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                                                                   Exhibit 10.16

                              Manulife Financial

                      MULTI-TENANT INDUSTRIAL LEASE-GROSS

1.    Basis Provisions ("Basic Provisions").

      1.1    Parties    This Lease ("Lease"), dated for reference purposes
  October 29, 1999    , is made and between    THE MANUFACTURERS LIFE INSURANCE
----------------------                       -----------------------------------
 COMPANY (U.S.A.) ("Lessor"), and      CARBITE, INC. a California Corporation
-----------------                 ----------------------------------------------
("Lessee"), (collectively the "Parties," or individually a "Party").

      1.2(a) Premises: That certain portion of the Building, including all
improvements therein or to be provided by Lessor under the terms of this Lease,
commonly known by the street address of 9985 Huennekens Street, located in the
                                        ----------------------
City of  San Diego, County of   San Diego  State of California, with zip code
       ------------           ------------          ----------
   92121 as outlined on Exhibit A attached hereto ("Premises"). The "Building"
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is that certain building containing the Premises and generally described as
(describe briefly the nature of the building): An industrial building located
                                               ------------------------------
within the Lessor's Property known as 9985 Huennekens Street. The Premises being
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the entire building with an area deemed to be 26,214 Square Feet.
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In addition to Lessee's rights to use and occupy the Premises as hereinafter
specified, Lessee shall have non-exclusive rights to the Common Areas (as
defined in Paragraph 2.7 below) as hereinafter specified, but shall not have any
rights to the roof, exterior walls or utility raceways of the Building or to any
other buildings in the Industrial Center. The Premises, the Building, the Common
Areas, the land upon which they are located, along with all other buildings and
improvements thereon, are herein collectively referred to as the "Industrial
Center." (Also see Paragraph 2.)

1.2(b) Parking:  Lessee's Share  of unreserved vehicle parking spaces
               -----------------
("Unreserved Parking Spaces"). and   no   reserved vehicle parking spaces
                                   -------
("Reserved Parking Spaces") (Also see Paragraph 2)

      1.3  Term: Four (4)  years and Zero months ("Original Term") commencing
                 ---------           ----
February 1, 2000 ("Commencement Date") and ending   January 31, 2004
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("Expiration Date"). (Also see Paragraph 3.)

      1.4    Early Possession: See Addendum, Paragraph 56  ("Early Possession
                              -----------------------------
Date"). (Also see Paragraphs 3.2 and 3.3.)

      1.5    Base Rent: $20,185.00 per month ("Base Rent"), payable on the
                        ----------
first (1st) day of each month commencing: February 1, 2000 (Also see Paragraph
----- -----                               ----------------
4.)
[ X ] If this box is checked, this Lease provides for the Base Rent to be
adjusted per Addendum Paragraph 49 , attached hereto.
                      -------------
      1.6(a) Base Rent Paid Upon Execution: $20,185.00 as Base Rent for the
                                            ----------
period February 1, 2000 through February 29, 2000.
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      1.6(b)    Lessee's Share of Common Area Operating Expenses: one hundred
                                                                ------------
decimal zero percent (100.0%) ("Lessee's Share") as determined by [ X ] prorata
--------------------
square footage of the Premises as compared to the total square footage of the
Industrial Center.

      1.7    Security Deposit: $20,185.00 ("Security Deposit") and shall
                               ----------
increase annually to match the monthly Base Rent increase Schedule per Paragraph
49 hereof, payable on each anniversary of the Commencement Date. (Also see
Paragraph 5.)

      1.8    Permitted Use: Offices and warehouse for a company that designs
                            ------------------------------------------------
and manufactures golfing equipment and for no other purposes whatsoever without
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obtaining the prior written consent from the Lessor.
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      1.9    Insuring Party. Lessor is the "Insuring Party." (Also see Paragraph
8.)

      1.10(a)Real Estate Brokers. The Following real estate broker(s)
(collectively, the "Brokers") and brokerage relationships exist in this
transaction and are consented to by the Parties (check applicable boxes):

<TABLE>
<S>                                        <C>
[ X ] CB Richard Ellis, Inc.        .      represents Lessor exclusively ("Lessor's Broker");
      -------------------------------
[ X ] AWS Commercial Real Estate    .      represents Lessee exclusively ("Lessee's Broker"); or
      -------------------------------
[ ]   None                          .      represents both Lessor and Lessee ("Dual Agency"). (Also see Paragraph 15.)
      -------------------------------
</TABLE>

      1.10(b) Payment to Brokers. Upon the execution of this Lease by both
Parties and upon the Commencement Date, Lessor shall pay to said Broker(s)
jointly, or in such separate shares as they may mutually designate in writing, a
fee as set forth in a separate written agreement between Lessor and said
Broker(s). Lessee hereby agrees and understands that said fee is a cost
associated with Lessee leasing the Premises and Lessor shall recover such cost
over the Term of the Lease as a portion of the Rent. Lessee shall reimburse the
Lessor for any unamortized costs of said fee in the event of any default by the
Lessee including but not limited to Lessee's failure to pay Rent.

      1.11    Guarantor.  The obligations of the Lessee under this Lease are to
be guaranteed by CARBITE GOLF, INC., a Company incorporated under the laws of
                 ------------------------------------------------------------
British Columbia, Canada ("Guarantor"). (Also see Paragraph 37.)
----------------

      1.12    Addenda and Exhibits. Attached hereto is an Addendum or Addenda
consisting of Paragraphs 49 through 54 and Exhibits A Through D all of which
                         --         --              -         -
constitute a part of this Lease.

2.    Premises, Parking and Common Areas.

      2.1     Letting. Lessor hereby leases to Lessee, and Lessee hereby leases
from Lessor, the Premises, for the term, at the rental, and upon all of the
terms, covenants and conditions set forth in this Lease. Unless otherwise
provided herein, any statement of square footage set forth in this Lease, or
that may have been used in calculating rental and/or Common area Operating
Expenses, is an approximation which Lessor and Lessee agree is reasonable and
the rental and Lessee's Share (as defined in Paragraph 1.6(b)) based thereon is
not subject to revision whether or not the actual square footage is more or
less.

      2.2     Condition. Lessor shall deliver the Premises to Lessee clean and
free of debris on the Commencement Date and warrants to Lessee that the existing
plumbing, electrical systems, fire sprinkler system, lighting, air conditioning
and heating systems and loading doors, if any, in the Premises, other than those
constructed by Lessee, shall be in good operating condition on the Commencement
Date. If a non-compliance with said warranty exists as of the Commencement Date,
Lessor shall, except as otherwise provided in this Lease, promptly after receipt
of written notice from Lessee setting forth with specificity the nature and
extent of such non-compliance, rectify same at Lessor's expense. If Lessee does
not give Lessor written notice of a non-compliance with this warranty within
thirty (30) days after the Commencement Date, correction of that non-compliance
shall be the obligation of Lessee at Lessee's sole cost and expense.

      2.3     Compliance with Covenants, Restrictions and Building Code. Lessor
warrants that any improvements (other than those constructed by Lessee or at
Lessee's direction) on or in the Premises which have been constructed or
installed by Lessor or with Lessor's consent or at Lessor's direction shall
comply with all applicable covenants or restrictions of record and applicable
building codes, regulations and ordinances in effect on the Commencement Date.
Lessor further warrants to Lessee that Lessor has no knowledge of any claim
having been made by any governmental agency that a violation or violations of
applicable building codes, regulations, or ordinances exist with regard to the
Premises as of the Commencement Date. Said warranties shall not apply to any
Alterations or Utility Installations (defined in Paragraph 7.3(a)) made or to be
made by Lessee. If the Premises do not comply with said warranties, Lessor
shall, except as otherwise provided in this Lease, promptly after receipt of
written notice from Lessee given within six (6) months following the
Commencement Date and setting forth with specificity the nature and extent of
such non-compliance, take such action, at Lessor's expense, as may be reasonable
or appropriate to rectify the non-compliance. Lessor makes no warranty that the
Permitted Use in Paragraph 1.8 is permitted for the Premises under Applicable
Laws (as defined in Paragraph 2.4).

      2.4     Acceptance of Premises. As of the Commencement Date, Lessee hereby
acknowledges: (a) that it has been advised to satisfy itself with respect to the
condition of the Premises (including but not limited to the electrical and fire
sprinkler systems, security, environmental aspects, seismic and earthquake
requirements, and compliance with the Americans with Disabilities Act and
applicable zoning, municipal, county, state and federal laws, ordinances and
regulations and any covenants or restrictions of record (collectively,
"Applicable Laws") and the present and future suitability of the Premises for
Lessee's intended use; (b) that Lessee has made such investigation as it deems
necessary with reference to such matters, is satisfied with reference thereto,
and assumes all responsibility therefore as the same relate to Lessee's
occupancy of the Premises and/or the terms of this Lease; and (c) that neither
Lessor, nor any of Lessor's agents, has made any oral or written representations
or warranties with respect to said matters other than as set forth in this
Lease.

      2.5     Lessee as Prior Owner/Occupant. The warranties made by Lessor in
this Paragraph 2 shall be of no force or effect if immediately prior to the date
set forth in Paragraph 1.1 Lessee was the owner or occupant of the Premises. In
such event, Lessee shall, at Lessee's sole cost and expense, correct any non-
compliance of the Premises with said warranties.

      2.6 Vehicle Parking. Lessee shall be entitled to use the number of
Unreserved Parking Spaces specified in Paragraph 1.2(b) on those portions of the
Common Areas designated from time to time by Lessor for parking. Lessee shall
not use more parking spaces than said number. Said parking spaces shall be
used for parking by vehicles no larger than full-size passenger automobiles or
pick-up trucks, herein called "Permitted Size Vehicles." Vehicles other than
Permitted Size Vehicles shall be parked and loaded or unloaded as directed by
Lessor in the Rules and Regulations (as defined in Paragraph 40) issued by
Lessor. (Also see Paragraph 2.9, and Exhibit "D")

          (a) Lessee shall not permit or allow any vehicles that belong to or
are controlled by Lessee or Lessee's employees, suppliers, shippers,

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customers, contractors or invitees to be loaded, unloaded, or parked in areas
other than those designated by Lessor for such activities.

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

          (c)  Lessor shall at the Commencement Date of this Lease, provide the
parking facilities required by Applicable Law.

     2.7  Common Areas -- Definition. The term "Common Areas" is defined as all
areas and facilities outside the Premises and within the exterior boundary line
of the Industrial Center and interior utility raceways within the Premises that
are provided and designated by the Lessor from time to time for the general
non-exclusive use of Lessor, Lessee and other lessees of the Industrial Center
and their respective employees, suppliers, shippers, customers, contractors and
invitees, including parking areas, loading and unloading areas, trash areas,
roadways, sidewalks, walkways, parkways, driveways and landscaped areas.

     2.8  Common Areas -- Lessee's Rights. Lessor hereby grants to Lessee, for
the benefit of Lessee and its employees, suppliers, shippers, contractors,
customers and invitees, during the term of this Lease, the non-exclusive right
to use, in common with others entitled to such use, the Common Areas as they
exist from time to time, subject to any rights, powers, and privileges reserved
by Lessor under the terms hereof or under the terms of any rules and regulations
or restrictions governing the use of the Industrial Center. Under no
circumstances shall the right herein granted to use the Common Areas be deemed
to include the right to store any property, temporarily or permanently, in the
Common Areas. Any such storage shall be permitted only by the prior written
consent of Lessor or Lessor's designated agent, which consent may be revoked at
any time. In the event that any unauthorized storage shall occur then Lessor
shall have the right, without notice, in addition to such other rights and
remedies that it may have, to remove the property and charge the cost to
Lessee, which cost shall be immediately payable upon demand by Lessor.

     2.9  Common Areas -- Rules and Regulations. Lessor or such other person(s)
as Lessor may appoint shall have the exclusive control and management of the
Common Areas and shall have the right, from time to time, to establish, modify,
amend and enforce reasonable Rules and Regulations with respect thereto in
accordance with Paragraph 40. Lessee agrees to abide by and conform to all such
Rules and Regulations, and to cause its employees, suppliers, shippers,
customers, contractors and invitees to so abide and conform. Lessor shall not be
responsible to Lessee for the non-compliance with said rules and regulations by
other lessees of the Industrial Center.

     2.10 Common Areas -- Changes. Lessor shall have the right, in Lessor's sole
discretion, from time to time:

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

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

          (c)  To designate other land outside the boundaries of the Industrial
Center to be a part of the Common Areas;

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

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

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

3.   Term

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

     3.2  Early Possession. If an Early Possession Date is specified in
Paragraph 1.4 and if Lessee totally or partially occupies the Premises after the
Early Possession Date but prior to the Commencement Date, the obligation to pay
Base Rent shall be abated for the period of such early occupancy. All other
terms of this Lease, however, (including but not limited to the obligations to
pay Lessee's Share of Common Area Operating Expenses and to carry the insurance
required by Paragraph 8) shall be in effect during such period. Any such early
possession shall not affect nor advance the Expiration Date of the Original
Term.

     3.3  Delay in Possession. If for any reason Lessor cannot deliver
possession of the Premises to Lessee by the Early Possession Date, if one is
specified in Paragraph 1.4, or if no Early Possession Date is specified, by the
Commencement Date, Lessor shall not be subject to any liability therefor, nor
shall such failure affect the validity of this Lease, or the obligations of
Lessee hereunder, or extend the term hereof, but in such case, Lessee shall not,
except as otherwise provided herein, be obligated to pay rent or perform any
other obligation of Lessee under the terms of this Lease until Lessor delivers
possession of the Premises to Lessee. If possession of the Premises is not
delivered to Lessee within sixty (60) days after the Commencement Date, Lessee
may, at its option, by notice in writing to Lessor within ten (10) days after
the end of said sixty (60) day period, cancel this Lease, in which event the
parties shall be discharged from all obligations hereunder; provided further,
however, that if such written notice of Lessee is not received by Lessor within
said ten (10) day period, Lessee's right to cancel this Lease hereunder shall
terminate and be of no further force or effect. Except as may be otherwise
provided, and regardless of when the Original Term actually commences, if
possession is not tendered to Lessee when required by this Lease and Lessee does
not terminate this Lease, as aforesaid, the period free of the obligation to pay
Base Rent, if any, that Lessee would otherwise have enjoyed shall run from the
date of delivery of possession and continue for a period equal to the period
during which the Lessee would have otherwise enjoyed under the terms hereof, but
minus any days of delay caused by the acts, changes or omissions of Lessee.

4.   Rent

     4.1  Base Rent. Lessee shall pay Base Rent and other rent or charges, as
the same may be adjusted from time to time, to Lessor in lawful money of the
United States, without offset or deduction, on or before the day on which it is
due under the terms of this Lease. Base Rent and all other rent and charges for
any period during the term hereof which is for less than one full month shall be
prorated based upon the actual number of days of the month involved. Payment of
Base Rent and other charges shall be made to Lessor at its address stated herein
or to such other persons or at such other addresses as Lessor may from time to
time designate in writing to Lessee.

     4.2  Common Area Operating Expenses. Lessee shall pay to Lessor during the
term hereof, in addition to the Base Rent, Lessee's Share (as specified in
Paragraph 1.6(b)) of increases above Base Year 2000 of all Common Area Operating
Expenses, as hereinafter defined, during each calendar year of the term of this
Lease, in accordance with the following provisions:

          (a)  "Common Area Operating Expenses" are defined, for purposes of
this Lease, as all costs incurred by Lessor relating to the Industrial Center,
including, but not limited to, the following:

               (i)    The operation, repair and maintenance, in neat, clean,
good order and condition, of the following:

                      (aa) The Common Areas, including parking areas, loading
and unloading areas, trash areas, roadways, sidewalks, walkways, parkways,
driveways, landscaped areas, striping, bumpers, irrigation systems, Common Area
lighting facilities, fences and gates, elevators and roof.

                      (bb) Exterior signs and any tenant directories.

                      (cc) Fire detection and sprinkler systems.

               (ii)   The cost of water, gas, electricity and telephone to
service the Common Areas.

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

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

               (v)    Any increase above the Base Real Property Taxes (as
defined in Paragraph 10.2(b)) for the Building and the Common Areas.

               (vi)   Any "Insurance Cost Increase" (as defined in Paragraph
8.1).

               (vii)  The cost of insurance carried by Lessor with respect to
the Common Areas.

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

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

          (b)  Any Common Area Operating Expenses and Real Property Taxes that
are specifically attributable to the Building or to any other building in the
Industrial Center or to the operation, repair and maintenance thereof, shall be
allocated entirely to the Building or to such other building. However, any
Common Area Operating Expenses and Real Property Taxes that are not specifically
attributable to the Building or to any other building or to the operation,
repair and maintenance thereof, shall be equitably allocated by Lessor to all
buildings in the Industrial Center.

          (c)  The inclusion of the improvements, facilities and services set
forth in Subparagraph 4.2(a) shall not be deemed to impose an obligation upon
Lessor to either have said improvements or facilities or to provide those
services unless the Industrial Center already has the same, Lessor already
provides the services, or Lessor has agreed elsewhere in this Lease to provide
the same or some of them.

          (d)  Lessee's Share of Common Area Operating Expenses shall be
payable by Lessee within ten (10) days after a reasonably detailed statement of
actual expenses is presented to Lessee by Lessor. At Lessor's option, however,
an amount may be estimated by Lessor from time to time of Lessee's Share of
annual Common Area Operating Expenses and the same shall be payable monthly or
quarterly, as Lessor shall designate, during each 12-month period of the Lease
term, on the same day as the Base Rent is due hereunder. Lessor shall deliver to
Lessee within sixty (60) days after the expiration of each calendar year a
reasonably detailed statement showing Lessee's Share of the actual Common Area
Operating Expenses incurred during the preceding year. If Lessee's payments
under this Paragraph 4.2(d) during said preceding year exceed Lessee's Share as
indicated on said statement, Lessee shall be credited the

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amount of such overpayment against Lessee's Share of Common Area Operating
Expenses next becoming due. If Lessee's payments under this Paragraph 4.2(d)
during said preceding year were less than Lessee's Share as indicated on said
statement, Lessee shall pay to Lessor the amount of the deficiency within ten
(10) days after delivery by Lessor to Lessee of said statement.

5.   Security Deposit. Lessee shall deposit with Lessor upon Lessee's execution
hereof the Security Deposit set forth in Paragraph 1.7 as security for Lessee's
faithful performance of Lessee's obligations under this Lease. If Lessee fails
to pay Base Rent or other rent or charges due hereunder, or otherwise Defaults
under this Lease (as defined in Paragraph 13.1), Lessor may use, apply or retain
all or any portion of said Security Deposit for the payment of any amount due
Lessor or to reimburse or compensate Lessor for any liability, cost, expense
(including, but not limited to the cleaning and/or restoration of the Premises
after Lessee vacates), loss or damage (including attorneys' fees) which Lessor
may suffer or incur by reason thereof. If Lessor uses or applies all or any
portion of said Security Deposit, Lessee shall within ten (10) days after
written request therefore deposit monies with Lessor sufficient to restore said
Security Deposit to the full amount required by this Lease. Any time the Base
Rent increases during the term of this Lease, Lessee shall, upon written request
from Lessor, deposit additional monies with Lessor as an addition to the
Security Deposit so that the total amount of the Security Deposit shall at all
times bear the same proportion to the then current Base Rent as the initial
Security Deposit bears to the initial Base Rent set forth in Paragraph 1.5.
Lessor shall not be required to keep all or any part of the Security Deposit
separate from its general accounts. Lessor shall, at the expiration or earlier
termination of the term hereof and after Lessee has vacated the Premises, return
to Lessee (or, at Lessor's option, to the last assignee, if any, of Lessee's
interest herein), that portion of the Security Deposit not used or applied by
Lessor. Unless otherwise expressly agreed in writing by Lessor, no part of the
Security Deposit shall be considered to be held in trust, to bear interest or
other increment for its use, or to be prepayment for any monies to be paid by
Lessee under this Lease.

6.   Use

     6.1  Permitted Use.

          (a) Lessee shall use and occupy the Premises only for the Permitted
Use set forth in Paragraph 1.8, or any other legal use which is reasonably
comparable thereto, and for no other purpose. Lessee shall not use or permit the
use of the Premises in a manner that is unlawful, creates waste or a nuisance,
or that disturbs owners and/or occupants of, or causes damage to the Premises or
neighboring premises or properties.

          (b) Lessor hereby agrees to not unreasonably withhold or delay its
consent to any written request by Lessee, Lessee's assignees or subtenants, and
by prospective assignees and subtenants of Lessee, its assignees and subtenants,
for a modification of said Permitted Use, so long as the same will not impair
the structural integrity of the improvements on the Premises or in the Building
or the mechanical or electrical systems therein, does not conflict with uses by
other lessees, is not significantly more burdensome to the Premises or the
Building and the improvements thereon, and is otherwise permissible pursuant to
this Paragraph 6. If Lessor elects to withhold such consent, Lessor shall within
five (5) business days after such request give a written notification of same,
which notice shall include an explanation of Lessor's reasonable objections to
the change in use. Lessor's concerns regarding the impact on parking or other
tenant's enjoyment of the Industrial Center due to the proposed modification of
said Permitted Use shall be reasonable grounds for Lessor's denial of said
change.

     6.2  Hazardous Substances.

          (a) Reportable Uses Require Consent. The term "Hazardous Substance" as
used in this Lease shall mean any product, substance, chemical, material or
waste whose presence, nature, quantity and/or intensity of existence, use,
manufacture, disposal, transportation, spill, release or effect, either by
itself or in combination with other materials expected to be on the Premises, is
either: (i) potentially injurious to the public health, safety or welfare, the
environment, or the Premises; (ii) regulated or monitored by any governmental
authority; or (iii) a basis for potential liability of Lessor to any
governmental agency or third party under any applicable statute or common law
theory. Hazardous Substance shall include, but not be limited to, hydrocarbons,
petroleum, gasoline, crude oil or any products or by-products thereof. Lessee
shall not engage in any activity in or about the Premises which constitutes a
Reportable Use (as hereinafter defined) of Hazardous Substances without the
express prior written consent of Lessor and compliance in a timely manner (at
Lessee's sole cost and expense) with all Applicable Requirements (as defined in
Paragraph 6.3). "Reportable Use" shall mean (i) the installation or use of any
above or below ground storage tank, (ii) the generation, possession, storage,
use, transportation, or disposal of a Hazardous Substance that requires a permit
from, or with respect to which a report, notice, registration or business plan
is required to be filed with, any governmental authority, and (iii) the presence
in, on or about the Premises of a Hazardous Substance with respect to which any
Applicable Laws require that a notice be given to persons entering or occupying
the Premises or neighboring properties. Notwithstanding the foregoing, Lessee
may, without Lessor's prior consent, but upon notice to Lessor and in compliance
with all Applicable Requirements, use any ordinary and customary materials
reasonably required to be used by Lessee in the normal course of the Permitted
Use, so long as such use in not a Reportable Use and does not expose the
Premises or neighboring properties to any meaningful risk of contamination or
damage or expose Lessor to any liability therefor. In addition, Lessor may (but
without any obligation to do so) condition its consent to any Reportable Use of
any Hazardous Substance by Lessee upon Lessee's giving Lessor such additional
assurances as Lessor, in its reasonable discretion, deems necessary to protect
itself, the public, the Premises and the environment against damage,
contamination or injury and/or liability therefor, including but not limited to
the installation (and, at Lessor's option, removal on or before Lease expiration
or earlier termination) of reasonably necessary protective modifications to the
Premises (such as concrete encasements) and/or the deposit of an additional
Security Deposit under Paragraph 5 hereof.

          (b) Duty to Inform Lessor. If Lessee knows, or has reasonable cause to
believe, that a Hazardous Substance has come to be located in, on, under or
about the Premises or the Building, other than as previously consented to by
Lessor, Lessee shall immediately give Lessor written notice thereof, together
with a copy of any statement, report, notice, registration, application, permit,
business plan, license, claim, action, or proceeding given to, or received from,
any governmental authority or private party concerning the presence, spill,
release, discharge of, or exposure to, such Hazardous Substance including but
not limited to, all such documents as may be involved in any Reportable Use
involving the Premises. Lessee shall not cause or permit any Hazardous Substance
to be spilled or released in, on, under or about the Premises (including,
without limitation, through the plumbing or sanitary sewer system).

          (c) Indemnification. Lessee shall indemnify, protect, defend and hold
Lessor, its agents, employees, lenders and ground lessor, if any, and the
Premises, harmless from and against any and all damages, liabilities, judgments,
costs, claims, liens, expenses, penalties, loss of permits and attorneys' and
consultants' fees arising out of or involving any Hazardous Substance brought
onto the Premises by or for Lessee or by anyone under Lessee's control. Lessee's
obligations under this Paragraph 6.2(c) shall include, but not be limited to,
the effects of any contamination or injury to person, property or the
environment created or suffered by Lessee, and the cost of investigation
(including consultants' and attorneys' fees and testing), removal, remediation
and/or abatement thereof, or of any contamination therein involved, and shall
survive the expiration or earlier termination of this Lease. No termination,
cancellation or release agreement entered into by Lessor and Lessee shall
release Lessee from its obligations under this Lease with respect to Hazardous
Substances, unless specifically so agreed by Lessor in writing at the time of
such agreement.

     6.3  Lessee's Compliance with Requirements. Lessee shall, at Lessee's sole
cost and expense, fully, diligently and in a timely manner, comply with all
"Applicable Requirements," which term is used in this Lease to mean all laws,
rules, regulations, ordinances, directives, covenants, easements and
restrictions of record, permits, the requirements of any applicable fire
insurance underwriter or rating bureau, and the recommendations of Lessor's
engineers and/or consultants, relating in any manner to the Premises (including
but not limited to matters pertaining to (i) industrial hygiene, (ii)
environmental conditions on, in, under or about the Premises, including soil and
groundwater conditions, and (iii) the use, generation, manufacture, production,
installation, maintenance, removal, transportation, storage, spill, or release
of any Hazardous Substance), now in effect or which may hereafter come into
effect. Lessee shall, within five (5) days after receipt of Lessor's written
request, provide Lessor with copies of all documents and information, including
but not limited to permits, registrations, manifests, applications, reports and
certificates, evidencing Lessee's compliance with any Applicable Requirements
specified by Lessor and shall immediately upon receipt notify Lessor in writing
(with copies of any documents involved) of any threatened or actual claim,
notice, citation, warning, complaint or report pertaining to or involving
failure by Lessee or the Premises to comply with any Applicable Requirements.

     6.4  Inspection; Compliance with Law. Lessor, Lessor's agents, employees,
contractors and designated representatives, and the holders of any mortgages,
deeds of trust or ground leases on the Premises ("Lenders") shall have the right
to enter the Premises at any time in the case of an emergency, and otherwise at
reasonable times, for the purpose of inspecting the condition of the Premises
and for verifying compliance by Lessee with this Lease and all Applicable
Requirements (as defined in Paragraph 6.3), and Lessor shall be entitled to
employ experts and/or consultants in connection therewith to advise Lessor with
respect to Lessee's activities, including but not limited to Lessee's
installation, operation, use, monitoring, maintenance, or removal of any
Hazardous Substance on or from the Premises. The costs and expenses of any such
inspections shall be paid by the party requesting same, unless a Default or
Breach of this Lease by Lessee or a violation of Applicable Requirements or a
contamination, caused or materially contributed to by Lessee, is found to exist
or to be imminent, or unless the inspection is requested or ordered by a
governmental authority as the result of any such existing or imminent violation
or contamination. In such case, Lessee shall upon request reimburse Lessor or
Lessor's Lender, as the case may be, for the costs and expenses of such
inspections.

7.   Maintenance, Repairs, Utility Installations, Trade Fixtures and
     Alterations.

     7.1  Lessee's Obligations.

          (a) Subject to the provisions of Paragraphs 2.2 (Condition), 2.3
(Compliance with Covenants, Restrictions and Building Code), 7.2 (Lessor's
Obligations), 9 (Damage or Destruction), and 14 (Condemnation), Lessee shall, at
Lessee's sole cost and expense and at all times, keep the Premises and every
part thereof in good order, condition and repair (whether or not such portion of
the Premises requiring repair, or the means of repairing the same, are
reasonably or readily accessible to Lessee, and whether or not the need for such
repairs occurs as a result of Lessee's use, any prior use, the elements or the
age of such portion of the Premises), including, without limiting the generality
of the foregoing, all equipment or facilities specifically serving the Premises,
such as plumbing, heating, air conditioning, ventilating, electrical, lighting
facilities, boilers, fired or unfired pressure vessels, fire hose connections if
within the Premises, fixtures, interior walls, interior surfaces of exterior
walls, ceilings, floors, windows, doors, plate glass, and skylights, but
excluding any items which are the responsibility of Lessor pursuant to Paragraph
7.2 below. Lessee, in keeping the Premises in good order, condition and repair,
shall exercise and perform

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good maintenance practices. Lessee's obligations shall include restorations,
replacements or renewals when necessary to keep the Premises and all
improvements thereon or a part thereof in good order, condition and state of
repair.

          (b)  Lessee shall, at Lessee's sole cost and expense, procure and
maintain a contract, with copies to Lessor, in customary form and substance for
and with a contractor specializing and experienced in the inspection,
maintenance and service of the heating, air conditioning and ventilation (herein
called "HVAC") system for the Premises. Such contract shall include a minimum
three (3) month maintenance schedule for each HVAC unit associated with the
Premises. However, Lessor reserves the right, upon notice to Lessee, to procure
and maintain the contract for the heating, air conditioning and ventilating
systems, and if Lessor so elects, Lessee shall reimburse Lessor, upon demand,
for the cost thereof.

          (c)  If Lessee fails to perform Lessee's obligations under this
Paragraph 7.1, Lessor may enter upon the Premises after ten (10) days' prior
written notice to Lessee (except in the case of an emergency, in which case no
notice shall be required), perform such obligations on Lessee's behalf, and put
the Premises in good order, condition and repair, in accordance with Paragraph
13.2 below.

     7.2  Lessor's Obligations. Subject to the provisions of Paragraphs 2.2
(Condition), 2.3 (Compliance with Covenants, Restrictions and Building Code),
4.2 (Common Area Operating Expenses), 6 (Use), 7.1 (Lessee's Obligations), 9
(Damage or Destruction) and 14 (Condemnation), Lessor, subject to reimbursement
pursuant to Paragraph 4.2, shall keep in good order, condition and repair the
foundations, exterior walls, structural condition of interior bearing walls,
exterior roof, fire sprinkler and/or standpipe and hose (if located in the
Common Areas) or other automatic fire extinguishing system including fire alarm
and/or smoke detection systems and equipment (outside of the Premises), fire
hydrants, parking lots, walkways, parkways, driveways, landscaping, fences,
signs and utility systems serving the Common Areas and all parts thereof, as
well as providing the services for which there is a Common Area Operating
Expense pursuant to Paragraph 4.2. Lessor shall not be obligated to paint the
exterior or interior surfaces of exterior walls nor shall Lessor be obligated to
maintain, repair or replace windows, doors or plate glass of the Premises.
Lessee expressly waives the benefit of any statute now or hereafter in effect
which would otherwise afford Lessee the right to make repairs at Lessor's
expense or to terminate this Lease because of Lessor's failure to keep the
Building, Industrial Center or Common Areas in good order, condition and repair.

     7.3  Utility Installations, Trade Fixtures, Alterations.

          (a)  Definitions; Consent Required. The term "Utility Installations"
is used in this Lease to refer to all air lines, power panels, electrical
distribution, security, fire protection systems, communications systems,
lighting fixtures, heating, ventilating and air conditioning equipment,
plumbing, and fencing in, on or about the Premises. The term "Trade Fixtures"
shall mean Lessee's machinery and equipment which can be removed without doing
material damage to the Premises. The term "Alterations" shall mean any
modification of the improvements on the Premises which are provided by Lessor
under the terms of this Lease, other than Utility Installations or Trade
Fixtures. "Lessee-Owned Alterations and/or Utility Installations" are defined as
Alterations and/or Utility Installations made by Lessee that are not yet owned
by Lessor pursuant to Paragraph 7.4(a). Lessee shall not make nor cause to be
made any Alterations or Utility installations in, on, under or about the
Premises without Lessor's prior written consent. Lessee may, however, make non-
structural Utility Installations to the interior of the Premises (excluding the
roof) without Lessor's consent but upon notice to Lessor so long as they are not
visible from the outside of the Premises, do not involve puncturing, relocating
or removing the roof or any existing walls, or changing or interfering with the
fire sprinkler or fire detection systems and the cumulative cost thereof during
the term of this Lease or as extended does not exceed $5,000.00.

          (b)  Consent. Any Alterations or Utility Installations that Lessee
shall desire to make and which require the consent of the Lessor shall be
presented to Lessor in written form with detailed plans. All consents given by
Lessor, whether by virtue of Paragraph 7.3(a) or by subsequent specific consent,
shall be deemed conditioned upon: (i) Lessee's acquiring all applicable permits
required by governmental authorities; (ii) the furnishing of copies of such
permits together with a copy of the plans and specifications for the Alteration
or Utility Installation to Lessor prior to commencement of the work thereon; and
(iii) the compliance by Lessee with all conditions of said permits in a prompt
and expeditious manner. Any Alterations or Utility Installations by Lessee
during the term of this Lease shall be done in a good and workmanlike manner,
with good and sufficient materials, and be in compliance with all Applicable
Requirements. Lessee shall promptly upon completion thereof furnish Lessor with
as-built plans and specifications therefor. Lessor may (but without obligation
to do so) condition its consent to any requested Alteration or Utility
Installation that costs $5,000.00 or more upon Lessee's providing Lessor with a
lien and completion bond in an amount equal to one and one-half times the
estimated cost of such Alteration or Utility Installation.

          (c)  Lien Protection. Lessee shall pay when due all claims for labor
or materials furnished or alleged to have been furnished to or for Lessee at or
for use on the Premises, which claims are or may be secured by any mechanic's or
materialmen's lien against the Premises or any interest therein. Lessee shall
give Lessor not less than ten (10) days' notice prior to the commencement of any
work in, on, or about the Premises, and Lessor shall have the right to post
notices of non-responsibility in or on the Premises as provided by law. If
Lessee shall, in good faith, contest the validity of any such lien, claim or
demand, then Lessee shall, at its sole expense, defend and protect itself,
Lessor and the Premises against the same and shall pay and satisfy any such
adverse judgement that may be rendered thereon before the enforcement thereof
against the Lessor or the Premises. If Lessor shall require, Lessee shall
furnish to Lessor a surety bond satisfactory to Lessor, in an amount equal to
one and one-half times the amount of such contested lien claim or demand,
indemnifying Lessor against liability for the same, as required by law for the
holding of the Premises free from the effect of such lien or claim. In addition,
Lessor may require Lessee to pay Lessor's attorneys' fees and costs in
participating in such action if Lessor shall decide it is to its best interest
to do so.

     7.4  Ownership, Removal, Surrender, and Restoration.

          (a)  Ownership. Subject to Lessor's right to require their removal and
to cause Lessee to become the owner thereof as hereinafter provided in this
Paragraph 7.4, all Alterations and Utility Installations made to the Premises by
Lessee shall be the property of and owned by Lessee, but considered a part of
the Premises. Lessor may, at any time and at its option, elect in writing to
Lessee to be the owner of all or any specified part of the Lessee-Owned
Alterations and Utility Installations. Unless otherwise instructed per
Subparagraph 7.4(b) hereof, all Lessee-Owned Alterations and Utility
Installations shall, at the expiration or earlier termination of this Lease,
become the property of Lessor and remain upon the Premises and be surrendered
with the Premises by Lessee.

          (b)  Removal. Unless otherwise agreed in writing, Lessor may require
that any or all Lessee-Owned Alterations or Utility Installations be removed by
the expiration or earlier termination of this Lease, notwithstanding that their
installation may have been consented to by Lessor. Lessor may require the
removal at any time of all or any part of any Alterations or Utility
Installations made without the required consent of Lessor.

          (c)  Surrender/Restoration. Lessee shall surrender the Premises by the
end of the last day of the Lease term or any earlier termination date, clean and
free of debris and in good operating order, condition and state of repair
ordinary wear and tear excepted. Ordinary wear and tear shall not include any
damage or deterioration that would have been prevented by good maintenance
practice or by Lessee performing all of its obligations under this Lease. Except
as otherwise agreed or specified herein, the Premises, as surrendered, shall
include the Alterations and Utility Installations. The obligation of Lessee
shall include the repair of any damage occasioned by the installation,
maintenance or removal of Lessee's Trade Fixtures, furnishings, equipment, and
Lessee-Owned Alterations and Utility Installations, as well as the removal of
any storage tank installed by or for Lessee, and the removal, replacement, or
remediation of any soil, material or ground water contaminated by Lessee, all as
may then be required by Applicable Requirements and/or good practice. Lessee's
Trade Fixtures shall remain the property of Lessee and shall be removed by
Lessee subject to its obligation to repair and restore the Premises per this
Lease.

8.   Insurance; Indemnity.

     8.1  Payment of Premium Increases.

          (a)  As used herein, the term "Insurance Cost Increase" is defined as
any increase in the actual cost of the insurance applicable to the Building and
required to be carried by Lessor pursuant to Paragraphs 8.2(b),8.3(a) and
8.3(b), ("Required Insurance"), over and above the Base Premium, as hereinafter
defined, calculated on an annual basis. "Insurance Cost Increase" shall include,
but not be limited to, requirements of the holder of a mortgage or deed of trust
covering the Premises, increased valuation of the Premises, and/or a general
premium rate increase. The term "Insurance Cost Increase" shall not, however,
include any premium increases resulting from the nature of the occupancy of any
other lessee of the Building. If the parties insert a dollar amount in Paragraph
1.9, such amount shall be considered the "Base Premium". If a dollar amount has
not been inserted in Paragraph 1.9 and if the Building has been previously
occupied during the twelve (12) month period immediately preceding the
Commencement Date, the "Base Premium" shall be the annual premium applicable to
such twelve (12) month period. If the Building was not fully occupied during
such twelve (12) month period, the "Base Premium" shall be the lowest annual
premium reasonably obtainable for the Required Insurance as of the Commencement
Date, assuming the most nominal use possible of the Building. In no event,
however, shall Lessee be responsible for any portion of the premium cost
attributable to liability insurance coverage in excess of $2,000,000 procured
under Paragraph 8.2(b).

          (b)  Lessee shall pay any Insurance Cost Increase to Lessor pursuant
to Paragraph 4.2. Premiums for policy periods commencing prior to, or extending
beyond, the term of this Lease shall be prorated to coincide with the
corresponding Commencement Date or Expiration Date.

     8.2  Liability Insurance.

          (a)  Carried by Lessee. Lessee shall obtain and keep in force during
the term of this Lease a Commercial General Liability policy of insurance
protecting Lessee, Lessor and any Lender(s) whose names have been provided to
Lessee in writing (as additional insureds) against claims for bodily injury,
personal injury and property damage based upon, involving or arising out of the
ownership, use, occupancy or maintenance of the Premises and all areas
appurtenant thereto. Such insurance shall be on an occurrence basis providing
single limit coverage in an amount not less than $2,000,000 per occurrence with
an "Additional Insured-Managers or Lessors of Premises" endorsement and contain
the "Amendment of the Pollution Exclusion" endorsement for damage caused by
heat, smoke or fumes from a hostile fire. The policy shall not contain any
intra-insured exclusions as between insured persons or organizations, but shall
include coverage for liability assumed under this Lease as a "Insured contract"
for the performance of Lessee's indemnity obligations under this Lease. The
limits of said insurance required by this Lease or as carried by Lessee shall
not, however, limit the liability of Lessee nor relieve Lessee of any obligation
hereunder. All insurance to be carried by Lessee shall be primary to and not
contributory with any similar insurance carried by Lessor, whose insurance shall
be considered excess insurance only.

THE MANUFACTURERS LIFE INSURANCE COMPANY (U.S.A.)        Initials:   RB
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          (b)  Carried by Lessor. Lessor shall also maintain liability insurance
described in Paragraph 8.2(a) above, in addition to and not in lieu of, the
insurance required to be maintained by Lessee. Lessee shall not be named as an
additional insured therein.

     8.3  Property Insurance-Building, Improvements and Rental Value.

          (a) Building and Improvements. Lessor shall obtain and keep in force
during the term of this Lease a policy or policies in the name of Lessor, with
loss payable to Lessor and to any Lender(s), insuring against loss or damage to
the Premises. Such insurance shall be for full replacement cost, except
with regard to earthquake and/or flood where insurance may be for a lesser
amount, as the same shall exist from time to time, or the amount required by any
Lender(s), but in no event more than the commercially reasonable and available
insurable value thereof if, by reason of the unique nature or age of the
improvements involved, such latter amount is less than full replacement cost.
Lessee-Owned Alterations and Utility installations, Trade Fixtures and Lessee's
personal property shall be insured by Lessee pursuant to Paragraph 8.4. If the
coverage is available and commercially appropriate, Lessor's policy or policies
shall insure against all risks of direct physical loss or damage (except the
perils of flood and/or earthquake unless required by Lender or included in the
Base Premium), including coverage for any additional costs resulting from debris
removal and reasonable amounts of coverage for the enforcement of any ordinance
or law regulating the reconstruction or replacement of any undamaged sections of
the Building required to be demolished or removed by reason of the enforcement
of any building, zoning, safety or land use laws as the result of a covered
loss, but not including plate glass insurance. Said policy or policies shall
also contain an agreed valuation provision in lieu of any co-insurance clause,
waiver of subrogation, and inflation guard protection causing an increase in the
annual property insurance coverage amount by a factor of not less than the
adjusted U.S. Department of Labor Consumer Price Index for All Urban Consumers
for the city nearest to where the Premises are located.

          (b)  Rental Value. Lessor shall also obtain and keep in force during
the term of this Lease a policy or policies in the name of Lessor, with loss
payable to Lessor and any Lender(s), insuring the loss of the full rental and
other charges payable by all lessees of the Building to Lessor for one year
(including all Real Property Taxes, insurance costs, all Common Area Operating
Expenses and any scheduled rental increases). Said insurance may provide that in
the event the Lease is terminated by reason of an insured loss, the period of
indemnity for such coverage shall be extended beyond the date of the completion
of repairs or replacement of the Premises, to provide for one full year's loss
of rental revenues from the date of any such loss. Said insurance shall contain
an agreed valuation provision in lieu of an co-insurance clause, and the amount
of coverage shall be adjusted annually to reflect the projected rental income,
Real Property Taxes, insurance premium costs and other expenses, if any,
otherwise payable, for the next 12-month period. Common Area Operating Expenses
shall include any deductible amount in the event of such loss.

          (c)  Adjacent Premises. Lessee shall pay for any increase in the
premiums for the property insurance of the Building and for the Common Areas or
other buildings in the Industrial Center if said increase is caused by Lessee's
acts, omissions, use or occupancy of the Premises.

          (d)  Lessee's Improvements. Since Lessor is the Insuring Party, Lessor
shall not be required to insure Lessee-Owned Alterations and Utility
Installations unless the item in question has become the property of Lessor
under the terms of this Lease.

     8.4  Lessee's Property Insurance. Subject to the requirements of paragraph
8.5, Lessee at its cost shall either by separate policy or, at Lessor's option,
by endorsement to a policy already carried, maintain insurance coverage on all
of Lessee's personal property, Trade Fixtures and Lessee-Owned Alterations and
Utility Installations in, on, or about the Premises similar in coverage to that
carried by Lessor as the Insuring Party under Paragraph 8.3(a). Such insurance
shall be full replacement cost coverage with a deductible not to exceed $1,000
per occurrence. The proceeds from any such insurance shall be used by Lessee for
the replacement of personal property and the restoration of Trade Fixtures and
Lessee-Owned Alterations and Utility Installations. Upon request from Lessor,
Lessee shall provide Lessor with written evidence that such insurance is in
force.

     8.5  Insurance Policies. Insurance required hereunder shall be in companies
duly licensed to transact business in the state where the Premises are located,
and maintaining during the policy term a "General Policyholders Rating" of at
least B+, V, or such other rating as may be required by a Lender, as set forth
in the most current issue of "Best's Insurance Guide." Lessee shall not do or
permit to be done anything which shall invalidate the insurance policies
referred to in this Paragraph 8. Lessee shall cause to be delivered to Lessor,
within seven (7) days after the earlier of the Early Possession Date or the
commencement Date, certified copies of, or certificates evidencing the existence
and amounts, of, the insurance required under Paragraph 8.2(a) and 8.4. No such
policy shall be cancelable or subject to modification except after thirty (30)
days' prior written notice to Lessor. Lessee shall at least thirty (30) days
prior to the expiration of such policies, furnish Lessor with evidence of
renewals or "insurance binders" evidencing renewal thereof, or Lessor may order
such insurance and charge the cost thereof to Lessee, which amount shall be
payable by Lessee to Lessor upon demand.

     8.6  Waiver of Subrogation. Without affecting any other rights or remedies,
Lessee and Lessor each hereby release and relieve the other, and waive their
entire right to recover damages (whether in contract or in tort) against the
other, for loss or damage to their property arising out of or incident to the
perils required to be insured against under Paragraph 8. The effect of such
releases and waivers of the right to recover damages shall not be limited by the
amount of insurance carried or required, or by any deductibles applicable
thereto. Lessor and Lessee agree to have their respective insurance companies
issuing property damage insurance waive any right to subrogation that such
companies may have against Lessor or Lessee, as the case may be, so long as the
insurance is not invalidated thereby.

     8.7  Indemnity. Except for Lessor's gross negligence and willful
misconduct, and/or breach of express warranties, Lessee shall indemnify,
protect, defend and hold harmless the Premises, Lessor and its agents, Lessor's
master or ground lessor, partners ad Lenders, from and against any and all
claims, loss of rents and/or damages, costs, liens, judgments, penalties, loss
of permits, attorneys' and consultants' fees, expenses and/or liabilities
arising out of, involving, or in connection with, the occupancy of the Premises
by Lessee, the conduct of Lessee's business, and act, omission or neglect of
Lessee, its agents, contractors, employees or invitees, and out of any Default
or Breach by Lessee in the performance in a timely manner of any obligation on
Lessee's part to be performed under this Lease. The foregoing shall include, but
not be limited to, the defense or pursuit of any claim or any action or
proceeding be brought therein, and whether or not (in the case of claims made
against Lessor) litigated and/or reduced to judgment. In case any action or
proceeding be brought against Lessor by reason of any of the foregoing matters,
Lessee upon notice from Lessor shall defend the same at Lessee's expense by
counsel reasonably satisfactory to Lessor and Lessor shall cooperate with Lessee
in such defense. Lessor need no have first paid any such claim in order to be so
indemnified.

     8.8  Exemption of Lessor from Liability. Lessor shall not be liable for
injury or damage to the person or goods, wares, merchandise or other property of
Lessee, Lessee's employees, contractors, invitees, customers, or any other
person in or about the Premises, whether such damage or injury is caused by or
results form fire, steam, electricity, gas, water or rain (Lessor to provide a
roof inspection report prior to he Commencement Date), or from the breakage,
leakage, obstruction or other defects of pipes, fire sprinklers, wires,
appliances, plumbing, air conditioning or lighting fixtures, or from any other
cause, whether said injury or damage results from conditions arising upon the
Premises or upon other portions of the Building of which the Premises are a
part, from other sources or places, and regardless of whether the cause of such
damage or injury or the means of repairing the same is accessible or not. Lessor
shall not be liable for any damages arising form any act or neglect of any other
lessee of Lessor nor from the failure by Lessor to enforce the provisions of any
other lease in the Industrial Center. Notwithstanding Lessor's negligence or
breach of this Lease, Lessor shall under no circumstances be liable for injury
to Lessee's business or for any loss of income or profit therefrom.

9.   Damage or Destruction.

     9.1  Definitions.

          (a)  "Premises Partial Damage" shall mean damage or destruction to the
Premises, other than Lessee-Owned Alterations and Utility Installations, the
repair cost of which damage or destruction is less than fifty percent (50%) of
the then Replacement Cost (as defined in Paragraph 9.1(d)) of the Premises
(excluding Lessee-Owned Alterations and Utility Installations and Trade
Fixtures) immediately prior to such damage or destruction.

          (b)  "Premises Total Destruction" shall mean damage or destruction to
the Premises, other than Lessee-Owned Alterations and Utility Installations, the
repair cost of which damage or destruction is fifty percent (50%) or more of the
then Replacement Cost of the Premises (excluding Lessee-Installations, the
repair cost of which damage or destruction is fifty percent (50%) or more of the
then Replacement Cost of the Premises (excluding Lessee-Owned Alterations and
Utility Installations and Trade Fixtures) immediately prior to such damage or
destruction. In addition, damage or destruction to the Building, other than
Lessee-Owned Alterations and Utility Installations and Trade Fixtures of any
Lessees of the Building, the cost of which damage or destruction is fifty
percent (50%) or more of the then Replacement Cost (excluding Lessee-Owned
Alterations and Utility Installations and Trade Fixtures of any lessees of the
Building) of the Building) of the Building shall, at the option of Lessor, be
deemed to be Premises Total Destruction.

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

          (d)  "Replacement Cost" shall mean the cost to repair or rebuild the
improvements owned by Lessor at the time of the occurrence to their condition
existing immediately prior thereto, including demolition, debris removal and
upgrading required by the operation of applicable building codes, ordinances or
laws, and without deduction fro depreciation.

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

     9.2  Premises Partial Damage-Insured Loss. If Premises Partial Damage that
is an Insured Loss occurs, than Lessor shall, at Lessor's expense, repair such
damage (but not Lessee's Trade Fixtures or Lessee-Owned Alterations and Utility
Installations) as soon as reasonably possible and this Lease shall continue in
full force and effect. In the event, however, that there is a shortage of
insurance proceeds and such shortage is due to the fact that, by reason of the
unique nature of the improvements in the Premises, full replacement cost
insurance coverage was not commercially reasonable and available, Lessor shall
have no obligation to pay for the shortage in insurance proceeds or to fully
restore the unique aspects of the Premises unless Lessee provides Lessor with
the funds to cover same, or adequate assurance thereof,, within the (10) days
following receipt of written notice of such shortage and request therefor. If
Lessor receives said funds or adequate assurance thereof within said ten (10)
day period, Lessor shall complete them as soon as reasonably possible and this
Lease

THE MANUFACTURERS LIFE INSURANCE COMPANY (U.S.A)       Initials:   RB
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                                 Page 5 of 19

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shall remain in full force and effect. If Lessor does not receive such funds or
assurance within said period, Lessor may nevertheless elect by written notice to
Lessee within ten (10) days thereafter to make such restoration and repair as is
commercially reasonable with Lessor paying any shortage in proceeds, in which
case this Lease shall remain in full force and effect. If Lessor does not
receive such funds or assurance within such ten (10) day period, and if Lessor
does not so elect to restore and repair, then this Lease shall terminate sixty
(60) days following the occurrence of the damage or destruction. Unless
otherwise agreed, Lessee shall in no event have any right to reimbursement from
Lessor for any funds contributed by Lessee to repair any such damage or
destruction. Premises Partial Damage due to flood or earthquake shall be subject
to Paragraph 9.3 rather than Paragraph 9.2, notwithstanding that there may be
some insurance coverage, but the net proceeds of any such insurance shall be
made available for the repairs if made by either Party.

     9.3    Partial Damage--Uninsured Loss. If Premises Partial Damage that is
not an Insured Loss occurs, unless caused by a negligent or willful act of
Lessee (in which event Lessee shall make the repairs at Lessee's expense and
this Lease shall continue in full force and effect), Lessor may at Lessor's
option, either (i) repair such damage as soon as reasonably possible at Lessor's
expense, in which event this Lease shall continue in full force and effect, or
(ii) give written notice to Lessee within thirty (30) days after receipt by
Lessor of knowledge of the occurrence of such damage of Lessor's desire to
terminate this Lease as of the date sixty (60) days following the date of such
notice. In the event Lessor elects to give such notice of Lessor's intention to
terminate this Lease, Lessee shall have the right within ten (10) days after the
receipt of such notice to give written notice to Lessor of Lessee's commitment
to pay for the repair of such damage totally at Lessee's expense and without
reimbursement from Lessor. Lessee shall provide Lessor with the required funds
or satisfactory assurance thereof within thirty (30) days following such
commitment from Lessee. In such event this Lease shall continue in full force
and effect, and Lessor shall proceed to make such repairs as soon as reasonably
possible after the required funds are available. If Lessee does not give such
notice and provide the funds or assurance thereof within the times specified
above, this Lease shall terminate as of the date specified in Lessor's notice of
termination.

     9.4    Total Destruction. Notwithstanding any other provision hereof, if
Premises Total Destruction occurs (including any destruction required by any
authorized public authority), this Lease shall terminate sixty (60) days
following the date of such Premises Total Destruction, whether or not the damage
or destruction is an Insured Loss or was caused by a negligent or willful act of
Lessee.

     9.5    Damage Near End of Term. If at any time during the last six (6)
months of the term of this Lease there is damage for which the cost to repair
exceeds one month's Base Rent, whether or not an Insured Loss, Lessor may, at
Lessor's option, terminate this Lease effective sixty (60) days following the
date of occurrence of such damage by giving written notice to Lessee of Lessor's
election to do so within thirty (30) days after the date of occurrence of such
damage. Provided, however, if Lessee at that time has an exercisable option to
extend this Lease or to purchase the Premises, then Lessee may preserve this
Lease by (a) exercising such option, and (b) providing Lessor with any shortage
in insurance proceeds (or adequate assurance thereof) needed to make the repairs
on or before the earlier of (i) the date which is ten (10) days after Lessee's
receipt of Lessor's written notice purporting to terminate this Lease, or (ii)
the day prior to the date upon which such option expires. If Lessee duly
exercises such option during such period and provides Lessor with funds (or
adequate assurance thereof) to cover any shortage in insurance proceeds, Lessor
shall, at Lessor's expense repair such damage as soon as reasonably possible and
this Lease shall continue in full force and effect. If Lessee fails to exercise
such option and provide such funds or assurance during such period, then this
Lease shall terminate as of the date set forth in the first sentence of this
Paragraph 9.5.

     9.6    Abatement of Rent; Lessee's Remedies.

            (a) In the event of (i) Premises Partial Damage or (ii) Hazardous
Substance Condition for which Lessee is not legally responsible, the Base Rent,
Common Area Operating Expenses and other charges, if any, payable by Lessee
hereunder, for the period during which such damage or condition, its repair,
remediation or restoration continues, shall be abated in proportion to the
degree to which Lessee's use of the Premises is impaired, but not in excess of
proceeds from insurance required to be carried under Paragraph 8.3(b).  Except
for abatement of Base Rent, Common Area Operating Expenses and other charges, if
any, as aforesaid, all other obligations of Lessee hereunder shall be performed
by Lessee, and Lessee shall have no claim against Lessor for any damage suffered
by reason of any such damage, destruction, repair, remediation or restoration.

            (b) If Lessor shall be obligated to repair or restore the Premises
under the provisions of this Paragraph 9 and shall not commence, in a
substantial and meaningful way, the repair or restoration of the Premises within
ninety (90) days after such obligation shall accrue, Lessee may, at any time
prior to the commencement of such repair or restoration, give written notice to
Lessor and to any Lenders of which Lessee has actual notice of Lessee's election
to terminate this Lease on a date not less than sixty (60) days following the
giving of such notice.  If Lessee gives such notice to Lessor and such Lenders
and such repair or restoration is not commenced within thirty (30) days after
receipt of such notice, this Lease shall terminate as of the date specified in
said notice.  If Lessor or a Lender commences the repair or restoration of the
Premises within thirty (30) days after the receipt of such notice, this Lease
shall continue in full force and effect.  "Commence" as used in this Paragraph
9.6 shall mean either the unconditional authorization of the preparation of the
required plans, or the beginning of the actual work on the Premises, whichever
occurs first.

     9.7    Hazardous Substance Conditions.  If a Hazardous Substance Condition
occurs, unless Lessee is legally responsible therefor (in which case Lessee
shall make the investigation and remediation thereof required by Applicable
Requirements and this Lease shall continue in full force and effect, but subject
to Lessor's rights under Paragraph 6.2(c) and Paragraph 13), Lessor may at
Lessor's option either (i) investigate and remediate such Hazardous Substance
Condition, if required, as soon as reasonably possible at Lessor's expense, in
which event this Lease shall continue in full force and effect, or (ii) if the
estimated cost to investigate and remediate such condition exceeds twelve (12)
times the then monthly Base Rent or $100,000 whichever is greater, give written
notice to Lessee within thirty (30) days after receipt by Lessor of knowledge of
the occurrence of such Hazardous Substance Condition of Lessor's desire to
terminate this Lease as of the date sixty (60) days following the date of such
notice.  In the event Lessor elects to give such notice of Lessor's intention to
terminate this Lease, Lessee shall have the right within ten (10) days after the
receipt of such notice to give written notice the Lessor of Lessee's commitment
to pay for the excess costs of (a) investigation and remediation of such
Hazardous Substance Condition to the extent required by Applicable Requirements,
over (b) an amount equal to twelve (12) times the then monthly Base Rent or
$100,000, whichever is greater. Lessee shall provide Lessor with the funds
required of Lessee or satisfactory assurance thereof within thirty (30) days
following said commitment by Lessee. In such event this Lease shall continue in
full force and effect, and Lessor shall proceed to make such investigation and
remediation as soon as reasonably possible after the required funds are
available. If Lessee does not give such notice and provide the required funds or
assurance thereof within the time period specified above, this Lease shall
terminate as of the date specified in Lessor's notice of termination.

     9.8    Termination--Advance Payments. Upon termination of this Lease
pursuant to this Paragraph 9, Lessor shall return to Lessee any advance payment
made by Lessee to Lessor and so much of Lessee's Security Deposit as has not
been, or is not then required to be, used by Lessor under the terms of this
Lease.

     9.9    Waiver of Statutes.  Lessor and Lessee agree that the terms of this
Lease shall govern the effect of any damage to or destruction of the Premises
and the Building with respect to the termination of this Lease and hereby waive
the provisions of any present or future statute to the extent it is inconsistent
herewith.

10.  Real Property Taxes.

     10.1   Payment of Taxes. Lessor shall pay the Real Property Taxes, as
defined in Paragraph 10.2(a), applicable to the Industrial Center, and except as
otherwise provided in Paragraph 10.3, any increases in such amounts over the
Base Real Property Taxes shall be included in the calculation of Common Area
Operating Expenses in accordance with the provisions of Paragraph 4.2.

     10.2   Real Property Tax Definitions.

            (a) As used herein, the term "Real Property Taxes" shall include any
form of real estate tax or assessment, general, special, ordinary or
extraordinary, and any license fee, commercial rental tax, improvement bond or
bonds, levy or tax (other than inheritance, personal income or estate taxes)
imposed upon the Industrial Center by any authority having the direct or
indirect power to tax, including any city, state or federal government, or any
school, agricultural, sanitary, fire, street, drainage, or other improvement
district thereof, levied against any legal or equitable interest of Lessor in
the Industrial Center or any portion thereof, Lessor's right to rent or other
income therefrom, and/or Lessor's business of leasing the Premises.  The term
"Real Property Taxes" shall also include any tax, fee, levy assessment or
charge, or any increase therein, imposed by reason of events occurring, or
changes in Applicable Law taking effect, during the term of this Lease,
including but not limited to a change in the ownership of the Industrial Center
or in the improvements thereon, the execution of this Lease, or any
modification, amendment or transfer thereof, and whether or not contemplated by
the Parties.  Notwithstanding the foregoing, it is agreed and understood during
the initial Term certain of the Lease, the Lessee shall not be required to pay
any increases in the Real Property Taxes incurred due to a sale of the
Industrial Center, this protection against any Real Property Tax increase shall
not be applicable for any renewal or extension of Term.

            (b) As used herein, the term "Base Real Property Taxes" shall be the
amount of Real Property Taxes, which are assessed against the Premises, Building
or Common Areas in the calendar year during which the Lease commences.  In
calculating Real Property Taxes for any calendar year, the Real Property Taxes
for any real estate tax year shall be included in the calculation of Real
Property Taxes for such calendar year based upon the number of days which such
calendar year and tax year have in common.

     10.3   Additional Improvements.  Common Area Operating Expenses shall not
include Real Property Taxes specified in the tax assessor's records and work
sheets as being caused by additional improvements placed upon the Industrial
Center by other lessees or by Lessor for the exclusive enjoyment of such other
lessees.  Notwithstanding Paragraph 10.1 hereof, Lessee shall, however, pay to
Lessor at the time Common Area Operating Expenses are payable under Paragraph
4.2, the entirety of any increase in Real Property Taxes if assessed solely by
reason of Alterations, Trade Fixtures or Utility Installations placed upon the
Premises by Lessee or at Lessee's request.

     10.4   Joint Assessment.  If the Building is not separately assessed, Real
Property Taxes allocated to the Building shall be an equitable proportion of the
Real Property Taxes for all of the land and improvements included within the tax
parcel assessed, such proportion to be determined by Lessor from the respective
valuations assigned in the assessor's work sheets or such other information as
may be reasonably available.  Lessor's reasonable determination thereof, in
good faith, shall be conclusive

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

11. Utilities. Lessee shall pay directly for all utilities and services supplied
to the Premises, including but not limited to electricity, telephone, security,
gas and cleaning of the Premises, together with any taxes thereon. If any such
utilities or services are not separately metered to the Premises or separately
billed to the Premises, Lessee shall pay to Lessor a reasonable proportion to be
determined by Lessor of all such charges jointly metered or billed with other
premises in the Building, in the manner and within the time periods set forth in
Paragraph 4.2(d). Lessee shall be solely responsible for all trash/refuse/debris
removal from the premises including procuring a contract with a disposal company
for a dumpster/bin rental. Lessee agrees to keep the area around said
dumpster/bin clean and free of debris at all times. Lessee is responsible for
dumpster/bin placement and safety concerns so associated, including, but not
limited to locking wheels, locking the lid(s), however, Lessee shall obtain
Lessor's approval for said dumpster/bin location, which Lessor may change from
time to time. Lessee shall be responsible for the removal of all contents placed
in the dumpster/bin, including, but not limited to hazardous materials.

12. Assignment and Subletting.

       12.1 Lessor's Consent Required.

            (a) Lessee shall not voluntarily or by operation of law assign,
transfer, mortgage or otherwise transfer or encumber (collectively, "assign") or
sublet all or any part of Lessee's interest in this Lease or in the Premises
without Lessor's prior written consent given under and subject to the terms of
Paragraph 36.

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

            (c) The involvement of Lessee or its assets in any transaction, or
series of transactions (by way of merger, sale, acquisition, financing,
refinancing, transfer, leveraged buy-out or otherwise), whether or not a formal
assignment or hypothecation of this Lease or Lessee's assets occurs, which
results or will result in a reduction of the Net Worth of Lessee, as hereinafter
defined, by an amount equal to or greater than twenty-five percent (25%) of such
Net Worth of Lessee as it was represented to Lessor at the time of full
execution and delivery of this Lease or at the time of the most recent
assignment to which Lessor has consented, or as it exists immediately prior to
said transaction or transactions constituting such reduction, at whichever time
said Net Worth of Lessee was or is greater, shall be considered an assignment of
this Lease by Lessee to which Lessor may reasonably without its consent. "Net
Worth of Lessee" for purposes of this Lease shall be the net worth of Lessee
(excluding any Guarantors) established under generally accepted accounting
principles consistently applied.

            (d) An assignment or subletting of Lessee's interest in this Lease
without Lessor's specific prior written consent shall, at Lessor's option, be a
Default curable after notice per Paragraph 13.1, or a non-curable Breach without
the necessity of any notice and grace period. If Lessor elects to treat such
unconsented to assignment or subletting as a non-curable Breach, Lessor shall
have the right to either: (i) terminate this Lease, or (ii) upon thirty (30)
days' written notice ("Lessor's Notice"), increase the monthly Base Rent for
the Premises to the greater of the then fair market rental value of the
Premises, as reasonably determined by Lessor, or one hundred ten percent (110%)
of the Base Rent then in effect. Pending determination of the new fair market
rental value, if disputed by Lessee, Lessee shall pay the amount set forth in
Lessor's Notice, with any overpayment credited against the next installment(s)
of Base Rent coming due, and any underpayment for the period retroactively to
the effective date of the adjustment being due and payable immediately upon the
determination thereof. Further, in the event of such Breach and rental
adjustment, (i) the purchase price of any option to purchase the Premises held
by Lessee shall be subject to similar adjustment to the then fair market value
as reasonably determined by Lessor (without the Lease being considered an
encumbrance or any deduction for depreciation or obsolescence, and considering
the Premises at its highest and best use and in good condition) or one hundred
ten percent (110%) of the price previously in effect, (ii) any index-oriented
rental or price adjustment formulas contained in this Lease shall be adjusted to
require that the base index be determined with reference to the index
applicable to the time of such adjustment, and (iii) any fixed rental
adjustments scheduled during the remainder of the Lease term shall be increased
in the same ratio as the new rental bears to the Base Rent in effect immediately
prior to the adjustment specified in Lessor's Notice.

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

       12.2 Terms and Conditions Applicable to Assignment and Subletting.

            (a) Regardless of Lessor's consent, any assignment or subletting
shall not (i) be effective without the express written assumption by such
assignee or sublessee of the obligations of Lessee under this Lease, (ii)
release Lessee of any obligations hereunder, nor (iii) alter the primary
liability of Lessee for the payment of Base Rent and other sums due Lessor
hereunder or for the performance of any other obligations to be performed by
Lessee under this Lease.

            (b) Lessor may accept any rent or performance of Lessee's
obligations from any person other than Lessee pending approval or disapproval of
an assignment. Neither a delay in the approval or disapproval of such assignment
nor the acceptance of any rent for performance shall constitute a waiver or
estoppel of Lessor's right to exercise its remedies for the Default or Breach by
Lessee of any of the terms, covenants or conditions of this Lease.

            (c) The consent of Lessor to any assignment or subletting shall not
constitute a consent to any subsequent assignment or subletting by Lessee or to
any subsequent or successive assignment or subletting by the assignee or
sublessee. However, Lessor may consent to subsequent sublettings and assignments
of the sublease or any amendments or modifications thereto without notifying
Lessee or anyone else liable under this Lease or the sublease and without
obtaining their consent, and such action shall not relieve such persons from
liability under this Lease or the sublease.

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

            (e) Each request for consent to an assignment or subletting shall be
in writing, accompanied by information relevant to Lessor's determination as to
the financial and operational responsibility and appropriateness of the proposed
assignee or sublessee, including, but not limited to the intended use and/or
required modification of the Premises, if any, together with a non-refundable
deposit of $1,000, as reasonable consideration for Lessor's considering and
processing the request for consent. Lessee agrees to provide Lessor with such
other or additional information and/or documentation as may be reasonably
requested by Lessor.

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

            (g) The occurrence of a transaction described in Paragraph 12.2(c)
shall give Lessor the right (but not the obligation) to require that the
Security Deposit be increased by an amount equal to six (6) times the then
monthly Base Rent, and Lessor may make the actual receipt by Lessor of the
Security Deposit increase a condition to Lessor's consent to such transaction.

            (h) Lessor, as a condition to giving its consent to any assignment
or subletting, may require that the amount and adjustment schedule of the rent
payable under this Lease be adjusted to what is then the market value and/or
adjustment schedule for property similar to the Premises as then constituted, as
determined by Lessor.

       12.3 Additional Terms and Conditions Applicable to Subletting. The
following terms and conditions shall apply to any subletting by Lease of all or
any part of the Premises and shall be deemed included in all subleases under
this Lease whether or not expressly incorporated therein:

            (a) Lessee hereby assigns and transfers to Lessor all of Lessee's
interest in all rentals and income arising from any sublease of all or a portion
of the Premises heretofore or hereafter made by Lessee, and Lessor may collect
such rent and income and apply same toward Lessee's obligations under this
Lease; provided, however, that until a Breach (as defined in Paragraph 13.1)
shall occur in the performance of Lessee's obligations under this Lease, Lessee
may, except as otherwise provided in this Lease, receive, collect and enjoy the
rents accruing under such sublease. Lessor shall not, by reason of the foregoing
provision or any other assignment of such sublease to Lessor, nor by reason of
the collection of the rents from a sublessee, be deemed liable to the sublessee
for any failure of Lessee to perform and comply with any of Lessee's obligations
to such sublessee under such Sublease. Lessee hereby irrevocably authorizes and
directs any such sublessee, upon receipt of a written notice from Lessor stating
that a Breach exists in the performance of Lessee's obligations under this
Lease, to pay to Lessor the rents and other charges due and to become due under
the sublease. Sublessee shall rely upon any such statement and request from
Lessor and shall pay such rents and other charges to Lessor without any
obligation or right to inquire as to whether such Breach exists and
notwithstanding any notice from or claim from Lessee to the contrary. Lessee
shall have no right or claim against such sublessee, or, until the Breach has
been cured, against Lessor, for any such rents and other charges so paid by said
sublessee to Lessor.

            (b) In the event of a Breach by Lessee in the performance of its
obligations under this Lease, Lessor, at its option and without any obligation
to do so, may require any sublessee to attorn to Lessor, in which event Lessor
shall undertake the obligations of the sublessor under such sublease from the
time of the exercise of said option to the expiration of such sublease;
provided, however, Lessor shall not be liable for any prepaid rents or security
deposit paid by such sublessee to such sublessor or for any other prior defaults
or breaches of such sublessor under such sublease.

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

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

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

13.  Default; Breach; Remedies.

     13.1 Default; Breach. Lessor and Lessee agree that if an attorney is
consulted by Lessor in connection with a Lessee Default or Breach (as
hereinafter defined), $350.00 is a reasonable minimum sum per such occurrence
for legal services and costs in the preparation and service of a notice of
Default, and that Lessor may include the cost of such services and costs in said
notice as rent due and payable to cure said default. A "Default" by Lessee is
defined as a failure by Lessee to observe, comply with or perform any of the
terms, covenants, conditions or rules applicable to Lessee under this Lease. A
"Breach" by Lessee is defined as the occurrence of any one or more of the
following Defaults, and, where a grace period for cure after notice is specified
herein, the failure by Lessee to cure such Default prior to the expiration of
the applicable grace period, and shall entitle Lessor to pursue the remedies set
forth in Paragraph 13.2 and/or 13.3:

          (a) The vacating of the Premises without the intention to reoccupy
same, or the abandonment of the Premises.

          (b) Except as expressly otherwise provided in this Lease, the failure
by Lessee to make any payment of Base Rent, Lessee's Share of Common Area
Operating Expenses, or any other monetary payment required to be made by Lessee
hereunder as and when due, the failure by Lessee to provide Lessor with
reasonable evidence of insurance or surety bond required under this Lease, or
the failure of Lessee to fulfill any obligation under this Lease which endangers
or threatens life or property, where such failure continues for a period of
three (3) days following written notice thereof by or on behalf of Lessor to
Lessee.

          (c) Except as expressly otherwise provided in this Lease, the failure
by Lessee to provide Lessor with reasonable written evidence (in duly executed
original form, if applicable) of (i) compliance with Applicable Requirements per
Paragraph 6.3, (ii) the inspection, maintenance and service contracts required
under Paragraph 7.1(b), (iii) the rescission of an unauthorized assignment or
subletting per Paragraph 12.1, (iv) a Tenancy Statement per Paragraphs 16 or 37,
(v) the subordination or non-subordination of this Lease per Paragraph 30, (vi)
the guaranty of the performance of Lessee's obligations under this Lease if
required under Paragraphs 1.11 and 37, (vii) the execution of any document
requested under Paragraph 42 (easements), or (viii) any other documentation or
information which Lessor may reasonably require of Lessee under the terms of
this lease, where any such failure continues for a period of ten (10) days
following written notice by or on behalf of Lessor to Lessee.

          (d) A Default by Lessee as to the terms, covenants, conditions or
provisions of this Lease, or of the rules adopted under Paragraph 40 hereof that
are to observed, complied with or performed by Lessee, other than those
described in Subparagraphs 13.1(a), (b), (c), above, where such Default
continues for a period of thirty (30) days after written notice thereof by or on
behalf of Lessor to Lessee; provided, however, that if the nature of Lessee's
Default is such that more than thirty (30) days are reasonably required for its
cure, then it shall not be deemed to be a Breach of this Lease by Lessee if
Lessee commences such cure within said thirty (30) day period and thereafter
diligently prosecutes such cure to completion.

          (e) The occurrence of any of the following events: (i) the making by
Lessee of any general arrangement or assignment for the benefit of creditors;
(ii) Lessee's becoming a "debtor" as defined in 11 U.S. Code Section 101 or any
successor statute thereto (unless, in the case of a petition filed against
Lessee, the same is dismissed within sixty (60) days; (iii) the appointment of a
trustee or receiver to take possession of substantially all of Lessee's assets
located at the Premises or of Lessee's interest in this Lease, where possession
is not restored to Lessee within thirty (30) days; or (iv) the attachment,
execution or other judicial seizure of substantially all of Lessee's assets
located at the Premises or of Lessee's interest in this Lease, where such
seizure is not discharged within thirty (30) days; provided, however, in the
event that any provision of this Subparagraph 13.1(e) is contrary to any
applicable law, such provision shall be of no force or effect, and shall not
affect the validity of the remaining provisions.

          (f) The discovery by Lessor that any financial statement of Lessee or
of any Guarantor, given to Lessor by Lessee or any Guarantor, was materially
false.

          (g) If the performance of Lessee's obligations under this Lease is
guaranteed: (i) the death of a Guarantor, (ii) the termination of a Guarantor's
liability with respect to this Lease other than in accordance with the terms of
such guaranty, (iii) a Guarantor's becoming insolvent or the subject of a
bankruptcy filing, (iv) a Guarantor's refusal to honor the guaranty, or (v) a
Guarantor's breach of its guaranty obligation on an anticipatory breach basis,
and Lessee's failure, within sixty (60) days following written notice by or on
behalf of Lessor to Lessee of any such event, to provide Lessor with written
alternative assurances of security, which, when coupled with the then existing
resources of Lessee, equals or exceeds the combined financial resources of
Lessee and the Guarantors that existed at the time of execution of this Lease.

     13.2 Remedies. If Lessee fails to perform any affirmative duty or
obligation of Lessee under this Lease, within ten (10) days after written notice
to Lessee (or in case of an emergency, without notice), Lessor may at its option
(but without obligation to do so), perform such duty or obligation on Lessee's
behalf, including but not limited to the obtaining of reasonably required bonds,
insurance policies, or governmental licenses, permits or approvals. The costs
and expenses of any such performance by Lessor shall be due and payable by
Lessee to Lessor upon invoice therefor. If any check given to Lessor by Lessee
shall not be honored by the bank upon which it is drawn, Lessor, at its own
option, may require all future payments to be made under this Lease by Lessee to
be made only by cashier's check. In the event of a Breach of this Lease by
Lessee (as defined in Paragraph 13.1), with or without further notice or demand,
and without limiting Lessor in the exercise of any right or remedy which Lessor
may have by reason of such Breach, Lessor may:

          (a) Terminate Lessee's right to possession of the Premises by any
lawful means, in which case this Lease and the term hereof shall terminate and
Lessee shall immediately surrender possession of the Premises to Lessor. In such
event Lessor shall be entitled to recover from Lessee: (i) the worth at the time
of the award of the unpaid rent which had been earned at the time of
termination; (ii) the worth at the time of award of the amount by which the
unpaid rent which would have been earned after termination until the time of
award exceeds the amount of such rental loss that the Lessee proves could have
been reasonably avoided; (iii) the worth at the time of award of the amount by
which the unpaid rent for the balance of the term after the time of award
exceeds the amount of such rental loss that the Lessee proves could be
reasonably avoided; and (iv) any other amount necessary to compensate Lessor for
all the detriment proximately caused by the Lessee's failure to perform its
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom, including but not limited, to the cost of recovering
possession of the Premises, expenses of reletting, including necessary
renovation and alteration of the Premises, reasonable attorneys' fees, and that
portion of any leasing commission paid by Lessor in connection with this Lease
applicable to the unexpired term of this Lease. The worth at the time of award
of the amount referred to in provision (iii) of the immediately preceding
sentence shall be computed by discounting such amount at the discount rate of
the Federal Reserve Bank of San Francisco or the Federal Reserve Bank District
in which the Premises are located at the time of award plus one percent (1%).
Efforts by Lessor to mitigate damages caused by Lessee's Default or Breach of
this Lease shall not waive Lessor's right to recover damages under this
Paragraph 13.2. If termination of this Lease is obtained through the provisional
remedy of unlawful detainer, Lessor shall have the right to recover in such
proceeding the unpaid rent and damages as are recoverable therein, or Lessor may
reserve the right to recover all or any part thereof in a separate suit for such
rent and/or damages. If a notice and grace period required under Subparagraph
13.1(b), (c) or (d) was not previously given, a notice to pay rent or quit, or
to perform or quit, as the case may be, given to Lessee under any statute
authorizing the forfeiture of leases for unlawful detainer shall also constitute
the applicable notice for grace period purposes required by Subparagraph
13.1(b), (c) or (d). In such case, the applicable grace period under the
unlawful detainer statute shall run concurrently after the one such statutory
notice, and the failure of Lessee to cure the Default within the greater of the
two (2) such grace periods shall constitute both an unlawful detainer and a
Breach of this Lease entitling Lessor to the remedies provided for in this Lease
and/or by said statute.

          (b) Continue the Lease and Lessee's right to possession in effect (in
California under California Civil Code Section 1951.4) after Lessee's Breach and
recover the rent as it becomes due, provided Lessee has the right to sublet or
assign, subject only to reasonable limitations. Lessor and Lessee agree that the
limitations on assignment and subletting in this Lease are reasonable. Acts of
maintenance or preservation, efforts to relet the Premises, or the appointment
of a receiver to protect the Lessor's interest under this Lease, shall not
constitute a termination of the Lessee's right to possession.

          (c) Pursue any other remedy now or hereafter available to Lessor under
the laws or judicial decisions of the state wherein the Premises are located.

          (d) The expiration or termination of this Lease and/or the termination
of Lessee's right to possession shall not relieve Lessee from liability under
any indemnity provisions of this Lease as to matters occurring or accruing
during the term hereof or by reason of Lessee's occupancy of the Premises.

     13.3 Inducement Recapture in Event of Breach. Any agreement by Lessor for
free or abated rent or other charges applicable to the Premises, or for the
giving or paying by Lessor to or for Lessee of any cash or other bonus,
inducement or consideration for Lessee's entering into this Lease, all of which
concessions are hereinafter referred to as "Inducement Provisions" shall be
deemed conditioned upon Lessee's full and faithful performance of all of the
terms, covenants and conditions of this Lease to be performed or observed by
Lessee during the term hereof as the same may be extended. Upon the occurrence
of a Breach (as defined in Paragraph 13.1) of this Lease by Lessee, any such
Inducement Provision shall automatically be deemed deleted from this Lease and
of no further force or effect, and any rent, other charge, bonus, inducement or
consideration theretofore abated, given or paid by Lessor under such an
inducement Provision shall be immediately due and payable by Lessee to Lessor,
and recoverable by Lessor, as additional rent due under this Lease,
notwithstanding any subsequent cure of said Breach by Lessee. The acceptance by
Lessor of rent or the cure of the Breach which initiated the operation of this
Paragraph 13.3 shall not be deemed a waiver by Lessor of the provisions of this
Paragraph 13.3 unless specifically so stated in writing by Lessor at the time of
such acceptance.

     13.4 Late Charges. Lessee hereby acknowledges that late payment by Lessee
to Lessor of rent and other sums due hereunder will cause Lessor to incur costs
not contemplated by this Lease, the exact amount of which will be extremely
difficult to ascertain. Such costs include, but are not limited to,

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processing and accounting charges, and late charges which may be imposed upon
Lessor by the terms of any ground lease, mortgage or deed of trust covering the
Premises. Accordingly, if any installment of rent or other sum due from Lessee
shall not be received by Lessor or Lessor's designee within ten (10) days after
such amount shall be due, then, upon the third (3/rd/) occurrence of any rent or
sum so past due, without any requirement for notice to Lessee, Lessee shall pay
to Lessor a late charge equal to five percent (5%) of such overdue amount. The
parties hereby agree that such late charge represents a fair and reasonable
estimate of the costs Lessor will incur by reason of late payment by Lessee.
Acceptance of such late charge by Lessor shall in no event constitute a waiver
of Lessee's Default or Breach with respect to such overdue amount, nor prevent
Lessor from exercising any of the other rights and remedies granted hereunder.
In the event that a late charge is payable hereunder, whether or not collected,
for three (3) consecutive installments of Base Rent, then notwithstanding
Paragraph 4.1 or any other provision of this Lease to the contrary, Base Rent
shall, at Lessor's option, become due and payable quarterly in advance.

     13.5 Breach by Lessor. Lessor shall not be deemed in breach of this Lease
unless Lessor fails within a reasonable time to perform an obligation required
to be performed by Lessor. For purposes of this Paragraph 13.5, a reasonable
time shall in no event be less than thirty (30) days after receipt by Lessor,
and by any Lender(s) whose name and address shall have been furnished to Lessee
in writing for such purpose, of written notice specifying wherein such
obligation of Lessor has not been performed; provided, however, that if the
nature of Lessor's obligation is such that more than thirty (30) days after such
notice are reasonably required for its performance, then Lessor shall not be in
breach of this Lease if performance is commenced with such thirty (30) day
period and thereafter diligently pursued to completion.

14.  Condemnation. If the Premises or any portion thereof are taken under the
power of eminent domain or sold under the threat of the exercise of said power
(all of which are herein called "condemnation"), this Lease shall terminate as
to the part so taken as of the date the condemning authority takes title or
possession, whichever first occurs. If more than ten percent (10%) of the floor
area of the Premises, or more than twenty-five percent (25%) of the portion of
the Common Areas designated for Lessee's parking, is taken by condemnation,
Lessee may, at Lessee's option, to be exercised in writing within ten (10) days
after Lessor shall have given Lessee written notice of such taking (or in the
absence of such notice, within ten (10) days after the condemning authority
shall have taken possession) terminate this Lease as of the date the condemning
authority takes such possession. If Lessee does not terminate this Lease in
accordance with the foregoing, this Lease shall remain in full force and effect
as to the portion of the Premises remaining, except that the Base Rent shall be
reduced in the same proportion as the rentable floor area of the Premises taken
bears to the total rentable floor area of the Premises. No reduction of Base
Rent shall occur if the condemnation does not apply to any portion of the
Premises. Any award for the taking of all or any part of the Premises under the
power of eminent domain or any payment made under threat of the exercise of such
power shall be the property of Lessor, whether such award shall be made as
compensation for diminution of value of the leasehold or for the taking of the
fee, or as severence damages; provided, however, that Lessee shall be entitled
to any compensation, separately awarded to Lessee for Lessee's relocation
expenses and/or loss of Lessee's Trade Fixtures. In the event that this Lease is
not terminated by reason of such condemnation, Lessor shall to the extent of its
net severance damages received, over and above Lessee's Share of the legal and
other expenses incurred by Lessor in the condemnation matter, repair any damage
to the Premises caused by such condemnation authority. Lessee shall be
responsible for the payment of any amount in excess of such net severance
damages required to complete such repair.

15.  Brokers' Fees.

     15.1 Procuring Cause.  The Broker(s) named in Paragraph 1.10 is/are the
procuring cause of this Lease.

     15.2 Additional Terms. For the purposes of this Lease, any fee paid by
Lessor to the procuring Broker(s) shall hereby be referred to as "commission."
Commission is payable only on the Base Rent, paragraph(s) 1.5 and any amending
paragraph related to Base Rent, if included hereto, for the Term certain of the
Lease or payable per other terms separately agreed to by Lessor and Broker(s).
Commission shall be paid upon the Commencement Date set out in the Lease
provided that the Lessee is in occupancy on said date and the first payment of
Rent due by the Lessee has been received by the Lessor. Commission is not
payable on: Options of any kind; Rights of First Refusal; Expansion space;
Parking or storage space; Escalation's of Additional Rent (Lessee contributions
towards taxes, insurance, energy or other such Common Area Operating Costs)
above a Base Year figure; Tenant Improvement Allowances above building standards
(whether lump-sum or amortized); Free Rent periods. Lessee hereby agrees and
understands that Lessor shall not be required to pay commission to any Broker(s)
for any renewal or extension of Term, nor for any expansion or relocation of
Lessee's Premises. If Lessee procures the services of Brokers(s) for said
renewal, extension, expansion or relocation, Lessee shall be solely responsible
for any commission as agreed to be paid in a separate agreement between Lessee
and Broker(s).

     15.3 Assumption of Obligations. Any buyer or transferee of Lessor's
interest in this Lease, whether such transfer is by agreement or by operation of
law, shall be deemed to have assumed Lessor's obligation under this Paragraph
15. Each Broker shall be an intended third party beneficiary of the provisions
of Paragraph 1.10 and of this Paragraph 15 to the extent of its interest in any
commission arising from this Lease and may enforce that right directly against
Lessor and its successors.

     15.4 Representations and Warranties. Lessee and Lessor each represent and
warrant to the other that it has had no dealings with any person, firm, broker
or finder other than as named in Paragraph 1.10(a) in connection with the
negotiation of this Lease and/or the consummation of the transaction
contemplated hereby, and that no broker or other person, firm or entity other
than said named Broker(s) is entitled to any commission or finder's fee in
connection with said transaction. Lessee and Lessor do each hereby agree to
indemnify, protect, defend and hold the other harmless from and against
liability for compensation or charges which may be claimed by any such unnamed
broker, finder or other similar party by reason of any dealings or actions of
the indemnifying Party, including any costs, expenses, and/or attorneys' fees
reasonably incurred with respect thereto.

16.  Tenancy and Financial Statements.

     16.1 Tenancy Statement. Each Party (as "Responding Party") shall within
ten (10) days after written notice from the other Party (the "Requesting Party")
execute, acknowledge and deliver to the Requesting Party a statement in writing
in a form similar to the then most current "Tenancy Statement" form published by
the American Industrial Real Estate Association or Lessor's standard Estoppel
Agreement at the time, plus such additional information, confirmation and/or
statements as may be reasonably requested by the Requesting Party.

     16.2 Financial Statement. If Lessor desires to finance, refinance, or sell
the Premises or the Building, or any part thereof, Lessee and all Guarantors
shall deliver to any potential lender or purchaser designated by Lessor such
financial statements of Lessee and such Guarantors as may be reasonably required
by such lender or purchaser, including but not limited to Lessee's financial
statements for the past three (3) years. All such financial statements shall be
received by Lessor and such lender or purchaser in confidence and shall be used
only for the purposes herein set forth.

17.  Lessor's Liability. The term "Lessor" as used herein shall mean the owner
or owners at the time in question of the fee title to the Premises. In the event
of a transfer of Lessor's title or interest in the Premises or in this Lease,
Lessor shall deliver to the transferee or assignee (in cash or by credit) any
unused Security Deposit held by Lessor at the time of such transfer or
assignment. Except as provided in Paragraph 15.3, upon such transfer or
assignment and delivery of the Security Deposit, as aforesaid, the prior Lessor
shall be relieved of all liability with respect to the obligations and/or
covenants under this Lease thereafter to be performed by the Lessor. Subject to
the foregoing, the obligations and/or covenants in this Lease to be performed by
the Lessor shall be binding only upon the Lessor as hereinabove defined. The
obligations of Lessor, and Lessor's directors, officers, shareholders, partners
(either general or limited), members, employees, agents and representatives,
under the Lease do not constitute personal obligations. Lessee, and Lessee's
successors and assigns, hereby agree not to seek any recourse against Lessor and
Lessor's directors, officers, shareholders, partners (either general or
limited), members, employees, agents and representatives for the satisfaction of
any actual or alleged liability of Lessor to Lessee under the Lease, but Lessee
shall look only to Lessor's interest in the Premises for the satisfaction of any
liability of Lessor to Lessee under the Lease. Notwithstanding any other
provision of this Lease, it is expressly understood and agreed that the total
liability of the Lessor arising out of or in connection with this Lease, the
relationship of the Lessor and the Lessee hereunder and/or the Lessee's use of
the Leased Premises, shall be limited to the estate of the Lessor in the
Property. No other property or asset of the Lessor or any partner or owner of
the Lessor shall be subject to levy, execution, or other enforcement proceedings
or other judicial process for the satisfaction of any judgment or any other
right or remedy of the Lessee arising out of or in connection with this Lease,
the relationship of the Lessor and the Lessee hereunder and/or the Lessee's use
of the Leased Premises.

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

19.  Interest on Past-Due Obligations. Any monetary payment due Lessor
hereunder, other than late charges, not received by Lessor within ten (10) days
following the date on which it was due, shall bear interest from the date due at
the prime rate charged by the largest state chartered bank in the sate in which
the Premises are located plus four percent (4%) per annum, but not exceeding the
maximum rate allowed by law, in addition to the potential late charge provided
for in paragraph 13.4.

20.  Time of Essence. Time is of the essence with respect to the performance of
all obligations to be performed or observed by the Parties under this Lease.

21.  Rent Defined. All monetary obligations of Lessee to Lessor under the terms
of this Lease are deemed to be rent.

22.  No Prior or Other Agreements. This Lease contains all agreements between
the Parties with respect to any matter mentioned herein, and no other prior or
contemporaneous agreement or understanding shall be effective. Lessee represents
and warrants to the Lessor that it has made, and is relying solely upon, its own
investigation as to the nature, quality and character of the Premises.

23.  Notices.

     23.1 Notice Requirements. All notices required or permitted by this Lease
shall be in writing and may be delivered in person (by hand or by messenger or
courier service) or may be sent by regular, certified or registered mail or U.S.
Postal Service Express Mail, with postage prepaid, or by facsimile transmission
during normal business hours, and shall be deemed sufficiently given if served
in a manner specified in this Paragraph 23. The addresses noted adjacent to a
Party's signature on this Lease shall be that Party's address for delivery or
mailing of notice purposes. Either Party may be written notice to the

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other specify a different address for notice purposes, except that upon Lessee's
taking possession of the Premises, the Premises shall constitute Lessee's
address for the purpose of mailing or delivering notices to Lessee. A copy of
all notices required or permitted to be given to Lessor hereunder shall be
concurrently transmitted to such party or parties at such addresses as Lessor
may from time to time hereafter designate by written notice to Lessee.

     23.2 Date of Notice.  Any notice sent by registered or certified mail,
return receipt requested, shall be deemed given on the date of delivery shown on
the receipt card, or if no delivery date is shown, the postmark thereon. If sent
by regular mail, the notice shall be deemed given forty-eight (48) hours after
the same is addressed as required herein and mailed with postage prepaid.
Notices delivered by United States Express Mail or overnight courier that
guarantees next day delivery shall be deemed given twenty-four (24) hours after
delivery of the same to the United States Express Mail or overnight courier. If
any notice is transmitted by facsimile transmission or similar means, the same
shall be deemed served or delivered upon telephone or facsimile confirmation of
receipt of the transmission thereof, provided a copy is also delivered via
delivery or mail. If notice is received on a Saturday or a Sunday or a legal
holiday, it shall be deemed received on the next business day.

24.  Waivers.  No waiver by Lessor of the Default or Breach of any term,
covenant or condition hereof by Lessee, shall be deemed a waiver of any other
term, covenant or condition hereof, or of any subsequent Default or Breach by
Lessee of the same or any other term, covenant or condition hereof. Lessor's
consent to, or approval of, any such act shall not be deemed to render
unnecessary the obtaining of Lessor's consent to, or approval of, any subsequent
or similar act by Lessee, or be construed as the basis of an estoppel to enforce
the provision or provisions of this Lease requiring such consent. Regardless of
Lessor's knowledge of a Default or Breach at the time of accepting rent, the
acceptance of rent by Lessor shall not be a waiver of any Default or Breach by
Lessee of any provison hereof. Any payment given Lessor by Lessee may be
accepted by Lessor on account of monies or damages due Lessor, notwithstanding
any qualifying statements or conditions made by Lessee in connection therewith,
which such statements and/or conditions shall be of no force or effect
whatsoever unless specifically agreed to in writing by Lessor at or before the
time of deposit of such payment.

25.  Recording.  Either Lessor or Lessee shall, upon request of the other,
execute, acknowledge and deliver to the other a short form memorandum of this
Lease for recording purposes. The Party requesting recordation shall be
responsible for payment of any fees or taxes applicable thereto. It is expressly
agreed and understood that Lessee hereby grants the Lessor power of attorney or
other such representation solely for the purpose of Lessor removing such
recordation if Lessee fails to remove said recordation at the expiry or earlier
termination of this Lease.

26.  No Right to Holdover.  Lessee has no right to retain possession of the
Premises or any part thereof beyond the expiration or earlier termination of
this Lease. In the event that Lessee holds over in violation of this Paragraph
26 then the Base Rent payable from and after the time of the expiration or
earlier termination of this Lease shall be increased to two hundred percent
(200%) of the Base Rent applicable during the month immediately preceding such
expiration or earlier termination. Nothing contained herein shall be construed
as a consent by Lessor to any holding over by Lessee.

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

28.  Covenants and Conditions.  All provisions of this Lease to be observed or
performed by Lessee are both covenants and conditions.

29.  Binding Effect; Choice of Law. This Lease shall be binding upon the
Parties, their personal representatives, successors and assigns and be governed
by the laws of the state in which the Premises are located. Any litigation
between the Parties hereto concerning this Lease shall be initiated in the
county in which the Premises are located.

30.  Subordination; Attornment; Non-Disturbance.

     30.1 Subordination. This Lease and any Option granted hereby shall be
subject and subordinate to any ground lease, mortgage, deed of trust, or other
hypothecation or security device (collectively, "Security Device"), now or
hereafter placed by Lessor upon the real property of which the Premises are a
part, to any and all advances made on the security thereof, and to all renewals,
modifications, consolidations, replacements and extensions thereof. Lessee
agrees that the Lenders holding any such Security Device shall have no duty,
liability or obligation to perform any of the obligations of Lessor under this
Lease, but that in the event of Lessor's default with respect to any such
obligation, Lessee will give any Lender whose name and address have been
furnished Lessee in writing for such purpose notice of Lessor's default pursuant
to Paragraph 13.5. If any Lender shall elect to have this Lease and/or any
Option granted hereby superior to the lien of its Security Device and shall give
written notice thereof to Lessee, this Lease and such Options shall be deemed
prior to such Security Device, notwithstanding the relative dates of the
documentation or recordation thereof.

     30.2 Attornment. Subject to the non-disturbance provisions of Paragraph
30.3, Lessee agrees to attorn to a Lender or any other party who acquires
ownership of the Premises by reason of a foreclosure of a Security Device, and
that in the event of such foreclosure, such new owner shall not: (i) be liable
for any act or omission of any prior lessor or with respect to events occurring
prior to acquisition of ownership, (ii) be subject to any offsets or defenses
which Lessee might have against any prior lessor, or (iii) be bound by
prepayment of more than one month's rent.

     30.3 Non-Disturbance. With respect to Security Devices entered into by
Lessor after the execution of this Lease, Lessee's subordination of this Lease
shall be subject to receiving assurance (a "non-disturbance agreement") from the
Lender that Lessee's possession and this Lease, including any options to extend
the term hereof, will not be disturbed so long as Lessee is not in Breach hereof
and attorns to the record owner of the Premises.

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

31.  Attorneys' Fees. If any Party or Broker brings an action or proceeding to
enforce the terms hereof or declare rights hereunder, the Prevailing Party (as
hereafter defined) in any such proceeding, action, or appeal thereon, shall be
entitled to reasonable attorneys' fees. Such fees may be awarded in the same
suit or recovered in a separate suit, whether or not such action or proceeding
is pursued to decision or judgment. The term "Prevailing Party" shall include,
without limitation, a Party or Broker who substantially obtains or defeats the
relief sought, as the case may be, whether by compromise, settlement, judgment,
or the abandonment by the other Party or Broker of its claim or defense. The
attorneys' fee award shall not be computed in accordance with any court fee
schedule, but shall be such as to fully reimburse all attorneys' fees reasonably
incurred. Lessor shall be entitled to attorneys' fees, costs and expenses
incurred in preparation and service of notices of Default and consultations in
connection therewith, whether or not a legal action is subsequently commenced in
connection with such Default or resulting Breach. Broker(s) shall be intended
third party beneficiaries of this Paragraph 31.

32.  Lessor's Access; Showing Premises; Repairs. Lessor and Lessor's agents
shall have the right to enter the Premises at any time, in the case of an
emergency, and otherwise at reasonable times for the purpose of showing the same
to prospective purchasers, lenders, or lessees, and making such alterations,
repairs, improvements or additions to the Premises or to the Building, as Lessor
may reasonably deem necessary. Lessor may at any time place on or about the
Premises or Building any ordinary "For Sale" signs and Lessor may at any time
during the last one hundred eighty (180) days of the term hereof place on or
about the Premises any ordinary "For Lease" signs. All such activities of Lessor
shall be without abatement of rent or liability to Lessee.

33.  Auctions.  Lessee shall not conduct, nor permit to be conducted, either
voluntarily or involuntarily, any auction upon the Premises without first having
obtained Lessor's prior written consent. Notwithstanding anything to the
contrary in this Lease, Lessor shall not be obligated to exercise any standard
of reasonableness in determining whether to grant such consent.

34.  Signs.  Lessee shall not place any sign upon the exterior of the Premises
or the Building, except that Lessee may, with Lessor's prior written consent,
install (but not on the roof) such signs as are reasonably required to advertise
Lessee's own business so long as such signs are in a location designated by
Lessor and comply with Applicable Requirements and the signage criteria (see
Exhibit "B" attached hereto) established for the Industrial Center by Lessor.
The installation of any sign on the Premises by or for Lessee shall be subject
to the provisions of Paragraph 7 (Maintenance, Repairs, Utility Installations,
Trade Fixtures and Alterations). Unless otherwise expressly agreed herein,
Lessor reserves all rights to the use of the roof of the Building, and the right
to install advertising signs on the Building, including the roof, which do not
unreasonably interfere with the conduct of Lessee's business; Lessor shall be
entitled to all revenues from such advertising signs.

35.  Termination; Merger. Unless specifically stated otherwise in writing by
Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual
termination or cancellation hereof, or a termination hereof by Lessor for Breach
by Lessee, shall automatically terminate any sublease or lesser estate in the
Premises; provided, however, Lessor shall, in the event of any such surrender,
termination or cancellation, have the option to continue any one or all of any
existing subtenancies. Lessor's failure within ten (10) days following any such
event to make a written election to the contrary by written notice to the holder
of any such lesser interest, shall constitute Lessor's election to have such
event constitute the termination of such interest.

36.  Consents.

          (a) Except for Paragraph 33 hereof (Auctions) or as otherwise provided
herein, wherever in this Lease the consent of a Party is required to an act by
or for the other Party, such consent shall not be unreasonably withheld or
delayed. Lessor's actual reasonable costs and expenses (including, but not
limited to, architects', attorneys', engineers' and other consultants' fees)
incurred in the consideration of, or response to, a request by Lessee for any
Lessor consent pertaining to this Lease or the Premises, including, but not
limited to, consents to an assignment a subletting or the presence or use of a
Hazardous Substance, shall be paid by Lessee to Lessor upon receipt of an
invoice and supporting documentation therefor. In addition to the deposit
described in Paragraph 12.2(e), Lessor may, as a condition to considering any
such request by Lessee, require that Lessee deposit with Lessor an amount of
money (in addition to the Security Deposit held under Paragraph 5) reasonably
calculated by Lessor to represent the cost Lessor will incur in considering and
responding to Lessee's request. Any unused portion of said deposit shall be
refunded to Lessee without interest. Lessor's consent to any act, assignment of
this Lease or subletting of the Premises by Lessee shall not constitute an
acknowledgment that no Default or Breach by Lessee of this Lease exists, nor
shall such consent, be deemed a waiver of any then existing Default or Breach,
except as may be otherwise specifically stated in writing by Lessor at the time
of such consent.

          (b)  All conditions to Lessor's consent authorized by this Lease are
acknowledged by Lessee as being reasonable. The failure to specify herein

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any particular condition to Lessor's consent shall not preclude the impositions
by Lessor at the time of consent of such further or other conditions as are then
reasonable with reference to the particular matter for which consent is being
given.

37.  Guarantor.

     37.1 Form of Guaranty. If there are to be any Guarantors of this Lease per
Paragraph 1.11, the form of the guaranty to be executed by each such Guarantor
shall be in the form most recently published by the American Industrial Real
Estate Association or the Lessor's standard Guaranty Form, and each such
Guarantor shall have the same obligations as Lessee under this lease, including
but not limited to, the obligation to provide the Tenancy Statement and
information required in Paragraph 16.

     37.2 Additional Obligations of Guarantor. It shall constitute a Default of
the Lessee under this Lease if any such Guarantor fails or refuses, upon
reasonable request by Lessor to give: (a) evidence of the due execution of the
guaranty called for by this Lease, including the authority of the Guarantor (and
of the party signing on Guarantor's behalf) to obligate such Guarantor on said
guaranty, and resolution of its board of directors authorizing the making of
such guaranty, together with a certificate of incumbency showing the signatures
of the persons authorized to sign on its behalf, (b) current financial
statements of Guarantor as may from time to time be requested by Lessor, (c) a
Tenancy Statement, or (d) written confirmation that the guaranty is still in
effect.

38.  Quiet Possession.  Upon payment by Lessee of the rent for the Premises and
the performance of all of the covenants, conditions and provisions on Lessee's
part to be observed and performed under this Lease, Lessee shall have quiet
possession of the Premises for the entire term hereof subject to all of the
provisions of this Lease.

39.  Options.

     39.1 Definition. As used in this Lease, the word "Option" has the following
meaning: (a) the right to extend the term of this Lease or to renew this Lease
or to extend or renew any lease that Lessee has on other property of Lessor; (b)
the right of first refusal to lease the Premises or the right of first offer to
lease the Premises or the right of first refusal to lease other property of
Lessor or the right of first offer to lease other property of Lessor; (c) the
right to purchase the Premises, or the right of first refusal to purchase the
Premises, or the right of first offer to purchase the Premises, or the right to
purchase other property of Lessor, or the right of first refusal to purchase
other property of Lessor, or the right of first offer to purchase other property
of Lessor.

     39.2 Options Personal to Original Lessee. Each Option granted to Lessee in
this Lease is personal to the original Lessee named in Paragraph 1.1 hereof, and
cannot be voluntarily or involuntarily assigned or exercised by any person or
entity other than said original Lessee while the original Lessee is in full and
actual possession of the Premises and without the intention of thereafter
assigning or subletting. The Options, if any, herein granted to Lessee are not
assignable, either as a part of an assignment of this Lease or separately or
apart therefrom, and no Option may be separated from this Lease in any manner,
by reservation or otherwise.

     39.3 Multiple Options. In the event that Lessee has any multiple Options to
extend or renew this Lease, a later option cannot be exercised unless the prior
Options to extend or renew this Lease have been validly exercised.

     39.4 Effect of Default on Options.

          (a)  Lessee shall have no right to exercise an Option, notwithstanding
any provision in the grant of Option to the contrary: (i) during the period
commencing with the giving of any notice of Default under Paragraph 13.1 and
continuing until the noticed Default is cured, or (ii) during the period of time
any monetary obligation due Lessor from Lessee is unpaid (without regard to
whether notice thereof is given Lessee), or (iii) during the time Lessee is in
Breach of this Lease, or (iv) in the event that Lessor has given to Lessee three
(3) or more notices of separate Defaults under Paragraph 13.1 during the twelve
(12) month period immediately preceding the exercise of the Option, whether or
not the Defaults are cured.

          (b)  The period of time within which an Option may be exercised shall
not be extended or enlarged by reason of Lessee's inability to exercise an
Option because of the provisions of Paragraph 39.4(a).

          (c)  All rights of Lessee under the provisions of an Option shall
terminate and be of no further force or effect, notwithstanding Lessee's due and
timely exercise of the Option, if, after such exercise and during the term of
this Lease, (i) Lessee fails to pay to Lessor a monetary obligation of Lessee
for a period of thirty (30) days after such obligation becomes due (without any
necessity of Lessor to give notice thereof to Lessee), or (ii) Lessor gives to
Lessee three (3) or more notices of separate Defaults under Paragraph 13.1
during any twelve (12) month period, whether or not the Defaults are cured, or
(iii) if Lessee commits a Breach of this Lease.

40.  Rules and Regulations. Lessee agrees that it will abide by, and keep and
observe all reasonable rules and regulations ("Rules and Regulations") which
Lessor may make from time to time for the management, safety, care, and
cleanliness of the grounds, the parking and unloading of vehicles and the
preservation of good order, as well as for the convenience of other occupants or
tenants of the Building and the Industrial Center and their invitees. See
Exhibit "D" attached hereto.

41.  Security Measures. Lessee hereby acknowledges that the rental payable to
Lessor hereunder does not include the cost of guard service or other security
measures, and that Lessor shall have no obligation whatsoever to provide same.
Lessee assumes all responsibility for the protection of the Premises, Lessee,
its agents and invitees and their property from the acts of third parties.

42.  Reservations. Lessor reserves the right, from time to time, to grant,
without the consent or joinder of Lessee, such easements, rights of way, utility
raceways, and dedications that Lessor deems necessary, and to cause the
recordation of parcel maps and restrictions, so long as such easements, rights
of way, utility raceways, dedications, maps and restrictions do not reasonably
interfere with the use of the Premises by Lessee. Lessee agrees to sign any
documents reasonably requested by Lessor to effectuate any such easement rights,
dedication, map or restrictions.

43.  Performance Under Protest. If at any time a dispute shall arise as to any
amount or sum of money to be paid by one Party to the other under the provisions
hereof, the Party against whom the obligation to pay the money is asserted shall
have the right to make payment "under protest" and such payment shall not be
regarded as a voluntary payment and there shall survive the right on the part of
said Party to institute suit for recovery of such sum. If it shall be adjudged
that there was no legal obligation on the part of said Party to pay such sum or
any part thereof, said Party shall be entitled to recover such sum or so much
thereof as it was not legally required to pay under the provisions of this
Lease.

44.  Authority. If either Party hereto is a corporation, trust, or general or
limited partnership, each individual executing this Lease on behalf of such
entity represents and warrants that he or she is duly authorized to execute and
deliver this Lease on its behalf. If Lessee is a corporation, trust or
partnership, Lessee shall, within thirty (30) days after request by Lessor,
deliver to Lessor evidence satisfactory to Lessor of such authority.

45.  Conflict. Any conflict between the printed provisions of this Lease and the
typewritten or handwritten provisions shall be controlled by the typewritten or
handwritten provisions.

46.  Offer. Preparation of this Lease by either Lessor or Lessee or Lessor's
agent or Lessee's agent and submission of same to Lessee or Lessor shall not be
deemed an offer to lease. This Lease is not intended to be binding until
executed and delivered by all Parties hereto.

47.  Amendments. This Lease may be modified only in writing, signed by the
parties in interest at the time of the modification. The Parties shall amend
this Lease from time to time to reflect any adjustments that are made to the
Base Rent or other rent payable under this Lease. As long as they do not
materially change Lessee's obligations hereunder, Lessee agrees to make such
reasonable non-monetary modifications to this Lease as may be reasonably
required by an institutional insurance company or pension plan Lender in
connection with the obtaining of normal financing or refinancing of the property
of which the Premises are a part.

48.  Multiple Parties. Except as otherwise expressly provided herein, if more
than one person or entity is named herein as either Lessor or Lessee, the
obligations of such multiple parties shall be the joint and several
responsibility of all persons or entities named herein as such Lessor or Lessee.

ADDENDUM TO LEASE:

49.  BASE RENT INCREASE SCHEDULE is attached hereto and is made a part of this
     Lease.

50.  ADA REQUIREMENTS is attached hereto and is made a part of this Lease.

51.  ACKNOWLEDGEMENT BY LESSEE is attached hereto and is made a part of this
     Lease.

52.  FIRE/LIFE SAFETY EQUIPMENT is attached hereto and is made a part of this
     Lease.

53.  NOISE AND DISTURBANCES is attached hereto and is made a part of this Lease.

54.  EARLY POSSESSION is attached hereto and is made a part of this Lease.

- Exhibits: A, B, C, & D are attached hereto and are made a part of this Lease.

- Preliminary Space Plans, by Lund Vandruff, Inc., dated, October 20, 1999 with
attached modification drawings by Carbite Golf are attached hereto and made a
part of this Lease.

THE MANUFACTURERS LIFE INSURANCE COMPANY (U.S.A.)           Initials:   RB
                                                                       ----
FORM RE-SD Multi-Ind. Gross (10/99)                                     BP
                                                                       ----

                                 Page 11 of 20
<PAGE>

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

          IF THIS LEASE HAS BEEN FILLED IN, IT HAS BEEN PREPARED FOR YOUR
          ATTORNEY'S REVIEW AND APPROVAL. FURTHER, EXPERTS SHOULD BE CONSULTED
          TO EVALUATE THE CONDITION OF THE PROPERTY FOR THE POSSIBLE PRESENCE OF
          ASBESTOS, UNDERGROUND STORAGE TANKS OR HAZARDOUS SUBSTANCES. NO
          REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN INDUSTRIAL
          REAL ESTATE ASSOCIATION OR BY THE REAL ESTATE BROKERS OR THEIR
          CONTRACTORS, AGENTS OR EMPLOYEES AS TO THE LEGAL SUFFICIENCY, LEGAL
          EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH
          IT RELATES; THE PARTIES SHALL RELY SOLELY UPON THE ADVICE OF THEIR OWN
          COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE. IF THE
          SUBJECT PROPERTY IS IN A STATE OTHER THAN CALIFORNIA, AN ATTORNEY FROM
          THE STATE WHERE THE PROPERTY IS LOCATED SHOULD BE CONSULTED.

The parties hereto have executed this Lease at the place and on the dates
specified above their respective signatures.

<TABLE>
<CAPTION>
<S>                                                         <C>
   Executed at: San Diego, California                       Executed at: San Diego, Calif
                ------------------------------------                     ---------------------------------------

   on:       November 1, 1999                               on:         Nov 1, 1999
       ---------------------------------------------            ------------------------------------------------

By LESSOR:                                                    By LESSEE:

THE MANUFACTURERS LIFE INSURANCE COMPANY (U.S.A.)              CARBITE INC. a California Corporation
----------------------------------------------------        -----------------------------------------------------

____________________________________________________        _____________________________________________________

By:           Bruce R. Pearson                               By: x         Michael Spacciapolli
    ------------------------------------------------             ------------------------------------------------

Name Printed: Bruce R. Pearson                               Name Printed: Michael Spacciapolli
             ---------------------------------------                       --------------------------------------
Title:        Real Estate Director                           Title:        President
       ---------------------------------------------                ---------------------------------------------

By: ________________________________________________         By: x         Randie Burrell
                                                                 ------------------------------------------------
Name Printed: ______________________________________         Name Printed: Randie Burrell
                                                                           --------------------------------------
Title: _____________________________________________         Title:        Vice President
                                                                    ---------------------------------------------

Address:  7510 Clairemont Mesa Blvd., Suite 211              Address:  6330 Nancy Ridge Dr., Suite 107
         -------------------------------------------                  -------------------------------------------
          San Diego, CA 92111-1539                                     San Diego, CA 92121
----------------------------------------------------        -----------------------------------------------------

Telephone (858)  292-1667                                    Telephone: (619)  625-0065
                 -----------------------------------                    -----------------------------------------

Facsimile (858)  292-0504                                    Telephone: (619)  625-0752
                 -----------------------------------                    -----------------------------------------
</TABLE>
                                    CHECKED
                                      MS
                                   --------
                                   VERIFIED
                                      BP
                                  ---------

THE MANUFACTURERS LIFE INSURANCE COMPANY (U.S.A.)         Initials:  MS
                                                                    ----
Form RE-SD Multi-Ind. Gross (10/99)                                  BP
                                                                    ----

                                 Page 12 of 19
<PAGE>

ADDENDUM TO THE LEASE BETWEEN THE MANUFACTURERS LIFE INSURANCE COMPANY (U.S.A.)
AND
CARBITE GOLF, INC., a Company incorporated under the laws of British Columbia,
Canada

49.  BASE RENT INCREASE SCHEDULE:

     .    Commencing on the 1/st/ day of February, 2001 and continuing until the
          31/st/ day of January, 2002, the Base Rent shall be adjusted to
          $20,992.00 per month.

     .    Commencing on the 1/st/ day of February, 2002 and continuing until the
          31/st/ of January, 2003, the Base Rent shall be adjusted to $21,830.00
          per month.

     .    Commencing on the 1/st/ day of February, 2003 and continuing until the
          31/st/ day of January, 2004, the Base Rent shall be adjusted to
          $22,705.00 per month.

50.  ADA REQUIREMENTS. Any tenant improvement work performed to ensure the
Premises meet the Americans with Disabilities ACT (ADA) requirements or any
other regulatory requirements shall be incorporated in the Tenant Improvements
(up to the maximum of the Tenant Improvement costs provided by the Lessor
described in Exhibit "C"). Any subsequent work required to conform to ADA or
other regulatory requirements due to the Lessee's use of the Premises shall be
performed by the Lessee at the Lessee's sole cost.

51.  ACKNOWLEDGMENT BY LESSEE. The Lessee hereby agrees and understands that it
is leasing premises within an industrial building and is fully aware and accepts
the potential noise, vibrations, odors and other such occurrences that are
associated with leasing in such an environment, either due to existing tenancies
or potential future tenancies within the Building and the Industrial Center.

52.  FIRE/LIFE SAFETY EQUIPMENT. The Lessee agrees and understands that it shall
be responsible for the maintenance and all costs associated with any and all
fire and life safety equipment utilized within the Premises, including but not
limited to any fire sprinkler system installed in the Premises. Evidence of a
service contract for such sprinkler system shall be provided to Lessor by
Lessee. In the event Lessee does not obtain such a service contract, Lessee,
upon Lessor's request, agrees to pay Lessor as additional Rent the cost of a
maintenance contract for the sprinkler equipment. Said additional Rent shall be
paid monthly along with the Rent stipulated in Paragraph 4 of this Lease. The
additional Rent may be adjusted from time-to-time to reflect any changes in the
prevailing cost of such service.

53.  NOISE AND DISTURBANCES.

          (a)  The Lessee shall ensure that its employees, agents, contractors,
customers, clients and/or invitees (collectively herein called
"Lessee/Associates") do not disturb other tenant's or person's enjoyment of
their premises or the Property. Examples of "disturbances" shall include but are
not limited to: loitering or congregating about the Premises and parking area
for purposes not benefiting the use of the Premises or other's use of the
Property; making noise in, on or about the Premises or Property that bother
others; swearing or intimidating others; disturbances may be any events that
elicit complaints by other tenants, neighbors and police visits to the property
in response to complaints. In the event that the Lessor determines at its sole
reasonable discretion that the Lessee/Associates are disturbing the enjoyment of
the Property for others, then Lessee shall take immediate corrective action upon
notification by Lessor. In addition, the Lessor shall have the option to take
such action as Lessor deems necessary to ensure compliance with this paragraph
and any costs associated with the Lessor's action shall be reimbursed by the
Lessee to the Lessor upon demand. The Lessor may hire a security firm or take
whatever other measures it deems necessary to enforce this agreement at Lessee's
cost.

          (b)  Any failure of the Lessee or Lessee/Associates to comply with
this paragraph, after Lessor provides two (2) notices to Lessee, then at the
election of the Lessor, any subsequent notice shall constitute a default under
this Lease. In which case, in addition to the Lessor's other remedies the Lessor
shall have the right to terminate this Lease and the Lessee shall cease its use
of the Premises, vacate the Premises, reimburse the Lessor for all unamortized
Tenant Improvement Costs, Commission Costs and other amounts due to the Lessor
under the Lease. The Lessor shall have free and clear right to enter into and
lease the Premises if the Lessee is so in default.

54.  EARLY POSSESSION. The Lessee may occupy the Premises early, (herein called
"Early Possession"). The Early Possession period shall commence upon the Lessor
completing its work per Exhibit "C", Alterations, attached hereto. It is a
condition that the Lessee shall comply with the insurance clause per Paragraph 8
of the Lease and shall provide proof of such insurance to the Lessor prior to
taking possession of the Premises. The Early Possession period is for the
purpose of allowing the Lessee to move in furniture and prepare the Premises for
its use and shall be free of Rent. However, if the Lessee commences to use the
Premises for its proposed use prior to the Commencement Date, then Rent shall be
paid on a prorata basis during such period of use. The Lessee shall transfer the
electrical utility into its responsibility prior to taking Early Possession of
the Premises.

THE MANUFACTURERS LIFE INSURANCE COMPANY (U.S.A.)          Initials:   RB
                                                                     ------
Form RE-SD Multi-Ind. Gross (10/99)                                    BP
                                                                     ------

                                 Page 13 of 19
<PAGE>

                                  EXHIBIT "A"

                                   PREMISES

Legal Description:
-----------------
Parcel 1 of Parcel Map No. 15181, in the City of San Diego, County of San Diego,
State of California, filed in the County Recorder of San Diego County, March 24,
1988.

Building (Premises):
-------------------
An industrial building constructed and located at 9985 Huennekens Street, in the
City of San Diego, in the County of San Diego with a zip code of 92121, on the
Parcel so described above and, for illustrative purposes only, having a
structural configuration as shown below.

                           [FLOOR PLAN APPEARS HERE]

                            9985 Huennekens Street

                                  Exhibit "A"

                                  Page 1 of 1

                                                                    Initial
                                                               -----------------
                                                               Lessor     Lessee

                                                                 BP         RB
<PAGE>

                                  EXHIBIT "B"

                                Sign Standards
                                --------------

1.   SIGN CRITERIA
     -------------

     This criterion has been established for the purpose of maintaining overall
     appearance of the Industrial Center. The Lessor reserves the right to
     strictly enforce conformance. Any sign installed without approval of the
     Lessor shall be removed at Lessee's cost. Lessee's failure to comply with
     these standards may constitute a breach of the Lease.

     A.   General Requirements:
          --------------------

          1. Lessee shall submit a sketch of its proposed sign to the Lessor
             for approval.

          2. If a standardized sign blank is required per the Industrial
             Center's Codes Covenants and Restrictions ("CC&R's") or per the
             Lessor's standards for the park, such sign blank shall be furnished
             and installed by Lessor and Lessor shall be reimbursed by Lessee
             for such costs. Lessee shall pay all costs related to the cost of
             painting its approved sign or sign blank). Lessee shall, at its
             sole cost, maintain all signs in good condition at all times during
             the term of the lease and shall remove all signs at the Expiration
             Date or early termination of this Lease. Included in Lessee's costs
             shall be the restoration of the Building to Lessor's standards due
             to any damage or defacement caused by the installation, maintenance
             or removal of said signs.

          3. Lessee shall be responsible for the fulfillment of all requirements
             of this criterion.

     B.   General Specifications:
          ----------------------

          1. No electrical or audible signs will be permitted without Lessor's
             specific written approval.

          2. The sign's dimensions and color shall be per the CC&R's or Lessor's
             criteria.

          3. An accurate rendering of all proposed signs (including any window
             signage) must be submitted to and approved by Lessor in writing
             before installation. The rendering must provide complete data
             concerning the size, color, letter style, material and such other
             information as may be required by the Lessor. Sign copy shall be
             limited to the Lessee's company name only, unless otherwise
             approved by the Lessor.

          4. Any sign insert must have a size, shape, composition, design
             provided.

          5. Placement of the sign and method of attachment to the building will
             be directed by the Lessor.

          6. Any sign board provided by the Lessor as part of the support
             structure or backing for a sign blank shall not be removed from the
             building. The Lessee shall remove its sign blank when the premises
             are vacated at the end of the lease term or earlier termination
             thereof.

          7. The rear door of the premises may be identified by Lessee with
             three inch (3") high black, block type letters identifying the
             Lessee's business name. The name is to be centered six inches
             (6") above the door.

          8. Except as provided herein, no advertising, placards, banners,
             pennants, names, insignia, trademarks, or other descriptive
             material shall be affixed or maintained upon the glass panes or the
             exterior walls of the building, landscaped areas, streets, or
             parking areas.

          9. Lessee's sign must be removed at the end of the Term and Lessee
             shall pay for any damage to the building caused by the sign's
             installation or removal. Lessee shall not install, erect or place
             on or about the property any sign, banner, clapboard or any other
             marketing material other than that approved by the Lessor. Lessor
             shall have the right to remove any such marketing material at its
             sole discretion and deduct the cost for such removal from the
             Lessee's Security Deposit. In the event the cost for removal of
             non-approved marketing material exceeds the amount of the Security
             Deposit the Lessee shall reimburse the Lessor for the removal costs
             immediately upon receipt of the Lessor's invoice. Lessor may
             dispose of any non-approved marketing material or signs as Lessor
             chooses.

                                                                    Initial
                                                              ------------------
                                                                Lessor   Lessee

                                                                  BP       RB

                                  Exhibit "B"

                                  Page 1 of 1

<PAGE>

                                  EXHIBIT "C"

                      ALTERATIONS/LEASEHOLD IMPROVEMENTS

Definition of Leasehold Improvements

     1.   For purposes of this Lease, the term "Leasehold Improvements"
     includes, without limitation, all fixtures, improvements, installations,
     Alterations and additions from time to time made, erected or installed by
     or on behalf of the Lessee, or any previous occupant of the Leased
     Premises, in the Leased Premises and by or on behalf of other tenants in
     other premises in the Building (including the Lessor if an occupant of the
     Building), including all partitions, doors and hardware however affixed,
     and whether or not movable, all mechanical, electrical and utility
     installations and all carpeting and window coverings with the exception
     only of furniture and equipment not of the nature of fixtures.

Installation of Improvements and Fixtures

     2.   The Lessor shall include in the Leased Premises the "Lessor's Work"
     (as hereinafter defined). The Lessee shall not make, erect, install or
     alter any Leasehold Improvements in the Leased Premises without having
     requested and obtained the Lessor's prior written approval. The Lessor's
     approval shall not, if given, under any circumstances be construed as a
     consent to the Lessor having its estate charged with the cost of work. The
     Lessor shall not unreasonably withhold its approval to any such request,
     but failure to comply with the Lessor's reasonable requirements from time
     to time for the Building shall be considered sufficient reason for refusal.
     In making, erecting, installing or altering any Leasehold Improvements the
     Lessee shall not, without the prior written approval of the Lessor, alter
     or interfere with any installations which have been made by the Lessor or
     others and in no event shall alter or interfere with window coverings (if
     any) or other light control devices (if any) installed in the Building. The
     Lessee's request for any approval hereunder shall be in writing and
     accompanied by an adequate description of the contemplated work and, where
     considered appropriate by the Lessor, working drawings and specifications
     thereof. If the Lessee requires from the Lessor drawings or specifications
     of the Building in connection with the Leasehold Improvements, the Lessee
     shall pay the cost thereof to the Lessor on demand. Any reasonable costs
     and expenses incurred by the Lessor in connection with the Lessee's
     Leasehold Improvements shall be paid by the Lessee to the Lessor on demand.
     All work to be performed in the Leased Premises shall be performed by
     competent and adequately insured contractors and sub-contractors of whom
     the Lessor shall have approved in writing prior to commencement of any
     work, such approval not to be unreasonably withheld (except that the Lessor
     may require that the Lessor's contractors and sub-contractors be engaged
     for any mechanical or electrical work). All such work including the
     delivery, storage and removal of materials shall be subject to the
     reasonable supervision of the Lessor, shall be performed in accordance with
     any reasonable conditions or regulations imposed by the Lessor including,
     without limitation, payment on demand of a reasonable fee of the Lessor for
     such supervision, and shall be completed in good and workmanlike manner in
     accordance with the description of the work approved by the Lessor and in
     accordance with all laws, regulations and by-laws of all regulatory
     authorities. Copies of required building permits or authorizations shall be
     obtained by the Lessee at its expense and copies thereof shall be provided
     to the Lessor. If the Lessee undertakes Leasehold Improvements, upon
     completion of such Leasehold Improvements the Lessee shall supply to the
     Lessor complete "As-Built" drawings representing Leasehold Improvements
     installed and, if applicable, an engineer approved air balance report. No
     locks shall be installed on the entrance doors or in any doors in the
     Leased Premises that are not keyed to the Building master key system.

Liens and Encumbrances on Improvements and Fixtures

     3.   In connection with the making, erection, installation or alteration of
     Leasehold Improvements and all other work or installations made by or for
     the Lessee in the Leased Premises the Lessee shall comply with all the
     provisions of the construction lien and other similar statutes from time to
     time applicable thereto (including any proviso requiring or enabling the
     retention by way of holdback of portions of any sums payable) and, except
     as to any such holdback, shall promptly pay all accounts relating thereto.
     The Lessee will not create any mortgage, conditional sale agreement or
     other encumbrance in respect of its Leasehold Improvements or, without the
     written consent of the Lessor, with respect to its trade fixtures nor shall
     the Lessee take any action as a consequence of which any such mortgage,
     conditional sale agreement or other encumbrance would attach to the
     Property or any part thereof. If and whenever any construction or other
     lien for work, labor, services or materials supplied to or for the Lessee
     or for the cost of which the Lessee may be in any way liable or claims
     therefor shall arise or be filed or any such mortgage, conditional sale
     agreement or other encumbrance shall attach, the Lessee shall within twenty
     (20) days after submission by the Lessor of notice thereof procure the
     discharge thereof, including any certificate of action registered in
     respect of any lien, by payment or giving security or in such other manner
     as may be required or permitted by law, and failing which the Lessor may
     avail itself of any of its remedies hereunder for default of the Lessee and
     may make any payments or take any steps or proceedings required to procure
     the discharge of any such liens or encumbrances, and shall be entitled to
     be repaid by the Lessee on demand for any such payments and to be paid on
     demand by the Lessee for all costs and expenses in connection with steps or
     proceedings taken by the Lessor and the Lessor's right to reimbursement and
     to payment shall not be affected or impaired if the Lessee shall then or
     subsequently establish or claim that any lien or encumbrances so discharged
     was without merit or excessive or subject to any abatement, set-off or
     defense. The Lessee agrees to indemnify the Lessor from all claims, costs
     and expenses which may be incurred by the Lessor in any proceedings brought
     by any person against the Lessor alone or with another or others for or in
     respect of work, labor, services or materials supplied to or for the
     Lessee.

Removal of Improvements and Fixtures

     4.   All Leasehold Improvements in or upon the Leased Premises shall
     immediately upon their placement be and become the Lessor's property
     without compensation therefor to the Lessee. Except to the extent otherwise
     expressly agreed by the Lessor in

                                                               Initial
                                                           ---------------
                                                           Lessor   Lessee

                                                             BP       RB

                                  EXHIBIT "C"

                                  Page 1 of 3
<PAGE>

     writing, no Leasehold Improvements, furniture or equipment shall be removed
     by the Lessee from the Leased Premises either during or at the expiration
     or sooner termination of the Term except that:

     a)   the Lessee shall, prior to the end of the Term, remove such of the
          Leasehold Improvements and trade fixtures in the Leased Premises as
          the Lessor shall require to be removed; and

     b)   the Lessee may, at the times appointed by the Lessor and subject to
          availability of elevators (if installed in the Building), remove its
          furniture and equipment at the end of the Term, and also during the
          Term in the usual and normal course of its business where such
          furniture or equipment has become excess for the Lessee's purposes or
          the Lessee is substituting therefor new furniture and equipment.

     The Lessee shall, in the case of every removal, make good at the expense of
     the Lessee any damage caused to the Property by the installation and
     removal. In the event of the Non-removal by the end of the Term, or sooner
     termination of this Lease, of such trade fixtures or Leasehold Improvements
     required by the Lessor of the Lessee to be removed, the Lessor shall have
     the option, in addition to its other remedies under this Lease to declare
     to the Lessee that such trade fixtures are the property of the Lessor and
     the Lessor upon such a declaration may dispose of such trade fixtures and
     retain any proceeds of disposition as security for the obligations of the
     Lessee to the Lessor and the Lessee shall be liable to the Lessor for any
     expenses incurred by the Lessor.

5.   For the purpose of this Lease:

     (a)  The term "Lessor's Work" shall mean all work required to be done, if
any, to complete the Leased Premises for occupancy by the Lessee, excluding the
Lessee's Work.

     (b)  The term "Lessee's Work" shall mean that, prior to or concurrent with
the Commencement Date of the Term and in accordance with this Exhibit "C",
                                                              -----------
Lessor will complete, subject to the "Tenant Improvement Allowance" (as
hereinafter defined) and except as otherwise provided herein, certain initial
improvements in the Leased Premises, which shall be a part of the Leasehold
Improvements, and shall be designed, constructed and completed by Lessor
pursuant to the "Space Plan" (as hereinafter defined) and in accordance with the
following:

          (i)    Lessor will deliver to Lessee a space plan dated October 20,
1999 from Lund Vandruff, Inc. as Project/Job No. 3616.1 (the "Space Plan"),
          -------------------                    ------
which shows the basic configuration of the Lessee's Work in the Leased Premises,
and which Space Plan will be reviewed and approved by both Lessor and Lessee
concurrent with their execution of this Lease. Based upon the Space Plan, Lessor
shall cause Lessor's architect to prepare and deliver to Lessee the final
working drawings and specifications for the Lessee's Work, which shall include
telephone, electrical plumbing and air-conditioning specifications, and all
floor coverings, wall coverings, window coverings, paint, cabinetry and
sprinkler layouts, if any (the "Final Plans"). Within five (5) business days
after Lessee and Lessee's architect receive the Final Plans from Lessor, Lessee
and/or Lessee's architect shall either approve or disapprove the Final Plans, in
writing, delivered to Lessor, noting with reasonable particularity any changes
or corrections therein. If Lessee makes any changes or corrections to the Final
Plans, Lessor's architect shall resubmit the revised Final Plans to Lessee and
Lessee's architect within three (3) business days after receipt by Lessor of
Lessee's changes or corrections and, thereafter, Lessee and/or Lessee's
architect shall either approve or disapprove the revised Final Plans within
three (3) business days after Lessee and Lessee's architect receive same, in
writing, delivered to Lessor and noting with reasonable particularity any
further change or corrections by Lessee therein. All costs to Lessor, including
Lessor's architects and engineers, in preparing and revising the Space Plan and
the Final Plans up to a maximum of Three Thousand and no/100 Dollars ($3,000.00)
shall be deducted from the Tenant Improvement Allowance, and Lessee shall be
solely responsible for all costs of Lessee, and Lessee's architects, engineers
and/or consultants, in reviewing and approving the Space Plan and the Final
Plans (which costs will not be a part of the Tenant Improvement Allowance).
                        ---

          (ii)   Following Lessee's approval of the Final Plans, Lessor shall
contract with a general contractor to construct and complete the Lessee's Work
in the Leased Premises. Lessor's general contractor will be selected by a
bidding procedure, whereby Lessor will designate two (2) Lessor-approved general
contractors, along with one (1) additional general contractor to be selected by
Lessee (subject to Lessor's reasonable approval). Lessor will then accept bids
for the construction and completion of the Lessee's Work from these general
contractors, and Lessor will select the general contractor with the lowest,
reasonable cost proposal for the Lessee's Work, on an open, fixed-price basis
(with notice of Lessor's selection, and copies of the various cost proposals,
delivered by Lessor to Lessee), which cost proposals, shall (A) include, as
nearly as possible, all work costs to be incurred in connection with the
construction of the Lessee's Work, (B) contain a bid analysis spreadsheet, which
spreadsheet shall document adjustments made to compensate for any inconsistent
assumptions made in such contractor's bid, and (C) a schedule of the critical
path construction schedule to complete the Lessee's Work. After Lessor's
selection of the general contractor, Lessor will enter into a construction
contract with such general contractor for the Lessee's Work, and thereafter,
Lessor will cause either Lessor's architect or the general contractor, or both,
to apply for the required permits and approvals to construct the Lessee's Work.

          (iii)  Following Lessor's receipt of the required permits and
approvals, Lessor's general contractor shall diligently pursue the construction
of the Lessee's Work, subject to Paragraph 5(b)(iv) below and except to the
extent that completion is delayed as a result of Lessee's request for any
"Changes" (as hereinafter defined) or the construction of such Changes, if any,
by Lessor or any "Lessee Delays" (as hereinafter defined) or events of force
majeure hereunder or under Paragraph 14 of this Lease.

          (iv)   Notwithstanding anything to the contrary set forth in Section 2
or elsewhere in this Lease, the "Commencement Date" of the Term shall be defined
as, and shall be conclusively deemed to occur on, the date Lessor substantially
completes the Lessee's Work in the Leased Premises (which shall occur on the
date the Lessee's Work has passed final inspection by the applicable local
governmental authority such that said authority will allow for Lessee's
occupancy of same) and Lessor tenders exclusive possession of the Leased
                   ---
Premises to Lessee, excluding any minor items (e.g., "punch-list" type items)
                                               -----
which can be completed by Lessor with only minor interference to the conduct of
Lessee's business in the Leased Premises. Once the Commencement Date is
determined,

                                                                  Initials
                                                             -----------------
                                                             Lessor     Lessee

                                                                BP        RB

                                  Exhibit "C"

                                  Page 2 of 3

<PAGE>

and in accordance with Section 2(b) of this Lease, Lessor and Lessee agree to
confirm such date in writing, and Lessee's failure to confirm the Commencement
Date, within twenty (20) days after Lessor's written request therefor, shall be
conclusively deemed to be Lessee's approval of the Commencement Date set by
Lessor.

     (v)       Lessor hereby agrees to contribute to Lessee for the Lessee's
Work an amount up to, but in no event to exceed, One Hundred Sixty-five Thousand
                                                 -------------------------------
and no/100 Dollars ($165,000.00) (the "Tenant Improvement Allowance"). The
------------------   ----------
Tenant Improvement Allowance shall be applied by Lessor, at Lessor's direction,
against all costs related to or in connection with Lessor's preparation and
revision of the Space Plan and the Final Plans, all permits and approvals, and
the construction and completion of the Lessee's Work in the Leased Premises.
Lessee hereby agrees that Lessee shall, within twenty (20) days after written
demand by Lessor to Lessee, be obligated to pay for all costs related to or in
connection with the Lessee's Work which are in excess of the Tenant Improvement
Allowance. Lessee shall not be entitled to receive any payment or credit, or any
off-set or deduction against any monetary obligation of Lessee under this Lease,
for any portion of the Tenant Improvement Allowance which is not expended by
Lessor hereunder for the Lessee's Work.

     (vi)      If Lessee requests any change to the Final Plans after Lessee's
approval of same and/or any change in Lessor's construction of the Lessee's Work
(collectively, "Changes"), Lessor shall promptly give Lessee an estimate of the
cost of such Changes and the resulting delay in the completion of the Lessee's
Work. Within five (5) business days after Lessee's receipt of such written
estimate from Lessor, Lessee shall give Lessor written notice indicating whether
or not Lessee elects to proceed with any such Changes. If Lessee elects to
proceed with such Changes, and if Lessor has reasonably approved such Changes,
Lessor will make such Changes to the Lessee's Work. If Lessee elects not to
proceed with such Changes or fails to timely notify Lessor of Lessee's election
within such five (5) business day period, Lessor shall complete the Lessee's
Work without making such Changes. Lessor shall not be responsible, in any manner
whatsoever, for any delay caused by Lessee's requests for such Changes or the
construction of such Changes. All costs related to any Changes shall be paid for
by Lessee to Lessor within thirty (30) days after Lessee's receipt of Lessor's
written demand therefor.

     (vii)     In addition to Paragraph 14 of this Lease, if the performance by
Lessor of any act required herein or under this Lease is prevented or delayed by
reason of acts of God, fires, floods, earthquakes, weather, epidemics or any
other force majeure delays, then Lessor shall be excused from performance for
the time period equal to the time period of the prevention or delay.

     (viii)    To the extent that the Commencement Date has not occurred because
Lessor was delayed in substantially completing the Lessee's Work as a result of
any of the following (collectively, "Lessee Delays"): Lessee's failure to
complete any item on or before the due date, which is a responsibility of Lessee
to complete or perform; Lessee's request for Changes or the construction of such
Changes by Lessor; Lessee's request for materials, finishes or installations
other than those Building-standard finishes normally provided by Lessor, as may
be changed by Lessor from time to time; any delay by Lessee in making any
payment to Lessor; and/or any act or failure to act by Lessee and/or Lessee's
employees, agents, architects, independent contractors, consultants and/or any
other persons performing, or required to perform, services on behalf of Lessee;
then as soon as reasonably possible but in no event more than thirty (30) days
after the occurrence of any Lessee Delays, Lessor shall notify Lessee in writing
of such Lessee Delays. If Lessor promptly notifies Lessee hereunder of any
Lessee Delays, then Lessor shall deliver to Lessee a reasonably detailed
statement of the net number of days of Lessee Delays, determined on a critical
path basis, and Lessee shall pay to Lessor, as Rent under this Lease, the
product of the per diem monthly Basic Rent payable by Lessee for the Leased
Premises multiplied by the number of days that such Lessee Delays caused the
Commencement Date to be delayed, with such payment to be made by Lessee to
Lessor along with Lessee's next monthly payment of Basic Rent under this Lease.

     (ix)      In accordance with Paragraphs 1.4, 3.2, 3.3 and 54 of this Lease,
Lessor agrees that within ten (10) days prior to the Commencement Date, Lessee
may enter upon the Leased Premises in order to install Lessee's trade fixtures,
furniture and equipment, and otherwise provide for Lessee's move into the Leased
Premises (collectively, "Lessee's Fixturizing Work"). Notwithstanding the
foregoing, Lessee's contractors installing phone, data and security systems may
enter during the Lessor's Work period provided said contractors do not delay or
disturb Lessor's Work and repair at their cost any damages they inflict upon
Lessor's Work. Should Lessee elect to enter the Leased Premises hereunder to
complete Lessee's Fixturizing Work, it is hereby agreed that Lessee, together
with Lessee's employees, agents, independent contractors, suppliers and any
other persons under Lessee's control (collectively, "Lessee's Personnel"),
installing Lessee's Fixturizing Work in the Leased Premises, shall be subject
to, and shall work under the direction of, Lessor and Lessor's general
contractor for the construction of Lessee's Work. If, in the reasonable
judgment of Lessor, the presence of Lessee's Personnel and the work that is
being performed by Lessee's Personnel shall interfere with Lessor's construction
or shall detrimentally affect Lessor's ability to comply with Lessor's
commitment for completing the Lessee's Work or cause any labor and/or union
difficulties, Lessor shall have the right to order any or all of Lessee's
Fixturizing Work to cease upon twenty-four (24) hours prior written notice to
Lessee and Lessee shall have Lessee's Personnel immediately remove from the
Leased Premises all tools, equipment and materials. If Lessee elects to exercise
Lessee's right of early entry hereunder, Lessee further agrees to: (A) pay for
and provide certificates evidencing the existence and amounts of insurance
required to be carried by Lessee and Lessee's Personnel, and otherwise comply
with all of the terms, covenants and conditions of this Lease, (B) pay any and
all utility and/or service charges allocated to Lessee by Lessor as a result of
Lessee's Fixturizing Work, and (C) comply with all applicable federal,
state and local laws, regulations, permits, and approvals, including all
Environmental Laws, applicable to Lessee's Fixturizing Work. Notwithstanding
anything to the contrary set forth herein, Lessee's early entry into the Leased
Premises for the purposes of completing Lessee's Fixturizing Work, if at all,
shall not be deemed a taking of possession of the Leased Premises by Lessee for
the purposes of either setting the Commencement Date or signaling Lessor's
substantial completion of the Lessee's Work.

                                                                   Initial
                                                             -------------------
                                                               Lessor   Lessee

                                                                 BP       RB

                                  Exhibit "C"

                                  Page 3 of 3

<PAGE>

                           FIRST AMENDMENT TO LEASE
                           ------------------------

THIS AGREEMENT made this 14/th/ day of January, 2000

BETWEEN

     THE MANUFACTURERS LIFE INSURANCE COMPANY (U.S.A.) (herein called "Lessor")
     -------------------------------------------------
OF THE FIRST PART,

and

     CARBITE, INC. A CALIFORNIA CORPORATION (herein called "Lessee") OF THE
     --------------------------------------
     SECOND PART.

     WHEREAS by an Agreement made the 29/th/ day of October, 1999 (the "Lease")
between Lessor, and the Lessee, the Lessor did demise and lease unto the Lessee
approximately 26,214 square feet at 9985 Huennekens St, San Diego, California
92121 (the "Leased Premises") for a four (4) year term to be computed from the
1st day of February, 2000, for a certain rent and subject to the covenants and
conditions in the Lease;

     AND WHEREAS the Lessee has requested the Lessor increase the Tenant
Improvement Allowance by means of a Seventy Thousand and no/100 Dollar ($70,000)
loan to be amortized into the Base Rent at ten percent (10%) interest compounded
annually.

     AND WHEREAS both Parties are in agreement to change the Commencement Date
due to delays caused by the City Planning department.

     AND WHEREAS the Lessor and the Lessee have mutually agreed to amend the
Lease to affect said loan and Commencement Date change.

     NOW for good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged the Lessor and Lessee hereby agree as follows:

     1.   It is hereby agreed and understood, due to delays caused by the City
          Planning Department and to no fault by either Party, the Lessor and
          Lessee hereby mutually agree to amend Paragraph 1.3 of the Lease such
          that the Commencement Date shall be March 1, 2000 and the Expiration
          Date shall be February 29, 2004. All dates referenced in the Lease
          affected by these changes shall hereby be amended accordingly.

     2.   It is further agreed and understood that no Party is or shall be
          liable for any damages, real or perceived, relating to or caused by
          the delay.

     3.   Lessor shall provide Lessee a Seventy Thousand and no/100 Dollars
          ($70,000) loan (the "Tenant Improvement Loan") to be used by the
          Lessee towards the Lessee's Owned Alterations. The Tenant Improvement
          Loan shall be paid by the Lessor to the Lessee in accordance with the
          provisions for payment of the Tenant Improvement Allowance.

     4.   In consideration of the Tenant Improvement Loan, the Lessee shall pay
          an additional One Thousand Seven Hundred Seventy-five and 38/100
          Dollars ($1,775.38) Per Month throughout the Term. The first payment
          shall commence March 1, 2000.

     5.   Paragraphs 1.5 and 1.6(a) shall hereby be amended such that the Base
          Rent per month shall be: $21,960.38.

     6.   The Rent Schedule per paragraph 49 shall hereby be deleted and
          replaced as follows:

                                                                  Initial
                                                            -------------------
                                                              Lessor   Lessee
                                                               MS        RB

                                  Page 1 of 2

<PAGE>

--------------------------------------------------------------------------------
49.  BASE RENT INCREASE SCHEDULE:

     .    Commencing on the 1/st/ day of March, 2001 and continuing until the
          28/th/ day of February, 2002, the Base Rent shall be adjusted to
          $22,767.38 per month.

     .    Commencing on the 1/st/ day of March, 2002 and continuing until the
          28/th/ day of February, 2003, the Base Rent shall be adjusted to
          $23,605.38 per month.

     .    Commencing on the 1/st/ day of March, 2003 and continuing until the
          29/th/ day of February, 2004, the Base Rent shall be adjusted to
          $24,480.38 per month.

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

     All other terms and conditions of the Lease shall remain in force.

            IN WITNESS WHEREOF the parties hereto have executed this Agreement.

               Lessor:
               THE MANUFACTURERS LIFE INSURANCE COMPANY (U.S.A)

               By:  _________________________________________
                     Bruce R. Pearson, Real Estate Director

               Lessee:
               CARBITE, INC. A CALIFORNIA CORPORATION

               by:   /s/ Michael Spacciapolli
                    -----------------------------------------
                     Michael Spacciapolli, President

               by:   /s/ Randie Burrell
                    -----------------------------------------
                     Randie Burrell, Vice President

                                                             Initial
                                                       ------------------
                                                         Lessor   Lessee

                                                                    RB
                                                                    MS

                                  Page 2 of 2<PAGE>

                                                                    EXHIBIT 10.1

Onyx Japan Joint Venture Agreement

Between

ONYX SOFTWARE CORPORATION

And

PRIME SYSTEMS CORPORATION

                           DATED SEPTEMBER 14, 2000

*Certain confidential information contained in this document, marked by
brackets, has been omitted and filed with the Securities and Exchange Commission
pursuant to Rule 406 of the Securities Act of 1933, as amended.
<PAGE>

<TABLE>
<CAPTION>
                               Table of Contents
<S>                                                                         <C>
1     Recitals.............................................................  3
2     Effect of this Agreement.............................................  3
3     Purpose..............................................................  4
4     Definitions..........................................................  4
5     Structure............................................................  5
6     Roles of the Parties.................................................  6
7     Intellectual Property................................................  6
8     Operation and Management.............................................  7
9     Initial Public Offering.............................................. 10
10    Representations and Warranties....................................... 10
11    Withdrawal........................................................... 11
12    Term and Termination................................................. 13
13    Events to occur upon termination..................................... 15
14    Determination of Fair Market Value................................... 15
15    Indemnity............................................................ 16
16    Confidentiality Agreement............................................ 16
17    Public Announcement.................................................. 17
18    Non-Compete.......................................................... 17
19    Notices.............................................................. 18
20    Ancillary Provisions................................................. 18
</TABLE>

       Schedule 1:  Matters requiring unanimous consent of Board of Directors
       Schedule 2:  Items not considered to be day-to-day operation matters

                                       2
<PAGE>

                            Joint Venture Agreement

This Joint Venture Agreement is executed on this 14th day of September 2000 by
and between:

          ONYX SOFTWARE CORPORATION, a company duly organized and existing under
          the laws of Washington with its principal place of business located at
          3180 139/th/ Avenue SE, Suite 500, Bellevue, WA 98005-4091, USA
          (hereinafter "Onyx");

          and

          PRIME SYSTEMS CORPORATION, a corporation duly organized and existing
          under the laws of Japan with its principal place of business located
          at Sakurai Building, 3F 2-8-1 Fukagawa, Koto-ku, Tokyo, 135-0033 Japan
          (hereinafter "Prime");

(Hereinafter, each of Onyx and Prime shall be individually referred to as the
"Party" and, both of the two jointly as the "Parties")

1    Recitals

WHEREAS Onyx is in the business of developing, marketing and licensing computer
software;

WHEREAS Prime is in the business of providing system solutions, developing and
marketing computer software etc.;

WHEREAS Onyx and Prime entered into a non-binding term sheet dated May 27, 2000
for the purpose of the consideration of the establishment of a Joint Venture in
Japan;

WHEREAS pursuant to the Interim Agreement dated August 8, 2000 (the "Interim
Agreement"), Onyx and Prime established a legal entity, Onyx Software Co., Ltd.
("Onyx Japan") on August 31, 2000 with a paid in capital of JPY86,000,000 of
which Onyx has invested JPY61,900,000 and Prime, JPY24,100,000; and

WHEREAS the Parties anticipate, and intend to exert their reasonable best
efforts to cause, Softbank Investment Corporation ("Softbank") to invest in Onyx
Japan by September 15, 2000;

Onyx and Prime enter into this Agreement to define the terms of the Joint
Venture vehicle, Onyx Japan, for the purpose of ensuring a cooperative, mutually
beneficial relationship and the successful realization of the purposes of the
Joint Venture as set forth in Clause 3 below.

2    Effect of this Agreement

This Agreement will take effect on the occurrence of the later of (i) the
execution of this Agreement; or (ii) Investment by Softbank into Onyx Japan (the
"Effective Date"). On the Effective Date, all terms of the Interim Agreement
will be superseded by this Agreement and this Agreement and the Schedules
comprised herein shall from the Effective Date constitute the entire agreement
relating to the relationship of the Parties with respect to Onyx Japan.

                                       3
<PAGE>

The Parties understand and agree that there are no other oral or written
collateral promises, representations, agreements or understandings between them
concerning the subject matter of this Agreement other than those expressly
stated herein.

3    Purpose

Onyx Japan is established for the purpose of successfully expanding Onyx
technology and software products in Japan. Onyx Japan is organized for the
purpose of product localization, sales, marketing and consulting as well as
servicing the software and solutions provided by Onyx or developed independently
by Onyx Japan, and for the purpose of engaging in all activities and
transactions that are necessary in furtherance of that purpose. Unless otherwise
agreed upon by the Parties in writing, Onyx Japan shall not engage in any other
activities except those set forth above.

4    Definitions

"Agreement" refers to this Joint Venture Agreement unless specified otherwise.

"Affiliate" means any entity, other than Onyx Japan, in which a Party owns or
controls more than 50% of the outstanding capital stock of such entity or any
entity which owns or controls more than 50% of one of the Parties.

"Arrangements" means this Agreement and other arrangements relating to the
establishment of Onyx Japan and the ongoing Joint Venture.

"Board of Directors" means the board of directors of Onyx Japan unless expressly
specified otherwise.

"Business Day" means any day which is not Saturday, Sunday or a national holiday
in the place where the performance of an obligation required under this
Agreement is to be undertaken.

"Chairman" means the chairman and representative director of Onyx Japan.

"Confidential Information" means the terms and conditions of this Agreement and
any information disclosed by either Party or their Affiliates to the other Party
or to Onyx Japan, either directly or indirectly, in writing, orally or by
inspection of tangible objects or software or Intellectual Property, which
information is designated, orally or in writing, as "Confidential,"
"Proprietary" or some other designation. Confidential Information shall not,
however, include any information which (i) was publicly known prior to the time
of disclosure by the disclosing Party, (ii) becomes publicly known after
disclosure by the disclosing Party to the receiving Party through no action or
inaction of the receiving Party, (iii) is already in the possession of the
receiving Party at the time of disclosure by the disclosing Party, or (iv) is
obtained by the receiving Party from a third party without a breach of any
obligations of confidentiality of such third party to the Party wishing to keep
such information confidential.

"Fair Market Value" is the value determined in accordance with the procedure
contained in Clause 14 of this Agreement.

"Intellectual Property" means any intellectual property in any jurisdiction
including, without limitation, any and all patents, utility models, designs,
logos, trademarks, service marks, trade names, copyrights (including software),
know-how and domain names, and any rights to obtain any of the foregoing where
applicable under pending applications for intellectual property rights.

"Interim Period" means the period from when the Interim Agreement was entered
into until this Agreement takes effect pursuant to Clause 2.

                                       4
<PAGE>

"IPO" means the initial public offering of Onyx Japan by listing on a recognized
technology-related stock exchange market in Japan such as "TSE Mothers" or
"Nasdaq Japan", in this case anticipated to be conducted during the calendar
year [*] or as soon as optimal thereafter as described in Clause 9.1.

"Joint Venture" is the arrangement referred to in this Agreement to create,
operate and manage Onyx Japan between Onyx and Prime and with investment by
Softbank.

"Material Default" means default or non-performance of any obligations under
this Agreement causing material damage to Onyx Japan or any Party to this
Agreement.

"Par Value" is the price at which the Shares were originally issued, which is
JPY50,000 per Share.

"President" means the president and representative director of Onyx Japan.

"Share" means a share in Onyx Japan represented by stock certificate or other
security instrument.

"Shareholder" means a shareholder in Onyx Japan.

"Softbank Investment" means the investment in 14% of the Total Capital of Onyx
Japan by Softbank anticipated to occur on or before September 15, 2000 or such
other date thereafter as agreed upon in writing by the Parties.

"Territory" means Japan.

"Total Capital" means the capital in Onyx Japan during the operational period of
JPY800,000,000 inclusive of the investment of Onyx, Prime and Softbank, as
provided in Clause 5.

5    Structure

     5.1  The Parties agree that the Joint Venture contemplated by this
          Agreement shall be carried out by Onyx Japan, as established by Onyx
          and Prime on August 31, 2000.

     5.2  The anticipated ownership structure of Onyx Japan after the Softbank
          Investment (and inclusive of investments made prior to or during the
          Interim Period) is as follows:

               Shareholder          %              Paid in Capital
                                                        (JPY)

               Onyx                 58%            464,000,000
               Prime                28%            224,000,000
               Softbank             14%            112,000,000

     5.3  The Parties shall complete all necessary arrangements and cooperate
          with each other to cause Onyx Japan to issue to Softbank, Onyx and
          Prime, at par value, the number of Shares necessary to ensure that the
          allocated Shares and Paid-in-Capital amounts provided above are
          attained prior to September 15, 2000. The Parties shall subscribe for
          such number of Shares and transfer the requisite capital to the bank
          account designated by Onyx Japan on or before the date of the Softbank
          Investment and shall use their reasonable best efforts to cause
          Softbank to provide the above noted capital and to subscribe for
          Shares by September 15, 2000. In the event that the Softbank
          Investment does not occur by September 15, 2000, the Parties shall
          confer in good

                                       5

---------------
[*] Confidential treatment requested.

<PAGE>

          faith for a reasonable period about an extension of the date by which
          the Softbank Investment can and shall occur.

     5.4  The Parties agree that they will consider, from a practical viewpoint
          for the effective development of the business of Onyx Japan, the
          possibility of the further equity participation in Onyx Japan by an
          appropriate company that is determined by mutual agreement between
          Prime and Onyx. Both Parties shall not unreasonably withhold their
          consent in this respect and, subject to Clause 5.5, agree that they
          will, in principle, decrease their respective Shareholding ratio on a
          pro rata basis as necessary to effect such participation.

     5.5  At no time shall Onyx's shareholding fall below 50.01% of the total
          issued Shares (including any potential stock (senzai kabushiki)),
          before or after the IPO is conducted.

6    Roles of the Parties

     6.1  Onyx shall provide Onyx Japan with all necessary or appropriate advice
          and guidance for effective operations, technical and marketing staff
          with outstanding ability that is necessary or appropriate for
          effective operations and all necessary or appropriate information on
          Onyx's strategies and vision. Onyx shall assist Onyx Japan in setting-
          up systems and processes for all operational departments which utilize
          the existing infrastructure of Onyx's departments. Onyx shall provide
          Onyx Japan with marketing materials and collateral, PR templates and
          marketing campaign templates for Onyx Japan to leverage in Japan. Onyx
          shall create, and provide Onyx Japan with, the core or base code for
          products that are to be localized into Japanese versions and sold by
          Onyx Japan. In the event the services to be provided by Onyx
          hereunder, with the exception of such minor services as mutually
          agreed upon by the Parties, require that any efforts or out-of-pocket
          costs, including, but not limited to, salaries and any other payments
          and costs relating to Onyx's employees to be seconded or transferred
          to Onyx Japan, shall be incurred by Onyx, the Parties shall mutually
          determine any fees to be paid to Onyx by Onyx Japan for the provision
          of such services.

     6.2  Prime shall provide Onyx Japan with a sales network and relevant
          connections, press and PR connections, market information and advice
          on effective Japanese operations. Prime shall also assist Onyx Japan
          with the localization and creation of localized Japanese versions of
          Onyx products, including provision of technical resources and staff.
          Prime shall provide Onyx Japan and its partner and customers with
          consulting and system integration services and will be one of the main
          system integrators for Onyx Japan's implementations. In the event the
          services to be provided by Prime hereunder, with the exception of such
          minor services as mutually agreed upon by the Parties, require that
          any efforts or out-of-pocket costs, including, but not limited to,
          salaries and any other payments and costs relating to Prime's
          employees to be seconded or transferred to Onyx Japan, or costs
          related to system integration, system management, development thereof
          or localizing of Onyx's products, shall be incurred by Prime, the
          Parties shall mutually determine any fees to be paid to Prime by Onyx
          Japan for the carrying out of such services.

7    Intellectual Property

     7.1  Onyx Japan will enter into a Distribution Agreement, which is mutually
          acceptable to the Parties, with Onyx providing for the license of all
          Intellectual Property owned by

                                       6
<PAGE>

          Onyx relevant to the Joint Venture ("Onyx Intellectual Property")
          within the Territory and the payment of reasonable compensation to
          Onyx by Onyx Japan.

     7.2  All right, title and interest in and to any Intellectual Property
          provided, supplied or licensed by Onyx, or proprietary rights relating
          thereto, and the media on which the same are furnished, provided,
          supplied or licensed by Onyx, including any developments, adaptations,
          versions or modifications shall, to such extent, belong exclusively to
          Onyx or its exclusive suppliers at all times. Any Intellectual
          Property developed independently by Onyx Japan without any reference
          or connection to Onyx Intellectual Property or Confidential
          Information whatsoever and without any reference or connection to
          Intellectual Property owned by, or Confidential Information of Prime
          relevant to the Joint Venture whatsoever will be the property of Onyx
          Japan ("Onyx Japan Intellectual Property"). Onyx shall be entitled, at
          its option, to non-exclusive perpetual world-wide or regional licenses
          to use, modify, adapt or develop Onyx Japan Intellectual Property with
          reasonable charge based on the fair market standard.

     7.3  All right, title and interest in and to any Intellectual Property
          provided, supplied or licensed by Prime, or proprietary rights
          relating thereto, and the media on which the same are furnished,
          provided, supplied or licensed by Prime, including any developments,
          adaptations, versions or modifications shall, to such extent, belong
          exclusively to Prime or its exclusive suppliers at all times. Prime
          shall be entitled, at its option, to non-exclusive perpetual
          world-wide or regional licenses to use, modify, adapt or develop Onyx
          Japan Intellectual Property with reasonable charge based on the fair
          market standard.

     7.4  Both Parties acknowledge that this Agreement and any license granted
          by Prime or Onyx to Onyx Japan under Clauses 7.2 or 7.3 above does not
          and shall not grant rights to any Party to use the software or
          Intellectual Property for any purpose other than in pursuance of the
          Onyx Japan Joint Venture. All Intellectual Property will be treated as
          Confidential Information by the Parties unless (i) there is a label or
          mark to indicate that the information or Intellectual Property is not
          to be treated as proprietary and/or confidential, (ii) it is agreed
          otherwise in writing by the provider of such Confidential Information
          or (iii) the contrary is clearly implied by the nature of the
          Intellectual Property and the context of its use.

8    Operation and Management

     8.1  Each Party agrees to take all actions necessary to ensure that Onyx
          Japan shall be operated in accordance with, and complies with the
          terms of, this Agreement and applicable law and shall vote all Shares
          held by it to give complete and timely effect to the terms of this
          Agreement.

     8.2  Onyx Japan shall be constituted with seven Directors and at least two
          Statutory Auditors as per the Articles of Incorporation. Of these,
          Onyx shall nominate 4 Directors and Prime shall nominate 3 Directors.
          Mr. Tadashi Sensu shall be one of Prime's initial 3 Directors. Onyx
          and Prime shall be entitled to nominate one Statutory Auditor each.
          One additional Statutory Auditor shall be elected at the annual
          general meeting of Shareholders of Onyx Japan with regard to the first
          period for settlement of accounts. Should the shareholding ratio
          between Onyx and Prime be altered by the transfer of Shares by Prime
          to any third party without the written approval of Onyx, the number of
          Directors shall be adjusted to reflect the proportional

                                       7
<PAGE>

          shareholdings of each Party. The Parties specifically agree that,
          notwithstanding any other provision contained in this Agreement, they
          shall complete all necessary procedures to effect in a timely manner
          the adjustment to the Board contemplated by this Clause, including but
          not limited to, Board and/or Shareholders meetings and amendment of
          the Articles of Incorporation. If Prime's shareholding falls to below
          15% of the total issued capital of Onyx Japan pursuant to a decision
          to sell to a third party without written approval from Onyx prior to
          such sale, Prime shall no longer be entitled to nominate a
          Representative Director. In such case, Prime shall cause the
          Representative Director nominated by it to resign from the position of
          Representative Director, and shall indemnify Onyx Japan for reasonable
          expenses incurred by Onyx Japan or compensation necessary with regard
          to the removal of such Representative Director, except for any
          retirement allowance or other remuneration to be paid by Onyx Japan to
          such Representative Director pursuant to the applicable internal rules
          of Onyx Japan. Such rules shall be determined by mutual agreement
          between the Parties.

     8.3  Pursuant to the Interim Agreement, the Chairman of Onyx Japan
          initially shall be Howard Hawk of Onyx, and the President of Onyx
          Japan initially shall be Hitoshi Nagata of Prime, each of whom shall
          be the initial Representative Director of Onyx Japan. The
          aforementioned officers shall serve until the appointment of a
          successor by Onyx to Mr. Nagata as President and Representative
          Director. Upon the appointment of such successor, Mr. Hawk shall
          forthwith resign and Mr. Nagata shall be appointed as the Chairman and
          Representative Director of Onyx Japan and entitled to remain in such
          office. Thereafter, all officers shall be selected by the Board of
          Directors. Notwithstanding the foregoing, Mr. Nagata may resign at any
          time from the position of President and Representative Director
          subject to Onyx's consent, which shall not be unreasonably withheld,
          and in such event Prime shall then appoint an alternative President
          and Representative Director. After Mr. Nagata is appointed as the
          Chairman and Representative Director, Mr. Nagata may resign at any
          time, and Prime shall nominate an alternative Representative Director
          who shall serve as Executive Vice President. The Parties shall
          complete all necessary procedures, including Board and/or Shareholder
          meetings to effect in a timely manner the actions contemplated by this
          Clause.

     8.4  Each Party may, at any time and at its sole discretion, remove, for or
          without cause, any Director nominated by it by delivering written
          notice to Onyx Japan and to the other Party, provided that the Party
          removing its Director reimburses Onyx Japan for any compensation that
          may become payable to such Director as a result of that removal. In
          the case of a vacancy in the office of a Director for any reason
          (including removal), the vacancy shall be filled by a person nominated
          by the Party that nominated the Director in question. Notwithstanding
          the foregoing,Prime shall not remove Mr. Sensu from the Board of
          Directors without the consent of Onyx.

     8.5  Management and Decisionmaking

          (a)  Onyx Japan shall be managed by the Board of Directors in
               accordance with the terms of this Agreement, its Articles of
               Incorporation and applicable laws and regulations.

          (b)  At its first meeting after the Effective Date of this Agreement,
               the Board of Directors, in addition to any other items on the
               meeting agenda, shall propose, consider and enact resolutions
               concerning the business plan of Onyx Japan.

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<PAGE>

          (c)  Decisions relating to issues listed in Schedule 1 shall be
               subject to approval by a unanimous vote of all directors
               attending the relevant Board meeting; provided, however, that the
               quorum of such Board meeting shall be 4 Directors or more,
               including at least 1 Director appointed by Prime. Prime shall
               make its best efforts to ensure that at least 1 Director
               appointed by Prime shall attend the relevant Board meeting.

          (d)  With regard to decisions that can be made by the Representative
               Director(s) of Onyx Japan, (i) the Representative Director
               nominated by Onyx shall have the authority to represent and act
               on behalf of Onyx Japan unilaterally, and (ii) the Representative
               Director nominated by Prime shall only represent and act on
               behalf of Onyx Japan jointly with the Representative Director
               nominated by Onyx, except with respect to day-to-day operation
               matters. Notwithstanding the foregoing, those acts listed in
               Schedule 2 attached hereto shall not be considered day-to-day
               operation matters as to which the Representative Director
               nominated by Prime shall be entitled to represent and act on
               behalf of Onyx Japan unilaterally; provided that the
               Representative Director nominated by Onyx may provide written and
               revocable specific authorization to the Representative Director
               nominated by Prime to allow the Representative Director nominated
               by Prime to carry out particular actions on a unilateral basis.
               Prime shall cause the Representative Director nominated by Prime
               to comply with all the restrictions set forth herein and in
               Schedule 2.

          (e)  Except as otherwise required by applicable laws or regulations
               (including the Commercial Code of Japan) or the Articles of
               Incorporation, Shareholders' meetings shall decide on any matter
               by way of an ordinary resolution (a resolution passed by a
               majority of the votes of all shareholders present at such
               meeting); provided that (notwithstanding the above) Shareholders'
               meetings shall decide on those matters set out below by way of a
               special resolution, which shall mean for the purposes of this
               Clause, a resolution which requires the consent of Prime;
               provided, that, if Prime's shareholding falls to below 15% of the
               total issued capital of Onyx Japan pursuant to a decision to sell
               to a third party without written approval from Onyx prior to such
               sale, Prime's consent shall no longer be required:

               (i)   any increase in the capital of Onyx Japan not contemplated
                     in the business plan which is mutually agreed upon by the
                     Parties, or decrease in the capital of Onyx Japan;

               (ii)  the issue of any preferred shares, convertible bonds, bonds
                     with warrants or other equity-linked or quasi-equity
                     securities, or the introduction of any stock option plans
                     in accordance with the Japanese Commercial Code or rights
                     to subscribe for or to convert any instruments into such
                     shares or securities;

               (iii) the payment of dividends or other distributions on account
                     of shares;

               (iv)  any change to the Articles of Incorporation except for such
                     change(s) required for the issuance of new shares
                     permissible without the consent of Prime prescribed in item
                     (i) above;

               (v)   issues of shares to be subscribed by persons other than the
                     parties:

               (vi)  change of the corporate name of Onyx Japan;

               (vii) dissolution of Onyx Japan or its liquidation;

                                       9
<PAGE>

               (viii)    any merger of Onyx Japan with any other company in
                         which Onyx Japan would not be the surviving entity, or
                         through which Onyx Japan would lose control of the
                         business of Onyx Japan; and

               (ix)      sale or disposition of all or substantially all of the
                         business of Onyx Japan.

          (f)  In the event any capital increase is made in accordance with the
               agreed business plan as contemplated in Clause 8.5(e)(i), Onyx
               shall cause Onyx Japan to issue such shares in Onyx Japan as
               necessary to maintain Prime's shareholding percentage in Onyx
               Japan as it stood before such capital increase.

9    Initial Public Offering

     9.1  Subject to Clause 12.3, the Parties shall use their reasonable best
          efforts to complete the IPO of the common stock of Onyx Japan within
          the calendar year [*] or as soon as optimal thereafter.

     9.2  On or before the filing of an application for the IPO, the Parties
          shall agree (i) to terminate or amend this Agreement to the extent
          necessary to achieve the IPO in the light of the then-current
          applicable IPO rules and regulations; (ii) on the reasonable number of
          shares to be offered by each of the Parties at the time of the IPO.

10   Representations and Warranties

     Each Party represents and warrants to the other Party as of the date hereof
     and as of the Effective Date of this Agreement that:

     (a)  It is duly incorporated and validly existing under the laws of its
          place of incorporation; it has all necessary power and authority to
          execute and deliver this Agreement, to perform its obligations
          hereunder and to consummate the transactions contemplated hereby; the
          execution and delivery of this Agreement by it and the consummation by
          it of all the transactions contemplated hereby have been duly and
          validly authorized by all necessary corporate action and no other
          corporate proceedings on the part of such Party are necessary to
          authorize this Agreement or to consummate such transactions; this
          Agreement has been duly and validly executed and delivered by such
          Party by its authorized representative and, assuming the due
          authorization, execution and delivery by each other Party, constitutes
          legal, valid and binding obligations of such Party, enforceable
          against it in accordance with its terms.

     (b)  Authority, Execution and Delivery. Each Party has full power and
          authority to execute this Agreement and to consummate the transactions
          contemplated by this Agreement to be performed by it. The execution
          and delivery by such Party of this Agreement and the consummation by
          such Party of the transactions contemplated by this Agreement to be
          performed by it have been duly authorized by all necessary corporate
          action by such Party's board of directors and/or shareholders. Such
          Party has duly executed and delivered this Agreement, and this
          Agreement constitutes (assuming the due authorization, execution and
          delivery by the other Party,) its legal, valid and binding
          obligations, enforceable against it in accordance with its terms,
          subject to applicable bankruptcy, insolvency, fraudulent transfer,
          reorganization, moratorium and similar laws and

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          judicial decisions of general applicability relating to or affecting
          creditors' rights generally.

     (c)  Litigation. There are no (i) outstanding judgments, decrees,
          injunctions, rulings or determinations of an arbitrator, court or
          Governmental entity against or affecting such Party or (ii) such
          proceedings pending or, to the knowledge of such Party, threatened
          against or affecting such Party or any of its affiliates, by or
          against any person directly or indirectly (A) challenging or seeking
          to restrain or prohibit any transaction contemplated by the Joint
          Venture documents or (B) seeking to prohibit or limit the scope or
          implementation of the Joint Venture arrangements, in each case other
          than any such judgements and proceedings that, individually and in the
          aggregate, would not have a material adverse effect on the Party,
          including the Party's fulfillment of its obligations under this
          Agreement and to the Joint Venture generally, or the Joint Venture.

     (d)  Compliance with Applicable Laws. To the knowledge of such Party, its
          existing business relating to the Joint Venture has been conducted in
          compliance with all applicable laws and regulations, except for
          instances of non-compliance that, in the aggregate, would not have a
          material adverse effect. With such exceptions as would not, in the
          aggregate, have a material adverse effect, neither such Party has
          received any written notice from a Governmental entity that alleges
          that its existing business relating to the Joint Venture is not in
          compliance with any applicable laws, regulations, or guidelines.

     (e)  Licenses. It holds and will maintain any and all such licenses,
          including licenses for the use of any third party's intellectual
          property, permits, approvals, authorizations, consents, exemptions,
          filings and registrations from any person, entity, company,
          organization, governmental authority or regulatory authority as are
          necessary to enable the Party to perform its obligations under this
          Agreement.

     (f)  Financial Statements. All financial statements provided to the other
          Party and/or its agent are true, correct and complete and have been
          prepared in accordance with generally accepted accounting principles
          in the relevant jurisdiction, and no adverse material changes have
          occurred since the date such financial statements were provided to the
          other Party through the date of execution of this Agreement. All of
          its documents and records provided to the other Party and/or its agent
          in the course of the other Party's conduct of due diligence are and
          have been complete and accurate in all material respects.

11   Withdrawal

     11.1 Right to withdraw. Subject to Clause 12.5, at any time after the first
          anniversary of this Agreement, Prime shall be entitled to sell its
          Shares by giving not less than 90 calendar days written notice to both
          Onyx and Onyx Japan. In the event that Prime sells its Shares as
          contemplated hereunder, Prime shall no longer be bound by any of the
          obligations set forth in this Agreement other than those specifically
          enumerated in Clause 12.6 and shall no longer be entitled to the
          rights set forth in this Agreement. Prime shall remain liable to
          satisfy any obligations due to be satisfied before the date of expiry
          of the notice given under this Clause.

     11.2 Transfer of Shares. Prime will be responsible for the preparation of
          all documentation and completion of all steps necessary to effect the
          transfer or sale

                                      11
<PAGE>

          referred to in Clause 11.1. If so requested by the Prime, Onyx will do
          all things and sign all documents reasonably required to assist in
          such transfer.

                                      12
<PAGE>

12   Term and Termination

     12.1 Term

         (a)   Unless terminated pursuant to this Clause 12, this Agreement
               shall remain in full force and effect until the expiration of a
               period of five (5) years from the date of execution of this
               Agreement and shall continue thereafter with full force and
               effect unless and until terminated by six months' written notice
               (the "Termination Notice") given by either Party to the other
               Party.

         (b)   In the event that Onyx serves a Termination Notice, Onyx shall
               purchase the shares of Onyx Japan held by Prime at Fair Market
               Value. In the event that Prime serves a Termination Notice, Onyx
               shall have the option to purchase the shares of Onyx Japan held
               by Prime at Fair Market Value.

     12.2 Early Termination for Default

          12.2.1 In the event that any Party (the "Defaulting Party"):

                 (a)  commits any Material Default or shall cause substantial
                      economic harm to any Party that is not the Defaulting
                      Party (the "Non-Defaulting Party");

                 (b)  fails to remedy a continued breach of this Agreement
                      within 30 days after being required in writing to do so by
                      any Non-Defaulting Party; or

                 (c)  enters into a voluntary or compulsory winding-up or
                      becomes insolvent or a liquidator or receiver is appointed
                      with authority over all or any part of its assets;

                 then in any such case, the Non-Defaulting Party to this
                 Agreement may terminate this Agreement by giving written notice
                 of such termination specifying the nature of the default (the
                 "Default Notice").

          12.2.2 At the expiry of 30 calendar days after a Default Notice has
                 been issued under Clause 12.2.1, by Onyx to Prime where Prime
                 is the Defaulting Party, Onyx shall have the right at its
                 election to (in addition to any other rights Onyx or other
                 Shareholders may have under Clause 13 or at law):

                 (a)  purchase all of the Shares held by Prime at Fair Market
                      Value; or

                 (b)  require that Onyx Japan be liquidated, in which case,
                      Prime will receive a pro-rata payment of the net receipts
                      from such liquidation, in accordance with its shareholder
                      ratio.

          12.2.3 At the expiry of 30 calendar days after a Default Notice has
                 been issued under Clause 12.2.1, by Prime to Onyx where Onyx is
                 the Defaulting Party, Prime shall have the right to (in
                 addition to any other rights Prime may have under Clause 13 or
                 at law) sell all of the Shares held by it to Onyx at the higher
                 of Par Value and Fair Market Value or, at its discretion, to a
                 third party at any price subject to the restrictions contained
                 in Clause 12.5.

     12.3 Termination if IPO is not achieved

          If an IPO cannot be completed by [*], Onyx or Prime may, at their
          discretion, terminate the Arrangements. In the event that Onyx chooses
          to terminate the

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          Arrangements pursuant to this Clause, Prime shall have the right (in
          addition to any other rights it may have under this Agreement or at
          law), subject to the restrictions contained in Clause 12.5, to sell
          the Shares held by Prime to Onyx at Fair Market Value or require that
          Onyx Japan be liquidated at its option. In the event that Prime
          chooses to terminate the Arrangements pursuant to this Clause, Onyx
          shall have the right (in addition to any other rights it may have
          under this Agreement or at law) to purchase the Shares held by Prime
          at Fair Market Value or require that Onyx Japan be liquidated at its
          option.

     12.4 Early Termination by Mutual Agreement

          If notwithstanding all reasonable efforts by the Parties, in the event
          that a disagreement between the Parties in respect of any of the
          matters described in Clauses 8.5 (c) and 8.5(e) and the matters listed
          in Schedule 1 to this Agreement results in a 'deadlock' situation in
          which Directors or Shareholders are divided on a decision or course of
          action such that a decision cannot be made with respect to such
          matter, and the matter cannot be resolved for a period of six
          consecutive months from the date of the first such deadlocked meeting,
          the Parties shall in any such case, reasonably and faithfully consult
          with each other regarding whether to continue the operation of Onyx
          Japan. If the Parties fail to agree to continue the operations of Onyx
          Japan for any reason within 90 calendar days after the commencement of
          such consultations, Onyx shall have the option to purchase Shares held
          by Prime at Fair Market Value by giving written notice to Prime. If
          Onyx does not choose to purchase the Shares held by Prime, Onyx shall
          choose to dissolve Onyx Japan.

     12.5 At any time that either Party (the "Seller") wishes to, or is
          compelled whether under this Clause 12, any other provision of this
          Agreement or otherwise, to sell any or all of its Shares, the Seller
          must (i) first offer such Shares to the other Party (the "Purchaser")
          at such price (the "Sale Price") as shall be specified in the first
          offer at or below the price that the Seller offers such Shares to a
          third party and the Purchaser will have 30 business days from the date
          of such offer in which to provide written notice to the Seller whether
          to purchase such Shares (the "Decision Period") at the Sale Price . If
          the Purchaser has not provided written notice that it will acquire the
          Shares to be sold or transferred by the Seller at the expiry of the
          Decision Period, the Seller may sell to a third party at any price not
          being less than the Sale Price. At no time may Prime sell or transfer
          Shares to any entity, other than Onyx, engaging in the area of
          customer relationship management, including, but not limited to Siebel
          Systems, Pivotal Software, SalesLogix, Inc., Baan, Nortel (Clarify),
          Oracle and PeopleSoft (Vantive), but not including other entities
          engaging in the area of enterprise resource planning. The Seller shall
          obtain a commitment from the assignee to enter into a written
          agreement in a form satisfactory to the other Party whereby the
          assignee agrees to be bound by the terms of this Agreement.

     12.6 Notwithstanding any language to the contrary in any other provision of
          this Agreement or any of the Arrangements, the following Clauses shall
          survive, for the period of time set forth below, expiration or
          termination of this Agreement for any reason: Clause 7 (Intellectual
          Property License) shall survive for 30 months; Clause 16
          (Confidentiality Agreement) shall survive for 24 months; Clause 17
          (Publicity) shall survive for 6 months; and Clause 18 (Non-Compete)
          shall survive for 6 months.

                                       14
<PAGE>

13   Events to occur upon termination.

     13.1 Upon termination in accordance with Clause 12 or for any other reason:

          (a)  Any sale and purchase of Shares by Prime to Onyx, shall take
               place on the 20/th/ Business Day after receipt from the Appraiser
               (as defined in Clause 14) or Appraisers of the valuation of the
               Fair Market Value of the relevant Shares. On such day, payment
               for the Shares shall be made in Japanese Yen by wire transfer of
               immediately available funds to an account designated by Prime at
               least three (3) Business Days prior to such day and, against
               receipt in full of such payment, Prime shall transfer the stock
               certificates representing all of its respective ownership of
               Shares to Onyx and/or a third party designated by Onyx.

          (b)  The Parties shall reasonably co-operate to minimize any
               disruption to Onyx Japan as a result of the transfer of Shares
               and provide any reasonable assistance as necessary, and no Party
               shall release or authorize any public statement, press release or
               other publicity relating to the termination without the prior
               written consent of the other Party.

          (c)  Any Directors, Representative Directors or Statutory Auditors of
               Onyx Japan nominated by Prime shall resign without payment, save
               in such case that the termination is pursuant to a breach of this
               Agreement by Onyx, as compensation for loss of office by written
               resignation containing an acknowledgement or release in terms
               that the giver of such resignation has no claim, save in such
               case that the termination is pursuant to a breach of this
               Agreement by Onyx, against Onyx or Onyx Japan arising out of such
               resignation for damages or compensation for loss of office.

          (d)  The Parties will comply with the obligations provided in Clause
               16.2 with respect to the confidential information of Onyx Japan
               mutatis mutandis.

14   Determination of Fair Market Value

     For the purposes of this Agreement and other agreements related to the
     Joint Venture, Fair Market Value shall be determined in the following
     manner. The Parties shall select, by mutual agreement, an experienced and
     qualified appraiser (the "Appraiser") within 40 calendar days of the notice
     of termination who shall determine the Fair Market Value of such Shares
     within 30 calendar days of its appointment or as soon thereafter as
     commercially practicable. The Appraiser shall submit its independent
     appraisal to each Party in a written report and the value assigned by the
     Appraiser to such Shares in the report shall be deemed to be the Fair
     Market Value of such Shares. If the Parties are unable to agree on an
     Appraiser within the 40 calendar day period referred to, each Party shall
     select its own Appraiser within a further 7 calendar days, and each
     Appraiser shall prepare a written appraisal of the Fair Market Value of
     such Shares within 30 calendar days of its appointment and submit its
     independent appraisal to each Party in a written report. In such case, the
     Fair Market Value of the Shares shall be deemed to be the average of the
     values obtained by the two Appraisers. In the absence of manifest error,
     the determination of the Fair Market Value pursuant to this Clause shall be
     final and binding.

                                       15
<PAGE>

15   Indemnity

     Each Party, at its own expense, shall defend, indemnify and hold harmless
     the other Party and/or each of its Affiliates, officers or directors from
     any claim, loss, debt, liability, damage, obligation, demand, judgment, or
     settlement of any nature (including attorney's fees and costs of defending
     same) incurred by the other Party and/or each of its Affiliates, officers
     or directors, arising from or relating to a breach of the warranties in
     Clause 10 or non-performance of any provisions of this Agreement provided
     that the indemnified Party provides the indemnifying Party with (i) prompt
     notice of such claim, (ii) sole control over the defense and (iii) proper
     and full information and assistance to settle and/or defend any such claim
     at the indemnifying Party's expense. The indemnified Party may participate,
     at its own expense, in the defense of any such claim.

16   Confidentiality Agreement

     16.1 Non-use and Non-disclosure. Except as provided or contemplated herein,
          each Party agrees not to use any Confidential Information of the other
          Party. Each Party agrees not to disclose any Confidential Information
          of the other Party to third parties or to such Party's employees,
          except (i) to those employees, agents, or representatives (including
          attorneys and accountants) of such Party and its Affiliates who are
          required to have the information in order to exercise the receiving
          Party's rights and perform the receiving Party's obligations under
          this Agreement and (ii) as required by applicable law to be disclosed
          by the receiving Party, provided that the receiving Party gives the
          disclosing Party prompt written notice of such requirement prior to
          such disclosure and assistance in obtaining an order protecting the
          information from public disclosure or narrowing such disclosure to the
          fullest extent reasonably possible. Neither Party shall reverse
          engineer, disassemble or decompile any prototypes, software or other
          tangible or intangible objects which embody the other Party's
          Confidential Information and which are provided to the other Party
          under this Agreement.

     16.2 Maintenance and disposition of Confidential Information. Each Party
          agrees that it shall take all reasonable measures to protect the
          secrecy of, and avoid the disclosure and unauthorized use of,
          Confidential Information of the other Party. Immediately upon
          expiration or termination of this Agreement, each Party shall (i)
          immediately cease all use of Confidential Information of the other,
          (ii) return or destroy all copies of Confidential Information of the
          disclosing Party and all memoranda, notes or other written material
          (whether in written or electronic form), or those portions thereof,
          that contain such Confidential Information or extracts thereof, and
          (iii) upon request of the other Party, provide certification of the
          return or destruction of the other Party's Confidential Information
          which shall include a written list detailing the items of Confidential
          Information so returned or destroyed by the Party, and which shall be
          signed by an officer of the Party authorized to do so, upon written
          request of the other Party.

     16.3 The obligation of the Parties under this Clause 16 shall remain
          effective for 2 years after the expiration or termination of this
          Agreement.

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<PAGE>

17   Public Announcement

     It is anticipated that a public announcement shall be made when Joint
     Venture arrangements have been finalized, likely to be on or after
     September 15, 2000. Neither Party nor Onyx Japan shall make any public
     disclosure (including, without limitation, any publicity release) relating
     to this Agreement or the proposed Joint Venture or any matters described
     herein without the prior written consent of the other Party; provided,
     however, that a Party shall be permitted to make such disclosures to the
     public or to governmental agencies as its counsel shall deem necessary to
     comply with any applicable law, rule or regulation to the extent required
     under the applicable law, rule or regulation after providing written
     notice, specifying the purpose and content of such disclosure, to the other
     Party prior to such disclosure.

     Notwithstanding the above, Prime may without any restriction refer to the
     Joint Venture and/or Onyx Japan in its own public disclosures, other than
     press releases, to be made by Prime or through Prime's initiative. In such
     case, Prime shall consult with Onyx about such public disclosures in
     advance. As to the press releases, Prime shall obtain Onyx's approval in
     advance, which approval shall not be unreasonably withheld. Onyx shall
     designate a representative in Japan, acceptable to Prime, who shall have
     the authority to approve such press releases and act as Onyx's
     representative with respect to public disclosures.

18   Non-Compete

     18.1 During the term of this Agreement as it may be extended upon renewal
          pursuant to Clause 12 and for 6 months after its expiration or
          termination for any reason, Prime shall not, and shall cause all of
          its Affiliates not to, compete with Onyx Japan in the following area:
          the creation, development, marketing, sales, implementation or
          servicing of products and/or services in the field of customer
          relationship management.

     18.2 For the avoidance of doubt, the Parties acknowledge that:

          (a)  Prime shall not establish a partnership or engage in any other
               on-going business relationship with any entity other than Onyx
               Japan in the area of customer relationship management, including
               but not limited to Siebel Systems, Pivotal Software, SalesLogix,
               Inc., Baan, Nortel (Clarify), Oracle and People Soft (Vantive);

          (b)  Prime shall be entitled to directly or indirectly engage in, and
               establish partnerships or joint ventures with other entities, in
               the area of enterprise resource planning; and

          (c)  Prime shall obtain Onyx's prior approval on whether Prime can
               engage in any business field including that of customer
               relationship management, notwithstanding the above. Onyx agrees
               that it shall not unreasonably withhold its approval for Prime to
               engage in any such business field.

     18.3 From the date of execution of this Agreement and extending for
          eighteen months after expiration or termination of this Agreement,
          neither Party shall solicit for employment nor hire nor retain as a
          consultant any person of any Party or Onyx Japan who has been
          compensated by the other Party or Onyx Japan for services rendered
          during the prior calendar year, without the prior written consent of
          the other Party.

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19   Notices

      Any notice, demand, consent or other communication (a "Notice") given or
      made under this Agreement:

      (a)  must be in writing and signed by a person duly authorized by the
           sender;

      (b)  must either be delivered to the intended recipient or by prepaid post
           (if posted to an address in another country, by registered airmail)
           or by hand or fax to the address or fax number below or the address
           or fax number last notified by the intended recipient to the sender:

           (i) to Onyx:                     Howard K Hawk
                                            Vice President - International
                                            Onyx Software Corporation
                                            3180 139/th/ Avenue SE, Suite 500
                                            Bellevue, WA 98005-4091, USA
                                            Fax:  425-732-2413

           (and a complete copy of any Notice to the General Counsel of Onyx at
           the same address and fax number as listed above)

           (ii) to Prime:                   Hitoshi Nagata
                                            President and CEO
                                            Prime Systems Corporation
                                            Sakurai Building, 3F
                                            2-8-1 Fukagawa, Koto-ku,
                                            Tokyo 135-0033, Japan
                                            Fax:  81-3-5245-1889

      (c)  shall be considered to be duly given or made:

           (i)  in the case of delivery by post, two business days after the
           date of posting (if posted to an address in the same country) or ten
           business days after the date of posting (if posted to an address in
           another country); and

           (ii) in the case of fax, on receipt by the sender of a transmission
           control report from the dispatching machine showing the relevant
           number of pages and the correct destination fax machine number or
           name or recipient and indicating that the transmission has been made
           without error,

     but if the result is that a Notice would be taken to be given or made on a
     day that is not a business day in the place to which the Notice is sent or
     is later than 4:00 p.m. (local time) it shall be taken to have been duly
     given or made at the commencement of business on the next business day in
     the place of the Notice's addressee.

20   Ancillary Provisions

     20.1 Severability Any section of this Agreement, or any part thereof, which
          is prohibited or unenforceable in any jurisdiction shall, as to such
          jurisdiction, be ineffective to the extent of such prohibition or
          unenforceability without invalidating the remaining provisions of this
          Agreement, and any such prohibition or unenforceability in any
          jurisdiction shall not invalidate or render unenforceable any
          provisions in any other

                                       18
<PAGE>

          jurisdiction.

     20.2 No Waiver Any failure to enforce any rights under this Agreement,
          irrespective of the length of time for which such failure continues,
          or any acquiescence in any default of the performance of any
          obligation under this Agreement or delay in respect of the same by a
          Party shall not constitute a waiver of those or any other rights or
          alter the rights of the Party not in default to enforce those rights
          in respect of the same or any future default.

     20.3 Relationship of the Parties Neither Party, nor any contractor or
          sub-licensee of such Party shall have any right, power or authority,
          or represent that it has the right, power or authority, to bind the
          other Party, or to assume or to create any obligation or
          responsibility, express or implied, on behalf of the other Party or in
          the other Party's name. Nothing stated in this Agreement shall be
          construed as constituting Onyx and Prime as partners, or creating the
          relationship of principal and agent between Onyx and Prime.

     20.4 Agreement Interpretation The title and headings in this Agreement are
          for convenient reference and are not intended to change or supplement
          the meaning of the terms of this Agreement. References in this
          Agreement to a number of days, weeks, months or years, shall mean
          calendar days, weeks, months or years, unless otherwise stated.

     20.5 No Other Warranties Other than as expressly provided in this
          Agreement, neither Party makes any warranties nor assumes any
          liabilities in connection with this Agreement.

     20.6 Exclusion of Consequential Damages Neither Party shall be liable for
          any consequential, incidental, or special damages arising out of or
          related to this Agreement, including lost revenue, profits, or
          savings, even if notified in advance of their possibility. Unless
          specifically provided otherwise in this Agreement, neither Party shall
          be liable for any third Party claims against the other Party for any
          losses or damages, including without limitation loss of or damage to
          records or data.

     20.7 Language, Governing Law and Disputes The English language version of
          this Agreement shall be controlling for all purposes and shall prevail
          over any inconsistencies with a Japanese language version, if any.
          This Agreement shall be governed by and construed in accordance with
          the laws of Japan. The Parties shall endeavor to resolve any disputes
          arising in connection with the Agreement by good faith discussion
          between the Parties. In the event that a dispute cannot be settled by
          discussion between the Parties, such dispute shall be subject to
          arbitration in the following jurisdictions.

          (a)  In the event that Prime requests arbitration of a dispute or
               files a claim in any court or government agency or tribunal
               against Onyx, an arbitration shall be held in San Francisco,
               California, shall be conducted in the English language, and shall
               be administered by the American Arbitration Association under its
               Commercial Arbitration Rules.

          (b)  In the event that Onyx requests arbitration of a dispute or files
               a claim in any court or government agency or tribunal against
               Prime, an arbitration shall be held in Tokyo, Japan, shall be
               conducted in the Japanese language and shall be

                                       19
<PAGE>

               administered by the Japan Commercial Arbitration Association
               under its Commercial Arbitration Rules.

     Judgement on any award rendered by the arbitrators in the above-mentioned
     arbitration shall be final and conclusive and may be entered in any court
     having jurisdiction for enforcement thereof and the Parties hereby agree to
     waive and do waive the defense of inconvenient forum.

                                       20
<PAGE>

     20.8 Counterparts This Agreement may be executed in two counterparts, each
          of which, when read together, shall constitute one Agreement.

In witness whereof, the duly authorized representatives of the Parties have
executed this Agreement as of the date first written above.

ONYX SOFTWARE CORPORATION                     PRIME SYSTEMS CORPORATION

     By: /s/ Brent Frei                       By: /s/ Hitoshi Nagata
         --------------                           ------------------
     Brent Frei                               Hitoshi Nagata
     President and CEO                        President and CEO

                                       21
<PAGE>

                                  Schedule 1

Items requiring approval of a unanimous vote of the Board (subject to Clause
8.5)

 .    Approval of any material agreements, documents or other arrangements
     between or involving Onyx Japan and any Shareholder or Affiliate of a
     Shareholder, as well as any amendment, consent, or waiver with respect to
     such arrangements;

 .    Liquidation, dissolution, winding up or voluntary bankruptcy of Onyx Japan;

 .    A sale of the majority of the outstanding capital stock of the Onyx Japan;

 .    Any actions that result in any change in the rights or obligations of one
     or more of the Parties as set forth under this Agreement;

 .    the acquisition of other businesses or companies by Onyx Japan in excess of
     20% of the fair value of the total assets of Onyx Japan; and

 .    any increase of capital within powers delegated by any Shareholders'
     meeting to the Board of Onyx Japan.

                                 Schedule 1-1
<PAGE>

                                  Schedule 2

The items that shall not be considered day-to-day operation matters under Clause
8.5(d) include:

1.   Expenditures in excess of Yen 2,000,000 in any single or related series of
     transactions.

2.   Commitments, contractual or otherwise, involving (i) any obligation of Onyx
     Japan in excess of Yen 2,000,000 per transaction per year, or (ii) any
     continuing obligation of Onyx Japan in excess of 18 months; provided, that,
     this limitation shall not apply to employment agreements with employees of
     Onyx Japan and commitments involving furniture, fixtures and office
     equipment for Onyx Japan.

3.   The hiring, firing, promotion or demotion of any employee (i) involved at
     the kachou level or higher, (ii) whose compensation is in excess of Yen
     7,000,000 per year, (iii) in excess of the projected number of employees of
     Onyx Japan as set forth in the business plan which is agreed upon by the
     Parties, or (iv) without the prior approval of the Onyx Japan kachou of the
     section in which that person works or would work, or, if there is no Onyx
     Japan kachou for such section at that time, a person specifically
     designated by Onyx to give such approval.

4.   The hiring or retention of outside professional advisors such as, but not
     limited to, certified public accountants, auditors, attorneys (bengoshi),
     tax attorneys (zeirishi) and patent attorneys (benrishi).

The Parties acknowledge and agree that, (1) other than the Representative
Director selected by Onyx, no Director, officer or other employee of Onyx Japan
shall have powers or authority equal to or exceeding those of the Representative
Director selected by Prime, and (2) the Representative Director selected by Onyx
shall use his best efforts to consult, in advance, with the Representative
Director selected by Prime with respect to any decision that the Representative
Director selected by Onyx has the power and authority to make.

                                 Schedule 2-1

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