31, 2005

7.  Security Deposit:        $17,226

8.  Broker(s):               Blair Hayes Commercial - Lessor
                             Pacifica Commercial Realty - Lessee

9.  Parking Spaces Provided: All spaces provided on site

10. Tenant Improvement
    Allowance:               As provided in Section 18 of this Lease.

11. Conditions to
    Obligations and
    Guaranty:                The obligations of the parties under this Lease are
                             subject to: the  premises  being  vacated by Howden
                             Fluid Systems,  the existing  lessee,  and Lessor's
                             receipt of a written  guaranty of this Lease,  duly
                             executed and delivered by Raymond M. Karam.

12.  Submission of this  instrument  for  examination or signature by the Lessee
     does not  constitute  a  reservation  of or option  for space and it is not
     effective  as a lease or  otherwise  until  execution  by both  Lessee  and
     Lessor. This document will be deemed withdrawn by Lessor if not executed by
     Lessee and delivered to Lessor by May 22, 2000.

<PAGE>

Daryush Agahi                   507     $9.33   4/3/00
23351 Via Guadix
Mission Viejo, CA 92691
   [Acquired from Karam (Rodgers shares)]
                             ------  --------
                             33,730  $150,000
                                    (aggregate)
<PAGE>

         IN WITNESS  WHEREOF,  the  parties  hereto  have  executed  this Lease,
consisting of the foregoing Basic Lease Provisions,  Articles 1 through 18 which
follow,  and any  attached  Exhibits  or  Addendums,  as of the date first above
written.

                              LESSOR:

Date:   May ___, 2000         UNITED INSURANCE COMPANY OF AMERICA

                              By: __________________________________
                                  Name:
                                  Title:

                              Address:
                              c/o Bermant Development Company
                              5383 Hollister Avenue
                              Suite No. 150
                              Santa Barbara, CA 93111

                              LESSEE:

Date: May 19 , 2000           NANOMOTION, INC.,
                              a California corporation

                              By: /s/ Raymond M. Karam
                                  --------------------------------
                                  Name:  Raymond M. Karma
                                  Title: President

                              Address:
                              130 Robin Hill Rd. #110
                              Goleta, CA  93117

<PAGE>

                               TABLE OF CONTENTS
ARTICLE                                                                     PAGE
        Basic Lease Provisions ............................................I-III

        Table of Contents .................................................i-iii
1.      LEASE OF PREMISES .....................................................1
2.      TERM ..................................................................1
        2.1 Commencement of Term ..............................................1
        2.2 Delay in Commencement .............................................2
3.      RENT ..................................................................2
        3.1 Initial Annual Rent ...............................................2
               3.1.1 Prepaid Rent .............................................2
        3.2 Additional Rent ...................................................2
        3.3 No Reduction or Offset ............................................2
        3.4 Definitions: ......................................................2
        3.5 Rent Adjustment ...................................................4
        3.6 Calculation and Payment ...........................................5
4.      SECURITY DEPOSIT ......................................................5
5.      USE ...................................................................5
        5.1 Use ...............................................................5
        5.2 Compliance with Law; Nuisance .....................................6
        5.3 Insurance Cancellation ............................................6
        5.4 Hazardous Substances ..............................................6
        5.5 Environmental Laws ................................................8
                  (a) Compliance with Environmental Laws ......................8
                  (b) Hazardous Materials Handling ............................8
                  (c) Notices .................................................9
                  (d) Indemnification of Lessor ...............................9
                  (e) lndemnification of Lessee ..............................10
6.      MAINTENANCE REPAIRS AND ALTERATIONS ..................................10
        6.1 Lessor's Obligations .............................................10
        6.2 Lessee's Obligations .............................................11
        6.3 Alterations and Additions ........................................11
        6.4 Surrender ........................................................11
        6.5 Lessor's Rights ..................................................12
7.      INSURANCE ............................................................12
        7.1 Lessee's Liability Insurance .....................................12
        7.2 Lessee's Worker's Compensation Insurance .........................12
        7.3 Lessee's Fire and Extended Coverage Insurance ....................12
        7.4 Policy Requirements  .............................................12
        7.5 Lessor's Rights ..................................................13

                                        i
<PAGE>

        7.6 Lessor's Insurance ...............................................13
        7.7 Indemnification ..................................................13
        7.8 Exemption of Lessor from Liability ...............................14
8.      DAMAGE OR DESTRUCTION ................................................14
        8.1 Partial Damage ...................................................14
        8.2 Damage Near End of Term ..........................................15
        8.3 Abatement of Rent; Lessee's Remedies .............................15
        8.4 Insurance Proceeds Upon Termination ..............................15
        8.5 Restoration ......................................................15
9.      PERSONAL PROPERTY TAXES ..............................................16
10.     UTILITIES ............................................................16
11.     ASSIGNMENT AND SUBLETTING ............................................16
12.     DEFAULTS; REMEDIES ...................................................18
        12.1 Default by Lessee ...............................................19
        12.2 Remedies for Default by Lessee ..................................19
        12.3 Default by Lessor ...............................................20
        12.4 Late Charges ....................................................21
13.     CONDEMNATION OR RESTRICTION ON USE ...................................21
        13.1 Eminent Domain  .................................................21
        13.2 Abatement of Rent ...............................................22
        13.3 Temporaiy Taking ................................................22
        13.4 Voluntary Sale as Taking ........................................22
14.     BROKERS ..............................................................22
15.     LESSOR'S LIABILITY ...................................................22
16.     PARKING ..............................................................23
17.     GENERAL PROVISIONS ...................................................24
        17.1 Estoppel Certificate ............................................24
        17.2 Severability ....................................................24
        17.3 Time of Essence .................................................24
        17.4 Captions ........................................................24
        17.5 Notices .........................................................24
        17.6 Waivers .........................................................25
        17.7 Holding Over ....................................................25
        17.8 Cumulative Remedies .............................................25
        17.9 Inurement .......................................................25
        17.10 Choice of Law ..................................................25
        17.11 Subordination ..................................................25
        17.12 Attorneys' Fees ................................................26
        17.13 Lessor's Access ................................................26
        17.14 Corporate Authority ............................................26
        17.15 Surrender or Cancellation ......................................26
        17.16 Entire Agreement ...............................................26
        17.17 Signs ..........................................................27

                                       ii
<PAGE>

        17.18  Interest on Past Due Obligations ..............................27
        17.19  Gender; Number  ...............................................27
        17.20  Recording of Lease ............................................27
        17.21  Waiver of Subrogation  ........................................28
        17.22  Confidentiality of Lease ......................................28
        17.23  Quiet Enjoyment ...............................................28
        17.24  Window Coverage ...............................................28
        17.25  Materials Storage Restrictions  ...............................28
        17.26  No Agency .....................................................29
        17.27  Force Majeure .................................................29
        17.28  Accord and Satisfaction .......................................29
        17.29  Financial Statements ..........................................29
        17.30  Supersedes Proposal to Lease ..................................29
        17.31  Construction ..................................................30
        17.32  Non-Disturbance Agreement .....................................30
18.     TENANT IMPROVEMENTS ..................................................30
19.     ONE TIME OPTION TO EXTEND ............................................30
20.     APPRAISAL PROVISIONS .................................................31

                                      iii
<PAGE>

EXHIBIT A - PREMISES

EXHIBIT B - RULES AND REGULATIONS

EXHIBIT C - GUARANTY OF LEASE

                                       iv
<PAGE>

     1.  LEASE OF PREMISES

         The Lessor  hereby  leases to the Lessee and the Lessee leases from the
Lessor for the term, at the rental,  and upon all of the conditions set forth in
this Lease,  the Premises  identified  in Item 1 of the Basic Lease  Provisions,
together  with the  non-exclusive  use,  in  common,  with the  Lessor and other
tenants of the Building  and their  respective  invitees,  of common areas in or
about the Building and the parking  garage (if any) or parking  areas  adjoining
the  Building.  The Lessee and the Lessor have agreed on the square  footage set
forth in Item 2 of the Basic  Lease  Provisions  and each party will be bound by
Item  2  through  the  term  of  this  Lease  or  any  extension  thereof.   The
configuration  of the Project and the  location of the  Building,  Premises  and
associated  common  and  parking  areas is  indicated  on  Exhibit  B. The size,
location and function of the buildings and related structures  depicted here are
approximate.  The configuration of the development,  the design,  size, function
and location of all other  improvements,  and the identity and location of other
tenants to the extent  depicted  are  subject to change  without  notice for any
reason deemed  sufficient by the owner.  The Lessor  reserves the right to alter
the configuration of the Project to construct additional  improvements  thereon,
to withdraw areas therefrom from time to time and alter the configuration of the
associated common and parking areas,  provided that the number of parking spaces
intended for the Lesse's use, and the Lessee's  general use and enjoyment of the
Premises  shall not  thereby  be  materially  diminished.  The  Lessee  shall be
allocated  the number of parking  spaces set forth in Item 9 of the Basic  Lease
Provisions  and  the  Lessee   acknowledges   that  the  Lessor  shall  have  no
responsibility  to  supervise  or  police  the usage of the  parking  lot by the
tenants of the Building. Nothing in this Lease shall cause the Lessor in any way
to be construed as an employer, employee, fiduciary, a partner, a joint venturer
or  otherwise  associated  in any way with the  Lessee in the  operation  of the
Premises,  or to subject the Lessor to any obligation,  loss,  charge or expense
connection with or arising from the Lessee's operation or use of the Premises.

         Pursuant to Section 1652 of the California Civil Code, it is understood
and agreed that the general  intent and purpose of this Lease is that this Lease
shall be an absolute  triple net lease with  respect to the  Lessor.  The Lessee
shall pay its pro rata share of all insurance,  utilities,  all operating  costs
for the Premises, the common areas of the Building, the Building and the land on
which it is situated.  It is intended that the rental return to the Lessor shall
not be reduced, offset or diminished directly or indirectly by any cost, charge,
or  expense  due from the Lessee and  others in  connection  with the  Premises,
Building  or land upon  which it is  situated,  nor  subject  to  suspension  or
termination for any reason. It is acknowledged and agreed that all provisions of
this Lease shall be interpreted in a manner  consistent  with and subordinate to
such general intent and purpose.

     2.  TERM

         2.1      Commencement of Term

                  (a) The term of the  Lease  shall be as shown in Item 5 of the
Basic Lease  Provisions,  commencing on the Commencement  Date, which the Lessor
and the  Lessee  expect  to be

<PAGE>

the  Commencement  Date as shown in Item 6 of the Basic  Lease  Provisions,  but
which may be such other date as herein  provided,  and ending on the Termination
Date, unless sooner terminated pursuant to any provision hereof.

                  (b) Payment of rent shall  commence  on the Rent  Commencement
Date.

                  (c)  If   delivery   of   possession   occurs   prior  to  the
CommencementDate, the term of this Lease shall commence on such date of delivery
of possession, but the Termination Date shall not be advanced.

         2.2 Delay in Commencement.  Notwithstanding  the Commencement  Date, if
for any reason the Lessor  cannot  deliver  possession  of the  Premises  to the
Lessee on or before said date,  the Lessor shall not be subject to any liability
therefor,  nor shall  such  failure  affect  the  validity  of this Lease or the
obligations  of the Lessee  hereunder.  The Lessee shall not be obligated to pay
rent until delivery of possession of the Premises has occurred.

     3.  RENT

         3.1 Initial  Monthly  Rent.  The Lessee shall pay to the Lessor as rent
for the Premises an Initial  Monthly  Rent in the amount  specified in Item 4 of
the Basic Lease Provisions in advance on the first day of each month, commencing
on the Rent Commencement Date specified in Item 6 of the Basic Lease Provisions.

                  3.1.1 Prepaid  Rent.  Upon Lease  execution,  the Lessee shall
deposit  with the Lessor an amount representing  the first (lst) month's rent as
provided in Item 4 of the Basic Lease Provisions.

         3.2  Additional  Rent.  The  Lessee  shall  reimburse  the  Lessor,  as
additional  rent,  in the manner  and at the times  provided,  for the  Lessee's
proportionate share of all Building Operating Expenses and Common Area Operating
Expenses  (as  hereinafter   defined)  incurred  by  the  Lessor.  The  Lessee's
proportionate  share  of  such  Building  Operating  Expenses  and  Common  Area
Operating  Expenses shall be based upon the Lessee's Building  Percentage in the
case  of  Building  operating  Expenses,  and  upon  the  Lessee's  Common  Area
Percentage in the case of Common Area Operating Expenses, all as defined herein.

         3.3 No  Reduction  or Offset.  All Rent due under  this Lease  shall be
payable without deduction, abatement or offset.

         3.4 Definitions: For purposes of this Article 3:

                  (a)  The  Lessee's   Building   Percentage   is  a  percentage
calculated  by dividing the Leased Area of the  Premises,  as shown in Item 2 of
the  Basic  Lease  Provisions,  by the  leasable  area  of the  Building,  as is
stipulated to be as shown in Item 3 of the Basic Lease Provisions.

                                       2
<PAGE>
                  (b)  Building  Operating  Expenses  shall  mean the sum of all
expenses  incurred by the Lessor in connection  with the  operation,  repair and
maintenance  of the  Building,  including,  but not limited to,  heating and air
conditioning;  all Real Property Taxes (as hereinafter  defined) imposed upon or
with  respect to the Building and related  improvements  (exclusive  of the land
underlying all such improvements);  all fire and extended coverage,  earthquake,
loss of rents,  vandalism,  malicious  mischief and other insurance covering the
Building  and  losses  suffered  which  fall  below  the  insurance  deductible;
utilities;  materials and supplies;  salaries, wages and other expenses incurred
with respect to the operation,  repair and maintenance of the Building, the cost
of  repainting,  wall  covering or  recarpeting  Common  Areas of the  Building;
security  and  fire   protection;   amortization  of  capital   investments  for
improvements which are designed to reduce operating costs, improve operations or
comply with  governmental  conservation  or safety programs over such reasonable
period as the  Lessor  shall  determine  (together  with  interest  at three (3)
percentage  points  above the discount  rate of the Federal  Reserve Bank of San
Francisco on the unamortized  amount); and an amount equal to three percent (3%)
of the  combined  total of the gross  receipts of the Rent,  Building  Operating
Expenses and Common Area Operating Expenses to cover the Lessor's administrative
and overhead expenses. Building Operating Expenses attributable to the utilities
and services  furnished  pursuant to Article 10 shall be  apportioned  among the
tenants  of the  Building  receiving  such  services  (excluding  those  tenants
furnishing or paying for their own utilities and janitorial  services)  based on
the respective leased areas occupied by such tenants.

                  (c) Lessee's  Common Area  Percentage  is a percentage  figure
calculated by the project  architect by dividing the Leased Area of the Premises
by the total leasable area in all improvements, including the Building and other
buildings, shown on Exhibit B, during such year as is initially stipulated to be
as shown in Item 3 of the Basic Lease  Provisions.  Should the  Building  and/or
landscape area become a separate legal lot, or should additional improvements or
common  area be added to or  deleted  from  Exhibit B, the  Lessor  may,  at its
option,  calculate the Lessee's  Common Area  Percentage by comparing the common
area  attributable  to the  Premises  with the common  area on such legal lot or
otherwise within Exhibit B as so revised.

                  (d) Common Area  Operating  Expenses shall mean the sum of all
expenses incurred by the Lessor in connection with the operation and maintenance
of driveways,  landscaping,  walkways, plazas, parking facilities, and perimeter
property  including,  but not  limited  to: all items  described  in Section 6.1
hereof;  all Real Property Taxes (as hereinafter  defined)  imposed upon or with
respect to the land included  within  Exhibit B all public  liability  insurance
covering  Exhibit  B;  and  losses  suffered  which  fall  below  the  insurance
deductible;  security and fire  protection;  salaries,  wages and other expenses
incurred  with  respect  to   maintenance   of  the  common  areas,   gardening,
landscaping, repaving, repainting and trash removal (excluding the cost of an on
site  manager  or  officer  manager);  depreciation  of  equipment  used in such
maintenance;  amortization of capital  investments for improvements which comply
with governmental conservation or safety programs over such reasonable period as
the Lessor  shall  determine  (together  with  interest at three (3)  percentage
points above the discount  rate of the Federal  Reserve Bank of San Francisco on
the unamortized amount). General overhead and depreciation of improvements shall
not be included in

                                       3
<PAGE>

the expenses except as specifically set forth in the foregoing. Any governmental
surcharge,  fee or  assessment  imposed with  respect to the parking  facilities
within  Exhibit B shall,  to the extent  paid by the Lessor and not passed on to
the users of said  parking  facilities,  be included  in Common  Area  Operating
Expenses.

                  (e) Real  Property  Taxes  shall  mean  all real and  personal
property taxes and assessments incurred during any calendar year, including, but
not limited to: special and extraordinary assessments, meter and sewer rates and
charges, occupancy taxes or similar taxes imposed on or with respect to the real
or personal  property, whether or not imposed on or measured by the rent payable
by the Lessee, and other governmental  levies and charges,  general and special,
ordinary and  extraordinary,  unforeseen  as well as  foreseen,  of any kind and
nature  whatsoever  relating  to the real or  personal  property,  and any gross
rental,  license or business  tax measured by or levied on rent payable or space
occupied.  If, by law, any property  taxes are payable,  or may at the option of
the taxpayer be paid, in  installments  (whether or not interest shall accrue on
the unpaid  balance of such  property  taxes),  the Lessor may, at the  Lessor's
option,  pay the same and,  in such event,  any  accrued  interest on the unpaid
balance of such  property  taxes  shall be deemed to be Real  Property  Taxes as
defined herein.  Real Property Taxes shall also include all expenses  reasonably
incurred by the Lessor in seeking a reduction by the taxing  authorities of Real
Property Taxes applicable to the Project.  Real Property Taxes shall not include
any capital levy, franchise,  estate, inheritance,  succession, gift or transfer
tax of the Lessor,  or any income,  profits or excess  profits tax,  assessment,
charge or levy upon the income of the Lessor; provided,  however, that if at any
time  during the term of this Lease  under the laws of the United  States or the
State of California,  or any political subdivision of either, a tax or excise on
rents,  space or other aspects of real property,  is levied or assessed  against
the  Lessor,  the same shall be deemed to be Real  Property  Taxes.  If any such
property  taxes upon the income of the  Lessor  shall be imposed on a  graduated
scale,  based upon the Lessor's  aggregate  rental  income,  Real Property Taxes
shall  include only such portion of such  property  taxes as would be payable if
the rent  payable  with  respect to the  Building and Common Areas were the only
rental income of the Lessor subject thereto.

         3.5  Rent  Adjustment.  As  specified  in  Item  4 of the  Basic  Lease
Provisions,  the amount of the monthly rental installment shall be increased, as
of each June 1 of the Lease term  (commencing  June 1, 2001), by an amount equal
to Four  Percent  (4%) of the monthly  rent for the prior year.  Therefore,  the
amount of such monthly rental installments shall be as follows:

        Calendar Year     Adjustment Date           Monthly Rental Installment
        2001              June 1,2001               $17,915.04
        2002              June 1,2002               $18,631.64
        2003              June 1,2003               $19,376.91
        2004              June 1,2004               $20,151.98

                                       4
<PAGE>

         3.6 Calculation and Payment. Annual rent shall be payable to the Lessor
without  deduction  or  offset,  in  lawful  money of the  United  States at the
Lessor's  address herein or to such other persons or at such other places as the
Lessor designates in writing.  Rent payable for any period for less than one (1)
month shall be prorated based upon a thirty (30) day month.

         Prior  to the  commencement  of the  lease  term  and of each  December
thereafter,  the Lessor shall give the Lessee a written estimate of the Lessee's
share of Building  and Common Area  Operating  Expenses  for the ensuing year or
portion  thereof.  The Lessee shall pay such  estimated  amount to the Lessor in
equal monthly installments, in advance. Within ninety (90) days after the end of
each calendar year,  the Lessor shall furnish to the Lessee a statement  showing
in  reasonable  detail the actual  Building and Common Area  Operating  Expenses
incurred by the Lessor  during such period,  and the parties shall within thirty
(30) days make any  payment  or  allowance  necessary  to  adjust  the  Lessee's
estimated  payment to the Lessee's actual  proportionate  share as shown by such
annual  statement.   Any  amount  due  the  Lessee  shall  be  credited  against
installments next coming due under this paragraph.

     4.  SECURITY DEPOSIT

         Concurrently  with the Lessee's  sexecution  of this  Lease, the Lessee
shall  deposit  with the Lessor the sum  specified  in Item 7 of the Basic Lease
Provisions  as  security  for the  faithful  performance  by the  Lessee  of all
covenants and conditions of this Lease. If the Lessee shall breach or default in
the  performance  of any covenants or  conditions  of this Lease,  including the
payment of rent,  the  Lessor may use,  apply or retain the whole or any part of
such  security  deposit  for the payment of any rent in default or for any other
sum which the Lessor may spend or be required to spend by reason of the Lessee's
default.  If the Lessor so uses or applies all or any  portion of said  deposit,
the Lessee shall,  within ten (10) days after written demand  therefor,  deposit
cash with the Lessor in an amount sufficient to restore said deposit to the full
amount herein above stated and the Lessee's failure to do so shall be a material
breach of this Lease. Should the Lessee comply with all covenants and conditions
of this Lease,  the security deposit or any balance thereof shall be returned to
the Lessee (or at the option of the Lessor, to the last assignee of the Lessee's
interest in this Lease) at the  expiration of the term.  The Lessee shall not be
entitled to interest on the security deposit and the Lessor shall have the right
to commingle  said security  deposit with other funds of the Lessor.  Should the
Lessor  sell its  interest  in the  Premises,  the  Lessor may  transfer  to the
purchaser  thereof the then unexpended or  unappropriated  deposit and thereupon
the Lessor shall be discharged from any liability for such funds.

     5.  USE

         5.1 Use.  The  Premises  shall be used and  occupied  for the  purposes
described in Item 1 of the Basic Lease  Provisions,  permitted under  applicable
ordinances and other Governmental  requirements,  the covenants,  conditions and
restrictions  affecting  the  Project,  as the same may be amended  from time to
time, and the Rules and Regulations as the Lessor may from time to time

                                       5
<PAGE>

reasonably  adopt for the safety,  care and  cleanliness of the Building and the
Project or the preservation of good order.  The Rules and Regulations  presently
in effect are attached  hereto as Exhibit C. The Lessor shall not be responsible
to the Lessee for the  non-performance of any of said Rules and Regulations,  or
non-compliance  with said covenants,  conditions and restrictions,  by any other
tenant of the Building.

         5.2 Compliance  with Law;  Nuisance.  The Lessee,  at the Lessee's sole
cost and  expense,  shall  comply  promptly  and at all  times  with  all  laws,
requirements,  ordinances,  statutes, and regulations of all municipal, state or
federal  authorities,  or any  board of fire  insurance  underwriters,  or other
similar bodies,  now in force or which may hereafter be in force,  pertaining to
the Building and the Premises and the occupancy thereof,  including any law that
requires alteration, maintenance or restoration of the Premises as the result of
the Lessee's use thereof.  The judgment of any court of competent  jurisdiction,
or the admission of the Lessee in any action or  proceeding  against the Lessee,
whether the Lessor is a party thereto or not, that the Lessee  violated any such
ordinances  or statutes in the use of the Premises  shall be  conclusive of that
fact as between the Lessor and the  Lessee.  The  Lessee,  at its sole  expense,
shall  also  comply  with  all  requirements  for  fire  extinguishers  or  fire
extinguisher systems required in the Premises.

         The Lessee shall not commit,  or suffer to be  committed,  any waste of
the Premises, or any nuisance,  annoyance or other unreasonable  annoyance which
may disturb the quiet enjoyment of adjoining  premises or of the Building by the
owners or occupants thereof.

         5.3 Insurance Cancellation. Notwithstanding the provisions of Paragraph
5.1 above, the Lessee shall not do or permit anything to be done in or about the
Premises nor bring or keep anything therein,  including all uses permitted under
Section 5.1 above, which will in any way increase the existing rate of or affect
any fire or other insurance upon the Building, or any other part thereof, or any
of its contents,  and if the Lessee's use of the Premises  causes an increase in
said insurance rates, the Lessee shall pay as additional rent the amount of such
increase.  The  Lessee  shall be in default  under this Lease  should the Lessee
cause the  cancellation of fire or other insurance upon the Building or Property
or should the Lessee fail to pay any increased  insurance rate  attributable  to
the Lessee's use of the Premises.  In determining whether increased premiums are
a result of the  Lessee's  use or  occupancy  of the  Premises  or  Building,  a
schedule  issued by the Lessor's insurer  computing the  insurance  rate on  the
Premises  or  Building,  or  the  leasehold  improvements  showing  the  various
components of such rate,  shall be conclusive  evidence of the several items and
charges  which make up such rate.  The Lessee  shall  promptly  comply  with all
reasonable  requirements  of the  insurance  authority  or of any insurer now or
hereafter in effect relating to the Premises.

         5.4 Hazardous Substances. Any corrosive,  flammable, hazardous or other
special  waste or  materials  shall be handled or  disposed  of as  directed  by
applicable state, Federal, County and City regulations. The Lessee shall handle,
store or dispose of such  materials  in a careful  and  prudent  manner.  At the
termination of the Lease, or any option period  thereof,  the Lessee shall fully
clean the  Premises in such a manner that no residue of such  materials or waste
shall  remain  on  the  Premises.   The  Lessee  shall  notify  the  appropriate
governmental authority of the presence and

                                       6
<PAGE>

amount of any such  material  or waste,  and shall  comply  with all  conditions
imposed by such authority. The Lessee shall contact the appropriate governmental
authority  prior to occupancy to determine  the existence of any records for the
Building and/or  Premises.  To the extent required by law,  specifically  thirty
(30) days prior to  occupancy,  the Lessee  shall  submit a Hazardous  Materials
Management Plan (HMMP) and a Hazardous  Materials Floor Plan (HMF) to the Lessor
and the appropriate  governmental  authority for approval.  These plans shall be
attached in full to this Lease.

         The HMMP shall include the following:

                  (a) The company name, address and contact person.

                  (b) General facility  description with map showing location of
all buildings and structures.

                  (c)  Facility  hazardous  material  storage  map  showing  the
location of each  proposed  hazardous  material  storage area and access to such
facilities.  The map shall be updated  annually by the occupant and submitted by
January 1 each year.

                  (d) A floor  plan  showing  the  location  of  each  hazardous
material  storage  area,  storage  area  access,  and the  location of emergency
equipment.

        The HMF shall include the following:

                  (a) Hazardous  Materials  Handling Report  describing the safe
handling of hazardous materials to prevent accidents.

                  (b)  Separation  or Hazardous  Material  Report  outlining the
methods  to be  utilized  to  insure  separation  and  protection  of  hazardous
materials from such factors that could cause fire, explosion, spills, etc.

                  (c)  Inspection   and  Record  Keeping  Plan   indicating  the
procedures  for  inspecting  each  storage  facility.  An  authorized  record of
inspection shall be maintained by the Lessee.

                  (d) Employee  Training  Program to insure that  employees know
how to safety handle hazardous materials.

                  (e)  Hazardous   Materials   Contingency   Plan  that  clearly
describes appropriate response procedures and measures in case of an accident.

                  (f) A floor plan identifying the location and quantity of each
hazardous  material,  including  the chemical  name and quantity  limit for each
class.

                                       7
<PAGE>

         The Lessee shall pay inspection  fees,  based on the hourly  inspection
rate, for an environmental audit to be conducted by the appropriate governmental
authority,  or the  Lessor  at  the  termination  of  the  Lease  and  prior  to
reoccupation of the Building and/or the Premises, if hazardous materials were in
use on the Building  and/or  Premises.  The appropriate  governmental  authority
shall  perform or the Lessee shall  arrange for such an audit in a timely manner
to prevent  economic  hardship to the Lessor and shall certify that the Premises
are available for  reoccupation,  or shall specify  clean-up  measures that will
render the Premisis safe for  reoccupation. The Lessee shall be responsible  for
any  clean-up  that may be required as a result of the audit,  if such items are
attributable to the Lessee's use of the Premises.

         Should  the  Lessee  fail to  comply  with any  duty set  forth in this
Section 5.4, the Lessor may, in addition to all other  remedies now or hereafter
provided by this Lease, or by law,  perform such duty or make good such default,
and any amounts which the Lessor shall advance  pursuant thereto shall be repaid
by the Lessee to the Lessor on demand.

     5.5 Environmental Laws.

                  (a) Compliance  with  Environmental  Laws. The Lessee,  in its
conduct of business  on or in any  activity,  work,  thing  done,  permitted  or
suffered by the Lessee,  its agents,  contractors,  employees or invitees on the
Premises,  shall at all times and in all respects comply with all federal, state
and county laws,  ordinances and regulations  (the "Hazardous  Materials  Laws")
relating to industrial hygiene,  environmental  protection or the use, analysis,
generation,  manufacture,  storage,  disposal  or  transportation  of  any  oil,
flammable  explosives,  asbestos,  radioactive  materials  or  waste,  or  other
hazardous,  toxic,  contaminated or polluting materials,  substances, or wastes,
including,  without limitation,  any "hazardous substances," "hazardous wastes,"
"hazardous  materials," or "toxic substances" under any such laws, ordinances or
regulations (collectively,  the "Hazardous Materials"). Such laws, ordinances or
regulations   shall   include,   but  not  be  limited  to,  the   Comprehensive
Environmental  Response,  Compensation and Liability Act of 1980, as amended, 42
U.S.C.  Section  9601, et seq; the Hazardous  Materials  Transportation  Act, 49
U.S.C.  Section  1801,  et seq;  the Resource  Conservation  and Recovery Act of
1976,42 U.S.C.  Section 6901 et seq; the Clean Water Act, 33 U.S.C. Section 466,
et seq;  the Safe  Drinking  Water Act,  14 U.S.C.  Section  1401,  et seq;  the
Superfund  Amendment and  Reauthorization  Act of 1986;  Public Law 99-499,  100
Stat. 1613; the Toxic Substances Control Act, 15 U.S.C. Section 2601, et seq, as
amended;  those substances  defined as "hazardous waste",  "extremely  hazardous
waste",  "restricted  hazardous waste" or "hazardous substance" in the Hazardous
Waste Control Act, Section 25100 et seq of the California  Health & Safety Code;
and  those  materials  and  substances   similarly   described  in  the  Federal
Insecticide,  Fungicide and Rodenticide  Act, 7 U.S.C.  Section 136, et seq., as
amended,  the Atomic  Energy Act of 1954,42  U.S.C.  Section  2011,  et seq., as
amended;  the Porter Cologne Water Quality Control Act,  Section 1300 et seq. of
the Califomia Health & Safety Code; and any regulations adopted and publications
promulgated pursuant to said Laws.

                  (b) Hazardous Materials Handling. The Lessee shall, at its own
expense,  procure,  maintain in effect and comply with all conditions of any and
all permits, licenses and other

                                       8
<PAGE>

governmental  and  regulatory  approvals  required  for the  Lessee's use of the
Premises,  including,  without limitation,  discharge of (appropriately treated)
materials or wastes into or through any  sanitary  sewer  serving the  Premises.
Except as discharged into the sanitary sewer in strict accordance and conformity
with all applicable Hazardous Materials Laws, the Lessee shall cause any and all
Hazardous  Materials  removed  from the  Premises to be removed and  transported
solely by duly licensed  haulers to duly licensed  facilities for final disposal
of such materials and wastes.  The Lessee shall in all respects  handle,  treat,
deal with and manage any and all Hazardous  Materials in, on, under or about the
Premises in total  conformity with all applicable  Hazardous  Materials Laws and
prudent industry  practices  regarding  management of such Hazardous  Materials.
Upon  expiration  or earlier  termination  of the term of the Lease,  the Lessee
shall  cause  all  Hazardous  Materials  to be  removed  from the  Premises  and
transported  for use,  storage or disposal in accordance and compliance with all
applicable  Hazardous  Materials  Laws.  The Lessee  shall not take any remedial
action in response to the  presence of any  Hazardous  Materials in or about the
Premises or the  Building,  nor enter into any  settlement  agreement,  consent,
decree or other  compromise  in respect to any claims  relating to any Hazardous
Materials in any way connected with the Premises or the Building,  without first
notifying the Lessor of the Lessee's intention to do so and affording the Lessor
ample  opportunity to appear,  intervene or otherwise  appropriately  assert and
protect the Lessor's interest with respect thereto.

                  (c) Notices. The Lessee shall immediately notify the Lessor in
writing of any of the following  activities  relating to the Lessee's operations
on the Premises: (i) any enforcement, clean-up, removal or other governmental or
regulatory action instituted,  completed or threatened pursuant to any Hazardous
Materials  Laws;  (ii) any claim made or  threatened  by any person  against the
Lessee,  the Premises or the  Building  relating to damage,  contribution,  cost
recovery  compensation,  loss or injury resulting from or claimed to result from
any Hazardous Materials in, on or removed from the Premises or the Building; and
(iii)  any  reports  made  to  any  environmental  agency  arising  out of or in
connection  with any Hazardous  Materials in or removed from the Premises or the
Building, including any complaints,  notices, warnings or asserted violations in
connection therewith.  The Lessee shall also supply to the Lessor as promptly as
possible,  and in any event within five (5) business days after the Lessee first
receives  or sends the same,  with copies of all  claims,  reports,  complaints,
notices,  warnings or asserted  violations  relating in any way to the Premises,
the Building or the Lessee's use thereof.  The Lessee shall promptly  deliver to
the Lessor copies of hazardous waste  manifests reflecting  the legal and proper
disposal of all Hazardous Materials removed from the Premises.

                  (d)  Indemnification  of Lessor.  The Lessee shall  indemnify,
defend,  protect,  and  hold the  Lessor,  and  each of the  Lessor's  partners,
employees, agents, attorneys, successors and assigns, free and harmless from and
against  any and all  claims,  liabilities,  penalties,  forfeitures,  losses or
expenses  (including  attorneys'  fees) for death of or injury to any  person or
damage to any  property  whatsoever  arising from or caused in whole or in part,
directly or indirectly,  by (A) the presence in, on, under or about the Premises
or the  Building,  or  discharge  in or from the Premises or the Building of any
Hazardous  Materials or the Lessee's  use,  analysis,  storage,  transportation,
disposal,  release,  threatened  release,  discharge or  generation of Hazardous
Materials

                                       9
<PAGE>

to, in, on, under,  about or from the Premises or the Building,  but only to the
extent  such  Hazardous  Materials  are  present  as a result of  actions of the
Lessee, its officers, employees, invitees, assignees, contractors, or agents, or
(B) the  Lessee's  failure  to comply  with any  Hazardous  Materials  Law.  The
Lessee's obligations  hereunder shall include,  without limitation,  and whether
foreseeable  or  unforeseeable,  all costs of any required or necessary  repair,
clean-up or detoxification or  decontamination  of the Premises or the Building,
and the preparation and implementation of any closure,  remedial action or other
required  plans in connection  therewith,  and shall  survive the  expiration or
earlier  termination  of the term of the Lease.  For purposes of the release and
indemnity  provisions  hereof,  any  acts  or  omissions  of the  Lessee,  or by
officers, invitees, employees, agents, assignees,  contractors or subcontractors
of the Lessee or others acting for or on behalf of the Lessee (to the extent any
such individual is acting within the scope of his relationship with the Lessee),
whether or not such acts or omissions  are  negligent,  intentional,  willful or
unlawful, shall be strictly attributable to the Lessee.

                  (e)  Indemnification  of Lessee.  The Lessor shall  indemnify,
defend,  protect,  and  hold the  Lessee,  and  each of the  Lessee's  officers,
directors,  shareholders,  employees, agents, attorneys, successors and assigns,
free and harmless from and against any and all claims,  liabilities,  penalties,
forfeitures,  losses or  expenses  (including  attorneys'  fees) for death of or
injury to any person or damage to any property whatsoever arising from or caused
in whole or in part,  directly or indirectly,  by (A) the presence in, on, under
or about the Premises or the  Building,  or discharge in or from the Premises or
the Building of any  Hazardous  Materials  existing as of the  execution of this
Lease,  or  the  Lessor's  use,  analysis,  storage,  transportation,  disposal,
release,  threatened release, discharge or generation of Hazardous Materials to,
in, on, under,  about or from the Premises or the Building,  or (B) the Lessor's
failure to comply with  Sections 5.4 and 5.5 hereof.  The  Lessor's  obligations
hereunder  shall  include,  without  limitation,   and  whether  foreseeable  or
unforeseeable,  all costs of any  required  or  necessary  repair,  clean-up  or
detoxification  or  decontamination  of the  Premises or the  Building,  and the
preparation and implementation of any closure, remedial action or other required
plans in  connection  therewith,  and shall  survive the  expiration  or earlier
termination of the term of the Lease.  For purposes of the release and indemnity
provisions  hereof,  any  acts  or  omissions  of the  Lessor,  or by  officers,
invitees,  employees,  agents,  assignees,  contractors or subcontractors of the
Lessor or others  acting  for or on behalf of the Lessor (to the extent any such
individual  is acting  within the scope of his  relationship  with the  Lessor),
whether or not such acts or omissions  are  negligent,  intentional,  willful or
unlawful, shall be strictly attributable to the Lessor.

     6.  MAINTENANCE. REPAIRS AN]) ALTERATIONS

         6.1 Lessor's Obligations.  The Lessor shall cause to be maintained,  in
good order,  condition and repair, the roof structure and membrane, and exterior
walls,  common windows and doors of the Building (excluding the interior surface
thereof),  heating, venting and  air  conditioning  systems,  and any public and
common  areas  in the  Building,  as  well  as  all  parking  areas,  driveways,
sidewalks,  private  roads or streets,  landscaping  and all other areas located
within  the  Project  other  than  areas  occupied  by  other   buildings  (such
non-building areas being herein referred to as "Common

                                       10
<PAGE>

Areas").   The  costs  of  such  maintenance  (other  than  maintenance  of  the
foundation,  roof  structure and the exterior load bearing walls) are chargeable
to the Lessee pursuant to Section 3.2 hereof.

         6.2 Lessee's  Obligations.  The Lessee  shall,  during the term of this
Lease,  keep in good order,  condition and repair,  the interior of the Premises
and every part thereof,  including, but not limited to, all interior windows and
doors in and to the  Premises.  The Lessor  shall  incur no expense nor have any
obligation  of any kind  whatsoever in connection  with the  maintenance  of the
interior of the  Premises  and the Lessee  expressly  waives the benefits of any
statute now or hereafter in effect which would  otherwise  afford the Lessee the
right to make repairs at the Lessor's expense or to terminate this Lease because
of any failure to keep the interior of the Premises in good order, condition and
repair.   Notwithstanding  the  foregoing,   the  Lessor  shall  be  liable  for
maintenance  or repairs which are caused by the Lessor's gross  negligence.  The
Lessee shall be responsible for interior janitorial services.

         6.3 Alterations and Additions.

                  (a) The Lessee shall not,  without the Lessor's  prior written
consent, make any alterations,  improvements, additions or utility installations
in, on or about the  Premises  unless such work is  non-structural  and does not
exceed TWO THOUSAND FIVE HUNDRED DOLLARS ($2,500). For all work, the Lessee will
provide  the  Lessor  with  as-built  drawings  reflecting  any  changes  to the
Premises. As used in this Paragraph 6.3, the term "utility  installations" shall
include bus ducting, power panels, fluorescent fixtures, space heaters, conduits
and wiring.  As a condition to giving such consent,  the Lessor may require that
the Lessee (i) agree to remove any such alterations,  improvements, additions or
utility  installations at the expiration or sooner  termination of the term, and
to restore the Premises to their prior condition and/or (ii) provide the Lessor,
at the Lessee's sole cost and expenses,  a lien and completion bond in an amount
equal to one and one-half (l 1/2) times the estimated cost of such improvements,
to insure the Lessor  against any liability  for  mechanics'  and  materialmen's
liens and to insure completion of work.

                  (b)  All  alterations,   improvements  and  additions  to  the
Premises shall be performed by the Lessor's  contractor for the Project or other
licensed  contractor  approved  by  the  Lessor,  which  approval  shall  not be
unreasonably  withheld.  The Lessee shall pay, when due, all claims for labor or
materials  furnished to or for the Lessee at or for use in the  Premises,  which
claims are or may be secured by any mechanics' or materialmen's lien against the
Premises or any  interest  therein,  and the Lessor shall have the right to post
notices of non-responsibility in or on the Premises as provided by law.

         6.4  Surrender.  On the last day of the term  hereof,  or on any sooner
termination,  the Lessee shall surrender to the Lessor the Premises and, subject
to the  provisions of Paragraph 6.3(a)  hereof, all  alterations,  additions and
improvements  thereto,  in the same condition as when received or made, ordinary
wear  and  tear  excepted;  provided,  however,  that  the  Lessee's  machinery,
equipment and trade  fixtures  (including  utility  installations)  which may be
removed without irreparable or material damage to the Premises, shall remain the
property of the Lessee and be

                                       11
<PAGE>
removed by the  Lessee.  The  Lessee  shall  repair  any damage to the  Premises
occasioned by the removal of the Lessee's furnishings,  machinery, equipment and
trade fixtures,  which repair shall include the patching and filing of holes and
repair of structural damage.

         6.5   Lessor's   Rights.    If   the   Lessee   fails to  perform   the
Lessee's obligations under this Article 6, the Lessor  may,  at its option  (but
shall not be required to), and with a five (5) day written notice to the Lessee,
perform such obligations on behalf of the Lessee, and the cost thereof, together
with interest thereon at the rate specified in Paragraph  12.2(a) hereof,  shall
immediately become due and payable as additional rent to the Lessor.

     7.  INSURANCE

         The Lessee, at its sole cost and expense, shall, commencing on the date
the  Lessee is given  access to the  Premises  for any  purpose,  and during the
entire term hereof, procure, pay for and keep in full force and effect:

         7.1  Lessee's  Liability  Insurance.  Comprehensive  general  liability
insurance with respect to the Premises and the operations of or on behalf of the
Lessee in, on or about the  Premises,  including,  but not limited to,  personal
injury,  product  liability  (if  applicable),   blanket  contractual,   owner's
protective, broad form property damage liability coverage, host liquor liability
and owned and  non-owned  automobile  liability  in an amount  not less than TWO
MILLION DOLLARS  ($2,000,000)  Combined Single Limit.  Such policy shall contain
(i)  severability of interest,  (ii) cross  liability,  and (iii) an endorsement
stating in substance that "such  insurance as is afforded by this policy for the
benefit of the  Lessor  shall be primary as  respects  any  liability  or claims
arising  out of the  occupancy  of the Premises  by  the  Lessee,  or out of the
Lessee's operations, and any insurance carried by the Lessor shall be excess and
non-contributory."

         7.2 Lessee's Worker's  Compensation  Insurance.  Worker's  Compensation
coverage as required by law, together with Employer Liability coverage.

         7.3 Lessee's Fire and Extended  Coverage  Insurance.  Insurance against
fire, vandalism,  malicious mischief and such other additional perils as now are
or hereafter  may be included in a standard "All Risks"  coverage,  insuring all
improvements and betterments made to the Premises,  the Lessee's trade fixtures,
furnishings,  equipment, stock, loss of income or extra expense, and other items
of personal property in an amount not less than 100% of replacement  value. Such
insurance  shall contain (i) no  coinsurance  or  contribution  clauses,  (ii) a
Replacement Cost  Endorsement,  and (iii) deductible  amounts  acceptable to the
Lessor.

         7.4 Policy  Requirements.  All  policies  of  insurance  required to be
carried  by the  Lessee  pursuant  to these  requirements  shall be  written  by
responsible  insurance  companies  authorized  to do  business  in the  State of
California. Any such insurance required by the Lessee hereunder may be furnished
by the Lessee under any blanket policy carried by it or under a separate  policy
therefor. A true and exact copy of each paid up policy evidencing such insurance
or a

                                       12
<PAGE>

certificate  of the  insurer,  certifying  that  such  policy  has been  issued,
providing the coverage required and containing the provisions  specified herein,
shall be delivered to the Lessor prior to the date the Lessee is given the right
to possession of the Premises, and upon renewals, not less than thirty (30) days
prior to the expiration of such coverage.  The Lessor may, at any time, and from
time to time,  inspect  and/or  copy  any and all  insurance  policies  required
hereunder.  In no event  shall the then  limits of any policy be  considered  as
limiting the liability of the Lessee under this Lease.

         Each policy evidencing  insurance  required to be carried by the Lessee
pursuant to these requirements shall contain, in form and substance satisfactory
to the Lessor:  (i) a provision  including  the Lessor and any other  parties in
interest designated by the Lessor as an additional insured; (ii) a waiver by the
Lessee's insurer of any right to  subrogation against the  Lessor,  its  agents,
employees  and  representatives  which  arise or might  arise by  reason  of any
payment under such policy or by reason of any act or omission of the Lessor, its
agents,  employees or  representatives,  and (iii) a provision  that the insurer
will not  cancel or  materially  change the  coverage  provided  by such  policy
without first giving the Lessor thirty (30) days' prior written notice.

         7.5 Lessor's  Rights.  If the Lessee fails to procure,  maintain and/or
pay for at the  times  and for  the  durations  specified  in  this  Lease,  the
insurance  required  hereunder,  or  fails to carry  insurance  required  by any
governmental requirement,  the Lessor may (but without obligation to do so), and
with  twenty-four  (24)  hours  advance  notice  to  the  Lessee,  perform  such
obligations  on  behalf  of the  Lessee,  and the cost  thereof,  together  with
interest  thereon at the rate  specified  in  Paragraph  12.2(a)  hereof,  shall
immediately become due and payable as additional rent to the Lessor.

         7.6 Lessor's  Insurance.  The Lessor shall maintain  during the term of
this Lease such insurance against physical damage to the Building, comprehensive
liability  insurance  and other  insurance as the Lessor may, from time to time,
determine.  The Lessor will  determine the limits of coverage,  deductibles  and
specific  perils insured  against.  The Lessor may, but shall not be obliged to,
take out and carry any other form or forms of  insurance as it or the mortgagees
of  the  Lessor  may  reasonably   determine   advisable.   Notwithstanding  any
contributions by the Lessee to the cost of insurance  premiums,  with respect to
the Building or any alterations of the Premises as may be provided  herein,  the
Lessee  acknowledges  that it has no right to receive any proceeds from any such
insurance policies carried by the Lessor.

         7.7 Indemnification. To the fullest extent permitted by law, the Lessee
shall  defend,  indemnify  and hold harmless the Lessor from and against any and
all claims  arising from the  Lessee's use of the Premises or the conduct of its
business or from any activity,  work or thing done, permitted or suffered by the
Lessee, its agents, contractors,  employees or invitees in or about the Premises
or elsewhere,  and shall further indemnify and hold harmless the Lessor from and
against any and all claims arising from any breach or default in the performance
of any  obligation  on the Lessee's part to be performed  hereunder,  or arising
from any act,  neglect,  fault or  omission  of the  Lessee,  or of its  agents,
employees,  or  invitees,  and from and  against  all  costs,  attorney's  fees,
expenses  and  liabilities  incurred  in or about  such  claim or any  action or
proceeding brought thereon.  In case any action or proceeding be brought against
the Lessor by reason of any such claim, the

                                       13
<PAGE>

Lessee,  upon  notice  from the Lessor,  shall  defend the same at the  Lessee's
expense by counsel approved in writing by the Lessor.  The Lessee, as a material
part of the  consideration to the Lessor  hereunder,  hereby assumes all risk of
damage to property or injury to persons in, upon or about the Premises  from any
cause  whatsoever,  except  that which is caused by the failure of the Lessor to
observe  any of the terms and  conditions  of this  Lease and such  failure  has
persisted  for an  unreasonable  period  of time  after  written  notice of such
failure,  and the Lessee  hereby  waives  all of its  claims in respect  thereof
against the Lessor.

         7.8 Exemption of Lessor from Liability.  The Lessor shall not be liable
for  injury to the  Lessee's  business  or any loss of income  therefrom  or for
damage  to the  property  of  the  Lessee,  the  Lessee's  employees,  invitees,
customers or any other person in or about the Premises,  nor shall the Lessor be
liable for injury to the person of the Lessee, the Lessee's employees, agents or
contractors,  whether  such damage or injury is caused by or results  from fire,
explosion,  falling  plaster,  electricity,  gas,  water  or  rain,  or from the
breakage,  leakage,  obstruction or other defects of pipes,  sprinklers,  wires,
appliances,  plumbing,  air conditioning or lighting fixtures, or from any other
cause,  whether such damage or injury results from  conditions  arising upon the
Premises or upon other portions of the Building, or from other sources or places
and  regardless  of whether  the cause of such  damage or injury or the means of
repairing  the  same  is  inaccessible.  The  Lessor  shall  not be  liable  for
incorporeal hereditaments including interference or obstruction of light, air or
view.  The Lessor  shall not be liable for any damages  arising  from any act or
neglect  of any  other  tenant of the  Building  or the  other  portions  of the
Project.

     8.  DAMAGE OR DESTRUCTION

         8.1 Partial Damage.  If the Premises,  or so much of the Building as to
cause the Premises to be  uninhabitable,  are damaged by any  casualty,  and the
damage (exclusive of any property or improvements installed by the Lessee in the
Premises)  can be repaired  within one hundred and fifty (150) days  without the
payment of overtime,  the Lessor  shall,  at the Lessor's  expense,  repair such
damage (exclusive of any property of the Lessee or improvements installed by the
Lessee in the Premises) as soon as practicable within said one hundred and fifty
(150) day period, and this Lease shall continue in full force and effect. If the
Premises,  or  so  much  of  the  Building  as  to  cause  the  Premises  to  be
uninhabitable,  are damaged by any  casualty,  and the damage  (exclusive of any
property of the Lessee or improvements  installed by the Lessee in the Premises)
cannot be repaired  within one hundred and fifty (150) days  without the payment
of overtime or other  premiums,  the Lessor or the Lessee may, at either party's
option,  either (i) repair such damage as soon as  practicable  at the  Lessor's
expense,  in which event this Lease shall continue in full force and effect,  or
(ii) give written  notice to the other party  within  thirty (30) days after the
date of the occurrence of such damage of the party's intention to terminate this
Lease,  in  which  event  this  Lease  shall  terminate  as of the  date  of the
occurrence  of such damage,  provided that either party elects under clause (ii)
to terminate this lease,  this lease shall  terminate even if Lessor has elected
under clause (i) to repair such damage.

                                       14
<PAGE>

         8.2  Damage  Near  End of  Term.  If the  Premises,  or so  much of the
Building as to cause the Premises to be  uninhabitable,  are damaged  during the
last six (6)  months of the term of this  Lease,  or any  renewal  thereof,  the
Lessor  may,  at the  Lessor's  option,  terminate  this Lease as of the date of
occurrence  of such damage by giving  written  notice to Lessee of the  Lessor's
election to do so within  thirty (30) days after the date of  occurrence of such
damage; provided,  however, that if the term of this Lease has been extended for
any reason  whatsoever,  the Lessor's  right to terminate  this Lease shall only
apply during the last six (6) months of the then current term of this Lease.

         8.3 Abatement of Rent; Lessee's Remedies.

                  (a) If the  Lessor  is  obligated  or  elects  to  repair  the
Premises as provided  above,  the rent payable for the period  during which such
repair  continues  shall be  abated,  in  proportion  to the degree to which the
Lessee's use of the Premises is impaired. Except for such abatement, if any, the
Lessee shall have no claim against the Lessor for any damage  suffered by reason
of any such damage,  destruction,  repair or restoration.  In the event that the
Lessor  exercises  its rights to  continue  the Lease as provided in Section 8.1
above, and less than one hundred percent (100%) of the Premises is usable by the
Lessee, the rent will continue to be abated to the extent not repaired until the
entire Premises is restored.

                  (b) If the  Lessor  is  obligated  or  elects  to  repair  the
Premises as provided above, but does not commence such repair within ninety (90)
days after such  obligation  shall  occur,  subject  to any  extension  of up to
another ninety (90) days for delays beyond the reasonable control of the Lessor,
the Lessee  may,  at the  Lessee's  option,  terminate  this Lease by giving the
Lessor written notice of the Lessee's election to do so at any time prior to the
commencement of such  repair or  restoration,  in which  event this Lease  shall
terminate as of the date of such destruction.

         8.4 Insurance  Proceeds Upon  Termination.  If this Lease is terminated
pursuant to any right given the Lessee or the Lessor to do so under this Article
8, all insurance  proceeds  payable under Section 7.6 with respect to the damage
giving  rise to such  right of  termination  shall be paid to the Lessor and any
encumbrances of the Premises, as their interests may appear.

                  8.5 Restoration.  The Lessor's obligation to restore shall not
include the restoration or replacement of the Lessee's  furnishings,  machinery,
equipment,  trade fixtures or other  personal  property or any  improvements  or
alterations made by the Lessee to the Premises.

                                       15
<PAGE>

     9.  PERSONAL PROPERTY TAXES

                  The Lessee shall pay prior to  delinquency  all taxes assessed
against, levied upon or attributable to its furnishings,  machinery,  equipment,
trade fixtures or other personal property contained in the Premises or elsewhere
and, if  required,  all  improvements  to the Premises in excess of the Lessor's
"building  standard"  improvements,  provided,  however,  that nothing contained
herein shall require the Lessor to insure the accuracy of any segregation of the
same for purposes of Section 3.4(b) hereof. When  practicable, the  Lessee shall
cause said  furnishings,  machinery,  equipment,  trade  fixtures  and all other
personal property to be assessed and billed separately from the real property of
the Lessor.

     10. UTILITIES

         The Lessee shall pay for all water, gas, heat, light, power, janitorial
services and other  utilities and services  supplied to the  Premises,  together
with any taxes  thereon.  If any such  services  are not  separately  metered or
charged to the Lessee,  the Lessee shall pay a pro rata  proportion,  as part of
operating  expenses,  based on leasable area, of all charges  jointly metered or
charged  with  other  premises.  The  Lessor  shall not be liable in  damages or
otherwise  unless  due to the  Lessor's  gross  negligence  for any  failure  or
interruption of any utility services being furnished to the building and no such
failure or interruption  shall entitle the Lessee to terminate this Lease. In no
event shall the Lessor be liable for any such failure or interruption  caused by
the exercise of govemmental authority, strikes, riots, acts of God, war, adverse
weather  conditions,  fire,  flood or casualties or acts of third parties beyond
the Lessor's control.  The operation and control of utilities,  air conditioning
and any  other  energy  system  is  subject to compliance  with  any  government
authority  governing  the regulation  and  use  of  energy  systems  within  the
commercial office or industrial building structure. The Lessee shall not subject
any of the mechanical,  electrical,  plumbing, sewer or other utility or service
systems or equipment  to exercise or use which causes  damage to said systems or
equipment.  Any such damages to equipment caused by the Lessee  overloading such
equipment shall be rectified by the Lessee,  or may, at the Lessor's option,  be
rectified by the Lessor, at the Lessee's sole cost and expense.

     11. ASSIGNMENT AND SUBLETTING

                  11.1 The Lessee shall not  voluntarily  or by operation of law
sublet, assign, transfer,  mortgage or otherwise encumber, or grant concessions,
licenses or franchises with respect to all or any part of the Lessee's  interest
in this Lease or the Premises  without the prior written  consent of the Lessor,
which shall not be unreasonably  withheld.  If the Lessee desires at any time to
assign this Lease or to sublet the  Premises or any  portion  thereof,  it shall
first  notify the  Lessor of its desire to do so and shall  submit in writing to
the Lessor (i) the name of the proposed  sublessee or assignee;  (ii) the nature
of the  proposed  sublessee  or  assignee;  (iii)  the  nature  of the  proposed
sublessee's  or assignee's  business to be carried on in the Premises;  (iv) the
terms and provisions of the proposed sublease or assignment; (v) such reasonable
financial  information  as  the  Lessor  may  request  concerning  the  proposed
sublessee or assignee, including, but not limited to, a balance sheet

                                       16
<PAGE>

as of a date within  ninety (90) days of the request for the  Lessor's  consent,
statements  of income or profit and loss for the two (2) year  period  preceding
the request for the Lessor's  consent,  and a written  statement  in  reasonable
details as to the  business  experience  of the  proposed  sublessee or assignee
during the five (5) years  preceding the request for the Lessor's  consent,  and
(vi) the name and  address of  sublessee's  or  assignee's  present or  previous
landlord. The Lessor may, as a condition to granting such consent,  require that
the  obligations  of any assignee  which is a subsidiary or affiliate of another
corporation  be  guaranteed  by  the  parent  or  controlling  corporation.  Any
sublease, license, concession, franchise or other permission to use the Premises
shall  be  expressly  subject  and  subordinate  to  all  applicable  terms  and
conditions  of this Lease.  Any  purported  or attempted  assignment,  transfer,
mortgage,  encumbrance,  subletting,  license,  concession,  franchise  or other
permission  to use the Premises  contrary to the  provisions  of this  paragraph
shall be void and, at the option of the Lessor, shall terminate this Lease.

         11.2 If the Lessee is a corporation,  then a transfer of its stock,  or
any dissolution,  merger or consolidation,  only if such transaction causes five
(5) or fewer persons who are not currently shareholders of the Lessee to acquire
ownership or control of shares of the Lessee's capital stock  representing Fifty
Percent  (50%) or more of the voting  power of all of the  Lessee's  outstanding
stock, or the sale or other transfer of all or  substantially  all of the assets
of the Lessee shall  constitute an  assignment of the Lessee's  interest in this
Lease within the meaning of this Article 11 and the provisions requiring consent
contained herein.

         11.3 No subletting, assignment, license, concession, franchise or other
permission to use the Premises  shall relieve the Lessee of its  obligations  to
pay the rent or to perform all of the other  obligations  to be performed by the
Lessee  hereunder.  The  acceptance  of rent by the Lessor from any other person
shall  not be deemed to be a waiver  by the  Lessor  of any  provisions  of this
Lease.

         11.4 At any time within ten (10) days afterthe Lessor's  receipt of the
information specified in Section 11.1 above, the Lessor may by written notice to
the Lessee elect (a) to sublease the Premises or the portion thereof so proposed
to be  subleased  by the  Lessee,  or to  take  an  assignment  of the  Lessee's
leasehold estate hereunder, upon the same terms as those offered to the proposed
sublessee or assignee,  as the case may be; or (b) to terminate this Lease as to
the portion  (including  all) of the  Premises so  proposed to be  subleased  or
assigned,  with a proportionate  abatement in the rent payable hereunder; or (c)
disapprove such assignment or subletting.  If the Lessor does not act within the
ten (10) days,  such failure to act is deemed a disapproval  of such request for
assignment or subletting.

         11.5 Each assignee or transferee,  other than the Lessor,  shall assume
all  obligations  of the Lessee under this Lease and shall be and remain  liable
jointly and severally  with the Lessee for the payment of the rent,  and for the
due  performance  of all the terms,  covenants,  conditions and agreements to be
performed by the Lessee  hereunder; provided, however,  that a transferee  other
than an  assignee  shall be liable to the Lessor for rent only in the amount set
forth in the  assignment  or  transfer.  No  assignment  shall be binding on the
Lessor unless such assignee or Lessee shall deliver

                                       17
<PAGE>
to the Lessor a counterpart  of such  assignment and an instrument in recordable
form which  contains a covenant of assumption by such assignee  satisfactory  in
substance  and form to the  Lessor,  consistent  with the  requirements  of this
Section  11.5 but the  failure  or  refusal of such  assignee  to  execute  such
instrument of assumption  shall not release or discharge  such assignee from its
liability as set forth above.

                  11.6  Consent by the Lessor to any  subletting  or  assignment
shall be  conditioned  upon payment by the Lessee to the Lessor of all "Transfer
Consideration"  (as hereafter  defined) received or to be received,  directly or
indirectly, by the Lessee on account of such assignment or subletting.  Transfer
Consideration  shall be paid to the Lessor at the same time or times as the same
is due to the Lessee. Failure to pay the Lessor the Transfer  Consideration,  or
any portion or installment thereof,  shall be deemed a default under this Lease,
entitling  the  Lessor  to  exercise  all  remedies  available  to it under  law
including,  but not limited  to,  those  specified  in Article 12 of this Lease.
"Transfer  Consideration"  shall only mean a) in the case of a  subletting,  any
consideration  paid or given,  directly or  indirectly,  by the sublessee to the
Lessee  pursuant to the  sublease  for the use of the  Premises,  or any portion
thereof,  over and above the rent and any additional rent, however  denominated,
in this Lease,  payable by the Lessee to the Lessor for the use of the  Premises
(or portion thereof),  prorating as appropriate the amount payable by the Lessee
to the Lessor under this Lease, if less than all of the Premises is sublet,  net
of broker's fees and commissions, and (b) in the case of an assignment only, any
consideration  paid or  given,  directly  or  indirectly,  by the  sublessee  or
assignee to the Lessee in exchange for entering into the sublease or assignment,
but shall not include  reimbursement for any security deposit,  reimbursement of
any  improvements,  fixtures or  furnishings  installed  in the  Premises by the
Lessee or any payment for  personal  property of the Lessee not in excess of the
Lessee's  book value  thereof  net of  broker's  fees and  commissions.  As used
herein,  consideration shall include consideration in any form,  including,  but
not limited to,  money,  property,  assumption of  liabilities  other than those
arising  under this  Lease,  discounts,  services,  credits or any other item or
thing of value. Irrespective of the form of such consideration, the Lessor shall
be entitled to be paid in cash in an amount  equivalent  to the aggregate of the
cash portion of the Transfer Consideration and the value of any non-cash portion
of the Transfer  Consideration.  If any Transfer  Consideration is to be paid or
given in  installments,  the Lessee shall pay each such  installment at the time
the  same  is to be paid  or  given.  Notwithstanding  the  foregoing,  Transfer
Consideration  shall not  include  the  proceeds  from the sales of stock by the
Lessee or its  shareholders,  and the  Lessor  and the  Lessee  agree  that this
provision  is only  intended to apply to any profit  realized by the Lessee from
the increased  rental value of the office space which  constitutes the Premises,
and not from any profit  realized in any kind of sale or merger or stock or debt
offering, or any similar corporate transaction by the Lessee.

         11.7 The Lessee shall reimburse the Lessor for the Lessor's  reasonable
costs and  attorneys'  fees  incurred in  conjunction  with the  processing  and
documentation of any assignment,  subletting,  transfer,  change of ownership or
hypothecation of this Lease or the Lessee's interest in the Premises.

     12. DEFAULTS; REMEDIES

                                       18
<PAGE>

         12.1  Default  by  Lessee.  The  occurrence  of any  one or more of the
following events shall constitute a default of this Lease by the Lessee:

                  (a) The vacating or  abandonment of the Premises by the Lessee
combined with the failure to pay rent;

                  (b) The  failure of the Lessee to make any  payment of rent or
any other payment required to be made by the Lessee hereunder,  as and when due,
where such failure  shall  continue for a period of three (3) days after written
notice thereof from the Lessor to the Lessee;  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;

                  (c) The failure by the Lessee to observe or perform any of the
covenants,  conditions or provisions of this Lease (or the covenants, conditions
and  restrictions  governing  the  Project) to be observed or  performed  by the
Lessee,  other than described in Paraaraph  l2.1(b)  hereof,  where such failure
shall  continue for a period of thirty (30) days after  written  notice  thereof
from the Lessor to the Lessee; 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;  provided,  further,  that if the nature of the
Lessee's default is such that more than thirty (30) days are reasonably required
for its cure, then the Lessee shall not be deemed to be in default if the Lessee
commences such cure within said thirty (30) day period and thereafter diligently
prosecutes such cure to completion; or

                  (d) The  making by the  Lessee of any  general  assignment  or
general  arrangement for the benefit of creditors;  the filing by or against the
Lessee of a petition to have the Lessee  adjudged a bankrupt  or a petition  for
reorganization or arrangement under any law relating to bankruptcy  (unless,  in
the case of a petition  filed against the Lessee,  the same is dismissed  within
sixty (60) days); the appointment of a trustee or receiver to take possession of
substantially  all of the Lessee's  assets  located at the  Premises,  or of the
Lessee's interest in this Lease,  where possession is not restored to the Lessee
within thirty (30) days; or the attachment,  execution or other judicial seizure
of  substantially  all of the Lessee's  assets located at the Premises or of the
Lessee's  interest in this Lease,  where such seizure is not  discharged  within
thirty (30) days.

         12.2 Remedies for Default by Lessee.  In the event of any such default,
the  Lessor may at any time  thereafter,  upon  notice  and  demand and  without
limiting  the  Lessor in the  exercise  of any other  right or remedy  which the
Lessor may have by reason of such default or breach:

                  (a) Terminate the Lessee's right to possession of the Premises
by any lawful  means,  in which case this Lease shall  terminate  and the Lessee
shall  immediately  surrender  possession of the Premises to the Lessor. In such
event, the Lessor shall be entitled to recover from the Lessee:

                                       19
<PAGE>

                           (1) The worth at the time of award of the unpaid rent
         which has been earned at the time of termination;

                           (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;

                           (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
         could be reasonably avoided; and

                           (4) Any other  amount  necessary  to  compensate  the
         Lessor for all the detrimentproximately caused  by the Lessee's failure
         to perform its  obligations under this  Lease or which in the  ordinary
         course of things would be likely to result  therefrom,  including,  but
         not  limited to: the cost of  recovering  possession  of the  Premises,
         expenses of releasing including necessary  renovation and alteration of
         the Premises, reasonable attorneys' fees and any other reasonable cost.
         The  "worth  at the  time  of  award"  of the  amounts  referred  to in
         subparagraphs  (1) and (2) above shall be computed by allowing interest
         at three (3)  percentage  points above the discount rate of the Federal
         Reserve Bank of San  Francisco at the time of the award.  The "worth at
         the time of award" of the amount referred to in subparagraph  (3) above
         shall be computed by  discounting  such amount at three (3)  percentage
         points above such discount rate.

                  (b) Suspend or discontinue  the services  specified in Article
10 above,  or any thereof,  during the  continuance  of any such default and any
such  suspension  or  discontinuance  shall not be deemed or  construed to be an
eviction or ejection of the Lessee.

                  (c)  Require  the  Lessee  to  make   payment  of  all  rental
obligations in cash or by certified cashier's check.

                  (d) Pursue any other remedy now or hereafter  available to the
Lessor  under  the  laws or  judicial  decisions  of the  State  of  California,
including,  but not limited to, the remedy  provided  in  California  Civil Code
Section 1951.4 to continue this Lease in effect.

                  (e) The Lessor, in addition to the rights  hereinbefore  given
in the case of the  Lessee's  breach or  default,  may pursue  any other  remedy
available to the Lessor at law or in equity.

         12.3  Default by Lessor.  The Lessor  shall not be in default of any of
the  obligations  of the  Lessor  under the Lease,  unless  the Lessor  fails to
perform such  obligations  within a reasonable  time,  but in no event more than
thirty  (30) days after  written  notice by the Lessee to the Lessor  specifying
wherein the Lessor has failed to perform such  obligations;  provided,  however.
that if the nature of the  Lessor's  default is such that more than  thirty (30)
days are required for its

                                       20
<PAGE>

cure,  the Lessor  shall not be in default  if the  Lessor  commences  such cure
within such thirty (30) day period and thereafter diligently prosecutes the same
to  completion.  In the event of any such default by the Lessor,  the Lessee may
pursue any remedy now or  hereafter  available  to the Lessee  under the laws of
judicial decisions of the State of California,  except that the Lessee shall not
have the right to terminate this Lease except as expressly  provided  herein nor
to set off against any  payments  due under this  Lease.  The Lessee  waives any
right to deduct  the  expenses  of repairs  done by the  Lessor on the  Lessor's
behalf from the rent and waives, except as herein provided,  any of the Lessor's
obligations for tenantability of the Building or the Premises.

         12.4 Late Charges. The Lessee acknowledges that the late payment by the
Lessee to the Lessor of rent and other sums due hereunder  will cause the Lessor
to incur costs not contemplated by this Lease, the exact amount of which will be
extremely  difficult to ascertain.  Such costs include,  but are not limited to,
processing and  accounting  charges and late charges which may be imposed on the
Lessor  by the  terms of any  mortgage  or trust  deed  covering  the  Premises.
Accordingly,  if any  installment  of rent or any other sum due from the  Lessee
shall not be received by the Lessor, or the Lessor's  designee,  within ten (10)
days  after the same is due,  the Lessee  shall pay to the Lessor a late  charge
equal to five percent (5%) of such overdue amount,  monthly,  until such overdue
amount is paid. The Lessee  acknowledges that such late charge represents a fair
and  reasonable  estimate  of the cost that the Lessor will incur by reason of a
late payment by the Lessee.  Acceptance  of such late charge by the Lessor shall
in no event  constitute  a waiver of the  Lessee's  default with respect to such
overdue  amounts nor prevent the Lessor from  exercising any of the other rights
and remedies granted hereunder.

     13. CONDEMNATION OR RESTRICTION ON USE

         13.1 Eminent Domain.  If the whole of the Premises,  or so much thereof
as to render the balance  unusable by the Lessee,  shall be taken under power of
eminent domain, this Lease shall automatically  terminate as of the date of such
condemnation, or as of the date possession is taken by the condemning authority,
whichever  is  earlier.  No award  for any  partial  or entire  taking  shall be
apportioned,  and the Lessee hereby assigns to the Lessor any award which may be
made in such  taking or  condemnation,  together  with any and all rights of the
Lessee now or hereafter arising in or to the same or any part thereof; provided,
however,  that nothing  contained  herein shall be deemed to give the Lessor any
interest  in or to require  the Lessee to assign to the Lessor any award made to
the Lessee for its  relocation  expenses,  the taking of personal  property  and
fixtures  belonging to the Lessee, the interruption of or damage to the Lessee's
business and/or for the Lessee's unamortized cost of leasehold improvements. The
unamortized  portion of the Lessee's  expenditures  for  improving  the Premises
shall  be  determined  by  multiplying  such  expenditures  by a  fraction,  the
numerator  of which shall be the number of years of the term of this Lease which
shall not have  expired  at the time of such  appropriation  or  taking  and the
denominator  of which  shall be the  number  of years of the term of this  Lease
which shall not have expired at the time of improving the Premises.  In no event
shall options to renew or extend be taken into  consideration in determining the
payment to be made to the Lessee. The Lessee's  right to receive compensation or
damages for its  fixtures  and  personal  property  shall not be affected in any
manner thereby.

                                       21
<PAGE>

         13.2 Abatement of Rent. In the event of a partial taking which does not
result in a  termination  of this Lease,  rent shall be abated in  proportion to
that part of the Premises so made unusable by the Lessee.

         13.3 Temporary  Taking.  No temporary  taking of the Premises and/or of
the Lessee's  rights  therein or under this Lease shall  terminate this Lease or
give the Lessee any right to any abatement of rent hereunder; and any award made
to the Lessee by reason of any such  temporary  taking shall belong  entirely to
the Lessee and the Lessor shall not be entitled to share therein.

         13.4  Voluntary  Sale as Taking.  A voluntary sale by the Lessor to any
public  body or agency  having  the power of  eminent  domain,  under  threat of
condemnation while condemnation proceedings are pending, shall be deemed to be a
taking under the power of eminent domain for the purpose of this Article 13.

     14. BROKERS

         The Lessee  represents and warrants that it has neither incurred nor is
aware of any other  broker's,  finder's,  or similar fee in connection  with the
origin,  negotiation,  execution  or  performance  of this  Lease and  agrees to
indemnify and hold harmless the Lessor from any loss, liability, damage, cost or
expense incurred by reason of a breach of this representation.

     15. LESSOR'S LIABILITY

         15.1 The term  "Lessor"  as used  herein  shall  mean only the owner or
owners at the time in  question  of the fee title or a  Lessee's  interest  in a
ground  lease of the  Building.  In the event of any  transfer  of such title or
interest, the Lessor herein named (and in case of any subsequent transfers,  the
then grantor)  shall be relieved  from,  and after the date of such transfers of
all liability for the Lessor's obligations thereafter to be performed; provided,
however,  that any funds in the hands of the  Lessor or the then  grantor at the
time of such transfer in which the Lessee has an interest  shall be delivered to
the  grantee.  The  obligations  contained  in this Lease to be performed by the
Lessor shall,  subject as aforesaid,  be binding on the Lessor's  successors and
assigns only during their respective periods of ownership.

         15.2 The initial  Lessor  hereunder is a joint  venture  operating as a
California partnership. In consideration of the benefits accruing hereunder, the
Lessee,  its successors  and assigns,  agree that, in the event of any actual or
alleged failure, breach or default hereunder by the initial Lessor:

                  (a) The sole and exclusive  remedy shall be against the assets
of the joint venture;

                                       22
<PAGE>

                  (b) No  joint  venturer  shall be sued or named a party in any
suit or action (except as may be necessary to secure  jurisdiction  of the joint
venture);

                  (c) No  service of  process  shall be made against  any  joint
venturer (except as  may be  necessary  to  secure  jurisdiction  of  the  joint
venture);

                  (d) No joint venturer shall be required to answer or otherwise
plead to any service of process;

                  (e) No judgment will be taken against any joint venturer;

                  (f) Any  judgment  taken  against  any  joint  venturer may be
vacated and set aside at any time nunc pro tunc;

                  (g) No writ of  execution  will  ever be  levied  against  the
assets of any joint venturer; and

                  (h) These  covenants and  agreements  are  enforceable  by the
Lessor and also by any joint venturer thereof.

     16. PARKING

                  During the term of this Lease, the Lessee shall have the right
in  common  with  other  tenants  of the  Building  (if  any)  and any  adjacent
buildings,  to use the parking area  available to tenants of the  Building.  The
Lessee's use of such parking facilities or that of its invitees shall be limited
to a maximum of the number of parking  spaces shown in Item 9 of the Basic Lease
Provisions  (but such space  will not be  separately  identified  and the Lessor
shall have no obligation to monitor the use of such parking facility), and shall
be subject to such rules and  regulations  as may be  established,  from time to
time, by the Lessor for the effective use of such parking facilities. Such rules
and  regulations  may  include,  but shall not be  limited  to,  designation  of
specific  areas for use by invitees of the Lessee and the Lessor;  hours  during
which  parking  shall  be  available  for use;  parking  attendants;  a  parking
validation  or other control  system to prevent  parking  abuse;  and such other
matters affecting the parking operation to the end that said facilities shall be
utilized to maximum  efficiency  and in the best  interest  of the  Lessor,  the
Lessee and their respective invitees.  The Lessor may temporarily close any part
of the Common Area for such  periods of time as may be  necessary to prevent the
public from obtaining prescriptive rights or to make repair or alterations.  The
Lessor shall not have any express or implied obligation to enforce or police the
parking lot usage. The Lessee's right to use any area for parking purposes shall
be  subject  to  restrictions  or other  limitations  resulting  from any  laws,
statutes,  ordinances and governmental rules, regulations or requirements now in
force or which may  hereafter  be in force,  and no such event  shall in any way
affect  this  Lease,  abate  rent,  relieve  the  Lessee of any  liabilities  or
obligations  under this Lease, or give rise to any claim whatsoever  against the
Lessor;  specifically,  the Lessee's right to use any area for  parking purposes
shall be subject to any  preferential  parking  program for  participants in any
ridesharing program established by the

                                       23
<PAGE>

Lessor. If the Lessor  reasonably  determines that the Lessee is regularly using
in excess of the number of parking spaces specified in Item 9 of the Basic Lease
Provisions, the Lessor may, in addition to any other remedy, impose a reasonable
charge for such excess usage, payable by the Lessee upon demand.

     17. GENERAL PROVISIONS

         17.1 Estoppel Certificate

(a) The Lessee shall at any time, and from time to time,  upon not less than ten
(10) days'  prior  written  notice  from the Lessor,  execute,  acknowledge  and
deliver to the Lessor a statement in writing (i)  certifying  that this Lease is
unmodified and in full force and effect (or, if modified,  stating the nature of
such  modification  and certifying that this Lease,  as so modified,  is in full
force and effect)  and the date to which the rent and other  charges are paid in
advance,  if any,  and (ii)  acknowledging  that  there are no, to the  Lessee's
knowledge,  uncured defaults on the part of the Lessor hereunder,  or specifying
such defaults if any are claimed.  Any such statement may be conclusively relied
upon by any prospective purchaser or encumbrancer of the Premises.

                  (b) The Lessee's failure to deliver such statement within such
time shall be  conclusive  upon the Lessee  that (i) this Lease is in full force
and effect without modification except as may be represented by the Lessor, (ii)
there are no uncured  defaults in the Lessor's  performance,  and (iii) not more
than one (1) month's rent has been paid in advance.

                  (c)  If  the  Lessor  desires  to  finance  or  refinance  the
Premises, or any part thereof, the Lessee shall deliver to any lender designated
by the Lessor  such  financial  statements  of the  Lessee as may be  reasonably
required by such lender. All such financial  statements shall be received by the
Lessor in confidence and shall be used only for the purposes herein set forth.

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

         17.3 Time of Essence.  Time is of the essence in the  performanceof all
terms and conditions of this Lease in which time is an element.

         17.4 Captions. Article and paragraph captions have been inserted solely
as a matter of convenience and such captions in no way define or limit the scope
or intent of any provision of this Lease.

         17.5 Notices.  Any notice  required or permitted to be given  hereunder
shall be in writing and shall be deemed to be  delivered  and  received (a) when
personally delivered,  or (b) on the second business day after the date on which
deposited in the United States  mails,  certified or  registered  mail,  postage
prepaid,  return  receipt  requested,  addressed  to the  Lessor  and the Lessee
respectively  at the  addresses  set forth below their  signatures  to the Basic
Lease Provisions, or to

                                       24
<PAGE>

such other or additional persons or at such other addresses as may, from time to
time, be  designated  in writing by the Lessor or the Lessee by notice  pursuant
hereto.

         17.6  Waivers.  No waiver  of any  provision  hereof  shall be deemed a
waiver of any other provision  hereof.  Consent to or approval of any act by one
of the parties hereto shall not be deemed to render unnecessary the obtaining of
such party's  consent to or approval of any  subsequent  act. The  acceptance of
rent  hereunder by the Lessor shall not be a waiver of any  preceding  breach by
the Lessee of any provision hereof,  other than the failure of the Lessee to pay
the particular  rent so accepted,  regardless of the Lessor's  knowledge of such
preceding breach at the time of acceptance of such rent.

         17.7 Holding  Over.  If the Lessee holds over after the  expiration  or
earlier  termination of the term hereof without the express  written  consent of
the Lessor,  the Lessee shall become a tenant at sufferance  only at One Hundred
and Fifty Percent (150%) of the monthly rent for the Premises then in effect for
the space,  in effect upon the date of such  expiration  or earlier  termination
(subject to  adjustment  as provided in Article 3 hereof and prorated on a daily
basis), and otherwise upon the terms, covenants and conditions herein specified,
so far as applicable.  Acceptance by the Lessor of rent after such expiration or
earlier  termination  shall not constitute a consent to a holdover  hereunder or
result in a renewal.  The foregoing provisions of this paragraph are in addition
to and do not affect the  Lessor's  right of re-entry or any other rights of the
Lessor hereunder or as otherwise provided by law.

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

         17.9 Inurement. Subject to any provisions hereof restricting assignment
or subletting by the Lessee and subject to the  provisions of Article 15 hereof,
the terms and conditions  contained in this Lease shall bind the parties,  their
personal representatives, successors and assigns.

         17.10  Choice of Law.  This Lease  shall be governed by the laws of the
State of California.

         17.11  Subordination.  This Lease  shall,  at the Lessor's  option,  be
either  superior or  subordinate to mortgages or deeds of trust on the Premises,
whether now existing or hereinafter created and subject to receipt by the Lessee
of a  non-disturbance  agreement  from such  lender(s).  The Lessee shall,  upon
written demand by the Lessor, execute such instruments as may be required,  from
time to time,  to  subordinate  the rights and interest of the Lessee under this
Lease  to  the  lien  of  any  mortgage  or  deed  of  trust  on  the  Building.
Notwithstanding any such subordination,  so long as the Lessee is not in default
hereunder, this Lease shall not be terminated or the Lessee's quiet enjoyment of
the  Premises  disturbed  in the  event  such  mortgage  or  deed  of  trust  is
foreclosed. In the event of such foreclosure,  the Lessee shall thereupon become
a Lessee of, and attorn to, the  successor in interest to the Lessor on the same
terms and conditions as are contained in this Lease.

                                       25

<PAGE>

         17.12  Attorneys'  Fees.  If any action at law or equity,  including an
action for  declaratory  relief,  is brought to enforce the  provisions  of this
Lease, the prevailing party shall be entitled to recover actual  attorneys' fees
incurred in bringing such action and/or  enforcing any judgment granted therein,
all of which shall be deemed to have accrued upon the commencement of the action
and shall be paid  whether or not such action is  prosecuted  to  judgment.  The
attorneys'  fees to be awarded the  prevailing  party may be  determined  by the
court in the same action or in a separate  action brought for that purpose.  Any
judgment or order  entered in such  action  shall  contain a specific  provision
providing  for the  recovery  of actual  attorneys'  fees and costs  incurred in
enforcing such judgment.  The award of attorneys'  fees shall not be computed in
accordance with any court  schedule,  but shall be made so as to fully reimburse
the prevailing party for all attorneys' fees, paralegal fees, costs and expenses
actually  incurred in good faith,  regardless  of the size of the  judgment,  it
being the intention of the parties to fully  compensate the prevailing party for
all attorneys' fees, paralegal fees, costs and expenses paid or incurred in good
faith.  For purposes of this section,  attorneys'  fees shall  include,  without
limitation,  attorneys'  fees,  paralegal fees,  costs and expenses  incurred in
relation to any of the following:  post-judgment motions;  contempt proceedings,
garnishment,  levy  and  debtor  or third  party  examinations;  discovery;  and
bankruptcy litigation.

         17.13 Lessor's  Access.  The Lessor and the Lessor's  agents shall have
the  right  to enter  the  Premises  at  reasonable  times  for the  purpose  of
inspecting the same,  showing the same to prospective  purchasers,  lessees,  or
lenders, and making such alterations,  repairs, improvements or additions to the
Premises or to the Building as the Lessor may deem  necessary or desirable.  The
Lessor may at any time place on or about the Building  any  ordinary  "For Sale"
signs and the Lessor may, at any time during the last one hundred  eighty  (180)
days of the term  hereof (or during any period in which the Lessee is in default
under this Lease),  place on or about the Building any ordinary "For Sale", "For
Lease" or similar signs, all without rebate of rent or liability to the Lessee.

         17.14 Corporate Authority.  If the Lessee is a corporation,  the Lessee
shall,  at the Lessor's  request,  require that each  individual  executing this
Lease on  behalf  of said  corporation  represent  and  warrant  that he is duly
authorized  to execute and deliver this Lease on behalf of said  corporation  in
accordance  with a duly  adopted  resolution  of the Board of  Directors of said
corporation or in accordance with the Bylaws of said  corporation, and that this
Lease is binding upon said  corporation in accordance with its terms. The Lessee
shall also, at the Lessor's request,  within thirty (30) days after execution of
this Lease,  deliver to the Lessor a certified copy of a resolution of the Board
of Directors of said corporation  authorizing or ratifying the execution of this
Lease.

         17.15  Surrender or  Cancellation.  The voluntary or other surrender of
this  Lease by the  Lessee,  or a mutual  cancellation thereof, shall not work a
merger,  and shall  terminate all or any existing  subleases,  unless the Lessor
elects to treat such surrender or cancellation as an assignment to the Lessor of
any or all of such subleases.

         17.16 Entire  Agreement.  This Lease, the exhibits hereto which by this
reference are incorporated herein as though set forth in full herein,  covers in
full each and every agreement of

                                       26
<PAGE>

every kind or nature  whatsoever  between  the  parties  hereto  concerning  the
Premises and the Building,  and all preliminary  negotiations  and agreements of
whatsoever   kind  or  nature  are  merged  herein.   The  Lessor  has  made  no
representations  or  promises  whatsoever  with  respect to the  Premises or the
Building,  or the design  configuration  of the Project,  except those contained
herein,  and no  other  person,  form or  corporation  has at any  time  had any
authority from the Lessor to make any  representations  or promises on behalf of
the Lessor.  If any such  representations  or promises have been made by others,
the Lessee  hereby  waives all right to rely  thereon.  No verbal  agreement  or
implied covenant shall be held to vary the provisions hereof,  any statute,  law
or custom to the contrary notwithstanding.

         Except as  otherwise  provided  herein,  nothing  expressed  or implied
herein is intended or shall be  construed to confer upon or grant any person any
rights or remedies under or by reason of any term or condition contained in this
Lease.

         17.17 Signs. No sign, placard, picture,  advertisement,  name or notice
shall be  inscribed,  displayed,  printed  or affixed to or near any part of the
outside or inside of the  Building  without  the  written  consent of the Lessor
first  had and  obtained  and  without  full  compliance  with all  governmental
requirements and with the Project Signage Plan and any other required  consents.
The  Lessor  shall have the right to remove  any such  sign,  placard,  picture,
advertisement, name or notice without notice to the Lessee and at the expense of
the Lessor.  The Lessee further agrees to maintain any such approved  signs,  as
may be approved by the Lessor,  in good  condition and repair at all times.  The
Lessee shall not place any sign on a vehicle or movable or non-movable object in
or on the street  adjacent to the  Project.  The Lessee  shall have the right to
modify  the  existing  building  monument  sign at the  Lessee's  sole  cost and
expense.  Prior to any modifications,  the Lessee shall obtain Lessor's approval
for all and any  changes and shall  obtain all  necessary  approvals  from Santa
Barbara County.  Lessee's right to monument signage under this Lease, if any, is
personal  to  Lessee  and may  not be  transferred  to any  person,  whether  in
connection  with any  assignment  or  sublease or  otherwise,  without the prior
written consent of Lessor.  Unless Lessor shall otherwise agree in writing,  any
such right to monument signage shall terminate and revert to Lessor in the event
of any  assignment or sublease of all or  substantially  all of Lessee's  rights
under this Lease or in the event Lessee shall no longer occupy the Premises.

         17.18 Interest on Past Due  Obligations. Any amount due from the Lessee
to the Lessor  hereunder which is not paid when due shall bear interest at three
(3) percentage points above the discount rate of the Federal Reserve Bank of San
Francisco at the time of the award from the date due until paid, but the payment
of such interest shall not excuse or cure any default by the Lessee.

         17.19 Gender; Number.  Whenever the context of this Lease requires, the
masculine  gender  includes  the  feminine or neuter,  and the  singular  number
includes the plural.

         17.20  Recording  of Lease.  The  Lessee  shall not  record  this Lease
without  the  express  written  consent of the  Lessor.  If such  permission  is
granted, at the expiration or sooner termination of this Lease, the Lessee shall
execute, acknowledge and deliver to the Lessor, within ten

                                       27
<PAGE>

(10) days after  written  demand from the Lessor,  any  quitclaim  deed or other
document  reasonably required by any reputable title company to remove the cloud
of this Lease from the title of the real property subject to the Lease.

         17.21  Waiver of  Subrogation.  The Lessor and the Lessee  each  hereby
waive any and all rights of recovery against the other, or against the officers,
employees and agents and representatives of the other, for loss of or any damage
to such  waiving  party or its  property,  or the  property of others  under its
control,  to the extent  that such loss or damage is insured  against  under any
valid  and  collectible  insurance  policy  in force at the time of such loss or
damages.  The Lessee shall,  upon  obtaining the policies of insurance  required
hereunder,  give notice to the insurance  carrier or carriers that the foregoing
mutual waiver of subrogation is contained in this Lease.

         17.22 Confidentiality of Lease. The Lessee acknowledges and agrees that
the terms of this Lease are confidential and constitute proprietary  information
of the Lessor. Disclosure of the terms hereof could adversely affect the ability
of the  Lessor to  negotiate  other  leases  with  respect to the  Building  and
impair the Lessor's relationship with other tenants of the Building.  The Lessee
agrees that it, its partners,  officers,  directors,  employees  and  attorneys,
shall not  disclose the terms and  conditions  of this Lease to any other person
without the prior written  consent of the Lessor.  It is  understood  and agreed
that damages would be an inadequate  remedy for the breach of this  provision by
the Lessee, and the Lessor shall have the right to specific  performance of this
provision and to  injunctive  relief to prevent its breach or continued  breach.
There  shall be  excluded  from  this  obligation  any  filing  required  by the
Securities and Exchange Commission or any other disclosure required by law.

         17.23 Quiet  Enjoyment.  Provided the Lessee has  performed  all of the
terms, covenants, agreements and conditions of this Lease, including the payment
for rent and all other  sums due  hereunder,  the  Lessee  shall  peaceably  and
quietly  hold and enjoy the  Premises  for the term  hereof,  but subject to the
provisions  and  conditions  of this Lease  against  the Lessor and all  persons
claiming by, through or under the Lessor. The Lessee's right to use the Premises
and the Common Area as herein provided shall be subject to restrictions or other
limitations or prohibitions  resulting from any laws,  statutes,  ordinances and
governmental  rules,  regulations  or requirements now  in force  or  which  may
hereafter  be in force and no such  event  shall in any way affect  this  Lease,
abate rent,  relieve the Lessee of any  liabilities  or  obligations  under this
Lease.

         17.24 Window Coverage. No window covering,  including,  but not limited
to,  coatings or  draperies,  shall be used by the Lessee  without the  Lessor's
written approval.

         17.25 Materials Storage Restrictions.  The Lessee agrees to conduct its
business  so as not to  violate  or  exceed  the  design  standards  of the fire
protection system or any insurance policies maintained by the Lessor pursuant to
Article 7.

                                       28
<PAGE>

         17.26 No  Agency.  Neither  party is the agent or partner of the other,
and the legal  relationship  between the parties hereto shall be governed solely
by the terms of this Lease when duly  executed by both  parties  with respect to
the transactions contemplated hereby.

         17.27 Force Majeure.  Notwithstanding any of the items set forth above,
the Lessor shall bear no liability  of whatever  kind to the Lessee if,  despite
the  Lessor's  exercise  of due  diligence,  the  Lessor's  carrying  out of its
obligations, as defined herein, prevented or delayed by legal action, nor by the
exercise of governmental  authority,  whether Federal, State of County, or other
or by  force  majeure,  strikes,  riots,  acts  of  God,  war,  adverse  weather
conditions,  fire, unavoidable  casualties,  or acts of third parties beyond the
Lessor's control.

         17.28 Accord and  Satisfaction.  No payment by the Lessee or receipt by
the Lessor of a lesser amount than the rent herein stipulated shall be deemed to
be other  than on  account  of the  earliest  stipulated  rent,  nor  shall  any
endorsement  or statement on any check or any letter  accompanying  any check or
payment as rent be deemed an accord and satisfaction,  and the Lessor may accept
such check or payment  without  prejudice to the  Lessor's  right to recover the
balance of such rent or pursue any other remedy provided in this Lease.

         17.29  Financial  Statements.  The Lessee shall  deliver to the Lessor,
prior to the execution of this Lease,  its financial  statement,  and the annual
financial  statements of the Lessee within ninety (90) days after the end of the
Lessee's  fiscal  year,  which  shall be  certified  by the  Lessee  as true and
correct.  The Lessee shall also provide financial statements of any guarantor of
this Lease, which shall be certified as true and correct by such guarantor. Such
financial   statements  shall  be  based  upon  generally  accepted   accounting
principles applied on a consistent basis. The financial statements shall clearly
show sufficient  information to accurately depict the financial condition of the
Lessee as of the date thereof. Any misrepresentations in the Lessee's  financial
statements will be considered, at the Lessor's option, as a breach of a material
provision of this Lease.  If the Lessee is a partnership or joint venture,  such
financial statements shall, upon the Lessor's request, be accompanied by similar
financial  statements  of each general  partner or joint  venture of the Lessee.
Such similar statements shall be certified to be true and correct by the subject
thereof.  Within five (5) days following written request by the Lessor delivered
after any  default  by the Lessee in the  payment  of any sums owing  under this
Lease,  whether or not any time period  allowed for the cure of such default has
expired,  the Lessee  shall  provide  the  Lessor  with  copies of the  Lessee's
financial  statement  for the end of the most  recent  quarter  of the  Lessee's
fiscal  year,  and the  Lessee's  financial  statement  (including  year to date
information) for the end of the month preceding such default. In each case, such
financial  statement  shall meet all of the  preceding  requirements  for annual
financial  statements.  The Lessee's failure to deliver the financial statements
contemplated  hereby  within  the time  specified  shall  constitute  a material
default by the Lessee under this Lease.

         17.30 Supersedes Proposal to Lease. This Lease supersedes any proposals
regarding the leasing of the  Premises,  whether  written or oral,  and any such
proposals  will be  terminated,  and of no force or effect,  effective  upon the
execution of this Lease.

                                       29
<PAGE>

         17.31  Construction.  The  provisions of this Lease should be liberally
construed to effectuate  its  purposes.  The language of all parts of this Lease
shall be  construed  simply  according  to its  plain  meaning  and shall not be
construed for or against  either party,  as each party has  participated  in the
drafting of this Lease and had the  opportunity to have their counsel review it.
Whenever  the  context  and  construction  so  requires,  all words  used in the
singular shall be deemed to be used in the plural,  all masculine  shall include
the feminine and neuter, and vice versa.

         17.32   Non-Disturbance   Agreement.   The   parties   shall   execute,
concurrently  with  the  execution  of  this  Lease,  the   Non-Disturbance  and
Attornment  Agreement  attached  as  Exhibit D,  which is  incorporated  by this
reference.  The Lessor shall obtain its lender's  execution of said agreement as
soon as reasonably  practical  after  execution by the parties,  and furnish the
Lessee with a fully executed copy.

     18. TENANT IMPROVEMENTS

         18.1 Lessor shall provide Lessee with a tenant improvement allowance of
$47,520  (the   "Allowance")  for  new  carpeting  and  paint  to  the  Premises
(collectively,  the "Work").  All aspects of completion  of the Work  (including
selection of materials and contractors) shall be subject to Lessor's  reasonable
prior approval. The Allowance shall be payable within 15 days after satisfaction
of the following conditions:  (i) the Work shall have been fully completed, (ii)
Lessee shall  provide  Lessor with  invoices for all costs  relating to the Work
(together with such  supporting  information as Lessor may reasonably  request),
and (iii) the building and the Premises shall not be subject to any lien arising
in  connection  with the Work or any other work  undertaken  by Lessee or on its
behalf and Lessor shall have received final lien release  documents (in form and
substance  acceptable to Lessor) from all general  contractors,  subcontractors,
materialmen and other vendors who provided  materials,  goods and/or services in
connection  with the Work. The Allowance shall not be used for any purpose other
than payment of the costs  associated  with the Work. An unused  Allowance shall
revert and be paid to Lessor.  Rent shall  commence  to accrue and be payable on
the  Rent   Commencement   Date   specified   in  the  Basic  Lease   Provisions
notwithstanding  the failure  for any reason to  complete  the Work on or before
such Rent Commencement  Date.  Notwithstanding  the above,  Lessor shall have no
obligation  to  disburse  the  Allowance  or  any  part  thereof  if  any of the
conditions  set forth above is not  satisfied on or before  September  30, 2000.
Lessor represents that the Premises on the Commencement Date are in good working
order and repair,  including the plumbing,  electrical,  HVAC and lighting.  Any
ceiling tiles in the Premises which are damaged on the  Commencement  Date shall
be promptly  replaced by Lessor.  Except as provided in this Section  18.1,  the
Premises shall be delivered in "as is" condition.

         19.  ONE TIME  OPTION TO  EXTEND.  Provided  that (1)  Lessee is not in
default  under any of the terms of this  Lease at the time of  exercise  of this
option or at the  expiration  of the initial term of this Lease nor has an event
occurred  which upon notice or lapse of time,  or both,  would create a default,
and (2)  Lessee  has not  assigned  this  Lease  (other  than  by  reason  of an
assignment  described in Section 11.2 above) nor sublet the Premises in whole or
in part, Lessee shall

                                       30
<PAGE>

have the option to extend the term of this Lease for one (1)  additional  period
of  five  (5)  years.  This  option  is  personal  to  Lessee  and it may not be
transferred to any person, whether in connection with any assignment or sublease
or otherwise, without the prior written consent of Lessor.

         Should Lessee exercise such option,  the terms and conditions  shall be
in  accordance  with the terms  and  conditions  of the  Lease,  except  for the
provisions relating to the rent, as provided herein.

         Rent to be paid by the  Lessee to the  Lessor for the first year of the
extended  term  (commencing  June 1, 2005)  shall be the market rent for similar
space in comparable  buildings in the Goleta area as determined by Lessor at the
time this  option to extend is  exercised;  provided,  however,  that in no such
event shall the monthly rent for such first year be less than the product of (i)
the monthly rent for the last month of the initial term of this Lease multiplied
by (ii)  104%.  The  monthly  rent for each year of the  extended  term shall be
increased,  as of each June 1 of the extended term (commencing June 1, 2006), at
a rate equal to Four Percent (4%) of the monthly  rent  applicable  to the prior
year. The criteria for the  establishment of market rent (the "Criteria")  shall
include,  but not be limited to,  rental  rate  escalation  provisions,  expense
recapture  and security  deposit  requirements  as necessary to reflect the then
prevailing market conditions.  To exercise this option,  Lessee must give notice
in writing of its  election to  exercise  such option to Lessor a minimum of one
hundred-eighty  (180) days and a maximum of three hundred-sixty (360) days prior
to the  expiration  of the initial  term of this Lease.  Lessor shall have sixty
(60) days  from the date of  receipt  of  Lessee's  notice  to advise  Lessee of
Lessor's determination of market rent for the extended period.

         Upon   Lessee's   receipt  of  notice   from   Lessor  as  to  Lessor's
determination  of market  rent,  Lessee  shall have  thirty  (30) days to notify
Lessor in writing that it accepts such determination or that Lessee rejects such
determination (in which latter case, Lessee shall  simultaneously  notify Lessor
of  Lessee's  determination  of the market  rent).  Lessee's  failure to respond
within  such thirty (30) day period  shall be deemed an  acceptance  of Lessor's
determination of  market rent and the  Lease shall  thereupon be extended for an
additional  five (5) year  period,  the  monthly  rent for the first year of the
extended  term shall be the Lessor's  determination  of market rent and the rent
increase  provisions  of this  Section  19  shall  apply to the  balance  of the
extended term.

         If Lessee rejects the market rent, as provided above, Lessor and Lessee
shall  forthwith  attempt in good faith to agree upon the market rent. If Lessor
and Lessee fail to reach  agreement on such market rent within  thirty (30) days
after the date of  rejection  (such date, the "Outside  Agreement  Date"),  then
each party's  determination  shall be submitted to appraisal in accordance  with
the appraisal provisions set forth in Section 20 below.

         The rent for the Premises  after the  expiration of the initial term of
the Lease and during any period that the market  rent for the  Premises is being
determined pursuant to Section 20 shall be the market rent determined by Lessor,
and the parties shall make a retroactive  adjustment,  if necessary, to the rent
payable  for such period  upon the  determination  of the market rent under said
Section 20.

         20. APPRAISAL PROVISIONS.

                                       31
<PAGE>

                  (i)  Lessor  and  Lessee  shall  each  appoint  a real  estate
appraiser   who  shall  be  an   individual  of   substantial   experience   and
qualifications  in commercial real estate appraisal for similar buildings in the
Goleta area and who shall have been active in such appraisal activities over the
five (5) year period ending on the date of such  appointment.  The determination
of the appraisers  shall be limited  solely to the issue of whether  Lessor's or
Lessee's  determination  of market  rent is the closer to the actual fair market
rental  (considering  the Criteria  referred to in Section 19 above).  Each such
appraiser  shall be  appointed  within  fifteen  (15)  days  after  the  Outside
Agreement Date.

                  (ii) The two appraisers so appointed shall within fifteen (15)
days of the date of the appointment of the second appointed appraiser agree upon
and appoint a third  appraiser  who shall be qualified  under the same  criteria
referred to in parapraph (i) above.

                  (iii) The three  appraisers  shall within  thirty (30) days of
the  appointment  of the third  appraiser  reach a decision  as to  whether  the
parties  shall use  Lessor's  or Lessee's  determination  of market rent for the
first year of the extended  term,  and shall notify  Lessor and Lessee  thereof,
whereupon  the Lease  shall be extended  for an  additional  five (5) year,  the
monthly rent for the first year of the extended term shall be in accordance with
such decision and the rent increase provisions of this Section 19 shall apply to
the balance of the extended term.

                  (iv) The  decision  of the  majority  of the three  appraisers
shall be binding upon Lessor and Lessee.

                  (v) If either  Lessor or Lessee  fails to appoint an appraiser
within the time period specified in paragraph (i) above, the appraiser appointed
by one of them shall  reach a decision  based  upon the same  procedures  as set
forth herein (i.e., by selecting  either Lessor's or Lessee's  determination  of
market rent),  and shall notify Lessor and Lessee thereof,  and such appraiser's
decision shall be binding upon Lessor and Lessee.

                  (vi) If the two  appraisers  fail to agree upon and  appoint a
third appraiser, both appraisers shall be dismissed and the matter to be decided
shall be forthwith  submitted to arbitration in Santa Barbara  County,  CA under
the  provisions  of the  American  Arbitration  Association  based upon the same
procedures as set forth herein (i.e., by selecting  either  Lessor's or Lessee's
determination of market rent).

                  (vii) The cost of appraisal  (and, if necessary,  arbitration)
shall be paid by Lessor and Lessee equally.

                  (viii)   Notwithstanding   anything to  the  contrary  in this
Section 20, the parties  agree that the  monthly  rent for the first year of the
extended  term shall not be less than the amount  referred to in the proviso set
forth in the  third  paragraph  of  Section  19,  and  that  the  rent  increase
provisions  set forth in the third  paragraph  of Section 19 shall  apply to the
balance of the extended term.

                                       32
<PAGE>

                                   EXHIBIT A

                                    PREMISES

<PAGE>

                                GRAPHIC OMITTED

                             70 Santa Felicia Drive
                                First Floor Plan

<PAGE>

                                GRAPHIC OMITTED

                             70 Santa Felicia Drive
                                Second Floor Plan
<PAGE>

                                   EXHIBIT B

                             RULES AND REGULATIONS

<PAGE>

                             RULES AND REGULATIONS

         1. Except as otherwise  provided in Section  17.17,  no sign,  placard,
picture, advertisement,  name or notice shall be inscribed, displayed or printed
or affixed on or to any part of the outside of the Building  without the written
consent of Lessor  first had and  obtained  and  Lessor  shall have the right to
remove any such sign, placard, picture, advertisement,  name or notice to and at
the expense of Lessee.

                  All  approved  signs or  lettering  on doors shall be printed,
painted,  affixed or inscribed at the expense of Lessee by a person  approved of
by Lessor.

                  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 the Premises.

         2. The directory of name  identification of the Building,  if any, will
be provided  exclusively for the display of the names and location of Lessee and
other  tenants in the  Building,  and Lessor  reserves  the right to exclude any
other names therefrom.

         3. All sidewalks, halls, passages, exits, entrances of the Building, if
any,  shall not be obstructed by any lessee or used by him for any purpose other
than  for  ingress  to and  egress  from his  respective  Premises.  The  halls,
passages, exits, entrances, elevators, stairways, balconies and pool 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 judgment
of  Lessor  shall  be  prejudicial  to the  safety,  character,  reputation  and
interests  of the  Building  and  its  lessees,  provided  that  nothing  herein
contained  shall be construed to prevent such access to persons with whom Lessee
normally deals in the ordinary  course of Lessee's  business unless such persons
are engaged in illegal  activities.  No lessee and no employee or invitee of any
lessee  shall go upon the roof of the  Building  without  the prior  consent  of
Lessor. For purposes of Lessee's obligations,  if any, of repair and maintenance
of the heating, ventilating and air conditioning systems of the Premises, Lessee
shall use a  maintenance  firm  selected or  designated  by Lessor unless Lessee
demonstrates  by written  evidence  reasonably  satisfactory  to Lessor that the
rates quoted by such firm for such work are not competitive with rates quoted by
one or more other firms which Lessee proposes to use.

         4. Lessee may install new or additional  locks or any bolts on any door
of the  Premises;  however,  Lessee  shall  provide  Lessor  with  access to the
Premises in the event of an emergency access requirement upon one hour notice.

         5. Lessee shall not  overload the floor of the Premises or mark,  drive
nails,  screws or drill into the  partitions,  woodwork or plaster or in any way
deface the Premises or any part thereof.

                                      B-l
<PAGE>

         6. Lessee shall not use,  keep or permit to be used or kept any foul or
noxious gas or substance in the Premises, or permit or suffer the Premises to be
occupied  or used in a manner  offensive  or  objectionable  to  Lessor or other
occupants  of the  Building  by reason of noise,  odors  and/or  vibrations,  or
interfere in any way with other tenants or those having  business  therein,  nor
shall any animals or birds be brought in or kept in or about the Premises of the
Building.

         7. Lessee shall be entitled to install a cafeteria/dining  area for the
use of Lessee's  employees  and  invitees  and  ordinary  office  purposes.  The
Premises  shall  not be  used  for  washing  clothes,  for  lodging,  or for any
improper, objectionable or immoral purposes.

         8. Other than customary office cleaning and janitorial supplies used in
reasonable  quantities  and stored in a proper  manner  allowed by  governmental
ordinances  and in a manner  consistent  with Article 5.4 of this Lease,  Lessee
shall not use or keep in the Premises or the Building any kerosene,  gasoline or
inflammable or combustible  fluid or material except in connection with Lessee's
permitted use of the Premises  under this Lease and in strict  conformance  with
applicable law, or use any method of heating or air conditioning other than that
supplied by Lessor. Any permitted  corrosive,  flammable or other special wastes
shall be handled for disposal as director by Lessor.

         9. Each lessee,  upon the termination of his tenancy,  shall deliver to
Lessor the keys of offices,  rooms and toilet  rooms,  if any,  which shall have
been  furnished  the lessee or which the lessee shall have had made,  and in the
event of loss of any keys so furnished, shall pay Lessor therefor.

         10. 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 a 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 shall have been caused.

         11.  Lessee  shall see that the doors of the  Premises  are  closed and
securely  locked  before  leaving the Building and must observe  strict care and
caution that all water  faucets or water  apparatus are entirely shut off before
Lessee or Lessee's employees leave the Building,  and that all electricity shall
likewise be carefully  shut off, so as to prevent  waste or damage,  and for any
default or carelessness  Lessee shall make good all injuries  sustained by other
tenants or occupants of the Building or Lessor.

         12. Lessor reserves the right to exclude or expel from the Building any
person.  who, in the reasonable  judgment of Lessor, is intoxicated or under the
influence of liquor or drugs, or who shall in any manner do any act in violation
of any of the Rules and Regulations of the Building.

         13.   Requirements   of  Lessee  as  to  any  matters  within  Lessor's
obligations  pursuant to its Lease will be attended to only upon  application at
Lessee's address for notices.  Employees of Lessor shall not perform any work or
do anything outside of their

                                      B-2
<PAGE>

regular duties unless under special  instructions  from Lessor,  and no employee
will  admit any person  (Lessee or  otherwise)  to any office  without  specific
instructions from Lessor.

         14. Lessor shall have the right, exercisable without notice and without
liability to Lessee  (other than  reimbursement  of costs  actually  incurred by
Lessee in the revision of any  stationery or promotional  materials),  to change
the name and street  address of the  Building of which the  Premises are a part,
but the street  address shall not be changed  unless  required by a governmental
agency.

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

         16.  Without the written  consent of Lessor,  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.

         17.  Lessee's  use of the common  areas  shall be limited to access and
parking purposes and under no  circumstances  shall Lessee be permitted to store
any goods or  equipment,  conduct  any  operations,  or  construct  or place any
improvements,  barriers  or  obstructions  in the  common  areas,  or  otherwise
adversely affect the appearance thereof.

         18. Canvassing,  soliciting and peddling in the Building are prohibited
and Lessee shall cooperate to prevent the same.

         19.  Lessee  shall  not  install  any  radio  or  television   antenna,
loudspeaker  or other  device  on the roof or  exterior  walls of its  Premises,
provided  Lessee may  install an antenna or other  communications  devise on the
roof of the Premises with Lessor's  prior  written  consent,  which shall not be
unreasonably  withheld,  provided  (i) such  antenna  or  devise  is  adequately
screened  with  materials  consistent  with other  materials of the Premises and
Building,  (ii) Lessee has received all permits and approvals from  governmental
agencies having  jurisdiction for the construction  thereof,  (iii) Lessee shall
bear all costs,  expenses and damages (including roof leaks) resulting from such
installation,  and (iv) Lessee shall indemnify,  protect, defend and hold Lessor
harmless  from and  against any claims,  demands,  costs or expenses  (including
reasonable  attorneys' fees) incurred by Lessor to the extent resulting from the
installation and/or operation of such equipment.  Upon the expiration or earlier
termination of this Lease,  Lessee shall, upon Lessor's written request,  remove
the antenna or  communications  devise and promptly  repair all damage caused by
such removal.

         20.  Lessor   reserves  the  right  to  make  such  other  and  further
nondiscriminatory  Rules and  Regulations as in its  reasonable  judgment may be
necessary for the safety,  care and cleanliness of the Premises and the Building
and for the  preservation  of good order therein.  Lessee agrees to abide by all
such Rules and Regulations which are adopted.

                                      B-3
<PAGE>

                                   EXHIBIT C

                               GUARANTY OF LEASE
<PAGE>

                               GUARANTY OF LEASE

         WHEREAS,   UNITED  INSURANCE   COMPANY  OF  AMERICA   ("Lessor"),   and
NANOMOTION,  INC., a California corporation  ("Lessee"),  are about to execute a
lease,  dated  as of May 19,  2000  (as the same  may be  amended,  modified  or
supplemented from time to time, the "Lease"), concerning the premises located at
70 Santa Felicia,  Goleta,  CA 93117 (the "Premises")  wherein Lessor will lease
the Premises to Lessee; and

         WHEREAS,  Raymond  Karam  ("Guarantor")  has a  financial  interest  in
Lessee; and

         WHEREAS,  Lessor  would  not  execute  the Lease if  Guarantor  did not
execute and deliver to Lessor this guaranty of the Lease.

         NOW, THEREFORE,  for and in consideration of the execution of the Lease
by Lessor and as a material inducement to Lessor to execute the Lease, Guarantor
hereby  unconditionally and irrevocably  guaranties the prompt payment by Lessee
of all  rentals  and all other sums  payable  by Lessee  under the Lease and the
faithful  and prompt  performance  by Lessee of each and every one of the terms,
conditions and covenants of the Lease to be kept and performed by Lessee.

         It is  specifically  agreed and understood  that the terms of the Lease
may be altered,  affected,  modified or changed by agreement  between Lessor and
Lessee,  or by a course of conduct,  and said Lease may be assigned by Lessor or
any assignee of Lessor,  in each case,  without  consent or notice to Guarantor,
and that this Guaranty shall  thereupon and thereafter  guaranty the performance
of the Lease as so changed, modified, altered, affected or assigned.

         This Guaranty shall not be released,  modified,  or affected by failure
or delay on the part of Lessor to enforce  any of the rights or  remedies of the
Lessor  under the  Lease,  whether  pursuant  to the terms  thereof or at law or
equity.  This  Guaranty  shall not be  released,  modified,  or  affected by the
exercise  of  any  remedy  by  Lessor  following  a  default  by  Lessee  of its
obligations  under the  Lease,  including  any  election  by  Lessor to  declare
forfeiture of the Lease or to terminate the Lease.

         No notice of default need be given to Guarantor,  it being specifically
agreed and  understood  that the  guaranty of the  undersigned  is a  continuing
guaranty under which Lessor may proceed forthwith and immediately against Lessee
and/or  against  Guarantor  following any breach or default by Lessee or for the
enforcement of any rights which Lessor may have as against Lessee pursuant to or
under the terms of the Lease or at law or in equity.

         Lessor  shall have the right to  proceed  against  Guarantor  hereunder
following  any breach or  default by Lessee  without  first  proceeding  against
Lessee and without previous notice to or demand upon either Lessee or Guarantor.

         Guarantor hereby waives (a) notice of acceptance of this Guaranty,  (b)
demand of payment,  presentation  and protest,  (c) all right to assert or plead
any statute of limitations as to or

                                       C-l
<PAGE>

relating to this Guaranty and the Lease,  (d) any right to require the Lessor to
proceed  against the Lessee or any other guarantor or any other person or entity
liable to Lessor,  (e) any right to require  Lessor to apply to any  default any
security deposit or other security it may hold under the Lease, (f) any right to
require  Lessor to  proceed  under  any  other  remedy  Lessor  may have  before
proceeding  against  Guarantor,  and (g) any right of subrogation,  contribution
and/or reimbursement.

         The liability of Guarantor  hereunder shall not be impaired,  modified,
changed,  released  or  limited  in any  manner  whatsoever  by any  impairment,
modification, change, release or limitation of liability of Lessee or its estate
or of any remedy for the  enforcement  thereof,  resulting from the operation of
any present or future  provision of the Federal  Bankruptcy Code, or any similar
law or statute of the United  States or any State thereof  covering  insolvency,
bankruptcy,   rehabilitation,   liquidation  or  reorganization,  it  being  the
intention of Guarantor that Guarantor's  liability hereunder shall be determined
without  regard to any rule of law or order which may  relieve  Lessee of any of
its obligations under the Lease.

         Guarantor  agrees that in the event Lessee  shall  become  insolvent or
shall have an order for relief entered  against it under the Federal  Bankruptcy
Code, or shall file a petition for reorganization, arrangement or similar relief
under any present or future  provision of the Federal  Bankruptcy  Code,  or any
similar law of the United States or any State thereof, or if such petition filed
by creditors of Lessee shall not be  dismissed  within  thirty (30) days,  or if
Lessee shall seek a judicial  readjustment  of the rights of its creditors under
any  present or future  Federal or State law, or if a receiver of all or part of
its property and assets is appointed by any State or Federal  court,  and in any
such proceeding the Lease shall be terminated or rejected; or the obligations of
Lessee thereunder shall be modified,  Lessor shall have the option either (a) to
require  the  Guarantor,  and the  Guarantor  hereby so agrees,  to execute  and
deliver  to  Lessor a new  lease as  Lessee  for the  balance  of the term  then
remaining as provided in the Lease and upon the same terms and conditions as set
forth  therein,  or (b) to recover  from the  Guarantor  that which Lessor would
otherwise  be entitled to recover  from Lessee under the Lease in the event of a
termination of the Lease by Lessor because of default by Lessee,  and such shall
be recoverable  from the Guarantor  without regard to whether Lessor is entitled
to recover the same from Lessee in any such proceeding.

         Guarantor  agrees  that,  in the event any  obligation  is performed by
Lessee,  the  liability of Guarantor  under this  Guaranty  shall remain in full
force  and  effect  in the  event  that all or any part of such  performance  is
avoided  or  recovered  from  Lessor as a  preference,  fraudulent  transfer  or
otherwise, in any bankruptcy, insolvency,  liquidation,  reorganization or other
proceeding involving Lessee.

         Guarantor  will file all claims  against  Lessee in any  bankruptcy  or
other  proceeding  in which the  filing of  claims is  required  by law upon any
indebtedness  of Lessee to Guarantor and will assign to Lessor,  as security for
Guarantor's  obligations under this Guaranty, all right of Guarantor thereunder.
If  Guarantor  does not file any such claim,  Lessor,  as  attorney-in-fact  for
Guarantor,  is  hereby  authorized  to do so in the  name of  Guarantor  or,  in
Lessor's discretion, to assign the claim and to cause proof of claim to be filed
in  the  name  of  Lessor's  nominee.   In  all

                                       C-2
<PAGE>

such cases,  whether in administration,  bankruptcy or otherwise,  the person or
persons  authorized  to pay such  claim  shall  pay to  Lessor  the full  amount
thereof,  and, to the full extent  necessary for that purpose,  Guarantor hereby
assigns  to  Lessor  all  of   Guarantor's   rights  to  any  such  payments  or
distributions to which Guarantor would otherwise be entitled.  Lessor and/or its
nominee will  transfer to Guarantor  all amounts  realized by it with respect to
any  claims  assigned  by  Guarantor  to Lessor  and/or its  nominee  under this
paragraph  after  all  obligations  owing to  Lessor  under  the  Lease and this
Guaranty have been paid and satisfied in full.

         Guarantor hereby  subordinates  all existing or future  indebtedness of
Lessee to Guarantor to the  obligations  owed to Lessor under the Lease and this
Guaranty.

         The  obligations  of  Lessee  under the Lease to  execute  and  deliver
estoppel  certificates and financial statements,  as therein provided,  shall be
deemed  to also  require  Guarantor  to do and  provide  the  same  relative  to
Guarantor.

         The term  "Lessor"  whenever used herein refers to and means the Lessor
specifically  in the Lease  and also any  assignee  of the  Lessor,  whether  by
outright assignment or by assignment for security, and also any successor to the
interest  of the  Lessor or of any  assignee  in the Lease or any part  thereof,
whether by assignment or  otherwise.  So long as Lessor's  interest in or to the
Premises  or the rents,  issues and  profits  therefrom,  or in, to or under the
Lease,  are subject to any mortgage or deed of trust or assignment for security,
no  acquisition  by Guarantor of Lessor's  interest in the Premises or under the
Lease shall affect the  continuing  obligation of Guarantor  under this Guaranty
which  shall  nevertheless  continue in full force and effect for the benefit of
the mortgagee,  beneficiary,  trustee or assignee  under such mortgage,  deed of
trust or assignment, of any purchaser at a sale by judicial foreclosure or under
private power of sale, and of the successors and assigns of any such  mortgagee,
beneficiary, trustee, assignee or purchaser.

         The term  "Lessee"  whenever used herein refers to and means the Lessee
specifically  named in the Lease and also any assignee or sublessee of the Lease
and also any  successor to the interest of the Lessee,  assignee or sublessee of
such Lease or any part thereof, whether by assignment, sublease or otherwise.

         If Lessor shall employ an attorney to present, enforce or defend any or
all of Lessor's rights or remedies hereunder, Guarantor shall pay all attorneys'
fees, costs and expenses and all other costs and expenses  incurred by Lessor in
connection  therewith,  whether or not an action is commenced by Lessor for such
purpose.

         Any  amount  due from  Guarantor  to Lessor  which is not paid when due
shall bear  interest at the lesser of (i) the then current base rate of interest
per annum  established  from time to time by Bank of America  National Trust and
Savings  Association and designated as its prime rate plus five percent (5%), or
(ii) the maximum rate or rates from time to time permitted by applicable federal
or state law,  from the date such payment is due until paid,  but the payment of
such  interest  shall not excuse or cure the failure to make such  payment  when
due.

                                      C-3
<PAGE>

         This  Guaranty  shall be binding  upon  Guarantor  and the  successors,
heirs, executors and administrators of Guarantor, and shall inure to the benefit
of Lessor and Lessor's successors and assigns.

         Lessor may assign or  transfer  the Lease and this  Guaranty,  or both,
without notice to Guarantor and no such assignment or transfer shall  extinguish
or diminish the liability of Guarantor under this Guaranty.

         Should any one or more  provisions of this Guaranty be determined to be
illegal or unenforceable, all other provisions nevertheless shall be effective.

         No  provision  of this  Guaranty  or right of Lessor  hereunder  can be
waived nor can  Guarantor be released  from  Guarantor's  obligations  hereunder
except by a writing duly  executed by an authorized  officer of Lessor.  No such
waiver shall be applicable except in the specific instance for which given.

         Wherever in this  Guaranty  the context so  requires,  reference to the
masculine shall be deemed to include the feminine and the neuter,  and reference
to either the singular or the plural shall be deemed to include the other.

         This Guaranty shall be construed and  interpreted  in accordance  with,
and all  disputes  hereunder  shall be  governed  by,  the laws of the  State of
Califomia.

         Any married person who signs the Guaranty as guarantor expressly agrees
that recourse may be had against his or her separate  property for all of his or
her obligations hereunder.

         If Guarantor is a partnership or a corporation,  the general partner or
partners or the  shareholders  will neither sell,  transfer or assign nor permit
the sale, transfer or assignment,  of his, her or their respective  interests or
any part thereof in the partnership or  shareholdings in the corporation so long
as the obligations  guaranteed  hereby remain unpaid or unperformed,  unless the
prior consent of Lessor is obtained.

         In the event that Lessee is acquired  by another  corporation  or other
business entity (whether by merger, consolidation, sale of assets, sale of stock
or  otherwise),  Lessor shall release  Guarantor of his  obligations  under this
Guaranty, and this Guaranty shall terminate,  if all of the following conditions
are met: (i) Lessor shall have  consented  in writing to the  assignment  of the
Lease to the  acquiring  entity,  (ii) no  default  shall have  occurred  and be
continuing under the Lease, (iii) Lessor, in its reasonable discretion, shall be
satisfied that the acquiring  entity in such acquisition (A) meets Lessor's then
current  financial  and other  requirements  applicable  to  tenants  for leases
comparable to the Lease, (B) is capable of satisfying in full all obligations of
tenant under the Lease,  and (C) has a net worth in excess of the  aggregate net
worth of Lessee and of Guarantor, and (iv) such acquiring entity shall assume in
a writing  delivered to Lessor all  obligations  of tenant  under the Lease,  or
shall (if Lessee shall survive such acquisition)  execute and deliver a guaranty
of the Lease in form and substance satisfactory to Lessor.

                                      C-4
<PAGE>

         Executed at Goleta, CA on May 19, 2000, to be effective the same day as
the effective day of the Lease.

                                   GUARANTOR

Address: 226 E. Junipero           /s/ Raymond M. Karam
Santa Barbara, CA  93117           ---------------------------------
                                   Raymond M. Karam

                                      C-5
<PAGE>

                                    CONSENT

         The undersigned consent and agree to the above Guaranty for the purpose
of making any community  property in which they have an interest  subject to the
recourse for the Guarantor's obligations hereunder.

                                   /s/ ????????????????????
                                   -----------------------------
                                   (Spouse of Raymond M. Karam)

                                      C-6

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