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                                                                    EXHIBIT 10.1

                          STANDARD INDUSTRIAL NET LEASE

CENTER NAME:        ONE TECHNOLOGY PLACE

LANDLORD:           COLLINS-TECH R.B.,
                    A CALIFORNIA LIMITED PARTNERSHIP

TENANT:             JMAR TECHNOLOGIES, INC.,
                    A DELAWARE CORPORATION

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                          STANDARD INDUSTRIAL NET LEASE

This STANDARD INDUSTRIAL NET LEASE ("Lease" ), dated for reference purposes only
July 1, 2005, is entered into by COLLINS-TECH R.B., a California limited
partnership ("Landlord"), and JMAR TECHNOLOGIES, INC., a Delaware corporation
("Tenant").

1.    BASIC LEASE TERMS.

      The basic terms of the Lease set forth in this Article 1 shall be read in
conjunction with the other Articles of this Lease, which define and explain the
basic terms.

      1.1   ADDRESS FOR NOTICE (see Section 24.19):

                Landlord:    11750 Sorrento Valley Road, Suite 209
                             San Diego, California  92121
                             Attention: [Center Name] Property Management

                Tenant:      At the Premises, or
                             Address for Tenant other than at the Premises:
                             5800 Armada Drive, Carlsbad, CA 92008

      1.2   DESCRIPTION OF PREMISES:

                Center Name: One Technology Place

                Address:     10905 Technology Place
                             San Diego, CA 92127

                Suite/Unit:  Entire Building

                Approximate Rentable Square Footage (see Exhibit "A"): 23,080

      1.3   COMMENCEMENT DATE: November 1, 2005 (the "Commencement Date").

      1.4   LEASE TERM (see Article 3): Approximately seven (7) years and 0
            months, beginning on the Commencement Date and ending on October 31,
            2012 (the "Expiration Date").

      1.5   MINIMUM MONTHLY RENT: The Minimum Monthly shall be as follows for
            the following periods:

                  November 1, 2005 through October 31, 2006    $26,542 per month
                  November 1, 2006 through October 31, 2007    $27,471 per month
                  November 1, 2007 through October 31, 2008    $28,432 per month
                  November 1, 2008 through October 31, 2009    $29,428 per month
                  November 1, 2009 through October 31, 2010    $30,605 per month
                  November 1, 2010 through October 31, 2011    $31,829 per month
                  November 1, 2011 through October 31, 2012    $33,102 per month

      1.6   SECURITY DEPOSIT: $159,250 a portion of which may be provided by
            Tenant in the form of a Letter of Credit (see Article 5 and Addendum
            Section 25).

      1.7 TENANT'S PRO RATA SHARE(see Article 6): 15.27% (Such percentage being
      calculated by dividing the Premises square footage [23,080] by the total
      rentable square footage of the Center as reflected on Landlord's records
      [151,154]).

      1.8   PERMITTED USE (see Article 11): office, research and development,
            production, manufacturing, distribution , and for no other use.

      1.9   TENANT'S GUARANTOR (If none, so state): None

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      1.10  TENANT'S PARKING SPACES (Unassigned) (see Section 11.6): 92 without
            additional charge during the term and any Option term.

      1.11  LANDLORD'S BROKER (If none, so state): Asset Management Group
            TENANT'S BROKER (If none, so state): Irving Hughes Group

      1.12  ADDITIONAL PROVISIONS: The following additional provisions are
            attached to and made a part of this Lease (if none, so state):
            Addendum to Standard Industrial Net Lease; Construction Addendum to
            Standard Industrial Net Lease

      1.13  EXHIBITS: The following Exhibits are attached to and made a part of
            this Lease:

                  Exhibit "A" - Description of Premises
                  Exhibit "B" - Rules and Regulations
                  Exhibit "C" - Sign Criteria
                  Exhibit "D" - Preliminary Space Plan

2. LEASE OF PREMISES.

      Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord,
the premises (the "Premises") described in Section 1.2, which Premises are
indicated on the site/floor plan attached as Exhibit "A". The Premises are part
of the office or industrial center identified in Section 1.2 (the "Center"). The
approximate Rentable Square Footage identified in Section 1.2 is a measurement
of the leasable floor area of the Premises, as determined by Landlord and
applied on a consistent basis throughout the Center. As used herein, the term
"Building" means the building of which the Premises are a part; if the Premises
encompasses the entire Building, then the terms "Premises" and "Building" shall
have the same meanings.

3. LEASE TERM.

      3.1 COMMENCEMENT. The term of this Lease (the "Lease Term") shall commence
on the Commencement Date stated in Section 1.3 and shall continue for the period
stated in Section 1.4, unless sooner terminated pursuant to any provision of
this Lease.

      3.2 DELAY IN COMMENCEMENT. If Landlord cannot deliver possession of the
Premises to Tenant on the Commencement Date specified in Section 1.3 for any
reason, Landlord shall not be subject to any liability therefor. Such
nondelivery shall not affect the validity of this Lease nor the obligations of
Tenant hereunder. However: (a) Tenant shall not be obligated to pay rent until
possession of the Premises is delivered to Tenant, (b) if possession of the
Premises is not delivered to Tenant within thirty (30) days of the Commencement
Date, the last day of the Lease Term shall be extended by the total number of
days that possession is so delayed, plus the minimum number of additional days
necessary to make the Expiration Date the last day of a calendar month, and (c)
if Landlord has not delivered possession of the Premises within ninety (90) days
after the Commencement Date, Tenant may elect to terminate this Lease by
delivering written notice to Landlord within ten (10) days thereafter, in which
event the parties shall be discharged from all further obligations hereunder.

      3.3 EARLY OCCUPANCY. Tenant shall have the right to occupy the Premises
prior to the Commencement Date for the purpose of constructing the Tenant
Improvements (see Addendum). Such early occupancy shall be on all of the terms
and conditions of this Lease, except that Tenant shall not be required to pay
Minimum Monthly Rent or Additional Rent prior to the Commencement Date (although
Tenant shall pay for Utilities actually consumed).

4. RENT.

      4.1 MINIMUM MONTHLY RENT. Tenant shall pay minimum monthly rent ("Minimum
Monthly Rent") in the initial amount stated in Section 1.5. The Minimum Monthly
Rent shall be increased as set forth in Section 1.5 and/or elsewhere in this
Lease. Tenant shall pay the Minimum Monthly Rent on or before the first day of
each calendar month, in advance, at the office of Landlord or at such other
place designated by Landlord, without deduction, offset or prior demand. If the
Commencement Date is not the first day of a calendar month, the rent for the
partial month at the beginning of the Lease Term shall be prorated on a per diem
basis and shall be due on the first day of such partial month. Upon execution of
this Lease, and before the Commencement Date, Tenant shall pay to Landlord the
aggregate of the first month's Minimum Monthly Rent, the first month's Monthly
Impound Payment (see Section 4.4), and the Security Deposit (see Section 5).

      4.2 LEASE YEAR. As used in this Lease, the term "Lease Year" means (i) the
first period of twelve (12) full calendar months following the Commencement Date
(including, if the Commencement Date is not the first day of a calendar month,
the period between the Commencement Date and the next first day of the month),
(ii) each period of twelve (12) full calendar months thereafter, and (iii) any
remaining period at the end of the Lease Term of less than twelve (12) full
calendar months.

      4.3 ADDITIONAL RENT. All charges payable by Tenant for Operating Costs
(Article 6), Maintenance and Repairs (Article 7), Real Property Taxes (Article
8), Insurance Costs (Article 9), and Utilities (Article 10) are hereinafter
referred to herein as "Additional Rent." All Minimum Monthly Rent, Additional
Rent, and all other charges and monetary amounts due Landlord from Tenant under
this Lease or otherwise shall constitute "rent." Unless this Lease provides
otherwise, all Additional Rent shall be paid by Tenant, without limitation or
offset, within fifteen (15) days after Tenant's receipt of a statement from
Landlord. If any Minimum Monthly Rent is abated or waived pursuant to another
specific term of this Lease or in any separate agreement, it is understood that
such abatement or waiver shall apply only to the Minimum Monthly Rent, and
Tenant shall be obligated to pay all Additional Rent and other charges
(including the applicable impounds thereof) during such periods of abatement or
waiver of Minimum Monthly Rent.

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      4.4 IMPOUNDS. Landlord shall have the right, but not the obligation, to
collect and impound, in advance, any or all components of Additional Rent based
upon Landlord's reasonable estimate of Tenant's future liability for such
amounts under this Lease. Landlord shall initially establish the monthly amount
of such impound ("Monthly Impound Payments"), based upon its estimate of
one-twelfth of Tenant's annual liability therefor. Landlord shall have the right
at any time to adjust the amount of the Monthly Impound Payment upon notice to
Tenant. The Monthly Impound Payment shall be due and payable on the first day of
each month throughout the Lease Term. Any failure to pay the Monthly Impound
Payment when due shall be considered a failure to pay rent when due under
Section 21(a) and other relevant provisions of this Lease, and shall entitle
Landlord to exercise any or all of its remedies available in the same manner as
for the failure to pay rent. Upon the occurrence of any Event of Default by
Tenant hereunder, Landlord shall have the right to apply all unapplied amounts
of Monthly Impound Payments to Tenant's default. Within ninety (90) days after
the end of each calendar year, Landlord shall deliver to Tenant an accounting of
Tenant's actual Share of Additional Rent and the estimated amounts previously
paid by Tenant. Any overpayment by Tenant shall be credited against next Monthly
Impound Payments due hereunder, or, if the Term has expired, shall be remitted
to Tenant. Tenant shall pay the amount of any underpayment within fifteen (15)
days after receipt of the accounting. Tenant acknowledges that the Monthly
Impound Payments are estimates only and not a representation of the amount of
Tenant's ultimate liability for Additional Rent.

      4.5 PAYMENT BY EFT OR ACH. At Landlord's election, and upon at least
thirty (30) days' notice to Tenant, Landlord may require that all payments of
Minimum Monthly Rent, Additional Rent and other amounts due hereunder be made in
immediately available funds or by wire transfer by electronic fund transfer
through the Automated Clearing House network or any similar system designated by
Landlord ("ACH"). Such payments shall be initiated by Tenant or Landlord, at
Landlord's election, to an account designated from time to time by Landlord at
an ACH member bank for settlement not later than 12:00 o'clock noon, San Diego,
California time, on the dates such sums or payments are respectively due. Any
payment received after such time shall be deemed to have been made after the due
date.

5. SECURITY DEPOSIT.

      Upon execution of this Lease, Tenant shall deposit with Landlord the
amount specified in Section 1.6 (the "Security Deposit"), to be held by
Landlord, without liability for interest, as security for Tenant's performance
of its obligations under this Lease. Landlord shall not be required to keep the
Security Deposit separate from its other accounts. Landlord may apply all or a
part of the Security Deposit to any unpaid rent (including unpaid Additional
Rent or Monthly Impound Payments) or other monetary payments due from Tenant or
to cure any other default of Tenant hereunder and to compensate Landlord for all
damage and expense sustained as a result of such default. If all or any portion
of the Security Deposit is so applied, Tenant shall deposit cash sufficient to
restore the Security Deposit to its original amount within fifteen (15) days
after receipt of Landlord's written demand. If Tenant fully and faithfully
performs each of its obligations under this Lease, the Security Deposit or any
balance thereof shall be returned to Tenant within thirty (30) days of the later
of the expiration or earlier termination of this Lease or the vacation of the
Premises by Tenant. At Landlord's request, Tenant shall accompany Landlord or
Landlord's representative on a "walk-through" of the Premises prior to
Landlord's return of the Security Deposit.

6. OPERATING COSTS.

      6.1 PAYMENT OF OPERATING COSTS BY TENANT. Tenant shall pay its Share of
Operating Costs to Landlord on a monthly or other periodic basis selected by
Landlord. Tenant shall pay the amount of such Share to Landlord, to the extent
such obligation exceeds any amount thereof impounded under Section 4.4, within
fifteen (15) days after receipt of a statement from Landlord.

      6.2 TENANT'S SHARE. Tenant's "Share" is the percentage or proportion of
the various components of Additional Rent and certain other charges for which
Tenant is responsible under this Lease. Tenant's Share for each such component
shall be Tenant's Pro Rata Share as stated in Section 1.7, unless Landlord
determines that another percentage or proportion would be equitable based on
factors such as Tenant's use of such in excess of its Pro Rata Share, such
component of Additional Rent applies to some but not all of the Center, or
factors set forth elsewhere in this Lease. Tenant's Pro Rata Share represents
the approximate current ratio of the Rentable Square Footage of the Premises
(identified in Section 1.2) to the total Rentable Square Footage of the Center,
as determined by Landlord from time to time. Changes in Rentable Square Footage
shall be effective on the first day of the first calendar month following the
change.

      6.3 OPERATING COSTS. "Operating Costs" includes all costs of operating,
managing, repairing and maintaining the Common Facilities, including without
limitation: gardening and landscaping; the cost of public liability, property
damage and other insurance applicable to the Common Facilities, including any
deductibles thereunder; Real Property Taxes applicable to the Common Facilities;
utilities; line painting and parking lot repairs; roof repairs; lighting; trash
and refuse removal; supplies; equipment; exterior painting; capital improvements
(including without limitation the costs of roof, parking lot and underground
utilities replacements) (with any capital improvements costing in excess of
$15,000 in one instance or a closely-related series of instances being amortized
over their useful life, not to exceed ten years); reasonable reserves for
repairs and replacements; the costs of altering, improving, renovating,
upgrading or retrofitting any portion of the Common Facilities to comply with
all laws, regulations and governmental requirements applicable to the Center
(including without limitation those related to disabled persons, hazardous
materials, lighting upgrades, sprinkler and energy-saving retrofits); security
service; reasonable property management costs and administrative fees;
bookkeeping services; labor; and the cost of personnel to implement such
services and to direct parking. In lieu of including the entire amount of any
such expense in Operating Costs in any one period, Landlord, at its election,
may spread the inclusion of, or may amortize, any such expenses, or a reasonable
reserve for anticipated expenses, in Operating Costs over such multiple periods
as Landlord shall determine.

      6.4 COMMON FACILITIES. "Common Facilities" (sometimes referred to herein
as "Common Areas") means all areas, facilities, utilities, equipment and
services provided by Landlord for the common use or benefit of the occupants of
the Center and

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their employees, agents, customers and other invitees, including without
limitation, if the same exist: building lobbies, common corridors and hallways,
restrooms, pedestrian walkways, driveways and access roads, access facilities
for disabled persons (including elevators), truck serviceways, loading docks,
garages, driveways, parking lots, landscaped areas, stairways, elevators,
retaining walls, all areas required to be maintained under the conditions of
governmental approvals for the Center, and other generally understood public or
common areas. All Common Facilities shall at all times be subject to the
exclusive control and management of Landlord. Landlord reserves the right to
relocate, alter, improve, or adjust the size and location of any Common
Facilities from time to time without liability to Tenant. Landlord shall have
the right from time to time to establish, modify and enforce reasonable rules
and regulations with respect to the Common Facilities. Landlord shall have the
right to construct, maintain and operate lighting facilities on the Common
Facilities; to police the same; from time to time to change the area, level,
location and arrangement of parking areas and other facilities; to restrict
parking by tenants, their officers, agents and employees to employee parking
areas; to close all or any portion of the Common Facilities to such extent; to
close temporarily all or any portion of the Common Facilities for any reason,
including for the purpose of preventing a dedication thereof or the accrual of
any rights to any person or the public therein; and to do and perform such other
acts in and to the Common Facilities which Landlord shall determine, using good
business judgment, to be advisable to improve the convenience and use thereof by
tenants, their officers, agents, employees and customers. Subject to the
foregoing, all Common Facilities not within the Premises, which Tenant may use
under a revocable license, on a nonexclusive basis in common with other tenants,
and if any such license is revoked, or if the amount of such areas is
diminished, Landlord shall not be subject to any liability and Tenant shall not
be entitled to any compensation or abatement of rent, nor shall such revocation
or diminution be deemed constructive or actual eviction.

7. MAINTENANCE AND REPAIRS.

      7.1 TENANT'S OBLIGATIONS. Except as provided in Section 7.2, Tenant, at
its sole cost, shall keep the Premises in good order, condition and repair
during the Lease Term, including without limitation: all nonstructural, interior
and exterior areas; landscaped areas not part of the Common Facilities; all
heating, ventilation and air conditioning systems and equipment; all glass,
glazing, windows, window moldings, partitions, doors and door hardware; all
interior painting; all fixtures and appurtenances in the Premises or exclusively
serving the Premises including electrical, lighting and plumbing fixtures; and
all other portions of the Premises seen or unseen. If any portion or element of
the Premises, or the other systems or equipment for which Tenant is responsible
hereunder cannot be fully repaired, Tenant shall promptly replace the same at
its sole cost and expense regardless of whether the benefit of such replacement
extends beyond the Lease Term. It is the intention of Landlord and Tenant that
Tenant shall maintain the Premises, at all times during the Lease Term, in an
attractive, first-class and fully operative condition, at Tenant's expense. If
any heating and air conditioning system or equipment exclusively serves the
Premises, Tenant shall additionally obtain and keep in force a preventive
maintenance contract providing for the regular (at least quarterly) inspection
and maintenance of the heating and air conditioning system (including leaks
around ducts, pipes, vents, and other parts of the air conditioning) by a
reputable licensed heating and air conditioning contractor acceptable to
Landlord. Prior to April 1 of each calendar year, Tenant shall deliver Landlord
written confirmation from such contractor verifying that such a contract has
been entered into and that the required service will be provided.
Notwithstanding the foregoing, Landlord shall have the right, upon written
notice to Tenant, to undertake the responsibility for preventive maintenance and
repair of the heating and air conditioning system, at Tenant's sole cost and
expense.

      7.2 LANDLORD'S OBLIGATIONS. Landlord shall repair and maintain the Common
Facilities, the roof, the foundations and structural portions of the Premises
and the Building; provided, however, any structural replacements of the
foundations and other structural portions of the Building shall be at Landlord's
sole expense and not reimbursable by Tenant as an Operating Cost. Tenant shall
pay (a) its Share of the costs of such maintenance, (b) the full amount of any
maintenance and repairs necessitated by any act, omission, conduct or activity
of, or breach of this Lease by, Tenant or any of Tenant's officers, agents,
customers or invitees (plus fifteen percent (15%) of the cost thereof to
reimburse Landlord for overhead); and (c) any maintenance and repairs
necessitated by breaking and entering of the Premises. Tenant shall pay its
Share of such maintenance and repair costs incurred by Landlord, to the extent
such obligation exceeds any amount thereof impounded under Section 4.4, within
fifteen (15) days after receipt of a statement from Landlord. There shall be no
abatement of rent, and no liability of Landlord, by reason of any injury to or
interference with Tenant's business arising from the making of any repairs,
alterations, or improvements to any portion of the Premises or the Center.
Except as provided in Article 16 (Damage and Destruction) and Article 17
(Condemnation), Landlord shall have absolutely no other responsibility to
repair, maintain or replace any portion of the Premises at any time. Tenant
waives the right to make repairs at Landlord's expense under California Civil
Code Section 1942, or under any other law, statute or ordinance now or hereafter
in effect. Landlord's obligations under this Section are not intended to alter
or modify in any way the provisions of Article 12.

      7.3 PERFORMANCE BY LANDLORD. If Tenant refuses or neglects to perform its
maintenance obligations hereunder to the reasonable satisfaction of Landlord,
Landlord shall have the right (but not the obligation), upon three (3) days'
prior notice to Tenant, to enter the Premises and perform such repairs and
maintenance on behalf of Tenant. Landlord shall also have the right (but not the
obligation), without prior notice to Tenant, to correct or remove any dangerous
or hazardous condition, to repair the heating, ventilation, air conditioning or
plumbing systems, to correct, repair or bring into legal compliance any fire or
other life safety systems of the Premises, and to repair or replace any broken
glass or glazing, if Tenant fails to correct or repair the same within
twenty-four (24) hours after the need arises. Landlord shall not be liable to
Tenant for any loss or damage to Tenant's merchandise, fixtures, or other
property or to Tenant's business in connection with Landlord's performance
hereunder, and Tenant shall pay Landlord's costs plus fifteen percent (15%) of
such amount for overhead, upon presentation of a statement therefor. Tenant
shall also pay interest at the rate provided in Section 22.4 from the date of
completion of repairs by Landlord to the date paid by Tenant.

8. REAL PROPERTY TAXES.

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      8.1 PAYMENT OF REAL PROPERTY TAXES BY TENANT. Tenant shall pay all Real
Property Taxes applicable to the Premises during the Lease Term. If the Premises
are not separately assessed, Tenant shall pay its Share thereof as equitably
determined by Landlord based upon the Rentable Square Footage of the Premises
compared to the total Rentable Square Footage covered by the tax bill, the
respective valuations assigned in the assessor's worksheet, and/or or other
relevant factors. Tenant shall pay its Share of Real Property Taxes to Landlord,
to the extent such obligation exceeds any amount thereof impounded under Section
4.4, within fifteen (15) days after receipt of a statement from Landlord.

      8.2 REAL PROPERTY TAXES DEFINED. "Real Property Taxes" means all taxes,
assessments, levies, fees and other governmental charges levied on or
attributable to the Premises or any part thereof, including without limitation:
(a) real property taxes and assessments levied with respect to all or a portion
of the Premises, (b) assessments, charges and fees charged by governmental
agencies or districts for services or facilities provided to the Premises, (c)
transfer, transaction, rental, gross receipts, license or similar taxes or
charges measured by rent received by Landlord, excluding any federal or state
income, franchise, estate or inheritance taxes of Landlord, (d) taxes based upon
a reassessment of the Premises due to a transfer or change of ownership, and (e)
any assessment, charge or fee that is a substitute in whole or in part for any
tax now or previously included within the definition of Real Property Taxes. If
Landlord elects to contest an assessment of any Real Property Taxes, Landlord
shall have the right to recover its actual costs of such contest (including
attorneys' fees and costs) as part of Real Property Taxes, but only to the
extent such contest has resulted in a reduction of Real Property Taxes. Tenant
shall not be entitled to the benefit of any reduction, refund, rebate or credit
accruing or payable to Landlord prior to the commencement of or after the
expiration or other termination of the Lease Term.

      8.3 PERSONAL PROPERTY TAXES. Tenant shall pay prior to delinquency all
taxes charged against trade fixtures, furnishings, equipment or any other
personal property belonging to Tenant. Tenant shall attempt to have such
personal property taxed separately from the Premises. If any such taxes on
Tenant's personal property are levied against Landlord or the Premises, or if
the assessed value of the Premises is increased by inclusion of a value placed
upon such personal property of Tenant, then: (a) Landlord, after written notice
to Tenant, shall have the right to pay the taxes levied against Landlord, or the
taxes based upon such increased valuation, but under protest if so requested by
Tenant in writing, and (b) Tenant shall pay to Landlord the taxes levied against
Landlord, or the taxes resulting from such increased valuation, within fifteen
(15) days after Tenant's receipt of a written statement from Landlord.

9. INSURANCE.

      9.1 LANDLORD'S INSURANCE. During the Lease Term, Landlord shall maintain
insurance covering loss or damage to the Premises (excluding Tenant's
Alterations, fixtures, equipment and personal property), insuring against any or
all risks of physical loss (and including, at Landlord's option, flood and
earthquake coverage), with the scope and amounts of such coverage as determined
by Landlord. Said insurance shall provide for payment of loss thereunder to
Landlord or to the holder of a first mortgage or deed of trust on the Premises.
Landlord shall also maintain during the Lease Term, as part of its casualty
insurance, a policy of rental income insurance covering a period of one (1)
year, with loss payable to Landlord. Landlord may also maintain (but shall not
be required to maintain) liability and other insurance (including environmental
insurance) as Landlord, at its sole option, may elect to maintain.

      9.2 TENANT'S INSURANCE.

            (a) Tenant shall carry, at Tenant's sole expense, insurance against
any or all risks of physical loss in an amount adequate to cover the cost of
replacement of all of Tenant's Alterations, trade fixtures, equipment and
personal property. If Tenant's insurance does not otherwise cover losses caused
by breakage or other malfunction of any of Tenant's machinery or equipment used
by Tenant in the Premises, then Tenant shall carry equipment breakdown insurance
(so called boiler and machinery insurance) covering Tenant's equipment and
machinery (including any heating, ventilation and air conditioning systems,
electrical equipment, and the like). Tenant acknowledges that Landlord's
insurance is not intended to cover Tenant's Alterations, trade fixtures,
equipment, and personal property. Any policy proceeds shall be used for the
repair or replacement of the property damaged or destroyed unless this Lease
shall cease and terminate under the provisions of Article 16, whereupon any
insurance proceeds covering any of Tenant's Alterations, fixtures, equipment and
personal property that Tenant is required to leave in the Premises at the
expiration or earlier termination of the Lease Term under Article 20 shall be
payable to Landlord. Provided, however, that at Landlord's sole election,
Landlord may obtain at Tenant's expense any or all of the insurance described in
this Section.

            (b) Tenant shall carry, at Tenant's sole expense, comprehensive or
commercial general liability insurance, fully covering any and all claims
arising from personal injury, death, and/or property damage occurring in or
about the Premises or the Center. Such liability insurance shall include without
limitation bodily injury (including wrongful death), property damage,
advertising injury, personal injury, independent contractors, owned, nonowned,
and hired vehicle liability and, if alcoholic beverages are served, sold,
consumed or obtained in the Premises, liquor-law liability. The initial limit of
such insurance shall be at least $2,000,000 combined single liability limit if
the Rentable Square Footage of the Premises (as indicated in Section 1.2)
exceeds 3,000 square feet, or $1,000,000 combined single liability limit if such
Rentable Square Footage is 3,000 square feet or less. Such liability insurance
limit shall be subject to periodic increase, at Landlord's election, based upon
inflation, increased liability awards, lender requirements, the recommendations
of Landlord's professional insurance advisors, and other relevant factors.
Tenant shall also, at its sole cost and expense, obtain worker's compensation
coverage in an amount adequate to comply with law, and employer's liability
coverage with a limit of not less than $2,000,000. If Tenant's use of the
Premises involves any use, generation, manufacturing, storage or disposal of any
Hazardous Materials, or if any of Tenant's activities increases any risk of any
liability to Tenant or Landlord under Hazardous Materials Laws, Tenant shall
carry such environmental insurance as may be required by

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Landlord or Landlord's lender. Tenant shall, at Tenant's sole expense, maintain
such other liability insurance as Tenant deems necessary to protect Tenant.

            (c) Each policy of insurance required to be carried by Tenant
hereunder shall (i) name Landlord, Landlord's lender and Landlord's property
manager (if any) as additional insureds, (ii) contain cross-liability and
contractual liability provisions, (ii) provide that no cancellation or reduction
in coverage shall be effective until thirty (30) days after written notice to
Landlord and Landlord's lender(other than notice of cancellation due to
non-payment which is effective 10 days after written notice to Landlord and
Landlord's lender), (iii) be issued by an insurer licensed in California and
reasonably approved by Landlord, (iv) include coverage for acts of terrorism,
and (v) be primary and noncontributory to any insurance carried by Landlord,
regardless of the absence of negligence or other fault of Tenant for alleged
injury, death and/or property damage. The deductible or self-insured retention
on any insurance required to be carried by Tenant hereunder shall not exceed,
without the prior written consent of Landlord, Five Thousand Dollars ($5,000)
per occurrence. Tenant shall be responsible for the payment of the full amount
of any deductible or self-insured retention on its insurance. No insurance
carried or required to be carried by Tenant, nor the amount or limits thereof,
shall limit Tenant's liability nor relieve Tenant of any obligation under this
Lease.

            (d) Each policy of insurance required to be carried by Tenant
hereunder shall be obtained by Tenant and maintained in full force and effect
throughout the Lease Term and any other period of Tenant's actual or
constructive possession of the Premises. Prior to the Commencement Date or any
earlier taking of possession of any part of the Premises, Tenant shall deliver
to Landlord (i) an ACORD Form 27 certificate (or such other certificate
providing the greatest protection to Landlord reasonably available) evidencing
all insurance required to be maintained by Tenant and identifying all additional
insureds required to be so designated under the terms of this Lease, and (ii)
all additional insured endorsements provided by the insurer in favor of
Landlord, Landlord's property manager and Landlord's lender as required by this
Lease. Tenant shall deliver evidence of a renewal of each required policy,
together with all required endorsements, at least thirty (30) days prior to
expiration thereof. Tenant shall permit Landlord at all reasonable times to
inspect the policies of insurance, and shall deliver copies thereof to Landlord
within ten (10) days after Landlord's request therefor. Tenant shall be in
material breach of this Lease if Tenant fails to obtain the insurance required
under this Section, or if Tenant obtains insurance with terms, conditions and/or
exclusions that are inconsistent with the requirements and terms of this Lease.

      9.3 PAYMENT OF INSURANCE COSTS. Tenant shall pay directly all premiums for
its liability insurance required under Section 9.2 and for all other insurance
Tenant elects to carry. Tenant shall pay its Share of the premiums for the
insurance policies carried by Landlord described in this Article or elsewhere in
this Lease ("Insurance Costs"). If the Lease Term expires before the expiration
of any such insurance policy, Tenant's liability for premiums shall be prorated
on an annual basis. Tenant shall pay its Share of Insurance Costs to Landlord,
to the extent such obligation exceeds any amount thereof impounded under Section
4.5, within fifteen (15) days after receipt of a statement from Landlord. If any
insurance policy maintained by Landlord covers property other than the Center
(under a so-called "blanket" policy or otherwise), Landlord shall reasonably
apportion the premium therefor among the properties so covered. In addition,
Tenant shall pay its Share of any deductible amount (not to exceed $25,000)
under Landlord's insurance policies within fifteen (15) days after receipt of a
statement from Landlord. ]Tenant's Share of any such deductible shall be
equitably determined by Landlord based upon, among other factors, the Rentable
Square Footage of the Premises affected compared to the Rentable Square Footage
of all other affected areas in the Center, and the Replacement Cost (as defined
in Section 16.1) applicable to the damage to the Premises compared to that
applicable to all other affected areas.

      9.4 WAIVER OF SUBROGATION. Landlord and Tenant each hereby waive any and
all claims against the other party and its officers, directors, shareholders,
partners, members, principals, employees, agents, representatives, and other
related entities and individuals, and their respective successors and assigns,
for any and all loss of or damage to the Premises, Center or other tangible
property, or any resulting loss of income, or losses under worker's compensation
laws and benefits, which loss or damage arises out of any peril that is or would
be covered by any physical damage insurance policy actually carried or required
to be carried pursuant to this Lease. The foregoing waiver shall apply
regardless of whether the party suffering the loss or damage actually carries
such insurance, recovers under such insurance, or self-insures the loss or
damage. Inasmuch as the foregoing waiver will preclude the assignment of any
such claim by subrogation (or otherwise) to an insurance company (or any other
person), Landlord and Tenant each agree to give to each insurance company
issuing to it any policy of physical damage insurance written notice of the
terms of this mutual waiver, and to have each such insurance policy properly
endorsed, if necessary, to prevent the invalidation of such insurance coverage
by reason of such waiver. The waiver set forth herein shall apply to any
deductible amount under any insurance policy, is not limited by the amount of
insurance carried or required to be carried, and is in addition to any other
waiver or release contained in this Lease. If Landlord has contracted with a
third party for the management of the Center, the waiver of subrogation by
Tenant herein shall also run in favor of such third party.

      9.5 TENANT'S USE NOT TO INCREASE PREMIUM. Tenant shall not keep, use,
manufacture, assemble, sell or offer for sale in or upon the Premises any
article that may be prohibited by, or that might invalidate, in whole or in
part, the coverage afforded by, a standard form of fire or all risk insurance
policy. Tenant shall pay the entire amount of any increase in premiums that may
be charged during the Lease Term for the insurance that may be maintained by
Landlord on the Premises or the Center resulting from the type of materials or
products stored, manufactured, assembled or sold by Tenant in the Premises,
whether or not Landlord has consented to the same. In determining whether
increased premiums are the result of Tenant's use of the Premises, a schedule
issued by the entity making the insurance rate on the Premises showing the
various components of such rate shall be conclusive evidence of the items and
charges that make up the fire insurance rate on the Premises.

10. UTILITIES.

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<PAGE>

     Tenant shall pay the cost of all water, gas, heat, light, power, sewer,
telephone, refuse disposal, and all other utilities and services supplied to the
Premises. Tenant shall make payments for all separately metered utilities, when
due, directly to the appropriate supplier. Landlord shall have the right to
require Tenant to install, at Tenant's sole expense, separate meters (or other
submeter, device or monitor for the measurement of utility usage) for any
utility for which a separate meter is not installed as of the Commencement Date.
If any utilities or services are not separately metered or monitored with
respect to the Premises, Tenant shall pay its Share thereof to Landlord, to the
extent such obligation exceeds any amount thereof impounded under Section 4.4,
within fifteen (15) days after receipt of a statement from Landlord. Landlord
shall in no way be liable or responsible for any loss, damage or expense that
Tenant may sustain or incur by reason of any change, failure, interruption,
interference or defect in the supply or character of the electricity or other
utilities supplied to the Premises. Landlord makes no representation or warranty
as the suitability of the utility service for Tenant's requirements, and no such
change, failure, defect, unavailability or unsuitability shall constitute any
actual or constructive eviction, in whole or in part, or entitle Tenant to any
abatement or diminution of rent, or relieve Tenant of any of its obligations
under the Lease. Landlord shall not be liable in damages or otherwise for any
failure or interruption of any utility service, and no such failure or
interruption shall entitle Tenant to terminate this Lease or abate the rent due
hereunder.

11. USE.

      11.1 PERMITTED USE. The Premises shall be used and occupied only for the
permitted uses specified in Section 1.8, and shall not be used or occupied for
any other purposes without the prior written consent of Landlord. Should Tenant
desire to change its use, Tenant shall request Landlord's consent to such change
in writing, and shall provide in writing such reasonably detailed information
about the proposed new use as may be requested by Landlord. Landlord shall not
unreasonably withhold its consent to any requested change of use, and shall have
the right to impose reasonable restrictions on such new use. Factors that
Landlord may take into account in granting or withholding its consent shall
include, without limitation: (i) whether the proposed use is compatible with the
character and tenant mix of the Center, (ii) whether the proposed use poses any
increased risk to Landlord or any other occupant of the Center, (iii) whether
any proposed Alterations to accommodate such proposed use might decrease the
rental or sale value of the Premises or the Center, and (iv) whether Tenant has
the requisite expertise and financial ability to successfully operate in the
Premises with the proposed new use.

      11.2 COMPLIANCE WITH LEGAL REQUIREMENTS. Tenant shall at all times and at
its sole expense comply with all federal, state, local and other laws,
ordinances, rules, regulations, orders, requirements, and recorded covenants and
restrictions applicable to the Center, whether now in force or hereafter in
effect (including without limitation those related to disabled persons, access,
hazardous materials, lighting upgrades, energy saving, and sprinkler and seismic
retrofits, and those required because of Tenant's occupancy or the conduct of
Tenant's business) (collectively, "Legal Requirements"). Tenant shall not do or
permit anything to be done in or about the Premises in conflict with any Legal
Requirement. Without limiting the generality of the foregoing, Tenant shall at
its sole cost take all actions, make all alterations, install all additional
facilities, and perform all work required to cause the Premises (and any and all
other areas of the Center under the control of Tenant or that Tenant is required
to maintain) to comply with all Legal Requirements.

      11.3 WASTE, QUIET CONDUCT. Tenant shall not use or permit the use of the
Premises in any manner that tends to create waste or a nuisance, that will cause
objectionable noise or odors, or that may disturb the quiet enjoyment of any
other tenant in the Center.

      11.4 RULES AND REGULATIONS. Tenant shall comply with the Rules and
Regulations for the Center attached as Exhibit "B", as the same may be amended
by Landlord from time to time, upon notice to Tenant.

      11.5 SIGNS. Landlord, at Landlord's sole expense, shall provide Building
standard identification signage in the sign cases already installed. Tenant
shall pay for sign letters and logo design. Tenant shall maintain all approved
signs and other items described herein in good condition and repair at all
times, and in compliance with Landlord's sign criteria attached hereto as
Exhibit "C". All signs must be fabricated by a contractor selected by Landlord.
Prior to construction of any such sign, a detailed drawing of the proposed sign
shall be prepared by Landlord's contractor, at the sole expense of Tenant, and
submitted to Landlord and Tenant for written approval. No sign, placard,
pennant, flag, awning, canopy, or advertising matter of any kind shall be placed
or maintained on any exterior door, wall or window of the Premises or in any
area outside the Premises, and no decoration, lettering or advertising matter
shall be placed or maintained on the glass of any window or door, or that can be
seen through the glass, of the Premises without first obtaining Landlord's
written approval. All signs and sign cases shall be considered fixtures and
improvements and shall become the property of Landlord upon expiration or
termination of this Lease. Tenant has no rights to signage at the Center except
as set forth in this Section. Landlord shall have the right from time to time to
revise the sign criteria, and within sixty (60) days after Tenant's receipt of
written notice of any new sign criteria, Tenant shall, at Tenant's expense,
remove all existing exterior signs and replace the same with new signs
conforming to the new sign criteria.

      11.6 PARKING. Tenant shall have the nonexclusive right, in common with
others, to use the parking areas of the Center; provided, however, that Tenant
shall not use more than the number of parking spaces designated in Section 1.10,
or if no number of such spaces is so indicated, Tenant shall not use more than
its reasonable share of parking spaces, as Landlord shall determine. Landlord
reserves the right, without liability to Tenant, to modify the parking areas, to
designate the specific location of the parking for Tenant and Tenant's customers
and employees, and to adopt reasonable rules and regulations for use of the
parking areas.

      11.7 ENTRY BY LANDLORD. Tenant shall permit Landlord and Landlord's agents
to enter the Premises at all reasonable times for any of the following purposes:
(a) to inspect the Premises, (b) to supply any services or to perform any
maintenance obligations of Landlord, including the erection and maintenance of
such scaffolding, canopies, fences, and props as may be required, (c) to make
such improvements, replacements or additions to the Premises or the Center as
Landlord deems necessary or desirable, (d) to post notices of nonresponsibility,
(e) to place any usual or ordinary "for sale" signs, or (f) within six (6)
months prior to the expiration of this Lease, to place any usual or ordinary
"for lease" signs. No such entry shall result in any rebate of rent or any
liability to Tenant for any

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<PAGE>

loss of occupation or quiet enjoyment of the Premises. Landlord shall give
reasonable notice to Tenant prior to any entry except in an emergency or unless
Tenant consents at the time of entry. If Tenant is not personally present to
open and permit an entry into the Premises, at any time when for any reason an
entry therein shall be necessary or permissible, Landlord or Landlord's agents
may enter the same by a master key, or may forcibly enter the same without
rendering Landlord or such agents liable therefor, and without in any manner
affecting the obligations and covenants of this Lease. Nothing herein contained,
however, shall be deemed or construed to impose upon Landlord any obligation,
responsibility or liability whatsoever for the care, maintenance or repair of
the Premises or any part thereof, except as otherwise specifically provided
herein.

12. ACCEPTANCE OF PREMISES; NONLIABILITY OF LANDLORD; DISCLAIMER.

      12.1 ACCEPTANCE OF PREMISES. By taking possession hereunder, Tenant
acknowledges that it has examined the Premises and accepts the condition
thereof. Tenant acknowledges and agrees that Landlord has no obligation to
improve the Premises other than as set forth specifically in this Lease, if at
all. In particular, Tenant acknowledges that any additional improvements or
alterations needed to accommodate Tenant's intended use shall be made solely at
Tenant's sole cost and expense, and strictly in accordance with the requirements
of this Lease (including the requirement to obtain Landlord's consent thereto),
unless such improvements and alterations are specifically required of Landlord.
Except for installing fire sprinklers in the Premises in accordance with the
Construction Addendum, and except for the construction of improvements to the
exterior access, parking lots and other exterior portions of the Premises that
are required for the accommodation of disabled persons (and not related to
changes in the path of travel necessitated by Tenant's Alterations), Landlord
shall have no responsibility to do any work required under any building codes or
other governmental requirements not in effect or applicable at the time the
Premises were constructed, including without limitation any requirements related
to future sprinkler retrofitting, seismic structural requirements, accommodation
of disabled persons, or hazardous materials. Landlord shall be under no
obligation to provide utility, telephone or other service or access beyond that
which exists at the Premises as of the date of this Lease, unless Landlord
specifically agrees in writing to provide the same. If it is anticipated that
Tenant will be doing any Alterations or installations prior to taking occupancy,
any delays encountered by Tenant in accomplishing such work or obtaining any
required permits therefor shall not delay the Commencement Date or the date that
Tenant becomes liable to pay rent, or the date that Landlord may effectively
deliver possession of the Premises to Tenant. By taking possession hereunder,
Tenant acknowledges that it accepts the square footage of the Premises as
delivered and as stated in this Lease. No discovery or alleged discovery after
such acceptance of any variance in such square footage as set forth in this
Lease (or in any proposal, advertisement or other description thereof) shall be
grounds for any adjustment in any component of the rent payable hereunder,
unless such adjustment is initiated by and implemented by Landlord.

      12.2 LANDLORD'S EXEMPTION FROM LIABILITY. Landlord shall not be liable for
injury to Tenant's business or loss of income therefrom, or for personal injury
or property damage that may be sustained by Tenant or any subtenant of Tenant,
or their respective employees, invitees, customers, agents or contractors or any
other person in or about the Premises, caused by or resulting from fire, flood,
earthquake or other natural disaster, or from steam, electricity, gas, water or
rain, or dampness of any origin, that may leak, flow or emanate from or into any
part of the Premises, or from the breakage, leakage, obstruction or other
defects of pipes, sprinklers, wires, appliances, plumbing, air-conditioning,
lighting fixtures or computer equipment or software, whether such damage or
injury results from conditions arising upon the Premises or upon other portions
of the Building, or from other sources, and regardless of whether the cause of
such damage or injury or the means of repairing the same is inaccessible to
Tenant. Landlord shall not be liable for any damages to property or for personal
injury or loss of life arising from any use, act or failure to act of any third
parties (including other occupants of the Center) occurring in, or about the
Premises or in or about the Center (including without limitation the criminal
acts of any third parties). Landlord shall not be liable for any latent defect
in the Premises or in the Building. All property of Tenant kept or stored on the
Premises shall be so kept or stored at the risk of Tenant only, and Tenant shall
indemnify, protect, hold harmless and defend Landlord and Landlord's officers,
directors, shareholders, partners, members, principals, employees, agents,
representatives, and other related entities and individuals, and their
respective successors and assigns, from and against any claims arising out of
damage to the same, including subrogation claims by Tenant's insurance carriers.
The indemnifications and waivers of Tenant set forth in this Section shall apply
notwithstanding Landlord's negligence, but shall not apply to damage or
liability caused (i) by the gross negligence or willful misconduct of Landlord,
and (ii) through no fault of Tenant, its assignees or subtenants, or their
respective agents, contractors, employees, customers, invitees or licensees.

      12.3 NO WARRANTIES OR REPRESENTATIONS.

            (a) Neither Landlord nor Landlord's agents make any warranty or
representation with respect to the suitability or fitness of the space for the
conduct of Tenant's business, or for any other purpose.

            (b) Neither Landlord nor Landlord's agents make any warranty or
representation with respect to any other tenants or users that may or may not
construct improvements, occupy space or conduct business within the Center, and
Tenant hereby acknowledges and agrees that it is not relying on any warranty or
representation relating thereto in entering into this Lease.

            (c) Landlord specifically disavows any oral representations made by
or on behalf of its employees, agents and independent contractors, and Tenant
hereby acknowledges and agrees that it is not relying and has not relied on any
oral representations in entering into this Lease.

            (d) Landlord has not made any promises or representations, expressed
or implied, that it will renew, extend or modify this Lease in favor of Tenant
or any permitted transferee of Tenant, except as may be specifically set forth
herein or in a written instrument amending this Lease signed by all necessary
parties.

            (e) Notwithstanding that the rent payable to Landlord hereunder may
at times include the cost of guard service or other security measures, it is
specifically understood that Landlord does not represent, guarantee or assume
responsibility that Tenant will be secure from any damage, injury or loss of
life because of such guard service. Landlord shall have no obligation to hire,
maintain or provide such services, which may be withdrawn or changed at any time
with or without notice to Tenant or any other person and

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<PAGE>

without liability to Landlord. To induce Landlord to provide such service if
Landlord elects in its sole discretion to do so, Tenant agrees that (i) Landlord
shall not be liable for any damage, injury or loss of life related to the
provision or nonprovision of such service, and (ii) Landlord shall have no
responsibility to protect Tenant, or its employees or agents, from the acts of
any third parties (including other occupants of the Center) occurring in or
about the Premises or in or about the Center (including without limitation the
criminal acts of any third parties), whether or not the same could have been
prevented by any such guard service or other security measures.

      12.4 KEYS. Tenant shall re-key the Premises at its sole cost upon taking
possession thereof. Tenant hereby acknowledges that various persons have had
access to the keys to the Premises as keyed prior to Tenant's possession, and
that Landlord disclaims all liability and responsibility for any unauthorized
distribution or possession of such prior keys.

13. INDEMNIFICATION.

      Tenant shall indemnify, protect, hold harmless and defend Landlord and
Landlord's officers, directors, shareholders, partners, members, principals,
employees, agents, representatives, and other related entities and individuals,
and their respective successors and assigns (collectively, "Landlord's Related
Entities"), from and against any and all claims, actions, damages, liability,
costs, and expenses, including attorneys' fees and costs, arising from personal
injury, death, and/or property damage and arising from: (a) Tenant's use or
occupation of the Premises or any work or activity done or permitted by Tenant
in or about the Premises (including without limitation any storage or display of
materials or merchandise, or other activity by Tenant in the Common Facilities),
(b) any activity, condition or occurrence in the Premises or other area under
the control of Tenant, (c) any breach or failure to perform any obligation
imposed on Tenant under this Lease, (d) any breach or failure by Tenant to cause
the Premises (and any and all other areas of the Center under the control of
Tenant or that Tenant is required to maintain) to comply with all Legal
Requirements related to disabled persons or access (other than the
responsibilities of the Landlord under Section 12.1 above), or (e) any other act
or omission of Tenant or its assignees or subtenants or their respective agents,
contractors, employees, customers, invitees or licensees. Tenant's obligation to
indemnify, protect, hold harmless and defend shall include, but not be limited
to, claims based on duties, obligations, or liabilities imposed on Landlord or
Landlord's Related Entities by statute, ordinance, regulation, or other law,
such as claims based on theories of peculiar risk and nondelegable duty, and to
any and all other claims based on the negligent act or omission of Landlord or
Landlord's Related Entities. The parties intend that this provision be
interpreted as the broadest Type I indemnity provision as defined in McDonald &
Kruse, Inc. v. San Jose Steel Co., 29 Cal. App. 3rd 413 (1972), and as allowed
by law between a landlord and a tenant. Upon notice from Landlord, Tenant shall,
at Tenant's sole expense and by counsel satisfactory to Landlord, defend any
action or proceeding brought against Landlord or Landlord's Related Entities by
reason of any such claim. If Landlord or any of Landlord's Related Entities is
made a party to any litigation commenced by or against Tenant, then Tenant shall
indemnify, protect, hold harmless and defend Landlord and Landlord's Related
Entities from and against any and all claims, actions, damages, liability,
costs, expenses and attorneys' fees and costs incurred or paid in connection
with such litigation. Tenant, as a material part of the consideration to
Landlord hereunder, assumes all risk of, and waives all claims against Landlord
for, personal injury or property damage in, upon or about the Premises, from any
cause whatsoever. Provided, however, that the indemnifications and waivers of
Tenant set forth in this Section shall not apply to damage and liability caused
(i) by the gross negligence or willful misconduct of Landlord, and (ii) through
no fault of Tenant, its assignees or subtenants, or their respective agents,
contractors, employees, customers, invitees or licensees.

14. HAZARDOUS MATERIALS.

      14.1 DEFINITIONS. "Hazardous Materials Laws" means any and all federal,
state or local laws, ordinances, rules, decrees, orders, regulations or court
decisions relating to hazardous substances, hazardous materials, hazardous
waste, toxic substances, environmental conditions on, under or about the
Premises, or soil and ground water conditions, including, but not limited to,
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, 42 U.S.C. `9601, et seq., the Resource Conservation and
Recovery Act, 42 U.S.C. `6901, et seq., the Hazardous Materials Transportation
Act, 49 U.S.C. `1801, et seq., the California Hazardous Waste Control Act, Cal.
Health and Safety Code `25100, et seq., the Carpenter-Presley-Tanner Hazardous
Substances Account Act, Cal. Health and Safety Code `25300, et seq., the Safe
Drinking Water and Toxic Enforcement Act, Cal. Health and Safety Code `25249.5,
et seq., the Porter-Cologne Water Quality Control Act, Cal. Water Code `13000,
et seq., any amendments to the foregoing, and any similar federal, state or
local laws, ordinances, rules, decrees, orders or regulations. "Hazardous
Materials" means any chemical, compound, material, substance or other matter
that: (a) is defined as a hazardous substance, hazardous material, hazardous
waste or toxic substance under any Hazardous Materials Law, (b) is controlled or
governed by any Hazardous Materials Law or gives rise to any reporting, notice
or publication requirements hereunder, or gives rise to any liability,
responsibility or duty on the part of Tenant or Landlord with respect to any
third person hereunder; or (c) is flammable or explosive material, oil,
asbestos, urea formaldehyde, radioactive material, nuclear medicine material,
drug, vaccine, bacteria, virus, mold, hazardous waste, toxic substance, or
related injurious or potentially injurious material (by itself or in combination
with other materials).

      14.2 USE OF HAZARDOUS MATERIALS. Tenant shall not allow any Hazardous
Material to be used, generated, manufactured, released, stored or disposed of
on, under or about, or transported from, the Premises, unless: (a) such use is
specifically disclosed to and approved by Landlord in writing prior to such use,
and (b) such use is conducted in compliance with the provisions of this Article.
Landlord's consent may be withheld in Landlord's sole discretion and, if
granted, may be revoked at any time. Landlord may approve such use subject to
reasonable conditions to protect the Premises and Landlord's interests. Landlord
may withhold approval if Landlord determines that such proposed use involves a
material risk of a release or discharge of Hazardous Materials or a violation of
any Hazardous Materials Laws or that Tenant has not provided reasonably
sufficient assurances of its ability to remedy such a violation and fulfill its
obligations under this Article. Notwithstanding the foregoing, Landlord hereby
consents to Tenant's use,

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<PAGE>

storage or disposal of products containing small quantities of Hazardous
Materials that are of a type customarily found in offices and households (such
as aerosol cans containing insecticides, toner for copies, paints, paint remover
and the like) provided that Tenant shall handle, use, store and dispose of such
Hazardous Materials in a safe and lawful manner and shall not allow such
Hazardous Materials to contaminate the Premises.

      14.3 COMPLIANCE WITH LAWS; HANDLING HAZARDOUS MATERIALS. Tenant shall
strictly comply with, and shall maintain the Premises in compliance with, all
Hazardous Materials Laws. Tenant shall obtain, maintain in effect and comply
with the conditions of all permits, licenses and other governmental approvals
required for Tenant's operations on the Premises under any Hazardous Materials
Laws, including, but not limited to, the discharge of appropriately treated
Hazardous Materials into or through any sanitary sewer serving the Premises. At
Landlord's request, Tenant shall deliver copies of, or allow Landlord to
inspect, all such permits, licenses and approvals. All Hazardous Materials
removed from the Premises shall be removed and transported by duly licensed
haulers to duly licensed disposal facilities, in compliance with all Hazardous
Materials Laws. Tenant shall perform any monitoring, testing, investigation,
clean-up, removal, detoxification, preparation of closure or other required
plans and any other remedial work required by any governmental agency or lender,
or recommended by Landlord's environmental consultants, as a result of any
release or discharge or potential release or discharge of Hazardous Materials
affecting the Premises or the Center or any violation or potential violation of
Hazardous Materials Laws by Tenant or any assignee or subtenant of Tenant or
their respective agents, contractors, employees, licensees or invitees
(collectively, "Remedial Work"). Landlord shall have the right to intervene in
any governmental action or proceeding involving any Remedial Work, and to
approve performance of the work, in order to protect Landlord's interests.
Tenant shall not enter into any settlement agreement, consent decree or other
compromise with respect to any claims relating to Hazardous Materials without
notifying Landlord and providing ample opportunity for Landlord to intervene.
Tenant shall additionally comply with the recommendations of Landlord's and
Tenant's insurers based upon National Fire Protection Association standards or
other applicable guidelines regarding the management and handling of Hazardous
Materials. If any present or future law imposes any requirement of reporting,
survey, investigation or other compliance upon Landlord, Tenant, or the
Premises, and if such requirement is precipitated by a transaction to which
Tenant is a party, including without limitation any Transfer (as defined in
Section 18.1) of this Lease by Tenant, then Tenant shall fully comply with and
pay all costs of compliance with such requirement, including Landlord's
attorneys' fees and costs.

      14.4 NOTICE; REPORTING; NOTICE UNDER HEALTH AND SAFETY CODE SECTION
25359.7. Tenant shall notify Landlord, in writing, within three (3) days after
any of the following: (a) Tenant has knowledge, or has reasonable cause to
believe, that any Hazardous Material has been released, discharged or is located
on, under or about the Premises, whether or not the release or discharge is in
quantities that would otherwise be reportable to a public agency, (b) Tenant
receives any order of a governmental agency requiring any Remedial Work pursuant
to any Hazardous Materials Laws, (c) Tenant receives any warning, notice of
inspection, notice of violation or alleged violation or Tenant receives notice
or knowledge of any proceeding, investigation or enforcement action, pursuant to
any Hazardous Materials Laws; or (d) Tenant receives notice or knowledge of any
claims made or threatened by any third party against Tenant or the Premises
relating to any loss or injury resulting from Hazardous Materials. If the
potential risk of any of the foregoing events is material, Tenant shall deliver
immediate verbal notice to Landlord, in addition to written notice as set forth
above. Tenant shall deliver to Landlord copies of all test results, reports and
business or management plans required to be filed with any governmental agency
pursuant to any Hazardous Materials Laws. Landlord hereby notifies Tenant, and
Tenant hereby acknowledges that, prior to the leasing of the Premises pursuant
to this Lease, Tenant has been notified, pursuant to California Health and
Safety Code Section 25359.7 (or any successor statue), that Landlord knows, or
has reasonable cause to believe, that certain hazardous substances (as such term
is used in such Section 25359.7) may have come to be located in, on or beneath
the Premises.

      14.5 INDEMNITY. Tenant shall indemnify, protect, hold harmless and defend
Landlord and Landlord's officers, directors, shareholders, partners, members,
principals, employees, agents, representatives, and other related entities and
individuals, and their respective successors and assigns, from and against any
and all liabilities, claims, suits, judgments, actions, investigations,
proceedings, costs and expenses (including attorneys' fees and costs) arising
out of or in connection with any breach of any provisions of this Article or
directly or indirectly arising out of the use, generation, storage, release,
disposal or transportation of Hazardous Materials by Tenant, or any assignee or
subtenant of Tenant, or their respective agents, contractors, employees,
licensees, or invitees, on, under or about the Premises during the Lease Term or
any other period of Tenant's actual or constructive occupancy of the Premises,
including, but not limited to, all foreseeable and unforeseeable consequential
damages and the cost of any Remedial Work. Any defense of Landlord pursuant to
this Section shall be by counsel acceptable to Landlord. Neither the consent by
Landlord to the use, generation, storage, release, disposal or transportation of
Hazardous Materials nor the strict compliance with all Hazardous Materials Laws
shall excuse Tenant from Tenant's indemnification obligations pursuant to this
Article. The foregoing indemnity shall be in addition to and not a limitation of
the indemnification provisions of Article 13 of this Lease. Tenant's obligations
pursuant to this Article shall survive the termination or expiration of this
Lease. It is distinctly understood that Tenant's indemnity shall not extend to
the use, generation, storage, release, disposal or transportation of Hazardous
Materials by Landlord or any other tenant of the Center, or the existence of any
Hazardous Materials on, under or about the Premises as of the Commencement Date
(or the date Tenant takes possession of the Premises, if earlier).

      14.6 ENTRY AND INSPECTION; CURE. Landlord and its agents, employees and
contractors, shall have the right (but not the obligation) to enter the Premises
at all reasonable times to inspect the Premises and Tenant's compliance with the
terms and conditions of this Article, or to conduct investigations and tests. No
prior notice to Tenant shall be required in the event of an emergency, or if
Landlord has reasonable cause to believe that violations of this Article have
occurred, or if Tenant consents at the time of entry. In all other cases,
Landlord shall give at least twenty-four (24) hours' prior notice to Tenant.
Landlord shall have the right (but not the obligation) to remedy any violation
by Tenant of the provisions of this Article pursuant to Section 22.3 of this
Lease

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<PAGE>

or to perform any Remedial Work. Tenant shall pay, upon demand, all costs
incurred by Landlord in investigating any such violations or potential
violations or performing Remedial Work, plus interest thereon at the rate
specified in this Lease from the date of demand until the date paid by Tenant.

      14.7 TERMINATION; EXPIRATION. Upon termination or expiration of this
Lease, Tenant shall, at Tenant's cost, remove any equipment, improvements or
storage facilities utilized in connection with any Hazardous Materials and shall
clean up, detoxify, repair and otherwise restore the Premises to a condition
free of Hazardous Materials, to the extent such condition is caused by Tenant or
any assignee or subtenant of Tenant or their respective agents, contractors,
employees, licensees or invitees.

      14.8 EXIT ASSESSMENT. No later than ten (10) days after the expiration or
earlier termination of this Lease, Tenant shall cause to be performed, at its
sole expense, an environmental assessment (the "Exit Assessment") of the
Premises. Landlord agrees to allow Tenant access to the Premises for such
purpose. The Exit Assessment must be performed by a qualified environmental
consultant acceptable to Landlord, and shall include without limitation the
following, as applicable to the Premises and Tenant's activities: (a) inspection
of all floors, walls, ceiling tiles, benches, cabinet interiors, sinks, the roof
and other surfaces for signs of contamination and/or deterioration related to
Hazardous Materials, (b) inspection of any and all ducts, hoods and exhaust
systems for signs of contamination, deterioration and/or leakage related or
potentially related to Hazardous Materials, (c) inspection of all readily
accessible drain lines and other discharge piping for signs of deterioration,
loss of integrity and leakage, (d) Tenant interviews and review of appropriate
Tenant records to determine the uses to which Tenant has put the Premises that
involve or may have involved Hazardous Materials, and to determine if any known
discharges to the Premises or ground or soils from Tenant's activities have
occurred, (e) documentation in detail of all observations, including dated
photographs, (f) if applicable a certification that all areas inspected are
clean and free of any Hazardous Materials and that the investigation conducted
by the consultant does indicate that any release of any Hazardous Materials has
occurred in the Premises or the Center as a result of Tenant's activities, (g)
if applicable, a detailed description of Hazardous Materials remaining in the
Premises and of any contamination, deterioration and/or leakage observed,
together with detailed recommendations for the removal, repair or abatement of
the same, and (h) if applicable, a detailed description of evidence of possible
or past releases of Hazardous Materials, together with detailed recommendations
for the prevention of the same in the future. Landlord shall have the right to
require additional evaluations or work in connection with the Exit Assessment
based upon Tenant's use of the Premises, any actual or suspected Hazardous
Materials issues, or other reasonable factors. The original of the Exit
Assessment shall be addressed to Landlord and shall be provided to Landlord
within twenty (20) days of the expiration or earlier termination of this Lease.
In addition to Tenant's obligations under Section 14.7, Tenant agrees to fully
implement and address all recommended actions contained in the Exit Assessment,
at its sole cost, within thirty (30) days of the date thereof.

      14.9 EVENT OF DEFAULT. The release or discharge of any Hazardous Material
or the violation of any Hazardous Materials Law by Tenant or any assignee or
subtenant of Tenant shall be a material Event of Default by Tenant under this
Lease. In addition to or in lieu of the remedies available under this Lease as a
result of such Event of Default, Landlord shall have the right, without
terminating this Lease, to require Tenant to suspend its operations and
activities on the Premises until Landlord is satisfied that appropriate Remedial
Work has been or is being adequately performed; Landlord's election of this
remedy shall not constitute a waiver of Landlord's right thereafter to declare
an Event of Default and pursue any other available remedy.

15. ALTERATIONS; LIENS.

      15.1 ALTERATIONS BY TENANT. Tenant shall not make any alterations,
additions or improvements ("Alterations") to the Premises without Landlord's
prior written consent, except for nonstructural Alterations that cost $5,000 or
less and are not visible from the exterior of the Premises. All Alterations
installed by Tenant shall be new or completely reconditioned. Landlord shall
have the right to approve the contractor, the method of payment of the
contractor, and the plans and specifications for all proposed Alterations.
Tenant shall obtain Landlord's consent to all proposed Alterations requiring
Landlord's consent prior to the commencement of any such Alterations. Tenant's
request for consent shall be accompanied by information identifying the
contractor and method of payment and two (2) copies of the proposed plans and
specifications. All Alterations of whatever kind and nature shall become at once
a part of the realty and shall be surrendered with the Premises upon expiration
or earlier termination of the Lease Term, unless Landlord requires Tenant to
remove the same as provided in Article 20. If Tenant demolishes or removes any
then-existing tenant improvements or other portions of the Premises or the
Building (including without limitation any previously-installed Alterations),
Tenant shall promptly commence and diligently pursue to completion all
Alterations then underway; provided, however, that if Tenant fails to do so, at
the election of Landlord, Tenant shall restore the Premises and the Building to
its condition and state of improvement prior to such demolition or removal.
During the Lease Term, Tenant agrees to provide, at Tenant's expense, a policy
of insurance covering loss or damage to Alterations made by Tenant, in an amount
adequate to repair or replace the same, naming Landlord and Landlord's property
manager (if any) as additional insureds. Provided, however, Tenant may install
movable furniture, trade fixtures, machinery or equipment in conformance with
applicable governmental rules or ordinances and remove the same upon expiration
or earlier termination of this Lease as provided in Article 20.

      15.2 PERMITS AND GOVERNMENTAL REQUIREMENTS. Tenant shall obtain, at
Tenant's sole cost and expense, all building permits and other permits of every
kind and nature required by any governmental agency having jurisdiction in
connection with the Alterations. Tenant shall indemnify, protect, hold harmless
and defend Landlord and Landlord's officers, directors, shareholders, partners,
members, principals, employees, agents, representatives, and other related
entities and individuals, and their respective successors and assigns, from and
against any and all claims, actions, damages, liability, costs, and expenses,
including attorneys' fees and costs, arising out of any failure by Tenant or
Tenant's contractor or agents to obtain all required permits, regardless of when
such failure is discovered. Tenant shall do any and all additional construction,
alterations, improvements and retrofittings required to be made to the Premises
and/or the Center, or any other property of Landlord as a result of, or as may
be triggered by, Tenant's

                                       12
<PAGE>

Alterations. Landlord shall have the right to do such construction itself; but
in all instances Tenant shall pay all costs directly or indirectly related to
such work and shall indemnify, protect, hold harmless and defend Landlord and
Landlord's officers, directors, shareholders, partners, members, principals,
employees, agents, representatives, and other related entities and individuals,
and their respective successors and assigns, from and against any and all
claims, actions, damages, liability, costs, and expenses, including attorneys'
fees and costs, arising out of any such additionally required work. All payment
and indemnification obligations under this Section shall survive the expiration
or earlier termination of the Lease Term.

      15.3 LIENS. Tenant shall pay when due all claims for any work performed,
materials furnished or obligations incurred by or for Tenant, and Tenant shall
keep the Premises free from any liens arising with respect thereto. If Tenant
fails to cause any such lien to be released within fifteen (15) days after
imposition, by payment or posting of a proper bond, Landlord shall have the
right (but not the obligation) to cause such release by such means as Landlord
deems proper. Tenant shall pay Landlord upon demand for all costs incurred by
Landlord in connection therewith (including attorneys' fees and costs), with
interest at the rate specified in Section 22.4 from the date of payment by
Landlord to the date of payment by Tenant. Tenant will notify Landlord in
writing thirty (30) days prior to commencing any alterations, additions,
improvements or repairs in order to allow Landlord time to file a notice of
nonresponsibility.

      15.4 REMODEL. Landlord may in the future remodel, renovate or refurbish
("remodel") all or any portion of the Center, which remodel may include the
Premises. The remodeling will be done in accordance with design specifications
prepared by the project architect and reviewed and approved by Landlord. Copies
of such specifications will be made available to Tenant. Tenant shall not,
through any act or omission on the part of Tenant, in any way impede, delay or
prevent the completion of such remodeling in a timely manner.

16. DAMAGE AND DESTRUCTION.

      16.1 PARTIAL DAMAGE. If, during the Lease Term, the Premises are damaged
or destroyed by fire or other casualty, or if the Building is damaged or
destroyed by fire or other casualty and such damage or destruction affects
Tenant's use of the Premises (collectively, "Premises Damage"), Landlord shall
perform the necessary repairs (other than to Tenant's Alterations, trade
fixtures, equipment, and personal property, the repair of which Tenant shall be
solely responsible), and this Lease shall continue in full force and effect.
Provided, however, that Landlord may, at its option, elect to terminate this
Lease if (i) Landlord's repairs cannot reasonably be completed within sixty (60)
days after the date of the Premises Damage in accordance with applicable laws
and regulations, or (ii) the Replacement Cost (defined below) exceeds six (6)
months' Minimum Monthly Rent, or (iii) Landlord does not receive sufficient
insurance proceeds to pay the full Replacement Cost and the shortfall exceeds
three (3) month's Minimum Monthly Rent. As used herein, "Replacement Cost" shall
mean the cost to repair or rebuild the Premises, Building or Center (other than
Tenant's Alterations, equipment, trade fixtures, and personal property) at the
time of the damage or destruction to their condition existing immediately prior
thereto, including without limitation all costs of demolition, debris removal,
permits, fees and other governmental requirements, and upgrading the Premises,
Building or Center as required by law or other requirements, without deduction
for depreciation.

      16.2 TOTAL DESTRUCTION. Notwithstanding any other provisions of this
Lease, a total destruction (including any destruction required by any authorized
public authority) of either the Premises or the Building shall, at the election
of either Landlord or Tenant, terminate this Lease as of the date of such
destruction.

      16.3 PARTIAL DESTRUCTION OF CENTER OR BUILDING. Notwithstanding any other
provision of this Lease, if fifty percent (50%) or more of the rentable area of
the Building or the Center is damaged or destroyed, notwithstanding that the
Premises may be unaffected, Landlord shall have the right to terminate this
Lease.

      16.4 INSURANCE DEDUCTIBLE. If Landlord is required or elects to repair any
Premises Damage caused by an insured casualty as provided in Section 16.1,
Tenant shall, within fifteen (15) days after receipt of written notice from
Landlord, pay the amount of any deductible (or its Share thereof) under any
insurance policy covering such Premises Damage, in accordance with Section 9.3
above.

      16.5 DAMAGE NEAR END OF TERM. If at any time during the last twelve (12)
months of the Lease Term there is Premises Damage for which Replacement Cost
exceeds one (1) month's Minimum Monthly Rent, Landlord may, at its option, elect
to terminate this Lease; provided, however, that if Tenant has any valid,
unexercised option to extend the term of this Lease, Tenant may prevent
Landlord's termination under this Section by exercising such option within five
(5) business days of receipt of Landlord's election to terminate.

      16.6 LANDLORD'S TERMINATION NOTICE; EFFECTIVE DATE; RELOCATION. If
Landlord elects to terminate this Lease under any applicable provision of this
Article 16, Landlord shall give notice of such election within forty-five (45)
days of the date of the damage or destruction. In the case of a total
destruction (Section 16.2) or Premises Damage that prevents Tenant from
occupying the Premises for its permitted use, the effective date of such
termination shall be the date of such Premises Damage; otherwise the effective
date of termination shall be a date selected by Landlord not earlier than thirty
(30) days from the date of Landlord's notice.

      16.7 RENT ABATEMENT. If Landlord repairs the Premises or the Building
after a Premises Damage as described in this Article 16, Minimum Monthly Rent
and Additional Rent shall be equitably reduced from the date of the Premises
Damage until the repairs are completed, based upon the extent to which such
repairs interfere with the business carried on by Tenant in the Premises, but
only to the extent that such loss is covered or would be covered by the rental
income insurance required to be carried by Landlord under Section 9.1.

      16.8 TENANT'S OBLIGATIONS. Landlord shall not be required to repair any
injury or damage by fire or other cause, or to make any restoration or
replacement of, any of Alterations, equipment, trade fixtures, and personal
property owned, placed or installed in or about the Premises by or on behalf of
Tenant. Unless this Lease is terminated pursuant to this Article, Tenant shall
promptly repair, restore or replace the same in the event of any damage thereto.
If all or any portion of the Premises, Building or Center is damaged

                                       13
<PAGE>

or destroyed by reason of any act or omission of Tenant, except as provided in
Section 9.4 (Waiver of Subrogation), Tenant shall either make the necessary
repairs at Tenant's expense or pay to Landlord the Replacement Cost arising
therefrom, regardless of whether this Lease is terminated. Nothing contained in
this Article shall be construed as a limitation on Tenant's liability for any
damage or destruction if such liability otherwise exists.

      16.9 WAIVER OF INCONSISTENT STATUTES. The parties' rights and obligations
in the event of damage or destruction shall be governed by the provisions of
this Lease; accordingly, Tenant waives the provisions of California Civil Code
Sections 1932(2) and 1933(4), and any other statute, code or judicial decisions
that grants a tenant a right to terminate a lease in the event of damage or
destruction of a leased premises.

17. CONDEMNATION.

      17.1 EFFECT ON LEASE. If all of the Premises, or so much thereof that the
remaining portion of the Premises cannot be used by Tenant for its permitted
use, is taken under the power of eminent domain or sold under the threat of the
exercise of such power (collectively "Condemnation"), this Lease shall terminate
as of the earlier of the date title vests in the condemnor or the date the
condemnor is entitled to possession of the interest condemned (the "Condemnation
Date"). Notwithstanding the foregoing, Landlord may prevent such termination by
exercising, within forty-five (45) days of the Condemnation, any right to
relocate Tenant to new Premises in the Center provided in Section 24.24 of this
Lease. In all other cases, Landlord may terminate this Lease as of the
Condemnation Date if (i) the Condemnation affects any material portion of the
Premises or the Building, (ii) Landlord receives insufficient funds from the
condemnor to complete the restoration of the Premises required under this
Section, or (iii) if the Condemnation affects such a substantial portion of the
Center (including the Common Facilities, parking lots or access to the Center)
that it is no longer economically appropriate in Landlord's business judgment to
lease the Premises on the terms and conditions of this Lease. If such
Condemnation affects the Premises and this Lease remains in effect, (a) this
Lease shall terminate as to the portion of the Premises taken as of the
Condemnation Date, (b) the Minimum Monthly Rent shall be equitably adjusted
based upon the rental value of the Premises remaining after the Condemnation
compared to the rental value of the Premises prior to Condemnation, (c) Tenant's
Share shall be adjusted based on any changes in the Rentable Square Footage of
the Premises and/or the Center, and (d) Landlord shall, within a reasonable
period of time, undertake such construction or restoration as may be reasonably
necessary to place the remaining Premises in a useable condition (provided that
the cost of such construction or restoration does not exceed the amount awarded
to Landlord by the condemnor for such purpose). Landlord shall not be
responsible to restore or replace any of Tenant's Alterations, fixtures,
equipment or personal property.

      17.2 CONDEMNATION AWARD. All compensation, damages and other items of
value awarded, paid or received in settlement or otherwise ("Award") upon any
partial or total Condemnation shall be paid to Landlord, and Tenant shall have
no claim thereto. Tenant hereby irrevocably assigns and transfers to Landlord,
and fully waives, releases and relinquishes any and all claims to or interest in
the Award, including, without limitation, any amount attributable to the amount,
if any, by which rental value of the Premises exceeds the rent payable for the
remainder of the Lease Term, to the value of any unexercised options to extend
the term or expand the Premises, or to Tenant's goodwill. Notwithstanding the
foregoing, Tenant shall have the right to make a separate claim and to recover
from the condemning authority, but not from Landlord, so long as the Award
payable to Landlord is not reduced thereby, such compensation as may be
separately awarded or recoverable by Tenant in Tenant's own right on account of
(a) the taking of the unamortized or undepreciated value of any leasehold
improvements owned by Tenant that Tenant has the right to remove at the end of
the Lease Term and the Tenant elects not to remove; (b) reasonable removal and
relocation costs for any leasehold improvements that Tenant has the right to
remove and elects to remove (if the condemning authority approves of the
removal); and (c) relocation costs under Government Code Section 7262, the claim
for which Tenant may pursue by separate action independent of this Lease.

      17.3 WAIVER OF INCONSISTENT STATUTES. The parties' rights and obligations
in the event of Condemnation shall be governed by the provisions of this Lease;
accordingly, Tenant waives the provisions of California Code of Civil Procedure
Sections 1265.110 through 1265.150, and any other statute, code or judicial
decisions that grants a tenant a right to terminate a lease in the event of the
Condemnation of a leased premises.

18. ASSIGNMENT AND SUBLETTING.

      18.1 LANDLORD'S CONSENT REQUIRED. Tenant shall not voluntarily or
involuntarily assign, sublease, mortgage, encumber, or otherwise transfer all or
any portion of the Premises or its interest in this Lease (collectively,
"Transfer") without Landlord's prior written consent, which consent Landlord
shall not unreasonably withhold. Landlord may withhold its consent until Tenant
has complied with the provisions of Sections 18.2 and 18.3. Any attempted
Transfer without Landlord's written consent shall be void and shall constitute a
noncurable Event of Default under this Lease. If Tenant is a corporation, any
cumulative Transfer of more than twenty percent (20%) of the voting stock of
such corporation shall constitute a Transfer requiring Landlord's consent
hereunder; provided, however, that this sentence shall not apply to any
corporation whose stock is publicly traded. If Tenant is a partnership, limited
liability company, trust or other entity, any cumulative Transfer of more than
twenty percent (20%) of the partnership, membership, beneficial or other
ownership interests therein shall constitute a Transfer requiring Landlord's
consent hereunder. Tenant shall not have the right to consummate a Transfer or
to request Landlord's consent to any Transfer if any Event of Default has
occurred and is continuing or if Tenant or any affiliate of Tenant is in default
under any lease of any other real property owned or managed (in whole or in
part) by Landlord or any affiliate of Landlord.

      18.2 LANDLORD'S ELECTION. Tenant's request for consent to any Transfer
shall be accompanied by a written statement setting forth the details of the
proposed Transfer, including the name, business and financial condition of the
prospective Transferee, financial details of the proposed Transfer (e.g., the
term and the rent and security deposit payable), and any other related
information that Landlord may reasonably require. Landlord shall have the right:
(a) to withhold consent to the Transfer, if reasonable, (b) to grant consent,
(c) to terminate this Lease as to the portion of the Premises affected by any
proposed Transfer, in which event Landlord

                                       14
<PAGE>

may enter into a lease directly with the proposed Transferee, or (d) to consent
on the condition that Landlord be paid fifty percent (50%) of all subrent or
other consideration to be paid to Tenant under the terms of the Transfer in
excess of the total rent due hereunder (including, if such Transfer is an
assignment or if such Transfer is to occur directly or indirectly in connection
with the sale of any assets of Tenant, fifty percent (50%) of the amount of the
consideration attributable to the Transfer, as reasonably determined by
Landlord). Landlord may require any permitted subtenant to make rental payments
directly to Landlord, in the amount of rent due hereunder. The grounds on which
Landlord may reasonably withhold its consent to any requested Transfer include,
without limitation, that: (i) the proposed Transferee's contemplated use of the
Premises following the proposed Transfer is not reasonably similar to the use of
the Premises permitted hereunder, (ii) in Landlord's reasonable business
judgment, the proposed Transferee lacks sufficient business reputation or
experience to operate a successful business of the type and quality permitted
under this Lease, (iii) in Landlord's reasonable business judgment, the proposed
Transferee lacks sufficient net worth, working capital, anticipated cash flow
and other indications of financial strength to meet all of its obligations under
this Lease, (iv) the proposed Transfer would breach any covenant of Landlord
respecting a radius restriction, location, use or exclusivity in any other
lease, financing agreement, or other agreement relating to the Center, and (v)
in Landlord's reasonable business judgment, the possibility of a release of
Hazardous Materials is materially increased as a result of the Transfer or if
Landlord does not receive sufficient assurances that the proposed Transferee has
the experience and financial ability to remedy a violation of Hazardous
Materials and to fulfill its obligations under Articles 13 and 14. In connection
with any such Transfer, Landlord shall have the right to require Tenant, at
Tenant's sole cost, to cause environmental testing meeting the requirements of
an Exit Assessment described in Section 14.8 to be performed. Landlord need only
respond to any request by Tenant hereunder within a reasonable time of not less
than ten (10) business days after receipt of all information and other
submission required in connection with such request.

      18.3 COSTS; TRANSFER FEE. Tenant shall pay all costs and expenses in
connection with any permitted Transfer, including any real estate brokerage
commissions due with respect to the Transfer. Tenant shall pay all attorneys'
fees and costs incurred by Landlord and a fee of $500 to reimburse Landlord for
costs and expenses incurred in connection with any request by Tenant for
Landlord's consent to a Transfer. Such fee shall be delivered to Landlord
concurrently with Tenant's request for consent. Such payment obligations shall
apply regardless of whether Landlord ultimately grants or denies Tenant's
request.

      18.4 ASSUMPTION; NO RELEASE OF TENANT. Any permitted assignee shall assume
in writing all obligations of Tenant under this Lease, utilizing a form of
assumption agreement provided or approved by Landlord, and an executed copy of
such assumption agreement shall be delivered to Landlord within fifteen (15)
days after the effective date of the Transfer. The taking of possession of all
or any part of the Premises by any such permitted assignee or subtenant shall
constitute an agreement by such person or entity to assume without limitation or
qualification all of the obligations of Tenant under this Lease, notwithstanding
any failure by such person to execute the assumption agreement required in the
immediately preceding sentence. No permitted Transfer shall release or change
Tenant's primary liability to pay the rent and to perform all other obligations
of Tenant under this Lease. Landlord's acceptance of rent from any other person
is not a waiver of any provision of this Article nor a consent to any Transfer.
Consent to one Transfer shall not constitute a consent to any subsequent
Transfer. If any transferee defaults under this Lease, Landlord may proceed
directly against Tenant without pursuing remedies against the transferee.
Landlord may consent to subsequent Transfers or modifications of this Lease by
Tenant's transferee, without notifying Tenant or obtaining its consent, and such
action shall not relieve Tenant of its liability under this Lease.

      18.5 NO MERGER. No merger shall result from any Transfer pursuant to this
Article, any surrender by Tenant of its interest under this Lease, or any
termination hereof in any other manner. In any such event, Landlord may either
terminate any or all subleases or succeed to the interest of Tenant thereunder.

      18.6 REASONABLE RESTRICTION. Tenant acknowledges that the restrictions on
Transfer contained herein are reasonable restrictions for purposes of Section
22.2 of this Lease and California Civil Code Section 1951.4.

19. SUBORDINATION; ATTORNMENT; ESTOPPEL CERTIFICATE.

      19.1 SUBORDINATION. The lien and terms of this Lease are and shall be
unconditionally junior and subordinate to the lien and terms of all ground
leases, mortgages, deeds of trust, and other security instruments now or
hereafter affecting the real property of which the Premises are a part, and to
all advances made on the security thereof, and to all renewals, modifications,
consolidations, replacements and extensions thereof. If any mortgagee,
beneficiary under deed of trust or ground lessor shall elect to have this Lease
prior to its mortgage, deed of trust or ground lease, and gives written notice
thereof to Tenant, this Lease shall be deemed prior thereto. Tenant agrees to
execute any documents required to effectuate such subordination or to make this
Lease prior to the lien of any such mortgage, deed of trust or ground lease, as
the case may be. If Tenant fails to deliver such agreement within ten (10) days
after written demand, (a) Tenant does hereby make, constitute and irrevocably
appoint Landlord as Tenant's attorney-in-fact and in Tenant's name, place and
stead, to do so, and (b) an Event of Default shall be deemed to have occurred
and, in addition to all other liability, Tenant shall be liable for the
immediate payment of all foreseeable and unforeseeable damages, penalties and
attorneys' fees and costs incurred by Landlord as a result of such failure.

      19.2 ATTORNMENT. If Landlord sells, transfers, or conveys its interest in
the Premises or this Lease, or if the same is foreclosed judicially or
nonjudicially, or is otherwise acquired, by a mortgagee, beneficiary under deed
of trust or ground lessor, upon the request and at the sole election of
Landlord's lawful successor, Tenant shall attorn to said successor. Tenant
shall, upon request of Landlord, execute an attornment agreement in form and
substance acceptable to Landlord agreeing in advance to such attornment to any
such mortgagee, beneficiary, ground lessor or other successor. Such attornment
agreement shall provide, among other things, that such mortgagee, beneficiary or
ground lessor shall not be (a) bound by any prepayment of more than one (1)
month's rent, (b) liable for the return of any Security Deposit or other sums
not actually received by said successor, (c) bound by any act or omission of
Landlord arising prior to the succession of such successor to the Landlord's
interest in this Lease, or be subject to any offset, defense or

                                       15
<PAGE>

counter-claim that Tenant may have previously accrued against Landlord, or (d)
be bound by any material amendment of this Lease made after the later of the
initial effective date of this Lease, or the date that such successor's lien or
interest first arose, unless said successor shall have consented to such
amendment in writing.

      19.3 ESTOPPEL CERTIFICATES. Within ten (10) days after written request
from Landlord, Tenant at Tenant's sole cost shall execute, acknowledge and
deliver to Landlord a written certificate in favor of Landlord and any
prospective lender on or purchaser of the Center or any part thereof, (a) that
this Lease is unmodified and in full force and effect (or, if modified, stating
the nature of such modifications and certifying that this Lease is in full force
and effect as so modified), (b) the amount of any rent paid in advance, and (c)
that there are no uncured defaults on the part of Landlord, or specifying the
nature of such defaults if any are claimed. In addition to the foregoing, such
certificate shall include Tenant's certification to such other matters of fact,
and be on such form, as Landlord or such prospective lender or purchaser shall
reasonably require. If Tenant fails to deliver such certificate within said
10-day period, an Event of Default shall be deemed to have occurred and, in
addition to all other liability, Tenant shall be liable for the immediate
payment of all foreseeable and unforeseeable damages, penalties and attorneys'
fees and costs incurred by Landlord as a result of such failure. Tenant's
failure to deliver such certificate within said 10-day period shall constitute a
conclusive acknowledgment by Tenant: (i) that this Lease is in full force and
effect without modification except as may be represented by Landlord, (ii) that
not more than one month's rent has been paid in advance, and (iii) that there
are no uncured defaults in Landlord's performance.

20. SURRENDER OF PREMISES.

      20.1 CONDITION OF PREMISES. Upon the expiration or earlier termination of
this Lease, Tenant shall surrender the Premises to Landlord, broom clean and in
the same condition and state of repair as at the commencement of the Lease Term,
except for ordinary wear and tear that Tenant is not otherwise obligated to
remedy under the provisions of this Lease. Tenant shall deliver all keys to the
Premises and the Building to Landlord. Upon Tenant's vacation of the Premises,
Tenant shall remove all portable furniture, trade fixtures, machinery,
equipment, signs and other items of personal property (unless prohibited from
doing so under Section 20.2), and shall remove any Alterations (whether or not
made with Landlord's consent) that Landlord may require Tenant to remove. Tenant
shall repair all damage to the Premises caused by such removal and shall restore
the Premises to its prior condition, all at Tenant's expense. Such repairs shall
be performed in a manner satisfactory to Landlord and shall include, but are not
limited to, the following: capping all plumbing, capping all electrical wiring,
repairing all holes in walls, restoring damaged floor and/or ceiling tiles, and
thorough cleaning of the Premises. If Tenant fails to remove any items that
Tenant has an obligation to remove under this Section when required by Landlord
or otherwise, such items shall, at Landlord's option, become the property of
Landlord and Landlord shall have the right to remove and retain or dispose of
the same in any manner, without any obligation to account to Tenant for the
proceeds thereof. Tenant waives all claims against Landlord for any damages to
Tenant resulting from Landlord's retention or disposition of such Alterations or
personal property. Tenant shall be liable to Landlord for Landlord's costs of
removing, storing and disposing of such items.

      20.2 REMOVAL OF CERTAIN ALTERATIONS, FIXTURES AND EQUIPMENT PROHIBITED.
All Alterations, fixtures (whether or not trade fixtures), machinery, equipment,
signs and other items of personal property that Landlord has not required Tenant
to remove under Section 20.1 shall become Landlord's property and shall be
surrendered to Landlord with the Premises, regardless of who paid for the same.
In particular and without limiting the foregoing, Tenant shall not remove any of
the following materials or equipment without Landlord's prior written consent,
regardless of who paid for the same and regardless of whether the same are
permanently attached to the Premises: power wiring and power panels; piping for
industrial gasses or liquids; laboratory benches, sinks, cabinets and casework;
fume hoods or specialized air-handling and evacuation systems; drains or other
equipment for the handling of waste water or hazardous materials; computer,
telephone and telecommunications wiring, panels and equipment; lighting and
lighting fixtures; wall coverings; drapes, blinds and other window coverings;
carpets and other floor coverings; heaters, air conditioners and other heating
or air conditioning equipment; fencing; security gates and systems; and other
building operating equipment and decorations.

      20.3 HOLDING OVER. Tenant shall vacate the Premises upon the expiration or
earlier termination of this Lease, and Tenant shall indemnify, protect, hold
harmless and defend Landlord against all liabilities, damages and expenses
incurred by Landlord as a result of any delay by Tenant in vacating the
Premises. If Tenant remains in possession of the Premises or any part thereof
after the expiration of the Lease Term with Landlord's written permission,
Tenant's occupancy shall be a tenancy from month-to-month only, and not a
renewal or extension hereof. All provisions of this Lease (other than those
relating to the term) shall apply to such month-to-month tenancy, except that
the Minimum Monthly Rent shall be increased to 150% of the Minimum Monthly Rent
in effect during the last month of the Lease Term. No acceptance of rent,
negotiation of rent checks or other act or omission of Landlord or its agents
shall extend the Expiration Date of this Lease other than a writing executed by
Landlord giving Tenant permission to remain in occupancy beyond the Expiration
Date under the terms of the immediately preceding sentence.

21. DEFAULT BY TENANT.

      The occurrence of any of the following shall constitute an "Event of
      Default" under this Lease by Tenant:

            (a) Failure to pay when due any Minimum Monthly Rent, Additional
Rent or any other monetary sums required to be paid by Tenant under the terms of
this Lease, if such failure continues for three (3) days after written notice by
Landlord to Tenant. Landlord's notice described herein is intended to satisfy,
and is not in addition to, any and all legal notices required prior to
commencement of an unlawful detainer action, including without limitation the
notice requirements of California Code of Civil Procedure Sections 1161 et seq.

            (b) Failure to perform any other agreement or obligation of Tenant
hereunder, if such failure continues for fifteen (15) days after written notice
by Landlord to Tenant, except as to those Events of Default that are noncurable,
in which case nosuch grace period shall apply. Landlord's notice described
herein is intended to satisfy, and is not in addition to, any and all legal
notices

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required prior to commencement of an unlawful detainer action, including without
limitation the notice requirements of California Code of Civil Procedure
Sections 1161 et seq.

            (c) Abandonment or vacation of the Premises by Tenant, or failure to
occupy the Premises for a period of ten (10) consecutive days.

            (d) If any of the following occurs: (i) a petition is filed for an
order of relief under the federal Bankruptcy Code or for an order or decree of
insolvency or reorganization or rearrangement under any state or federal law,
and such petition is not dismissed within thirty (30) days after the filing
thereof; (ii) Tenant makes a general assignment for the benefit of creditors;
(iii) a receiver or trustee is appointed to take possession of any substantial
part of Tenant's assets, unless such appointment is vacated within thirty (30)
days after the date thereof; or (iv) Tenant consents to or suffers an
attachment, execution or other judicial seizure of any substantial part of its
assets or its interest under this Lease, unless such process is released or
satisfied within thirty (30) days after the occurrence thereof. If a court of
competent jurisdiction determines that any of the foregoing events is not a
default under this Lease, and a trustee is appointed to take possession (or if
Tenant remains a debtor in possession), and such trustee or Tenant transfers
Tenant's interest hereunder, then Landlord shall receive the difference between
the rent (or other consideration) paid in connection with such transfer and the
rent payable by Tenant hereunder. Any assignee pursuant to the provisions of any
bankruptcy law shall be deemed without further act to have assumed all of the
obligations of the Tenant hereunder arising on or after the date of such
assignment. Any such assignee shall, upon demand, execute and deliver to
Landlord an instrument confirming such assumption.

            (e) The occurrence of any other event that is deemed to be an Event
of Default under any other provision of this Lease, or any other lease to which
Landlord (or any affiliate of Landlord) and Tenant (or any affiliate of Tenant)
are parties.

22. REMEDIES.

      Upon the occurrence of any Event of Default by Tenant, Landlord shall have
the following remedies, each of which shall be cumulative and in addition to any
other remedies now or hereafter available at law or in equity:

      22.1 TERMINATION OF LEASE. Landlord can terminate this Lease and Tenant's
right to possession of the Premises by giving written notice of termination, and
then re-enter the Premises and take possession thereof. No act by Landlord other
than giving written notice to Tenant of such termination shall terminate this
Lease. Upon termination, Landlord has the right to recover all damages incurred
by Landlord as a result of Tenant's default, including:

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

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

            (c) The worth at the time of award of the amount by which the unpaid
rent for the balance of the Lease Term after the time of award exceeds the
amount of such rental loss that Tenant proves could have been reasonably
avoided; plus

            (d) Any other amount necessary to compensate Landlord for all the
detriment proximately caused by Tenant's default, including, but not limited to
(i) expenses for cleaning, repairing or restoring the Premises, (ii) expenses
for altering, remodeling or otherwise improving the Premises for the purpose of
reletting, (iii) brokers' fees and commissions, advertising costs and other
expenses of reletting the Premises, (iv) costs of carrying the Premises, such as
taxes, insurance premiums, utilities and security precautions, (v) expenses in
retaking possession of the Premises, (vi) attorneys' fees and costs, (vii) any
unearned brokerage commissions paid in connection with this Lease, and (viii)
reimbursement of any previously waived or abated Minimum Monthly Rent,
Additional Rent or other charges; plus

            (e) At Landlord's election, such other amounts in addition to or in
lieu of the foregoing as may be permitted from time to time under applicable
law. As used in paragraphs (a) and (b) above, the "worth at the time of award"
shall be computed by allowing interest at the maximum permissible legal rate. As
used in paragraph (c) above, the "worth at the time of award" shall be computed
by discounting such amount at the discount rate of the Federal Reserve Bank of
San Francisco at the time of award plus one percent (1%).

      22.2 CONTINUATION OF LEASE. Landlord has the remedy described in
California Civil Code Section 1951.4 (Landlord may continue this Lease in effect
after Tenant's breach and abandonment and recover rent as it becomes due, if
Tenant has the right to sublet or assign, subject only to reasonable
limitations), as follows:

            (a) Landlord can continue this Lease in full force and effect
without terminating Tenant's right of possession, and Landlord shall have the
right to collect rent and other monetary charges when due and to enforce all
other obligations of Tenant hereunder. Landlord shall have the right to enter
the Premises to do acts of maintenance and preservation of the Premises, to make
alterations and repairs in order to relet the Premises, and/or to undertake
other efforts to relet the Premises. Landlord may also remove personal property
from the Premises and store the same in a public warehouse at Tenant's expense
and risk. No act by Landlord permitted under this paragraph shall terminate this
Lease unless a written notice of termination is given by Landlord to Tenant or
unless the termination is decreed by a court of competent jurisdiction.

            (b) In furtherance of the remedy set forth in this Section, Landlord
may relet the Premises or any part thereof for Tenant's account, for such term
(which may extend beyond the Lease Term), at such rent, and on such other terms
and conditions as Landlord may deem advisable in its sole discretion. Tenant
shall be liable immediately to Landlord for all costs Landlord incurs in
reletting the Premises. Any rents received by Landlord from such reletting shall
be applied to the payment of: (i) any indebtedness other than rent due hereunder
from Tenant to Landlord, (ii) the costs of such reletting, including brokerage
and attorneys' fees and costs, and the cost of any alterations and repairs to
the Premises, and (iii) the payment of rent due and unpaid hereunder, including
any previously waived or abated rent. Any remainder shall be held by Landlord
and applied in payment of future amounts as the same become due and payable
hereunder. In no event shall Tenant be entitled to any excess rent received by
Landlord after an Event of Default by

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<PAGE>

Tenant and the exercise of Landlord's remedies hereunder. If the rent from such
reletting during any month is less than the rent payable hereunder, Tenant shall
pay such deficiency to Landlord upon demand.

            (c) Landlord shall not, by any re-entry or other act, be deemed to
have accepted any surrender by Tenant of the Premises or Tenant's interest
therein, or be deemed to have terminated this Lease or Tenant's right to
possession of the Premises or the liability of Tenant to pay rent accruing
thereafter or Tenant's liability for damages under any of the provisions hereof,
unless Landlord shall have given Tenant notice in writing that it has so elected
to terminate this Lease.

            (d) Tenant acknowledges and agrees that the restrictions on the
Transfer of this Lease set forth in Article 18 of this Lease constitute
reasonable restrictions on such transfer for purposes of this Section and
California Civil Code Section 1951.4.

      22.3 PERFORMANCE BY LANDLORD. If Tenant fails to pay any sum of money or
perform any other act to be performed by Tenant hereunder, and such failure
continues for fifteen (15) days after notice by Landlord, Landlord shall have
the right (but not the obligation) to make such payment or perform such other
act without waiving or releasing Tenant from its obligations. All sums so paid
by Landlord and all necessary incidental costs, together with interest thereon
at the rate specified in Section 22.4, shall be payable to Landlord on demand.
Landlord shall have the same rights and remedies in the event of nonpayment by
Tenant as in the case of default by Tenant in the payment of the rent.

      22.4 LATE CHARGE; INTEREST ON OVERDUE PAYMENTS. The parties acknowledge
that late payment by Tenant of Minimum Monthly Rent, Additional Rent or other
charges hereunder will cause Landlord to incur costs not contemplated by this
Lease, the exact amount of which will be extremely difficult and impractical to
determine, including, but not limited to, processing and accounting charges,
administrative expenses, and additional interest expenses or late charges that
Landlord may be required to pay as a result of late payment on Landlord's
obligations. Therefore, if any installment of Minimum Monthly Rent, Additional
Rent or other charges is not received by Landlord on the date due, and without
regard to whether Landlord gives Tenant notice of such failure or exercises any
of its remedies upon an Event of Default, Tenant shall pay a late charge equal
to the greater of ten percent (10%) of the overdue amount or One Hundred Dollars
($100). The parties hereby agree that such late charge represents a fair and
reasonable estimate of the damages Landlord will incur by reason of late payment
by Tenant. In addition, any amount due from Tenant that is not paid when due
shall bear interest at a rate equal to two percent (2%) over the then current
Bank of America prime or reference rate or ten percent (10%) per annum,
whichever is greater, but not in excess of the maximum permissible legal rate,
from the date such payment is due until the date paid by Tenant. Landlord's
acceptance of any interest or late charge shall not constitute a waiver of
Tenant's default or prevent Landlord from exercising any other rights or
remedies available to Landlord.

      22.5 LANDLORD'S RIGHT TO REQUIRE ADVANCE PAYMENT OF RENT; CASHIER'S
CHECKS. If Tenant is late in paying any component of rent more than two (2)
times during any calendar year during the Lease Term, Landlord shall have the
right, upon notice to Tenant, to require that all rent be paid three (3) months
in advance. Additionally, if any of Tenant's checks are returned for
nonsufficient funds, or if Landlord at any time serves upon Tenant a Three Day
Notice to Pay Rent or Quit (pursuant to California Civil Code Sections 1161 et
seq. or any successor or similar unlawful detainer statutes), Landlord may, at
its option, require that all future rent (including any sums demanded in any
subsequent three (3) day notice) be paid exclusively by money order or cashier's
check.

23. DEFAULT BY LANDLORD.

      23.1 NOTICE TO LANDLORD. Landlord shall not be in default under this Lease
unless Landlord fails to perform an obligation required of Landlord within a
reasonable time, but in no event later than thirty (30) days after written
notice by Tenant to Landlord and to each Mortgagee as provided in Section 23.2,
specifying the nature of the alleged default; provided, however, that if the
nature of the obligation is such that more than thirty (30) days are required
for performance, then Landlord shall not be in default if Landlord commences
performance within such 30-day period and thereafter diligently prosecutes the
same to completion.

      23.2 NOTICE TO MORTGAGEES. Tenant agrees to give each mortgagee or trust
deed holder on the Premises or the Center ("Mortgagee"), by certified mail, a
copy of any notice of default served upon Landlord, provided that Tenant has
been previously notified in writing of the address of such Mortgagee. Tenant
further agrees that if Landlord fails to cure such default within the time
provided for in this Lease, then the Mortgagees shall have an additional thirty
(30) days after Tenant's notice within which to cure such default, or if such
default cannot reasonably be cured within that time, then such additional time
as may be necessary if, within said 30-day period, any Mortgagee has commenced
and is diligently pursuing the remedies necessary to cure the default (including
but not limited to commencement of foreclosure proceedings if necessary to
affect such cure), in which event this Lease shall not be terminated while such
remedies are being so diligently pursued.

      23.3 LIMITATIONS ON REMEDIES AGAINST LANDLORD. In the event Tenant has any
claim or cause of action against Landlord: (a) Tenant's sole and exclusive
remedy shall be against Landlord's interest in the Building, and neither
Landlord nor any of Landlord's officers, directors, shareholders, partners,
members, principals, employees, agents, representatives, or other related
entities or individuals, or their respective successors and assigns
(collectively, "Landlord's Related Entities"), nor any other property of
Landlord or Landlord's Related Entities shall be liable for any deficiency, (b)
none of Landlord's Related Entities shall be sued or named as a party in any
suit or action (except as may be necessary to secure jurisdiction over
Landlord), (c) no service of process shall be made against any of Landlord's
Related Entities (except as may be necessary to secure jurisdiction), and none
of Landlord's Related Entities shall be required to answer or otherwise plead to
any service of process, (d) no judgment shall be taken against any of Landlord's
Related Entities and any judgment taken against any of Landlord's Related
Entities may be vacated and set aside at any time, and (e) no writ of execution
will ever be levied against the assets of any of Landlord's Related Entities.
The covenants and agreements set forth in this Section shall be enforceable by
Landlord and/or by any of Landlord's Related Entities. If Landlord fails to give
any consent that a court later holds Landlord was required to give under the
terms of this Lease, Tenant shall be entitled solely to specific performance and
such other remedies as may be specifically reserved to Tenant under this Lease,
but in no

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<PAGE>

event shall Landlord be responsible for monetary damages (including incidental
and consequential damages) for such failure to give consent.

24. GENERAL PROVISIONS.

      24.1 ACTION OR DEFENSE BY TENANT. Any claim, demand or right of defense of
any kind by Tenant that is based upon or arises in any connection with this
Lease or negotiations prior to its execution shall be barred unless Tenant
commences an action thereon or initiates a legal proceeding or defense by
reason thereof within six (6) months after the date of the occurrence of the
event, act or omission to which the claim, demand or right of defense relates.
Tenant acknowledges and understands that, after having had an opportunity to
consult with legal counsel, the purpose of this paragraph is to shorten the time
period within which Tenant would otherwise have to raise such claims, demands or
rights of defense.

      24.2 ARBITRATION AND MEDIATION; WAIVER OF JURY TRIAL. Except as provided
in this Section, if any dispute ensues between Landlord and Tenant arising out
of or concerning this Lease, and if said dispute cannot be settled through
direct discussions between the parties, the parties shall first to attempt to
settle the dispute through mediation before a mutually acceptable mediator.
The cost of mediation shall be divided equally between the parties. Thereafter,
any remaining, unresolved disputes or claims shall be resolved by binding
arbitration in accordance with the rules of the American Arbitration
Association, and judgment upon the award rendered by the arbitrator may be
entered in any court of competent jurisdiction. The prevailing party in any such
arbitration shall be entitled to recover reasonable costs and attorneys' fees
and costs as determined by the arbitrator; provided, however, that the foregoing
provisions regarding mediation and arbitration shall not apply to (a) any issue
or claim that might properly be adjudicated in an unlawful detainer proceeding,
or (b) to any issue or claim that Landlord elects not to have resolved through
arbitration and with respect to which Landlord commences an action in law or
equity to determine the same. Without limiting the foregoing, Landlord and
Tenant hereby waive trial by jury in any action, proceeding or counterclaim
(including any claim of injury or damage and any emergency and other statutory
remedy in respect thereof) brought by either against the other on any matter
arising out of or in any way connected with this Lease, the relationship of
Landlord and Tenant, or Tenant's use or occupancy of the Premises.

      24.3 ATTORNEYS' FEES. If Landlord brings any legal action or proceeding,
declaratory or otherwise, arising out of this Lease, including any suit by
Landlord to recover rent or possession of the Premises or otherwise to enforce
this Lease, Tenant shall pay Landlord's costs and attorneys' fees and costs
incurred in such proceeding. As used herein, "attorneys' fees and costs" include
without limitation attorneys' fees and costs, printing, photocopying,
duplicating and other expenses, air freight charges, fees billed for law clerks,
paralegals and other persons not admitted to the bar but performing services
under the supervision of an attorney, experts' fees, appraisers' fees,
accountants' fees, court costs, the fees of other professionals, costs incurred
in connection with any and all arbitrations, mediations, post-judgment motions,
contempt proceedings, garnishments, levies, debtor and third party examination,
discovery and bankruptcy litigation. If Landlord issues notice(s) to pay rent,
notice(s) to perform covenant, notice(s) of abandonment or similar documents as
a result of Tenant's default under this Lease, and if Tenant cures such default,
Tenant shall pay to Landlord within fifteen (15) days of demand, the reasonable
costs incurred by Landlord in preparing and delivering the same, including
Landlord's attorneys' fees and costs.

      24.4 AUTHORITY OF TENANT. Tenant represents and warrants that it has full
power and authority to execute and fully perform its obligations under this
Lease pursuant to its governing instruments, without the need for any further
action, and that the person(s) executing this Agreement on behalf of Tenant are
the duly designated agents of Tenant and are authorized to do so. Prior to
execution of this Lease, Tenant shall supply Landlord with such evidence as
Landlord may request regarding the authority of Tenant to enter into this Lease.
Any actual or constructive taking of possession of the Premises by Tenant shall
constitute a ratification of this Lease by Tenant.

      24.5 BINDING EFFECT; PARTIES BENEFITED. Subject to the provisions of
Article 18 restricting transfers by Tenant and subject to Section 24.26
regarding transfer of Landlord's interest, all of the provisions of this Lease
shall bind and inure to the benefit of the parties hereto and their respective
heirs, legal representatives, successors and assigns. Except for Landlord's
employees and agents (including without limitation any property manager or
property management firm engaged by Landlord with respect to the Premises), each
of whom shall be entitled to the benefits of and shall be third party
beneficiaries of the provisions of Articles 12 and 13, no third person shall be
entitled to enforce or be entitled to any rights hereunder or be a third party
beneficiary of any term or provision this Lease.

      24.6 BROKERS. Tenant warrants that it has had no dealings with any real
estate broker or agent in connection with the negotiation of this transaction
except only the broker(s) set forth in Section 1.11 of the Basic Lease
Provisions, and it knows of no other real estate broker or agent who is entitled
to a commission in connection with this transaction. Tenant agrees to indemnify,
protect, hold harmless and defend Landlord from and against any obligation or
liability to pay any commission or compensation to any other party arising from
the act or agreement of Tenant. Tenant acknowledges that certain partners,
affiliates or members of Landlord, or their respective officers, directors,
shareholders, members or employees, may hold real estate sales person or broker
licenses, and additionally may be employees of Asset Management Group and as
such may have negotiated, or may have a financial interest in, this transaction.

      24.7 CONSTRUCTION. The headings and captions used in this Lease are for
convenience only and are not a part of the terms and provisions of this Lease.
In any provision relating to the conduct, acts or omissions of Tenant, the term
"Tenant" shall include Tenant, its subtenants and assigns and their respective
agents, employees, contractors, and invitees, and any others using the Premises
with Tenant's express or implied permission.

      24.8 COUNTERPARTS. This Lease may be executed in multiple copies, each of
which shall be deemed an original, but all of which shall constitute one Lease
binding on all parties after all parties have signed such a counterpart.

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<PAGE>

      24.9 COVENANTS AND CONDITIONS. Each provision to be performed by Tenant
shall be deemed to be both a covenant and a condition.

      24.10 ENTIRE AGREEMENT. This Lease, together with any and all exhibits,
schedules, riders and addenda attached or referred to herein, constitutes the
entire agreement between the parties with respect to the subject matter hereof.
There are no oral or written agreements or representations between the parties
hereto affecting this Lease, and this Lease supersedes, cancels and merges any
and all previous verbal or written negotiations, arrangements, representations,
brochures, displays, models, photographs, renderings, floor plans, elevations,
projections, estimates, agreements and understandings if any, made by or between
Landlord and Tenant and their agents, with respect to the subject matter, and
none thereof shall be used to interpret, construe, supplement or contradict this
Lease. This Lease and all amendments thereto is and shall be considered to be
the only agreement between the parties hereto and their representatives and
agents. There are no other representations or warranties between the parties,
and all reliance with respect to representations is solely based upon the
representations and agreements contained in this Lease.

      24.11 EXHIBITS. Any and all exhibits, schedules, riders and addenda
attached or referred to herein are hereby incorporated herein by reference.

      24.12 FINANCIAL STATEMENTS. Within ten (10) days after written request
from Landlord, Tenant shall deliver to Landlord such financial statements as are
reasonably requested by Landlord to verify the net worth of Tenant, or any
assignee, subtenant, or guarantor of Tenant. In addition, Tenant shall deliver
to any proposed or actual lender or purchaser of the Premises designated by
Landlord any financial statements required by such party to facilitate the sale,
financing or refinancing of the Premises, including the past three (3) years'
financial statements. Tenant represents and warrants to Landlord that each such
financial statement is a true and accurate statement as of the date of such
statement. All such financial statements shall be received in confidence and
shall be used only for the purposes set forth herein. Tenant hereby irrevocably
authorizes Landlord to conduct credit checks and other investigations into
Tenant's financial affairs.

      24.13 FORCE MAJEURE. If Landlord is delayed in or prevented from the
performance of any act required under this Lease by reason of strikes,
lock-outs, labor troubles, inability to procure standard materials, failure of
power, restrictive governmental laws, regulations or orders, governmental action
or inaction (including failure, refusal or delay in issuing permits, approvals
and/or authorizations), riots, civil unrest or insurrection, war, terrorism,
bioterrorism, fire, earthquake, flood or other natural disaster, unusual and
unforeseeable delay that results from an interruption of any public utilities,
or other unusual and unforeseeable delay not within the reasonable control of
Landlord, then performance of such act will be excused for the period of the
delay and the period for the performance of any such act will be extended for a
period equivalent to the period of such delay.

      24.14 GOVERNING LAW. This Lease shall be governed, construed and enforced
in accordance with the laws of the State of California.

      24.15 JOINT AND SEVERAL LIABILITY. If more than one person or entity
executes this Lease as Tenant, each of them is jointly and severally liable for
all of the obligations of Tenant hereunder.

      24.16 MODIFICATION. The provisions of this Lease may not be modified or
amended, except by a written instrument signed by all parties.

      24.17 MODIFICATION FOR LENDER. If, in connection with obtaining financing
or refinancing for the Premises or the Center, Landlord's lender requests
reasonable modifications to this Lease, Tenant will not unreasonably withhold or
delay its consent thereto, provided that such modifications do not increase the
obligations of Tenant hereunder or materially and adversely affect Tenant's
rights hereunder.

      24.18 NONDISCRIMINATION. Tenant for itself and its officers, directors,
shareholders, partners, members, principals, employees, agents, representatives,
and other related entities and individuals, and their respective successors and
assigns, agrees to comply fully with any and all laws and other requirements
prohibiting discrimination against any person or group of persons on account of
race, color, religion, creed, sex, marital status, sexual orientation, national
origin, ancestry, age, physical handicap or medical condition, in the use
occupancy or patronage of the Premises and/or of Tenant's business. Tenant shall
indemnify, protect, hold harmless and defend Landlord and Landlord's officers,
directors, shareholders, partners, members, principals, employees, agents,
representatives, and other related entities and individuals, and their
respective successors and assigns, from and against all damage and liability
incurred by Landlord in the event of any violation of the foregoing covenant or
because of any event of or practice of discrimination against any such persons
or group of persons by Tenant or its officers, directors, shareholders,
partners, members, principals, employees, agents, representatives, and other
related entities and individuals, and their respective successors and assigns,
in accordance with the indemnification provisions of Article 13.

      24.19 NOTICE. Any and all notices to either party shall be personally
delivered, sent by recognized courier service (such as Federal Express or United
Parcel Service), or sent by certified mail, return receipt requested, postage
prepaid, addressed to the party to be notified at the address specified in
Section 1.1, or at such other address as such party may from time to time
designate in writing. Notice shall be deemed delivered on the date of personal
delivery, on the date scheduled for delivery by such courier service, or three
(3) business days after deposit in the U.S. Mail, certified, return receipt
requested. Provided, however, that any notice required pursuant to California
Code of Civil Procedure Sections 1161 et seq. may be given as provided in such
sections. Any and all notices provided herein that Landlord may give setting
forth or alleging any default or breach of this Lease, or of any failure of
Tenant to perform its obligations hereunder shall be deemed to satisfy, and
shall not be in addition to, any and all legal notices required prior to the
commencement of an unlawful detainer action, including without limitation the
notices required pursuant to California Code of Civil Procedure Sections 1161 et
seq.

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      24.20 PARTIAL INVALIDITY. If any provision of this Lease is determined by
a court of competent jurisdiction to be invalid or unenforceable, the remainder
of this Lease shall not be affected thereby. Each provision shall be valid and
enforceable to the fullest extent permitted by law.

      24.21 QUIET ENJOYMENT. Landlord agrees that Tenant, upon paying the rent
and performing the terms, covenants and conditions of this Lease, may quietly
have the right to use and occupy the Premises as against Landlord during the
Lease Term, subject, however, to the lien and provisions of any mortgage or deed
of trust to which this Lease is or becomes subordinate.

      24.22 RECORDING; NON-DISCLOSURE. Tenant shall not record this Lease or any
memorandum hereof without Landlord's prior written consent. Tenant shall not,
without the express written consent of Landlord, disclose the terms or
provisions of this Lease to any person, except for Tenant's employees, agents,
attorneys, officers and directors whose duties require such persons to be
informed of such matters, or except as required by law.

      24.23 RELATIONSHIP OF THE PARTIES. Nothing contained in this Lease shall
be deemed or construed as creating a partnership, joint venture,
principal-agent, or employer-employee relationship between Landlord and any
other person or entity (including, without limitation, Tenant) or as causing
Landlord to be responsible in any way for the debts or obligations of such other
person or entity.

      24.24 INTENTIONALLY DELETED.

      24.25 TIME OF THE ESSENCE. Time is of the essence of each and every
provision of this Lease.

      24.26 TRANSFER OF LANDLORD'S INTEREST. In the event of a sale, assignment,
exchange or other disposition of Landlord's interest in the Premises, other than
a transfer for security purposes only, Landlord shall be relieved of all
obligations and liabilities accruing hereunder after the effective date of said
sale, assignment, exchange or other disposition, provided that any Security
Deposit or other funds then held by Landlord in which Tenant has an interest are
delivered to Landlord's successor. The obligations to be performed by Landlord
hereunder shall be binding on Landlord's successors and assigns only during
their respective periods of ownership.

      24.27 WAIVER. No provision of this Lease or the breach thereof shall be
deemed waived, except by written consent of Landlord. A waiver of any such
breach shall not be deemed a waiver of any preceding or succeeding breach of the
same or any other provision. No delay or omission by Landlord in exercising any
of its remedies shall impair or be construed as a waiver thereof, unless such
waiver is expressly set forth in a writing signed by Landlord. The subsequent
acceptance of rent hereunder by Landlord shall not be deemed to be a waiver of
any previous breach by Tenant, other than the failure of Tenant to pay the
particular rental so accepted, regardless of Landlord's knowledge of such
previous breach at the time of acceptance of such rent.

            THE SUBMISSION OF THIS LEASE FOR EXAMINATION AND/OR SIGNATURE BY
            TENANT IS NOT A COMMITMENT BY LANDLORD OR ITS AGENTS TO RESERVE THE
            PREMISES OR TO LEASE THE PREMISES TO TENANT. THIS LEASE SHALL BECOME
            EFFECTIVE AND LEGALLY BINDING ONLY UPON FULL EXECUTION AND DELIVERY
            BY BOTH LANDLORD AND TENANT. UNTIL LANDLORD DELIVERS A FULLY
            EXECUTED COUNTERPART HEREOF TO TENANT, LANDLORD HAS THE RIGHT TO
            OFFER AND TO LEASE THE PREMISES TO ANY OTHER PERSON TO THE EXCLUSION
            OF TENANT.

EXECUTED, by Landlord and Tenant as of the date first written above.

                                      LANDLORD:

                                      COLLINS-TECH R.B.
                                      a California general partnership

                                      By: CDC FINANCIAL INVESTORS GP I, a
                                      California limited liability company,
                                          General Partner

                                          By: COLLINS DEVELOPMENT
                                              COMPANY, INC., a California
                                              corporation, Manager

                                              By: /s/ Robert Petersen
                                                  ------------------------------
                                              Title:
                                                     ---------------------------

                                              By: /s/ E. Tyler Miller
                                                  ------------------------------
                                              Title:
                                                     ---------------------------

                                      TENANT:

                                      JMAR TECHNOLOGIES, INC.,
                                      a Delaware corporation

                                      By: /s/ Ronald A. Walrod
                                          --------------------------------
                                      Title: President & CEO
                                             -----------------------------

                                      By: /s/ Joseph G. Martinez
                                          --------------------------------
                                      Title: Senior VP
                                             -----------------------------

                                       21
<PAGE>

                      ADDENDUM TO STANDARD INDUSTRIAL LEASE
                  (JMAR TECHNOLOGIES - 10905 TECHNOLOGY PLACE)

This ADDENDUM TO STANDARD INDUSTRIAL LEASE ("Addendum") is attached to and made
a part of that certain Standard Industrial Lease by and between COLLINS-TECH
R.B., a California limited partnership ("Landlord"), and JMAR TECHNOLOGIES,
INC., a California corporation ("Tenant"), dated July 1, 2005 (the "Lease"), for
premises located at 10905 Technology Place, San Diego, California (the
"Premises"). Landlord and Tenant hereby agree that notwithstanding anything
contained in the Lease to the contrary, the provisions set forth below shall be
deemed to be a part of the Lease and shall supersede, to the extent appropriate,
any contrary provision of the Lease. All references to the "Lease" in this
Addendum shall be construed to mean the Lease, and any and all exhibits and/or
other addenda thereto, as amended and supplemented by this Addendum. All
capitalized terms used in this Addendum, unless specifically defined in this
Addendum, shall have the same meaning as such terms have in the Lease.

            25.   OPTIONAL LETTER OF CREDIT.

                  25.1 Tenant shall have the right to substitute a Letter of
Credit for all but Thirty Thousand, Six Hundred Five Dollars ($30,605) of the
Security Deposit described in Section 1.6 and Article 5. Tenant may do so within
thirty (30) days of the execution and delivery of this Lease by both parties.
Such Letter of Credit shall be issued by a financial institution in a form and
substance acceptable to Landlord. The Letter of Credit shall have an original
term of no less than one year with provisions for extensions unless sixty (60)
days prior notice is given to Landlord by the issuing bank. The Letter of Credit
shall provide for partial draws. Tenant shall keep the Letter of Credit, at its
expense, in full force and effect throughout the term of this Lease.

                  25.2 Upon the happening of any "Draw Event" (as defined
below), Landlord or its assignee, at its option, may present its written demand
for payment of the entire face amount of the Letter of Credit and the funds so
obtained shall become due and payable to Landlord or its assignee, and at the
election of Landlord shall be (i) held and applied as a part of the Security
Deposit pursuant to the provisions of Article 5 above, or (ii) shall be applied
directly to any then-uncured Event of Default. In connection with any such
demand, Landlord shall be required only to present to the issuing bank a
statement providing substantially as follows: "The undersigned, being a duly
authorized representative or officer of Collins - Tech R.B., a California
limited partnership ("Landlord"), hereby represents that Landlord is entitled to
draw on this letter of credit pursuant to that certain Standard Industrial Net
Lease by and between Landlord and JMAR Technologies, Inc., a Delaware
corporation, dated July 1, 2005, as amended, for the premises located at 10905
Technology Place, San Diego, California."

                  25.3 A "Draw Event" shall mean any of the following:

                        (a) Tenant becomes or is the subject of any bankruptcy,
insolvency or similar proceeding or event, or upon the occurrence of an Event of
Default under Section 21(d).

                        (b) Upon the occurrence of an Event of Default under
Sections 21(a), 21(b) or 21(c) (i.e., the events described in such sections
have occurred and all applicable notice and/or grace periods, if any, have
expired), and (i) Landlord has given Tenant notice of its intention to draw upon
the Letter of Credit (a "Draw Notice"), and (ii) Tenant has failed to completely
and fully cure such Event of Default (including without limitation the
reimbursement of all of Landlord's attorneys' fees) within ten (10) days after
the giving of such Draw Notice.

                        (c) The Letter of Credit is not extended, or a
substitute Letter of Credit meeting the requirements of this Section or cash is
not provided, within thirty (30) days prior to its expiration (which non-renewal
and failure to provide a substitute Letter of Credit meeting the requirements of
this Section or cash itself shall constitute an Event of Default under the Lease
immediately without further notice).

It is distinctly understood and agreed that the giving of any Draw Notice is not
a condition to the declaration of any Event of Default, and any Event of Default
that has occurred shall continue in existence notwithstanding the giving of Draw
Notice. Without limiting any other provision of this Lease, following any Event
of Default and prior to the cure, if any, of such Event of Default as allowed
pursuant to subsection (b) above), Landlord shall have the right to avail itself
of any and all rights and remedies arising out of such Event of Default,
including the commencement and prosecution of any unlawful detainer or other
action or proceeding.

                  25.4 The Security Deposit shall be reduced by Fifty Thousand
Dollars $50,000 at the end of the Second Lease Year and $25,000 at the end of
each Lease Year thereafter provided that any such reduction shall be postponed
for one year if Landlord is entitled to impose a late charge under Section 22.4,
twice in the preceding 12-month period. In no event shall the Security Deposit
comprise less than Thirty Thousand, Six Hundred Five Dollars ($30,605) in cash.

                                   "ADDENDUM"
                                     Page 1
<PAGE>

            26. OPTION TO EXTEND TERM.

                  26.1 Tenant shall have the option (the "Option") to extend the
term of this Lease for one (1) additional period of five (5) years ("Option
Term") upon all of the terms and conditions of this Lease, other than the
Minimum Monthly Rent, which shall be determined as described below. The Option
must be exercised, if at all, by Tenant giving Landlord written notice of the
exercise thereof no more than twelve (12) months and no less than nine (9)
months prior to the expiration of this Lease Term. Any failure of Tenant to give
due notice of its exercise of the Option within the required time shall
constitute an irrevocable election on the part of Tenant not to exercise the
Option, and this Lease shall expire at the end of the Term. Tenant shall have no
other right to extend this Lease Term beyond the Option Term described herein.
Notwithstanding anything set forth herein to the contrary, if on the date of
giving the notice or the date the Option Term is to commence, there exists any
Event of Default on the part of Tenant under this Lease, Tenant's notice shall
be deemed ineffective, the Option Term shall not commence and this Lease shall
expire as scheduled. In addition, any due exercise of Tenant's option hereunder
shall be voidable by Landlord if, at the time of such exercise, there existed
any condition of default on the part of Tenant with respect to which Landlord
had given a notice of default under Section 21 and Tenant thereafter fails to
cure such default within any applicable cure period.

                  26.2 The Minimum Monthly Rent during the Option Term initially
shall be the "Fair Market Rental Value" of the Premises, as defined below, as of
the first day of the Option Term; provided, however, that in no event shall the
Minimum Monthly Rent for any portion of the Option Term be less than the Minimum
Monthly Rent in effect for the last month of the Term immediately preceding the
commencement of the Option Term, regardless of any determination of a Fair
Market Rental Value pursuant to the other provisions of this Section that would
result in a lower Minimum Monthly Rent.

                  26.3 Upon exercise of the Option, Landlord and Tenant shall,
in good faith, attempt to reach a mutually acceptable Fair Market Rental Value
of the Premises and consequent Minimum Monthly Rent for the Option Term. If
Landlord and Tenant cannot agree upon the Fair Market Rental Value within thirty
(30) business days of Tenant's exercise of the Option, then within ten (10) days
thereafter, Landlord and Tenant shall each select and notify the other of the
name of an "Evaluator," who, for purposes of this Section, shall be an
independent and impartial real estate professional (such as a licensed real
estate agent) having more than ten years' experience in the leasing of space
comparable to the Premises. Each Evaluator shall promptly proceed to select a
third Evaluator, who shall have the aforesaid qualifications of an Evaluator.
Such third Evaluator shall determine the Fair Market Rental Value of the
Premises and shall deliver to both Landlord and Tenant a copy of such
determination within thirty (30) days after his or her appointment as the third
Evaluator. The parties agree that the third Evaluator's determination as
aforesaid shall be considered as the Fair Market Rental Value of the Premises
and shall be conclusive and binding upon Landlord and Tenant. If the original
two Evaluators shall fail to agree upon the selection of a third Evaluator, the
same shall be designated by the president of the San Diego Board of Realtors, or
any successor organization thereto. Landlord and Tenant shall each pay any fees
of their own Evaluator and shall share equally the fees of the third Evaluator,
if any.

                  26.4 As used herein, the term "Fair Market Rental Value" shall
mean the rent for space comparable to the Premises in the Rancho Bernardo area
of the County of San Diego that a willing, comparable Tenant would pay to a
willing Landlord, neither of whom is compelled to rent, at arms length, on all
of the terms and conditions of the Lease (other than the Minimum Monthly Rent,
which is to be determined pursuant to this Section). In determining the Fair
Market Rental Value, it shall be assumed that Landlord has fully paid any and
all leasing costs (including without limitation tenant improvement costs,
leasing commissions and tenant concessions), that might be prevalent in the
marketplace. The determination of Fair Market Rental Value shall also include
any appropriate adjustments over the term of the Option Term in the Minimum
Monthly Rent based on the cost of living or otherwise (including any minimums
and maximums in the adjustment thereof), and without regard to any leasing costs
(including without limitation tenant improvement costs, leasing commissions and
tenant concessions), that might be prevalent in the marketplace.

                  26.5 No brokerage commissions or fees shall be payable by
Landlord in connection with any extension of the Lease Term pursuant to the
Option contained in this Section.

            27. ROOF PENETRATIONS AND EQUIPMENT.

                  27.1 Tenant shall have the right, at its sole cost and expense
and subject to Landlord's reasonable approval and any approvals required by the
City of San Diego, to place telecommunications equipment, satellite dish(es) and
antenna(e) together with all wiring or other connections therefor (collectively,
the "Roof Items"), on the roof of the Building in a location reasonably
designated by Landlord. If any such installation interferes with the operations
or installations of any other tenant or of Landlord installed prior to the
installation of Tenant's equipment, Tenant shall, at its sole cost and expense,
at Landlord's request relocate or modify its installation to eliminate any such
interference.

                                   "ADDENDUM"
                                     Page 2
<PAGE>

                  27.2 Landlord shall, at Tenant's cost, cooperate with Tenant
in the procurement of necessary permits or zoning variances for the Roof Items
and execute all documents required to obtain necessary permits or zoning
variances.

                  27.3 Tenant shall follow any reasonable recommendations of
Landlord's roofing contractor with respect to the installation of the Roof
Items. Following the installation of the Roof Items, Landlord's roofing
contractor shall inspect the same and Tenant shall conduct such repairs,
maintenance or other installations as may be recommended by Landlord's roofing
contractor related to such installation. All such repairs as well as the costs
of Landlord's roofing contractor in conducting such inspections, shall be borne
by Tenant. In the event Landlord contemplates roof repair or requires access
that requires temporary removal or relocation of the Roof Items, or which may
result in an interruption in Tenant's telecommunication services, Landlord
shall, if practicable, notify Tenant at least thirty (30) days prior to such
contemplated work in order to allow Tenant to make other arrangements for such
services. The cost or removal and re-installation of any Roof Items affected
thereby shall be borne by Tenant. Tenant shall not be required to relocate any
of its Roof Items to accommodate the needs of any other tenant or occupant of
the Building. Tenant or its agents or representatives shall be permitted use of
and access to the roof for the purposes stated herein. Tenant shall give
Landlord at least ten (10) days prior notice of its intention to install any
additional Roof Items and shall afford Landlord a reasonable opportunity to have
its representative present during such installation.

                  27.4 Upon termination of the Lease, Tenant shall disconnect
and remove such Roof Items, and fully repair and restore the roof to the same
condition than prior to installation of the Roof Items, normal wear and tear
excepted. Tenant's obligations with respect to the Roof Items are identical to
Tenant's obligations with respect to the Premises pursuant to the Lease,
including without limitation maintenance, insurance and indemnification.
Provided, however, that at the sole discretion of Landlord, Tenant may leave
some or all of its Roof Items in place after the expiration or earlier
termination of the Lease.

                  27.5 The Roof Items may be used solely by Tenant in connection
with Tenant's own business. Tenant acknowledges and agrees that the rooftop
access for antenna(e) and communications devices is a valuable asset of
Landlord's, and Landlord's ability to rent such rooftop access to other
companies providing telecommunications services would be severely curtailed or
impaired should Tenant offer the same rooftop access to persons or entities
providing the same or similar services to others. Accordingly, the Roof Items
shall not be in any way used, leased or made available to anyone other than
Tenant, whether for free or at a charge, except (i) in connection with Tenant's
business conducted in the Premises, (ii) in the instance of other companies
transmitting information in common with information being transmitted as part of
Tenant's own business.

                  27.6 All Roof Items shall be placed a sufficient distance from
the front of the Center parapet such that no Roof Items are visible from
pedestrians or vehicles on any public street.

            28. NO OTHER CHANGE. Except as specifically set forth in this
Addendum, all of the terms and conditions of the Lease and any other addendum
thereto shall remain unchanged and in full force and effect.

                                      LANDLORD:

                                      COLLINS-TECH R.B.
                                      a California general partnership

                                      By: CDC FINANCIAL INVESTORS GP I, a
                                      California limited liability company,
                                          General Partner

                                          By: COLLINS DEVELOPMENT
                                              COMPANY, INC., a California
                                              corporation, Manager

                                              By: /s/ Robert Petersen
                                                  _________________________

                                              Title:
                                                     ______________________

                                              By: /s/ E. Tyler Miller
                                                  _________________________
                                              Title:
                                                     ______________________

                                      TENANT:

                                      JMAR TECHNOLOGIES, INC.,
                                      a Delaware corporation

                                      By: /s/ Ronald A. Walrod
                                          _________________________________
                                      Title:  President & CEO
                                             ______________________________

                                      By: /s/ Joseph G. Martinez
                                          _________________________________
                                      Title:  Senior VP
                                             ______________________________

                                   "ADDENDUM"
                                     Page 3
<PAGE>

               CONSTRUCTION ADDENDUM TO STANDARD INDUSTRIAL LEASE
                  (JMAR TECHNOLOGIES - 10905 TECHNOLOGY PLACE)

This CONSTRUCTION ADDENDUM TO STANDARD INDUSTRIAL LEASE ("Construction
Addendum") is attached to and made a part of that certain Standard Industrial
Lease by and between COLLINS-TECH R.B., a California limited partnership
("Landlord"), and JMAR TECHNOLOGIES, INC., a Delaware corporation ("Tenant"),
dated July 1, 2005 (the "Lease"), for premises located at 10905 Technology
Place, San Diego, California (the "Premises"). Landlord and Tenant hereby agree
that notwithstanding anything contained in the Lease to the contrary, the
provisions set forth below shall be deemed to be a part of the Lease and shall
supersede, to the extent appropriate, any contrary provision of the Lease. All
references to the "Lease" in this Construction Addendum shall be construed to
mean the Lease, and any and all exhibits and/or other addenda thereto, as
amended and supplemented by this Construction Addendum. All capitalized terms
used in this Construction Addendum, unless specifically defined in this
Construction Addendum, shall have the same meaning as such terms have in the
Lease.

            29. TENANT IMPROVEMENTS; ALLOWANCE; FIRE SPRINKLERS.

                  29.1 Landlord, at Landlord's sole expense, shall construct a
fire sprinkler safety system (including upgrades to the existing system)
(collectively the "Fire Sprinklers") in accordance with plans and specifications
prepared by Bunche Architects.

                  29.2 Notwithstanding the foregoing, Landlord shall not be
required to expend more than One Hundred Fifty Thousand Dollars ($150,000) (the
"Maximum Amount") for the construction of the Fire Sprinklers. Such costs shall
include any and all costs and expense spent or incurred by Landlord in the
design, permitting, construction, clean up, upgrading, retrofitting,
supervising, or otherwise preparing the Premises and the Building for the
installation of the Fire Sprinklers. If the Maximum Amount is insufficient to
pay the costs of the Fire Sprinklers, Landlord shall give Tenant notice thereof
within a reasonable time after Landlord determines that such a shortfall will
exist. Tenant shall, within five (5) business days after such notice, elect
whether to pay the shortfall or terminate this Lease.

                  29.3 Within 90 days after delivery of possession of the
Premises to Tenant for any purpose, Tenant will complete an inspection and
testing of the Premises and its systems, including without limitation the HVAC,
electrical, mechanical, plumbing, ceiling tiles, lights and lenses, and ceiling
grid work. In addition to Tenant's acknowledgements and agreements set forth in
the Lease, except for Landlord's agreement to install the Fire Sprinklers as
provided above, upon Tenant's completion of such inspection and testing Tenant
shall accept the Premises in its current "AS-IS, WHERE-IS" condition and
configuration.

            30. TENANT IMPROVEMENTS BY TENANT; TENANT IMPROVEMENT ALLOWANCE.

                  30.1 TENANT IMPROVEMENT ALLOWANCE. Tenant intends to construct
certain initial improvements in the Premises (the "Tenant Improvements"). Tenant
shall be entitled to a one-time tenant improvement allowance of up to Three
Hundred Forty-Six Thousand Two Hundred Dollars $346,200 (the "Allowance") for
the costs relating to the design and construction of the Tenant Improvements. In
no event shall Landlord be obligated to make disbursements pursuant to this
Construction Addendum in a total amount that exceeds the Allowance.

                  30.2 ALLOWANCE ITEMS. Except as otherwise set forth in this
Construction Addendum, the Allowance shall be disbursed by Landlord only for the
following items and costs (collectively the "Allowance Items"):

                        (a) Payment of the fees of the "Architect" and the
"Engineers," as defined in Section 29.4 of this Construction Addendum, which
fees shall, notwithstanding anything to the contrary contained in this
Construction Addendum, not exceed an aggregate amount equal to $30,000, and
payment of the fees incurred by, and the cost of documents and materials
supplied by, Landlord and Landlord's consultants in connection with the
preparation and review of the "Construction Drawings," as defined in Section
29.4 of this Construction Addendum;

                        (b) The payment of plan check, building permit and
license fees relating to construction of the Tenant Improvements;

                        (c) The cost of constructing the Tenant Improvements,
including, without limitation, testing and inspection costs, , utility usage,
and trash removal costs, and contractors' fees and general conditions;

                        (d) The cost of any changes in the Premises or the
Building when such changes are required by the Construction Drawings;

                             "CONSTRUCTION ADDENDUM"
                                     Page 1
<PAGE>

                        (e) The cost of any changes to the Construction Drawings
or Tenant Improvements required by applicable building code ("Code");

                        (f) Sales and use taxes;

                        (g) Title 24 fees; and

                        (h) All other actual costs to be expended by Landlord in
connection with the construction of the Tenant Improvements.

                  30.3 DISBURSEMENT OF ALLOWANCE. During the construction of the
Tenant Improvements, no more frequently than monthly, Landlord shall make
disbursements of the Allowance for Allowance Items and/or shall authorize the
release of monies as follows:

                        (a) PERIODIC DISBURSEMENTS. To obtain a disbursement of
the Allowance, Tenant shall deliver to Landlord: (i) a request for payment of
the "Contractor," defined in Section 29.5 of this Construction Addendum,
approved by Tenant, in a form to be provided by Landlord, showing the schedule,
by trade, of percentage of completion of the Tenant Improvements in the
Premises, detailing the portion of the work completed and the portion not
completed, (ii) invoices from all of "Tenant's Construction Agents," as defined
in Section 29.5(b) of this Construction Addendum, for labor rendered and
materials delivered to the Premises, (iii) executed mechanic's lien releases
from all of Tenant's Construction Agents; and (iv) all other information
reasonably requested by Landlord. Tenant's request for payment shall be deemed
Tenant's acceptance and approval of the work furnished and/or the materials
supplied as set forth in Tenant's payment request. Thereafter, Landlord shall
deliver a check to Tenant made jointly payable to Contractor, any subcontractor,
and Tenant in payment of the lesser of: (A) the amounts so requested by Tenant,
as set forth in this Section, less a ten percent (10%) retention (the aggregate
amount of such retentions shall collectively referred to herein as the "Final
Retention"), and (B) the balance of any remaining available portion of the
Allowance (not including the Final Retention), provided that Landlord does not
dispute any request for payment based on non-compliance of any work with the
Approved Working Drawings (defined in Section 29.4(d) below), or due to any
substandard work, or for any other reason. Landlord's payment of such amounts
shall not be deemed Landlord's approval or acceptance of the work furnished or
materials supplied as set forth in Tenant's payment request.

                        (b) FINAL RETENTION. Subject to the provisions of this
Construction Addendum, a check for the Final Retention payable jointly to
Contractor, any other applicable Tenant's Construction Agents, and Tenant shall
be delivered by Landlord to Tenant following the completion of construction of
the Tenant Improvements, provided that (i) Tenant delivers to Landlord properly
executed mechanics lien releases, (ii) Landlord has determined that no
substandard work exists that adversely affects the mechanical, electrical,
plumbing, heating, ventilating and air conditioning, life-safety or other
systems of the Building, the structure or exterior appearance of the Building,
or any other tenant's use of such other tenant's leased premises in the
Building, and (iii) Architect delivers to Landlord a certificate, in a form
reasonably acceptable to Landlord, certifying that the construction of the
Tenant Improvements in the Premises has been substantially completed.

                        (c) OTHER TERMS. Landlord shall only be obligated to
make disbursements from the Allowance to the extent costs are incurred by Tenant
for Allowance Items.

                  30.4 CONSTRUCTION DRAWINGS.

                        (a) SELECTION OF DRAWINGS. Tenant shall retain an
architect/space planner approved by Landlord (the "Architect") to prepare the
Construction Drawings. If appropriate, Tenant shall retain engineering
consultants approved by Landlord (the "Engineers") to prepare all plans and
engineering working drawings relating to the structural, mechanical, electrical,
plumbing, HVAC and life safety (excluding the Fire Sprinklers described in
Section 25) in the Premises. The plans and drawings to be prepared by the
Architect and the Engineers hereunder shall be referred to collectively herein
as the "Construction Drawings." All Construction Drawings shall comply with the
drawing format and specifications determined by Landlord, and shall be subject
to Landlord's approval. Landlord's review of the Construction Drawings shall be
for its sole purpose and shall not obligate Landlord to review the same for
quality, design, Code compliance or other like matters. Accordingly,
notwithstanding that any Construction Drawings are reviewed by Landlord or its
space planner, architect, engineers and consultants, and notwithstanding any
advice or assistance that may be rendered to Tenant by Landlord or Landlord's
space planner, architect, engineers, and consultants, Landlord shall have no
liability whatsoever in connection therewith and shall not be responsible for
any omissions or errors contained in the Construction Drawings, and Tenant's
waiver and indemnity set forth in Section of the Lease shall specifically apply
to the Construction Drawings.

                            "CONSTRUCTION ADDENDUM"

                                     Page 2
<PAGE>

                        (b) PRELIMINARY AND FINAL SPACE PLANS. Attached hereto
as Exhibit D is a copy of the preliminary space plan for the Tenant
Improvements, which preliminary plan is approved by Landlord and Tenant.
Landlord acknowledges that Tenant will reduce the number of demised private
offices and other planned improvements in the mezzanine area of the Premises and
will make modifications to reduce the number of laser laboratories and to move
the "chiller room" outside to the fenced storage area behind the Facility.
Tenant shall supply Landlord with four (4) copies signed by Tenant of its final
space plan for the Premises before any architectural working drawings or
engineering drawings have been commenced. The final space plan (the "Final Space
Plan") shall include a layout and designation of all offices, rooms and other
partitioning, their intended use, and equipment to be contained therein.
Landlord may request clarification or more specific drawings for special use
items not included in the Final Space Plan. Landlord shall advise Tenant within
five (5) business days after Landlord's receipt of the Final Space Plan for the
Premises if the same is unsatisfactory or incomplete in any respect. If Tenant
is so advised, Tenant shall promptly cause the Final Space Plan to be revised to
correct any deficiencies or other matters Landlord may reasonably require.

                        (c) FINAL WORKING DRAWINGS. After the Final Space Plan
has been approved by Landlord, Tenant shall supply the Engineers with a complete
listing of standard and non-standard equipment and specifications, including,
without limitation, BTU calculations, electrical requirements and special
electrical receptacle requirements for the Premises, to enable the Engineers and
the Architect to complete the "Final Working Drawings" (as defined below) in the
manner as set forth below. Upon the approval of the Final Space Plan by Landlord
and Tenant, Tenant shall promptly cause the Architect and the Engineers to
complete the architectural and engineering drawings for the Premises, and
Architect shall compile a fully coordinated set of architectural, structural,
mechanical, electrical and plumbing working drawings in a form that is complete
to allow subcontractors to bid on the work and to obtain all applicable permits
(collectively, the "Final Working Drawings") and shall submit the same to
Landlord for Landlord's approval. Tenant shall supply Landlord with four (4)
copies signed by Tenant of such Final Working Drawings. Landlord shall advise
Tenant within ten (10) business days after Landlord's receipt of the Final
Working Drawings for the Premises if the same is unsatisfactory or incomplete in
any respect. If Tenant is so advised, Tenant shall immediately revise the Final
Working Drawings in accordance with such review and any disapproval of Landlord
in connection therewith.

                        (d) APPROVED WORKING DRAWINGS. The Final Working
Drawings shall be approved by Landlord (the "Approved Working Drawings") prior
to the commencement of construction of the Premises by Tenant. After approval by
Landlord of the Final Working Drawings, Tenant may submit the same to the city
and other governmental agencies having jurisdiction for all applicable building
permits. Tenant hereby agrees that neither Landlord nor Landlord's consultants
shall be responsible for obtaining any building permit or certificate of
occupancy for the Premises and that obtaining the same shall be Tenant's
responsibility; provided, however, that Landlord shall cooperate with Tenant in
executing permit applications and performing other ministerial acts reasonably
necessary to enable Tenant to obtain any such permit or certificate of
occupancy. No changes, modifications or alterations in the Approved Working
Drawings may be made without the prior written consent of Landlord, which
consent may not be unreasonably withheld.

                  30.5 TENANT'S SELECTION OF CONTRACTORS.

                        (a) THE CONTRACTOR. A licensed general contractor
("Contractor") selected by Tenant and approved by Landlord shall be retained by
Tenant to construct the Tenant Improvements.

                        (b) TENANT'S CONSTRUCTION AGENTS. All subcontractors,
laborers, materialmen, and suppliers used by Tenant (collectively, "Tenant's
Construction Agents") must be approved in writing by Landlord, which approval
shall not be unreasonably withheld or delayed. The term "Tenant's Construction
Agents" shall include Contractor. If Landlord does not approve any proposed
Tenant's Construction Agents, Tenant shall submit other proposed Tenant's
Construction Agents for Landlord's written approval. Notwithstanding the
foregoing, Tenant shall retain subcontractors approved by Landlord in connection
with any structural, roof, mechanical, electrical, plumbing or heating,
air-conditioning or ventilation work to be performed in the Premises.

                  30.6 CONSTRUCTION OF TENANT IMPROVEMENTS BY TENANT'S
            CONSTRUCTION AGENTS.

                        (a) GENERAL CONSTRUCTION CONTRACT; COST BUDGET. Prior to
Tenant's execution of the general construction contract and general conditions
with Contractor (the "General Contract"), Tenant shall submit the General
Contract to Landlord for its approval. Prior to the commencement of the
construction of the Tenant Improvements, and after Tenant has accepted all bids
for the Tenant Improvements, Tenant shall provide Landlord with a detailed
breakdown, by trade, of the final costs to be incurred or that have been
incurred, in connection with the design and construction of the Tenant
Improvements, which costs form a basis for the amount of the General Contract
(the "Final Costs").

                            "CONSTRUCTION ADDENDUM"

                                     Page 3
<PAGE>

                        (b) LANDLORD'S GENERAL CONDITIONS. Tenant's and Tenant's
Construction Agent's construction of the Tenant Improvements shall comply with
the following: (i) the Tenant Improvements shall be constructed in strict
accordance with the Approved Working Drawings, (ii) Tenant's Construction Agents
shall submit schedules of all work relating to the Tenant's Improvements to
Contractor, and Contractor shall, within five (5) business days of receipt
thereof, inform Tenant's Construction Agents of any changes that are necessary
thereto, and Tenant's Construction Agents shall adhere to such corrected
schedule, and (iii) Tenant shall abide by all rules made by Landlord with
respect to the use of freight, loading dock and service elevators, storage of
materials, coordination of work with the contractors of other tenants, and any
other matter in connection with this Construction Addendum, including, without
limitation, the construction of the Tenant Improvements.

                        (c) INDEMNITY. Tenant's indemnity of Landlord as set
forth in Section 13 of the Lease shall also apply with respect to any and all
costs, losses, damages, injuries and liabilities related in any way to any act
or omission of Tenant or Tenant's Construction Agents, or anyone directly or
indirectly employed by any of them, or in connection with the Tenant
Improvements.

                        (d) REQUIREMENTS OF TENANT'S CONSTRUCTION AGENTS. Each
of Tenant's Construction Agents shall guarantee to Tenant and for the benefit of
Landlord that the portion of the Tenant Improvements for which it is responsible
shall be free from any defects in workmanship and materials for a period of not
less than one (1) year from the date of completion thereof. Each of Tenant's
Construction Agents shall be responsible for the replacement or repair, without
additional charge, of all work done or furnished in accordance with its contract
that shall become defective within one (1) year after the later to occur of (i)
completion of the work performed by such contractor or subcontractors and (ii)
the Commencement Date of the Lease. The correction of such work shall include,
without additional charge, all additional expenses and damage incurred in
connection with such removal or replacement of all or any part of the Tenant
Improvements and/or the Premises or the Center and/or Common Facilities. All
such warranties or guarantees as to materials or workmanship of or with respect
to the Tenant Improvements shall be contained in the General Contract or
subcontract and shall be written such that such guarantees or warranties shall
inure to the benefit of both Landlord and Tenant, as their respective interests
may appear, and can be directly enforced by either. Tenant shall give Landlord
any assignment or other assurances that may be necessary to effect such right of
direct enforcement.

                  30.7 INSURANCE REQUIREMENTS.

                        (a) GENERAL COVERAGES. All of Tenant's Construction
Agents shall carry worker's compensation insurance covering all of their
respective employees, and shall also carry public liability insurance, including
property damage, all with limits, in form and with companies as are required to
be carried by Tenant under the Lease.

                        (b) SPECIAL COVERAGES. Tenant shall carry "Builder's All
Risk" insurance in an amount approved by Landlord covering the construction of
the Tenant Improvements, and such other insurance as Landlord may require. Such
insurance shall be in amounts and shall include such extended coverage
endorsements as may be reasonably required by Landlord including, but not
limited to, the requirement that all of Tenant's Construction Agents shall
carry excess liability and Products and Completed Operation Coverage insurance,
each in amounts not less than $3,000,000 combined single limit, and in form and
with companies as are required to be carried by Tenant under the other
provisions of the Lease.

                        (c) GENERAL TERMS. Certificates for all insurance
carried pursuant to this Section shall be delivered to Landlord before the
commencement of construction of the Tenant Improvements and before the
Contractor's equipment is moved onto the site. All such policies of insurance
must contain a provision that the company writing said policy will give Landlord
thirty (30) days' prior written notice of any cancellation or lapse of the
effective date or any reduction in the amounts of such insurance. In the event
that the Tenant Improvements are damaged by any cause during the course of the
construction thereof, Tenant shall immediately repair the same at Tenant's sole
cost and expense. Tenant's Construction Agents shall maintain all of the
foregoing insurance coverage in force until the Tenant Improvements are fully
completed and accepted by Landlord. All policies carried under this Section
shall insure Landlord and Tenant, as their interests may appear, as well as
Tenant's Construction Agents. All insurance, except Workers' Compensation,
maintained by Tenant's Construction Agents shall preclude subrogation claims by
the insurer against anyone insured thereunder. Such insurance shall provide that
it is primary insurance as respects the Landlord and that any other insurance
maintained by Landlord is excess and noncontributing with the insurance required
hereunder. Landlord may, in its discretion, require Tenant to require its
contractors obtain a lien and completion bond or some alternate form of security
satisfactory to Landlord in an amount sufficient to ensure the lien-free
completion of the Tenant Improvements and naming Landlord as a co-obligee.

                  30.8 GOVERNMENTAL COMPLIANCE. The Tenant Improvements shall
comply in all respects with the following: (i) the Code and other state,
federal, city or quasi-governmental laws, codes, ordinances and regulations, as
each may apply according to the rulings of the controlling public official,
agent or other person; (ii) applicable standards of the American

                            "CONSTRUCTION ADDENDUM"

                                     Page 4
<PAGE>

Insurance Association (formerly, the National Board of Fire Underwriters) and
the National Electrical Code; and (iii) building material manufacturer's
specifications.

                  30.9 INSPECTION BY LANDLORD. Landlord shall have the right to
inspect the Tenant Improvements at all times, provided however, that Landlord's
failure to inspect the Tenant Improvements shall in no event constitute a waiver
of any of Landlord's rights hereunder nor shall Landlord's inspection of the
Tenant Improvements constitute Landlord's approval of the same. Should Landlord
disapprove any portion of the Tenant Improvements, Landlord shall notify Tenant
in writing of such disapproval and shall specify the items disapproved. Any
defects or deviations in, and/or disapproval by Landlord of, the Tenant
Improvements shall be rectified by Tenant at no expense to Landlord, provided
however, that if Landlord determines that a defect or deviation exists or
disapproves of any matter in connection with any portion of the Tenant
Improvements and such defect, deviation or matter might adversely affect the
mechanical, electrical, plumbing, heating, ventilating and air-conditioning or
life-safety systems of the Building, the structure or exterior appearance of the
Building or the use of the building or Center by any other occupant thereof,
Landlord may take such action as Landlord deems necessary, at Tenant's expense
and without incurring any liability on Landlord's part, to correct any such
defect, deviation and/or matter, including, without limitation, causing the
cessation of performance of the construction of the Tenant Improvements until
such time as the defect, deviation and/or matter is corrected to Landlord's
satisfaction.

                  30.10 MEETINGS. During the design and construction of the
Tenant Improvements, Landlord, at Landlord's election, shall hold weekly
meetings with the Tenant, Architect, the Contractor and such of Tenant's
Construction Agents as Landlord may reasonably require regarding the progress of
the preparation of Construction Drawings and the construction of the Tenant
Improvements.

                  30.11 NOTICE OF COMPLETION; COPY OF RECORD SET OF PLANS.
Within ten (10) days after completion of construction of the Tenant
Improvements, Tenant shall cause a Notice of Completion to be recorded in the
office of the Recorder of the county in which the Center is located, and shall
furnish a copy thereof to Landlord upon such recordation. If Tenant fails to do
so, Landlord may execute and file the same on behalf of Tenant as Tenant's agent
for such purpose, at Tenant's sole cost and expense. At the conclusion of
construction, (i) Tenant shall cause the Architect and Contractor (A) to update
the Approved Working Drawings as necessary to reflect all changes made to the
Approved Working Drawings during the course of construction, (B) to certify to
the best of their knowledge that the "record-set" of mylar as-built drawings are
true and correct, which certification shall survive the expiration or
termination of the Lease, and (C) to deliver to Landlord two (2) sets of copies
of such record set of drawings within ninety (90) days following issuance of a
certificate of occupancy for the Premises, and (ii) Tenant shall deliver to
Landlord a copy of all warranties, guaranties, and operating manuals and
information relating to the improvements, equipment, and systems in the
Premises.

                  30.12 MISCELLANEOUS.

                        (a) TIME OF THE ESSENCE. Unless otherwise indicated, all
references herein to a "number of days" shall mean and refer to calendar days.
If any item requiring approval is timely disapproved by Landlord, the procedure
for preparation of the document and approval thereof shall be repeated until the
document is approved by Landlord.

                        (b) TENANT'S LEASE DEFAULT. Notwithstanding any
provision to the contrary contained in the Lease, if an Event of Default as
described in Section 21 of the Lease has occurred at any time on or before the
Substantial Completion of the Premises, then (i) in addition to all other rights
and remedies granted to Landlord pursuant to the Lease, Landlord shall have the
right to withhold payment of all or any portion of the Allowance and/or Landlord
may cause Contractor to cease the construction of the Premises (in which case,
Tenant shall be responsible for any delay in the substantial completion of the
Premises caused by such work stoppage), and (ii) all other obligations of
Landlord under the terms of this Construction Addendum shall be forgiven until
such time as such default is cured pursuant to the terms of the Lease (in which
case, Tenant shall be responsible for any delay in the substantial completion of
the Premises caused by such inaction by Landlord).

                            "CONSTRUCTION ADDENDUM"

                                     Page 5
<PAGE>

            31. NO OTHER CHANGE. Except as specifically set forth in this
Construction Addendum, all of the terms and conditions of the Lease and any
other addendum thereto shall remain unchanged and in full force and effect.

                                       LANDLORD:

                                       COLLINS-TECH R.B.
                                       a California general partnership

                                       By: CDC FINANCIAL INVESTORS GP I, a
                                       California limited liability company,
                                           General Partner

                                           By: COLLINS DEVELOPMENT
                                               COMPANY, INC., a California
                                               corporation, Manager

                                               By: /s/ Robert Petersen
                                                  ______________________________
                                               Title:
                                                     ___________________________

                                               By: /s/ E. Tyler Miller
                                                  _____________________________
                                               Title:
                                                     ___________________________

                                       TENANT:

                                       JMAR TECHNOLOGIES, INC.,
                                       a Delaware corporation

                                       By: /s/ Ronald A. Walrod
                                          _____________________________
                                       Title:  President & CEO
                                             __________________________

                                       By: /s/ Joseph G. Martinez
                                          _____________________________
                                       Title:  Senior VP
                                             __________________________

                            "CONSTRUCTION ADDENDUM"

                                     Page 6
<PAGE>

                                   EXHIBIT "A"
                          SITE/FLOOR PLAN OF PREMISES/
                              DESCRIPTION OF CENTER

                               Exhibit A - Page i
<PAGE>

                                   EXHIBIT "B"
                              RULES AND REGULATIONS

The following Rules and Regulations shall apply to the Center. Tenant agrees to
comply with the same and to require its agents, employees, contractors,
customers and invitees to comply with the same. Landlord shall have the right
from time to time to amend or supplement these Rules and Regulations, and Tenant
agrees to comply, and to require its agents, employees, contractors, customers
and invitees to comply, with such amended or supplemented Rules and Regulations,
provided that (a) notice of such amended or supplemental Rules and Regulations
is given to Tenant, and (b) such amended or supplemental Rules and Regulations
apply uniformly to all tenants of the Center. If Tenant or its subtenants,
employees, agents, or invitees violate any of these Rules and Regulations,
resulting in any damage to the Center or increased costs of maintenance of the
Center, or causing Landlord to incur expenses to enforce the Rules and
Regulations, Tenant shall pay all such costs to Landlord. In the event of any
conflict between the Lease and these or any amended or supplemental Rules and
Regulations, the provisions of the Lease shall control.

1.    Tenant shall be responsible at its sole cost for the removal of all of
      Tenant's refuse or rubbish. All garbage and refuse shall be disposed of
      outside of the Premises, shall be placed in the kind of container
      specified by Landlord, and shall be prepared for collection in the manner
      and at the times and places specified by Landlord. If Landlord provides or
      designates a service for picking up refuse and garbage, Tenant shall use
      the same at Tenant's sole cost. Tenant shall not burn any trash or garbage
      of any kind in or about the Premises. If Landlord supplies janitorial
      services to the Premises, Tenant shall not, without Landlord's prior
      written consent, employ any person or persons other than Landlord's
      janitorial service to clean the Premises.

2.    No aerial, satellite dish, transceiver, or other electronic communication
      equipment shall be erected on the roof or exterior walls of the Premises,
      or in any other part of the Center, without Landlord's prior written
      consent. Any aerial, satellite dish, transceiver, or other electronic
      communication equipment so installed without Landlord's prior written
      consent shall be subject to removal by Landlord without notice at any time
      and without liability to Landlord.

3.    No loudspeakers, televisions, phonographs, radios, or other devices shall
      be used in a manner so as to be heard or seen outside of the Premises
      without Landlord's prior written consent. Tenant shall conduct its
      business in a quiet and orderly manner so as not to create unnecessary or
      unreasonable noise. Tenant shall not cause or permit any obnoxious or foul
      odors that disturb the public or other occupants of the Center. If Tenant
      operates any machinery or mechanical equipment that causes noise or
      vibration that is transmitted to the structure of the Building, or to
      other parts of the Center, to such a degree as to be objectionable to
      Landlord or to any other occupant of the Center, Tenant shall install and
      maintain, at Tenant's expense, such vibration eliminators or other devices
      sufficient to eliminate the objectionable noise or vibration.

4.    Tenant shall keep the outside areas immediately adjoining the Premises
      clean and free from dirt, rubbish, pallets and other debris to the
      satisfaction of Landlord. If Tenant fails to cause such outside areas to
      be maintained as required within twelve (12) hours after verbal notice
      that the same do not so comply, Tenant shall pay a fee equal to the
      greater of Fifty Dollars ($50.00) or the costs incurred by Landlord to
      clean up such outside areas.

5.    Tenant shall not store any merchandise, inventory, equipment, supplies,
      finished or semi-finished products, raw materials, or other articles of
      any nature outside the Premises (or the building constructed thereon if
      the Premises includes any outside areas) without Landlord's prior written
      consent.

6.    Tenant and Tenant's subtenants, employees, agents, or invitees shall park
      only the number of cars allowed under the Lease and only in those portions
      of the parking area designated for that purpose by Landlord. Upon request
      by Landlord, Tenant shall provide the license plate numbers of the cars of
      Tenant and Tenant's employees in order to facilitate enforcement of this
      regulation. Tenant and Tenant's employees shall not store vehicles or
      equipment in the parking areas, or park in such a manner as to block any
      of the accessways serving the Center and its occupants.

7.    The Premises shall not be used for lodging, sleeping, cooking, or for any
      immoral or illegal purposes, or for any purpose that will damage the
      Premises or the reputation thereof. Landlord reserves the right to expel
      from the Center any person who is intoxicated or under the influence of
      liquor or drugs or who shall act in violation of any of these Rules and
      Regulations. Tenant shall not conduct or permit any sale by auction on the
      Premises. No video, pinball, or similar electronic game machines of any
      description shall be installed, maintained or operated upon the Premises
      without the prior written consent of Landlord.

8.    Neither Tenant nor Tenant's employees or agents shall disturb, solicit, or
      canvas any occupant of the Center, and Tenant shall take reasonable steps
      to discourage others from doing the same.

9.    Tenant shall not keep in, or allow to be brought into, the Premises or
      Center any pet, bird or other animal, other than "seeing-eye" dogs or
      other animals under the control of and specifically assisting any disabled
      person.

10.   The plumbing facilities shall not be used for any other purpose than that
      for which they are constructed, and no foreign substance of any kind shall
      be disposed of therein. The expense of any breakage, stoppage, or damage
      resulting from a violation of this provision shall be borne by Tenant.
      Tenant shall not waste or use any excessive or unusual amount of water.

11.   Tenant shall use, at Tenant's cost, such pest extermination contractor as
      Landlord may direct and at such intervals as Landlord may require.

12.   Tenant will protect the carpeting from undue wear by providing carpet
      protectors under chairs with casters, and by providing protective covering
      in carpeted areas where spillage or excessive wear may occur.

                               Exhibit B - Page i
<PAGE>

13.   Tenant shall be responsible for repair of any damage caused by the moving
      of freight, furniture or other objects into, within, or out of the
      Premises or the Center. No heavy objects (such as safes, furniture,
      equipment, freight, etc.) shall be placed upon any floor without
      Landlord's prior written approval as to the adequacy of the allowable
      floor loading at the point where the objects are intended to be moved or
      stored. Landlord may specify the time of moving to minimize any
      inconvenience to other occupants of the Center. If the Building is
      equipped with a freight elevator, all deliveries to and from the Premises
      shall be made using the freight elevator during the time periods specified
      by Landlord, subject to such reasonable scheduling as Landlord in its
      discretion shall deem appropriate.

14.   Without Landlord's prior written consent, no drapes or sunscreens of any
      nature shall be installed in the Premises and the sash doors, sashes,
      windows, glass doors, lights and skylights that reflect or admit light
      into the building shall not be covered or obstructed. Landlord shall have
      the right to specify the type of window coverings that may be installed,
      at Tenant's expense. Tenant shall not mark, drive nails, screw or drill
      into, paint, or in any way deface any surface or part of the building.
      Notwithstanding the foregoing, Tenant may hang pictures, blackboards, or
      similar objects, provided Tenant repairs and repaints any nail or screw
      holes, and otherwise returns the premises to the condition required under
      the Lease and the expiration or earlier termination of the Lease Term. The
      expense of repairing any breakage, stoppage, or damage resulting from a
      violation of this rule shall be borne by Tenant.

15.   No electrical wiring, electrical apparatus, or additional electrical
      outlets shall be installed in the Premises without Landlord's prior
      written approval. Any such installation not so approved by Landlord may be
      removed by Landlord at Tenant's expense. Tenant may not alter any existing
      electrical outlets or overburden them beyond their designed capacity.
      Landlord reserves the right to enter the Premises, with reasonable notice
      to Tenant, for the purpose of installing additional electrical wiring and
      other utilities for the benefit of Tenant or adjoining tenants. Landlord
      will direct electricians as to where and how telephone and affixed wires
      are to be installed in the Premises. The location of telephones, call
      boxes, and other equipment affixed to the Premises shall be subject to the
      prior written approval of Landlord.

16.   If Tenant's use of the Premises involves the sale and/or preparation of
      food, Tenant shall at all times maintain a health department rating of "A"
      (or such other highest health department or similar rating as is
      available). Any failure by Tenant to maintain such "A" rating twice in any
      twelve (12) month period shall, at the election of Landlord, constitute a
      noncurable Event of Default under the Lease.

17.   Tenant shall comply with all safety, fire protection and evacuation
      procedures and regulations established by Landlord or any governmental
      agency.

18.   Tenant assumes any and all responsibility for protecting its Premises from
      theft, robbery and pilferage, which includes keeping doors locked and
      other means of entry to the Premises closed.

19.   If Tenant occupies any air-conditioned space, Tenant shall keep entry
      doors opening onto corridors, lobby or courtyard closed at all times. All
      truck and loading doors shall be closed at all times when not in use.

20.   Tenant shall not paint any floor of the Premises without Landlord's prior
      written consent. Prior to surrendering the Premises upon expiration or
      termination of the Lease, Tenant shall remove any paint or sealer
      therefrom (whether or not previously permitted by Landlord) and restore
      the floor to its original condition as of the Commencement Date,
      reasonable wear and tear excepted. Tenant shall not affix any floor
      covering to the floor of the Premises in any manner except as approved by
      Landlord.

                                  RAW      JGM
                           ______________________________
                                Tenant's Initials

                              Exhibit B - Page ii

<PAGE>

                                   EXHIBIT "C"

                      ONE TECHNOLOGY PLACE INDUSTRIAL PARK
                                RANCHO BERNARDO
                              SAN DIEGO, CALIFORNIA
                                  SIGN CRITERIA

PURPOSE:                The purpose of these sign criteria is to establish
                        optimum tenant identification with overall harmony of
                        design for One Technology Place.

CONFORMANCE:            Conformance to these criteria will be strictly enforced.
                        Non-conforming or unapproved signs shall be brought into
                        conformance or removed at the expense of the tenant
                        within thirty (30) days written notice.

PAYMENT:                The tenant responsibility for costs of identification
                        signs is indicated with the sample drawings. The tenant
                        shall pay for all installation and maintenance, as well
                        as all necessary permits and approvals.

APPROVALS:              All drawings, designs, colors, typestyles, and logos
                        shall be submitted to the owner for specific approval
                        prior to fabrication. Only approved copy/logos shall be
                        incorporated in each sign.

UNACCEPTABLE
SIGN TYPES:             The following sign types are unacceptable as tenant
                        identifications signs:

                        A.    Hand-painted lettering, signs employing luminous
                              paint, painted paper or cardboard signs, stickers
                              or decals hung around or behind glass.

                        B.    Advertising placards, pennants, names, insignias,
                              trademarks, or descriptive material within four
                              (4) feet of the inside of the glass panes and
                              window/door supports or upon the exterior walls of
                              the building or storefront.

                        C.    Animated, flashing or audible signs.

                        D.    Political posters, displays, campaign signs, etc.

                        E.    Individual channel letters.

                        F.    Pole signs, or other free-standing ground signs,
                              other than those indicated above.

BASIC SIGN
CONSTRUCTION:           A.    No exposed conduit, tubing, lamps or raceways,
                              miscellaneous cabinets, conductors, transformers
                              and other equipment shall be permitted.

                        B.    Non-corrosive construction materials including
                              bolts, framing and clips shall be used on all
                              exterior wall signs.

                        C.    All signs and their installation must comply with
                              local building and electrical codes.

EXCEPTIONS:             No exceptions to the above criteria shall be permitted
                        without the express written authorization of the owner.

                                 TYPES OF SIGNS

GROUND SIGN:

Those buildings provided with free-standing monument type signs may identify up
to four (4) tenants. Allocation of available sign area will be at the discretion
of the owner. Each tenant is responsible for providing camera-ready artwork
including logo, if required. Tenant is responsible for the cost of screen
printing of name and logo, and installation. The copy area available on each of
the (4-way) standard tenant signs is 8" x 41".

BUILDING WALL IDENTIFICATION SIGN:

Each tenant with exclusive building entry is required to display one wall
identification sign. These will be 8'0" x 1.6" with a copy area of 7'5" x
11-1/2". They will be black anodized black Kynar aluminum cans with while
lettering. Tenant is responsible for the cost of lettering and installation.

ENTRY DOOR IDENTIFICATION:

Tenant identification is screen-printed white on existing dark tinted glass
door. Copy area is 10" x 18". Tenant is responsible for cost of screen-printing.

BACKDOOR IDENTIFICATION

Finished aluminum cans are provided. Tenant is responsible for cost of lettering
and installation. There are two sizes depending on building height.

TYPE II -               Buildings A, D, E, G, J
                        Name: Copy area 4" x 13-3/4"
                        Information: 3 lines copy 1" x 16-1/4"

TYPE V -                Buildings B, C, F, H, K
                        Name: Copy area 4" x 13-3/4"
                        Information: 3 lines copy 1" x 16-1/4"

                                                                    RAW JGM
                                                                  ------------
                                                                    INITIALS

<PAGE>

                                   EXHIBIT "D"

                             PRELIMINARY SPACE PLAN

                                  See Attached.

                               Exhibit D - Page i
<PAGE>

                                  [SPACE PLAN]

<PAGE>

                                  [SPACE PLAN]<PAGE>

                                                                    EXHIBIT 10.2

GENERAL DYNAMICS
Advanced Information Systems, Inc.

JSI Microelectronics Inc.
4235 Forcum Avenue Suite 500
McClellan, CA 95652-2301

Attention:      Mr Larry Johnson
Subject:        Letter Subcontract Number 70-10135141-05

Enclosures:     1. Disputes Provision
                2. Termination Provision

References:     1. Proposal Number 20-018
                2. Statement of Work dated January 04, 2005
                3. Certifications and Representations
                4. GDAIS Standard Subcontract Terms and Conditions dated
                July 29, 2004

Dear Mr. Johnson:

This document constitutes a Letter Subcontract between General Dynamics Advanced
Information Systems, Inc. ("GDAIS" or "Contractor") located at 8800 Queen Avenue
South, Bloomington, Minnesota 55431 and JSI Microelectronics Inc.
("Subcontractor") located at 4235 Forcum Avenue, Suite 500, McClellen, CA
95652-2301. Subcontractor is hereby authorized to commence work effective
February 21, 2005, in accordance with the enclosed Statement of Work and the
referenced proposal.

The Subcontractor's acceptance of this Letter Subcontract will be indicated by
the execution of and returning an executed copy to GDAIS not later than five (5)
days from the date hereof. Upon Subcontractor's acceptance of this Letter
Subcontract, Subcontractor agrees to proceed immediately to perform the services
authorized herein, subject to the limitations stated. Furthermore, Subcontractor
agrees that Subcontractor's referenced proposal shall remain valid until this
Letter Subcontract is either definitized or terminated.

The Subcontractor is not authorized to make expenditures or to incur
obligations, in performance of this Letter Subcontract, that exceed
$1,300,000.00. The maximum amount for which GDAIS shall be liable if this letter
is terminated is $1,300,000.00.

A cost type definitive Subcontract is contemplated. GDAIS and Subcontractor will
promptly enter good faith negotiations to definitize this Letter Subcontract
Specifically, GDAIS and Subcontractor shall negotiate (in a manner consistent
with this Letter Subcontract) flow-down provisions from GDAIS' prime contract,
and any other provisions deemed necessary to the Subcontract by GDAIS or agreed
to by GDAIS and Subcontractor. Notwithstanding the preceding sentence, the
Letter Subcontract price is subject to downward negotiations only, any

<PAGE>

GENERAL DYNAMICS
Advanced Information Systems, Inc.

delivery schedule negotiations shall relate to acceleration from the Letter
Subcontract schedule (if any) only, and GDAIS shall have the right to flow-down
(as reasonably amended) any prime contract clauses needed by GDAIS for
compliance with its prime contract obligations. GDAIS and Subcontractor shall
definitize this Letter Subcontract within 30 calendar days of the date of the
complete execution of this Letter Subcontract or before completion of 40 percent
of the work to be performed, whichever comes first. In the event that GDAIS and
Subcontractor do not definitize this Letter Subcontract within that time, GDAIS
may either extend the period by written notice to Subcontractor or terminate the
Letter Subcontract in accordance with the termination provisions set forth
elsewhere herein. Subcontractor understands that time is of the essence and
Subcontractor shall immediately commence and continue performance of the work as
specified in this Letter Subcontract (notwithstanding the status of
definitization discussions) unless and until: (i) GDAIS terminates this Letter
Subcontract by issuance of a termination notice as set forth elsewhere herein;
(ii) the Letter Subcontract expires without definitization or extension by
GDAIS; or (iii) a definitized Subcontract supersedes this Letter Subcontract and
the schedule set forth herein (if any).

The schedule for definitization of this Letter Subcontract is set forth below:

      Negotiate and Definitize Award: On or before September 23, 2005

The period of performance under this Letter Subcontract shall commence as of the
effective date stated above and end upon execution of a definitive Subcontract.

All representations and certifications that Subcontractor has submitted to GDAIS
in connection with this effort are incorporated by reference as part of this
Letter Subcontract and will also be included in the definitive Subcontract. If
there are any changes to Subcontractors' representations and certifications,
Subcontractor agrees to promptly notify GDAIS.

This letter shall be governed by and construed according to the Laws of the
Commonwealth of Virginia.

GDAIS may, by written notice to the Subcontractor, terminate this letter in
whole or in part at any time for (i) convenience of the Customer/Contractor, or
(ii) failure of the Subcontractor to fulfill his obligation in accordance with
the "Termination" clause appended hereto. Upon termination, the Subcontractor
shall: (1) immediately discontinue all services affected, and (2) deliver GDAIS
all data, drawings, specifications, reports, estimates, summaries, and such
other information and materials as may have been delivered under the terms of
the Subcontract. If the Letter Subcontract is terminated, a settlement shall be
made in accordance with FAR Clause Part 49, with allowability of costs as
defined by FAR Part 31. The rights and remedies of GDAIS provided in this
paragraph are in addition to any other rights and remedies provided by law or
under this letter.

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