Document:

EQUITY LINE OF CREDIT AGREEMENT
                         -------------------------------

     AGREEMENT  dated as of the ___ day of May, 2002 (the  "Agreement")  between
CORNELL CAPITAL PARTNERS,  LP, a Delaware limited  partnership (the "Investor"),
and  INNOVATIVE  GAMING CORP. OF AMERICA,  a corporation  organized and existing
under the laws of the State of Minnesota (the "Company").

     WHEREAS,  the  parties  desire  that,  upon the  terms and  subject  to the
conditions  contained herein,  the Company shall issue and sell to the Investor,
from time to time as provided  herein,  and the Investor shall purchase from the
Company up to Ten Million  ($10,000,000)  Dollars of the Company's common stock,
par value of $0.01 per share (the "Common Stock"); and

     WHEREAS,  such  investments will be made in reliance upon the provisions of
Regulation D ("Regulation D") of the Securities Act of 1933, as amended, and the
regulations  promulgated  there under (the  "Securities  Act"), and or upon such
other exemption from the registration  requirements of the Securities Act as may
be available with respect to any or all of the investments to be made hereunder.

     WHEREAS,  the  Company has engaged  Westrock  Advisors,  Inc. to act as the
Company's exclusive placement agent in connection with the sale of the Company's
Common Stock to the Investor hereunder.

     NOW, THEREFORE, the parties hereto agree as follows:

                                   ARTICLE I.
                               Certain Definitions

     Section  1.1.  "Advance"  shall mean the portion of the  Commitment  Amount
requested by the Company in the Advance Notice.

     Section 1.2.  "Advance Date" shall mean the date Butler Gonzalez  LLP/First
Union  Escrow  Account is in receipt of the funds from the  Investor  and Butler
Gonzalez LLP, as the Investor's Counsel, is in possession of free trading shares
from the Company and  therefore an Advance by the Investor to the Company can be
made and  Butler  Gonzalez  LLP can  release  the  free  trading  shares  to the
Investor.  No  Advance  Date  shall be less than six (6)  Trading  Days after an
Advance Notice Date.

     Section 1.3.  "Advance  Notice" shall mean a written notice to the Investor
setting forth the Advance amount that the Company requests from the Investor and
the Advance Date.

     Section  1.4.  "Advance  Notice  Date"  shall  mean each  date the  Company
delivers to the  Investor an Advance  Notice  requiring  the Investor to advance
funds to the Company,  subject to the terms of this Agreement. No Advance Notice
Date shall be less than seven (7) Trading  Days after the prior  Advance  Notice
Date.

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     Section 1.5. "Bid Price" shall mean, on any date, the closing bid price (as
reported by Bloomberg  L.P.) of the Common Stock on the  Principal  Market or if
the Common Stock is not traded on a Principal  Market,  the highest reported bid
price  for the  Common  Stock,  as  furnished  by the  National  Association  of
Securities Dealers, Inc.

     Section  1.6.  "Closing"  shall mean one of the  closings of a purchase and
sale of Common Stock pursuant to Section 2.3.

     Section 1.7.  "Commitment  Amount" shall mean the aggregate amount of up to
Ten Million  Dollars  ($10,000,000)  which the Investor has agreed to provide to
the Company in order to purchase  the  Company's  Common  Stock  pursuant to the
terms and  conditions  of this  Agreement,  provided  that the Company shall not
request an Advance if the  issuance of the full number of shares of Common Stock
issuable in connection  with such Advance would (i) result in a violation of the
Listing  Qualifications of the National Association of Securities Dealers, Inc.,
Market  Place Rules (or any similar  applicable  section)  unless the  necessary
shareholder  approval or consent has been received prior to such request or (ii)
result in the Investor owning in excess of 4.9% of the then  outstanding  shares
of Common Stock .

     Section 1.8.  "Commitment  Period" shall mean the period  commencing on the
earlier to occur of (i) thirty (30) days  following the Effective  Date, or (ii)
such earlier date as the Company and the Investor may mutually agree in writing,
and  expiring  on the  earliest  to occur of (x) the date on which the  Investor
shall have made payment of Advances  pursuant to this Agreement in the aggregate
amount of Ten Million  Dollars  ($10,000,000),  (y) the date this  Agreement  is
terminated  pursuant to Section 2.5, or (z) the date occurring  twenty four (24)
months after the Effective Date.

     Section 1.9.  "Common  Stock" shall mean the Company's  common  stock,  par
value $0.01 per share.

     Section  1.10.  "Condition  Satisfaction  Date"  shall have the meaning set
forth in Section 7.2.

     Section 1.11.  "Damages"  shall mean any loss,  claim,  damage,  liability,
costs and expenses (including,  without limitation,  reasonable  attorney's fees
and disbursements and costs and expenses of expert witnesses and investigation).

     Section 1.12.  "Effective  Date" shall mean the date on which the SEC first
declares  effective  a  Registration  Statement  registering  the  resale of the
Registrable Securities as set forth in Section 7.2(a).

     Section 1.13.  "Escrow Agreement" shall mean the escrow agreement among the
Company,  the Investor,  the  Investor's  Counsel and First Union  National Bank
dated the date hereof.

     Section  1.14.  "Exchange  Act" shall mean the  Securities  Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.

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     Section  1.15.   "Material   Adverse  Effect"  shall  mean  any  condition,
circumstance, or situation that would prohibit or otherwise materially interfere
with the ability of the Company to enter into and perform any of its obligations
under this  Agreement  or the  Registration  Rights  Agreement  in any  material
respect.

     Section 1.16. "Market Price" shall mean the lowest closing Bid Price of the
Common Stock during the Pricing Period.

     Section 1.17.  "Maximum  Advance  Amount",  subject to the  limitations set
forth in Section 1.7 hereof,  the Maximum Advance  Amount,  shall be equal up to
Two Hundred Thousand Dollars ($200,000) per Advance Notice.

     Section  1.18 "NASD"  shall mean the  National  Association  of  Securities
Dealers, Inc.

     Section  1.19  "Person"  shall  mean  an  individual,   a  corporation,   a
partnership, an association, a trust or other entity or organization,  including
a government or political subdivision or an agency or instrumentality thereof.

     Section  1.20  "Placement  Agent"  shall  mean  Westrock  Advisors,  Inc. a
registered broker-dealer.

     Section 1.21 "Pricing  Period" shall mean the five (5) consecutive  Trading
Days after the Advance Notice Date.

     Section 1.22 "Principal  Market" shall mean the Nasdaq SmallCap Market, the
Nasdaq National Market,  the American Stock Exchange,  the OTC Bulletin Board or
the New York Stock  Exchange,  whichever  is at the time the  principal  trading
exchange or market for the Common Stock.

     Section 1.23  "Purchase  Price"  shall be set at ninety five (95%)  percent
(95%) of the Market Price during the Pricing Period.

     Section 1.24 "Registrable Securities" shall mean the shares of Common Stock
(i) in  respect  of which  the  Registration  Statement  has not  been  declared
effective by the SEC, (ii) which have not been sold under circumstances  meeting
all of the applicable  conditions of Rule 144 (or any similar  provision then in
force)  under the  Securities  Act  ("Rule  144") or (iii)  which  have not been
otherwise  transferred to a holder who may trade such shares without restriction
under the  Securities  Act, and the Company has delivered a new  certificate  or
other  evidence of  ownership  for such  securities  not  bearing a  restrictive
legend.

     Section 1.25  "Registration  Rights  Agreement" shall mean the Registration
Rights Agreement dated the date hereof, regarding the filing of the Registration
Statement for the resale of the Registrable Securities, entered into between the
Company and the Investor.

     Section 1.26 "Registration  Statement" shall mean a registration  statement
on Form  S-1 or  SB-2  (if use of such  form is then  available  to the  Company
pursuant to the rules of the SEC and, if not, on such other form  promulgated by
the SEC for which the Company then  qualifies  and which counsel for the Company
shall deem appropriate,  and which form shall be available for the resale of the
Registrable  Securities  to be  registered  there under in  accordance  with the
provisions  of this  Agreement and the  Registration  Rights  Agreement,  and in
accordance with the intended method of distribution of such securities), for the
registration of the resale by the Investor of the Registrable  Securities  under
the Securities Act.

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     Section  1.27  "Regulation  D" shall  have  the  meaning  set  forth in the
recitals of this Agreement.

     Section 1.28 "SEC" shall mean the Securities and Exchange Commission.

     Section  1.29  "Securities  Act"  shall have the  meaning  set forth in the
recitals of this Agreement.

     Section  1.30  "SEC  Documents"  shall  mean  Annual  Reports  on Form 10K,
Quarterly  Reports on Form 10Q,  Current Reports on Form 8K and Proxy Statements
of the Company as  supplemented  to the date hereof,  filed by the Company for a
period of at least twelve (12) months  immediately  preceding the date hereof or
the Advance  Date,  as the case may be, until such time as the Company no longer
has an obligation to maintain the  effectiveness of a Registration  Statement as
set forth in the Registration Rights Agreement.

     Section  1.31  "Trading  Day" shall mean any day during  which the New York
Stock Exchange shall be open for business.

                                   ARTICLE II.
                                    Advances

     Section 2.1. Investments.

          (a)  Advances.   Upon  the  terms  and  conditions  set  forth  herein
(including,  without  limitation,  the provisions of Article VII hereof), on any
Advance  Notice Date the  Company may request an Advance by the  Investor by the
delivery  of an Advance  Notice.  The number of shares of Common  Stock that the
Investor  shall  receive for each Advance  shall be  determined  by dividing the
amount of the Advance by the  Purchase  Price.  No  fractional  shares  shall be
issued.  Fractional  shares  shall be rounded to the next higher whole number of
shares.  The aggregate maximum amount of all Advances that the Investor shall be
obligated to make under this Agreement shall not exceed the Commitment Amount.

          (b)  Notwithstanding  the foregoing the Company shall only be entitled
to an  Advance  if the  Company's  Common  Stock has an active  bid at all times
during the Pricing Period.

          (c) The Company  acknowledges that the Investor may sell the Company's
Common Stock  purchased  pursuant to an Advance Notice during the  corresponding
Pricing Period.

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     Section 2.2. Mechanics.

          (a) Advance  Notice.  At any time during the  Commitment  Period,  the
Company may deliver an Advance Notice to the Investor, subject to the conditions
set forth in Section 7.2; provided,  however, unless waived by the Investor, the
amount for each Advance as designated by the Company in the  applicable  Advance
Notice,  shall not be more than the Maximum Advance Amount. The aggregate amount
of the  Advances  pursuant  to this  Agreement  shall not exceed the  Commitment
Amount,  unless  otherwise  agreed by the  Investor in the  Investor's  sole and
absolute discretion.  The Company acknowledges that the Investor may sell shares
of the Company's Common Stock  corresponding with a particular Advance Notice on
the day the Advance Notice is received by the Investor.  There will be a minimum
of seven (7) Trading Days between each Advance Notice Date.

          (b) Date of Delivery of Advance  Notice.  An Advance  Notice  shall be
deemed delivered on (i) the Trading Day it is received by facsimile or otherwise
by the Investor if such notice is received  prior to 12:00 noon Eastern Time, or
(ii) the  immediately  succeeding  Trading Day if it is received by facsimile or
otherwise after 12:00 noon Eastern Time on a Trading Day or at any time on a day
which is not a Trading Day. No Advance Notice may be deemed delivered,  on a day
that is not a Trading Day.

          (c) Pre-Closing  Share Credit.  Within two (2) business days after the
Advance  Notice Date,  the Company shall credit  shares of the Company's  Common
Stock to the  Investor's  balance  account  with The  Depository  Trust  Company
through its Deposit  Withdrawal At Custodian  system,  in an amount equal to the
amount  of the  requested  Advance  divided  by the  closing  Bid  Price  of the
Company's Common Stock as of the Advance Notice Date multiplied by one point one
(1.1).  Any  adjustments to the number of shares to be delivered to the Investor
at the  Closing  as a result of  fluctuations  in the  closing  Bid Price of the
Company's  Common Stock shall be made as of the date of the Closing.  Any excess
shares  shall be credited to the next  Advance.  In no event shall the number of
shares issuable to the Investor  pursuant to an Advance cause the Investor to be
deemed to be the  beneficial  owner of in excess of four and 9/10 percent (4.9%)
of the then outstanding Common Stock of the Company.

          (d) Hardship.  In the event the Investor  sells the  Company's  Common
Stock pursuant to subsection 2.1 (c) above and the Company fails to perform it's
obligations  as mandated in Section 2.5 and 2.2 (c), and  specifically  fails to
provide the Investor with the shares of Common Stock for the applicable Advance,
the Company  acknowledges that the Investor shall suffer financial  hardship and
therefore  shall  be  liable  for any  and all  losses,  commissions,  fees,  or
financial hardship caused to the Investor.

     Section 2.3. Closings. On each Advance Date, which shall be six (6) Trading
Days  after an  Advance  Notice  Date,  (i) the  Company  shall  deliver  to the
Investor's Counsel,  as defined pursuant to the Escrow Agreement,  shares of the
Company's  Common Stock,  representing the amount of the Advance by the Investor
pursuant to Section 2.1 herein,  registered  in the name of the  Investor  which
shall be delivered to the Investor,  or otherwise in accordance  with the Escrow
Agreement and (ii) the Investor  shall deliver to First Union National Bank (the
"Escrow  Agent") the amount of the Advance  specified  in the Advance  Notice by
wire  transfer of  immediately  available  funds which shall be delivered to the
Company, or otherwise in accordance with the Escrow Agreement.  In addition,  on

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or prior to the Advance Date, each of the Company and the Investor shall deliver
to the other  through the  Investor's  Counsel all  documents,  instruments  and
writings  required to be  delivered  or  reasonably  requested by either of them
pursuant to this  Agreement  in order to implement  and effect the  transactions
contemplated  herein.  Payment  of  funds to the  Company  and  delivery  of the
Company's  Common  Stock to the  Investor  shall  occur in  accordance  with the
conditions  set  forth  above  and  those  contained  in the  Escrow  Agreement;
provided,  however,  that to the  extent  the  Company  has not paid  the  fees,
expenses,   and  disbursements  of  the  Investor,  the  Investor's  counsel  or
Kirkpatrick & Lockhart LLP in accordance  with Section 12.4,  the amount of such
fees, expenses,  and disbursements may be deducted by the Investor (and shall be
paid to the relevant  party) from the amount of the Advance with no reduction in
the  amount of shares of the  Company's  Common  Stock to be  delivered  on such
Advance Date.

     Section 2.4.  Termination of Investment.  The obligation of the Investor to
make an  Advance to the  Company  pursuant  to this  Agreement  shall  terminate
permanently  (including  with  respect  to an  Advance  Date  that  has  not yet
occurred)  in the event that (i) there shall occur any stop order or  suspension
of the  effectiveness  of the  Registration  Statement for an aggregate of fifty
(50)  Trading  Days,  other  than due to the acts of the  Investor,  during  the
Commitment  Period,  and (ii) the Company  shall at any time fail  materially to
comply with the  requirements of Article VI and such failure is not cured within
thirty (30) days after receipt of written  notice from the  Investor,  provided,
however,  that  this  termination  provision  shall  not  apply  to  any  period
commencing upon the filing of a  post-effective  amendment to such  Registration
Statement  and ending upon the date on which such post  effective  amendment  is
declared effective by the SEC..

     Section 2.5. Agreement to Advance Funds.

          (a) The Investor agrees to advance the amount specified in the Advance
Notice to the Company after the  completion of each of the following  conditions
and the other conditions set forth in this Agreement:

              (i) the execution  and delivery by the Company,  and the Investor,
of this Agreement, and the Exhibits hereto;

              (ii)  Investor's  Counsel shall have received the shares of Common
Stock applicable to the Advance in accordance with Section 2.2(c) hereof;

              (iii) the  Company's  Registration  Statement  with respect to the
resale  of the  Registrable  Securities  in  accordance  with  the  terms of the
Registration Rights Agreement shall have been declared effective by the SEC;

              (iv) the Company  shall have  obtained  all  material  permits and
qualifications  required by any  applicable  state for the offer and sale of the
Registrable Securities, or shall have the availability of exemptions there from.
The sale and issuance of the Registrable  Securities shall be legally  permitted
by all laws and regulations to which the Company is subject;

              (v) the Company  shall have filed with the  Commission in a timely
manner  all  reports,  notices  and other  documents  required  of a  "reporting
company" under the Exchange Act and applicable Commission regulations;

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              (vi) the fees as set forth in Section  12.4 below  shall have been
paid or can be withheld as provided in Section 2.3; and

              (vii) the  conditions  set forth in  Section  7.2 shall  have been
satisfied.

              (viii)  The  Company  shall  have  provided  to  the  Investor  an
acknowledgement,  to  the  satisfaction  of the  Investor,  from  the  Company's
accountants as to the accountant's  ability to provide all consents  required in
order to file a registration statement in connection with this transaction;

              (ix) The Company's transfer agent shall be DWAC eligible.

     Section 2.6. Lock Up Period.

          (a) The Company shall not,  without the prior consent of the Investor,
issue or sell (i) any Common Stock without  consideration or for a consideration
per share less than the Bid Price on the date of  issuance or (ii) issue or sell
any warrant,  option,  right,  contract,  call, or other  security or instrument
granting  the  holder   thereof  the  right  to  acquire  Common  Stock  without
consideration  or for a  consideration  per share less than the Bid Price on the
date of issuance.

          (b) On the date hereof, the Company shall obtain from each officer and
director a lock-up  agreement,  as defined below,  in the form annexed hereto as
Schedule 2.6(b)  agreeing to only sell in compliance with the volume  limitation
of Rule 144.

                                  ARTICLE III.
                   Representations and Warranties of Investor

     Investor  hereby  represents  and warrants to, and agrees with, the Company
that the  following  are true and as of the date  hereof and as of each  Advance
Date:

     Section  3.1.   Organization  and  Authorization.   The  Investor  is  duly
incorporated  or  organized  and  validly  existing in the  jurisdiction  of its
incorporation  or  organization  and has all  requisite  power and  authority to
purchase and hold the securities issuable hereunder.  The decision to invest and
the execution and delivery of this Agreement by such Investor,  the  performance
by such  Investor of its  obligations  hereunder  and the  consummation  by such
Investor of the transactions  contemplated  hereby have been duly authorized and
requires no other  proceedings on the part of the Investor.  The undersigned has
the right,  power and  authority to execute and deliver this  Agreement  and all
other  instruments  (including,  without  limitations,  the Registration  Rights
Agreement), on behalf of the Investor. This Agreement has been duly executed and
delivered by the Investor and,  assuming the  execution and delivery  hereof and
acceptance thereof by the Company,  will constitute the legal, valid and binding
obligations of the Investor, enforceable against the Investor in accordance with
its terms.

          Section 3.2.  Evaluation of Risks. The Investor has such knowledge and
experience in financial tax and business  matters as to be capable of evaluating
the  merits  and risks of,  and  bearing  the  economic  risks  entailed  by, an
investment  in the Company and of protecting  its  interests in connection  with
this  transaction.  It recognizes that its investment in the Company  involves a
high degree of risk.

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         Section  3.3.  No  Legal   Advice  From  the   Company.   The  Investor
acknowledges  that it had the  opportunity  to  review  this  Agreement  and the
transactions  contemplated  by this  Agreement with his or its own legal counsel
and investment and tax advisors.  The Investor is relying solely on such counsel
and advisors and not on any statements or  representations of the Company or any
of its  representatives  or agents  for legal,  tax or  investment  advice  with
respect to this investment,  the transactions  contemplated by this Agreement or
the securities laws of any jurisdiction.

         Section 3.4. Investment Purpose.  The securities are being purchased by
the  Investor for its own account,  for  investment  and without any view to the
distribution, assignment or resale to others or fractionalization in whole or in
part.  The Investor  agrees not to assign or in any way transfer the  Investor's
rights to the  securities  or any  interest  therein and  acknowledges  that the
Company  will not  recognize  any  purported  assignment  or transfer  except in
accordance with applicable  Federal and state  securities  laws. No other person
has or will have a direct or indirect beneficial interest in the securities. The
Investor  agrees not to sell,  hypothecate or otherwise  transfer the Investor's
securities  unless the securities  are  registered  under Federal and applicable
state securities laws or unless,  in the opinion of counsel  satisfactory to the
Company, an exemption from such laws is available.

          Section 3.5. Accredited Investor. Investor is an "Accredited Investor"
as that term is defined in Rule 501(a)(3) of Regulation D of the Securities Act.

          Section 3.6.  Information.  The  Investor  and its  advisors  (and its
counsel),  if any,  have  been  furnished  with all  materials  relating  to the
business,  finances  and  operations  of the Company and  information  it deemed
material  to  making an  informed  investment  decision.  The  Investor  and its
advisors,  if any,  have been afforded the  opportunity  to ask questions of the
Company and its  management.  Neither such inquiries nor any other due diligence
investigations  conducted  by such  Investor  or its  advisors,  if any,  or its
representatives  shall modify,  amend or affect the Investor's  right to rely on
the Company's  representations and warranties  contained in this Agreement.  The
Investor  understands  that its  investment  involves a high degree of risk. The
Investor is in a position  regarding the Company,  which, based upon employment,
family  relationship  or economic  bargaining  power,  enabled and enables  such
Investor to obtain  information from the Company in order to evaluate the merits
and risks of this investment. The Investor has sought such accounting, legal and
tax  advice,  as it has  considered  necessary  to make an  informed  investment
decision with respect to this transaction.

          Section 3.7.  Receipt of  Documents.  The Investor and its counsel has
received and read in their entirety: (i) this Agreement and the Exhibits annexed
hereto;  (ii) all due  diligence and other  information  necessary to verify the
accuracy and  completeness  of such  representations,  warranties and covenants;
(iii) the  Company's  Form 10-K for the year ended year ended  December 31, 2001
and Form 10-Q for the periods ended March 31, 2001,  June 30, 2001 and September
30, 2001; and (v) answers to all questions the Investor submitted to the Company

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regarding  an  investment  in the  Company;  and the  Investor has relied on the
information  contained  therein and has not been furnished any other  documents,
literature, memorandum or prospectus.

          Section 3.8.  Registration Rights Agreement and Escrow Agreement.  The
parties have  entered  into the  Registration  Rights  Agreement  and the Escrow
Agreement, each dated the date hereof.

          Section 3.9. No General Solicitation.  Neither the Company, nor any of
its affiliates, nor any person acting on its or their behalf, has engaged in any
form of general  solicitation  or general  advertising  (within  the  meaning of
Regulation D under the Securities  Act) in connection  with the offer or sale of
the shares of Common Stock offered hereby.

         Section  3.10.  Not an  Affiliate.  The  Investor  is  not an  officer,
director  or  a  person  that  directly,  or  indirectly  through  one  or  more
intermediaries,  controls or is controlled  by, or is under common  control with
the Company or any  "Affiliate"  of the Company (as that term is defined in Rule
405 of the Securities Act).  Neither the Investor nor its Affiliates has an open
short position in the Common Stock of the Company,  and the Investor agrees that
it will not, and that it will cause its  Affiliates  not to, engage in any short
sales of or hedging transactions with respect to the Common Stock, provided that
the Company  acknowledges  and agrees that upon receipt of an Advance Notice the
Investor  will sell the  Shares to be issued  to the  Investor  pursuant  to the
Advance Notice, even if the Shares have not been delivered to the Investor.

                                   ARTICLE IV.
                  Representations and Warranties of the Company

         Except as stated below, on the disclosure  schedules attached hereto or
in the SEC Documents (as defined  herein),  the Company  hereby  represents  and
warrants to, and  covenants  with,  the Investor that the following are true and
correct as of the date hereof:

         Section  4.1.  Organization  and  Qualification.  The  Company  is duly
incorporated  or  organized  and  validly  existing in the  jurisdiction  of its
incorporation  or  organization  and  has  all  requisite  power  and  authority
corporate  power to own its properties and to carry on its business as now being
conducted.  Each of the  Company and its  subsidiaries  is duly  qualified  as a
foreign corporation to do business and in good standing in every jurisdiction in
which the  nature  of the  business  conducted  by it makes  such  qualification
necessary,  except to the extent  that the failure to be so  qualified  or be in
good standing  would not have a Material  Adverse  Effect on the Company and its
subsidiaries taken as a whole.

         Section  4.2.   Authorization,   Enforcement,   Compliance  with  Other
Instruments.  (i) The Company has the requisite corporate power and authority to
enter into and perform this Agreement, the Registration Rights Agreement and any
related  agreements,  in accordance with the terms hereof and thereof,  (ii) the
execution and delivery of this Agreement, the Registration Rights Agreement, the
Escrow Agreement,  the Placement Agent Agreement dated the date hereof among the
Company,  the Placement Agent and the Investor (the "Placement Agent Agreement")
and any related  agreements  by the Company  and the  consummation  by it of the
transactions  contemplated hereby and thereby,  have been duly authorized by the
Company's Board of Directors and no further consent or authorization is required
by the  Company,  its  Board  of  Directors  or  its  stockholders,  (iii)  this
Agreement,   the  Registration  Rights  Agreement,  the  Escrow  Agreement,  the

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Placement Agent Agreement and any related agreements have been duly executed and
delivered  by  the  Company,  (iv)  this  Agreement,   the  Registration  Rights
Agreement,  the Escrow Agreement, the Placement Agent Agreement and assuming the
execution  and delivery  thereof and  acceptance by the Investor and any related
agreements   constitute  the  valid  and  binding  obligations  of  the  Company
enforceable  against the Company in accordance with their terms,  except as such
enforceability  may be  limited by general  principles  of equity or  applicable
bankruptcy, insolvency, reorganization,  moratorium, liquidation or similar laws
relating to, or affecting  generally,  the enforcement of creditors'  rights and
remedies.

          Section 4.3.  Capitalization.  As of the date hereof,  the  authorized
capital stock of the Company consists of 100,000,000 shares of Common Stock, par
value  $0.01 per share of which  27,712,604  shares of Common  Stock and  30,000
shares of Series E Preferred Stock,  209,170 shares of Series F Preferred Stock,
20,000 shares of Series J Preferred Stock and 4,297 shares of Series K Preferred
Stock were issued and  outstanding as of April 1, 2002. All of such  outstanding
shares have been validly issued and are fully paid and nonassessable.  Except as
disclosed in the SEC Documents (as defined in Section 4.5 hereof),  no shares of
Common Stock are subject to preemptive rights or any other similar rights or any
liens or encumbrances suffered or permitted by the Company.  Except as disclosed
in the SEC  Documents,  as of the date  hereof,  (i)  there  are no  outstanding
options,  warrants,  scrip,  rights to subscribe to, calls or commitments of any
character  whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its subsidiaries, or contracts,
commitments,  understandings  or arrangements by which the Company or any of its
subsidiaries is or may become bound to issue additional  shares of capital stock
of the Company or any of its subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character  whatsoever  relating to, or
securities  or rights  convertible  into,  any  shares of  capital  stock of the
Company  or  any  of its  subsidiaries,  (ii)  there  are  no  outstanding  debt
securities  and (iii) there are no  agreements or  arrangements  under which the
Company or any of its  subsidiaries  is obligated to register the sale of any of
their  securities  under the Securities Act (except pursuant to the Registration
Rights   Agreement).   There  are  no  securities  or   instruments   containing
anti-dilution or similar  provisions that will be triggered by this Agreement or
any related  agreement or the consummation of the transactions  described herein
or therein..  The Company has furnished to the Investor true and correct  copies
of the Company's  Certificate of  Incorporation,  as amended and as in effect on
the date hereof (the "Certificate of Incorporation"), and the Company's By-laws,
as in effect on the date hereof (the "By-laws"), and the terms of all securities
convertible  into or exercisable for Common Stock and the material rights of the
holders thereof in respect thereto.

          Section 4.4. No Conflict.  The execution,  delivery and performance of
this  Agreement  by the  Company  and the  consummation  by the  Company  of the
transactions  contemplated  hereby  will not (i)  result in a  violation  of the
Certificate of Incorporation, any certificate of designations of any outstanding
series of  preferred  stock of the Company or By-laws or (ii)  conflict  with or
constitute  a default  (or an event  which with  notice or lapse of time or both
would  become a default)  under,  or give to others  any rights of  termination,
amendment,   acceleration  or  cancellation  of,  any  agreement,  indenture  or
instrument to which the Company or any of its subsidiaries is a party, or result
in a  violation  of  any  law,  rule,  regulation,  order,  judgment  or  decree
(including  federal and state  securities laws and regulations and the rules and
regulations  of the  Principal  Market  on which  the  Common  Stock is  quoted)

                                       10
<PAGE>

applicable  to the Company or any of its  subsidiaries  or by which any material
property or asset of the Company or any of its subsidiaries is bound or affected
and which would cause a Material Adverse Effect.  Except as disclosed in the SEC
Documents,  neither the Company nor its subsidiaries is in violation of any term
of or in default  under its  Certificate  of  Incorporation  or By-laws or their
organizational  charter or  by-laws,  respectively,  or any  material  contract,
agreement, mortgage,  indebtedness,  indenture,  instrument, judgment, decree or
order or any  statute,  rule or  regulation  applicable  to the  Company  or its
subsidiaries.  The  business of the Company  and its  subsidiaries  is not being
conducted  in  violation  of any  material  law,  ordinance,  regulation  of any
governmental entity.  Except as specifically  contemplated by this Agreement and
as required under the Securities Act and any applicable  state  securities laws,
the Company is not required to obtain any consent, authorization or order of, or
make any filing or registration with, any court or governmental  agency in order
for  it to  execute,  deliver  or  perform  any  of  its  obligations  under  or
contemplated  by  this  Agreement  or  the  Registration   Rights  Agreement  in
accordance  with the terms  hereof or  thereof.  All  consents,  authorizations,
orders,  filings  and  registrations  which the  Company is  required  to obtain
pursuant to the preceding sentence have been obtained or effected on or prior to
the date  hereof.  The Company and its  subsidiaries  are unaware of any fact or
circumstance which might give rise to any of the foregoing.

          Section 4.5. SEC  Documents;  Financial  Statements.  Since January 1,
2000, the Company has filed all reports,  schedules, forms, statements and other
documents required to be filed by it with the SEC under of the Exchange Act. The
Company has delivered to the Investor or its representatives,  or made available
through the SEC's website at http://www.sec.gov, true and complete copies of the
SEC Documents.  As of their respective  dates,  the financial  statements of the
Company disclosed in the SEC Documents (the "Financial  Statements") complied as
to form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto.  Such financial
statements have been prepared in accordance with generally  accepted  accounting
principles, consistently applied, during the periods involved (except (i) as may
be otherwise  indicated in such financial  statements or the notes  thereto,  or
(ii) in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary  statements)  and fairly present in all
material respects the financial  position of the Company as of the dates thereof
and the  results of its  operations  and cash flows for the  periods  then ended
(subject,  in the  case  of  unaudited  statements,  to  normal  year-end  audit
adjustments).  No other  information  provided by or on behalf of the Company to
the  Investor  which is not  included in the SEC  Documents  contains any untrue
statement of a material  fact or omits to state any material  fact  necessary in
order to make the statements  therein,  in the light of the circumstances  under
which they were made, not misleading.

          Section  4.6.  10b-5.  The SEC  Documents  do not  include  any untrue
statements  of  material  fact,  nor do they  omit to state  any  material  fact
required to be stated therein necessary to make the statements made, in light of
the circumstances under which they were made, not misleading.

          Section 4.7. No Default. Except as disclosed in Section 4.4 or the SEC
Documents, the Company is not in default in the performance or observance of any
material  obligation,   agreement,   covenant  or  condition  contained  in  any
indenture,  mortgage, deed of trust or other material instrument or agreement to
which it is a party or by which it is or its  property  is bound and neither the

                                       11
<PAGE>

execution,  nor the delivery by the Company,  nor the performance by the Company
of its  obligations  under this  Agreement or any of the exhibits or attachments
hereto will  conflict  with or result in the breach or  violation  of any of the
terms or  provisions  of, or  constitute  a default or result in the creation or
imposition  of any lien or charge on any  assets or  properties  of the  Company
under  its  Certificate  of  Incorporation,  By-Laws,  any  material  indenture,
mortgage, deed of trust or other material agreement applicable to the Company or
instrument  to which  the  Company  is a party or by which it is  bound,  or any
statute,  or any decree,  judgment,  order,  rules or regulation of any court or
governmental  agency  or  body  having  jurisdiction  over  the  Company  or its
properties,  in each  case  which  default,  lien or charge is likely to cause a
Material Adverse Effect on the Company's business or financial condition.

         Section 4.8. Absence of Events of Default. Except for matters described
in the SEC Documents and/or this Agreement,  no Event of Default,  as defined in
the  respective  agreement to which the Company is a party,  and no event which,
with the giving of notice or the passage of time or both,  would become an Event
of Default (as so defined),  has occurred and is continuing,  which would have a
Material  Adverse  Effect  on the  Company's  business,  properties,  prospects,
financial condition or results of operations.

         Section  4.9.   Intellectual  Property  Rights.  The  Company  and  its
subsidiaries  own or possess  adequate  rights or licenses  to use all  material
trademarks,  trade names,  service marks,  service mark  registrations,  service
names, patents,  patent rights,  copyrights,  inventions,  licenses,  approvals,
governmental authorizations, trade secrets and rights necessary to conduct their
respective businesses as now conducted.  The Company and its subsidiaries do not
have any knowledge of any  infringement  by the Company or its  subsidiaries  of
trademark,  trade name rights, patents, patent rights,  copyrights,  inventions,
licenses, service names, service marks, service mark registrations, trade secret
or other similar rights of others,  and, to the knowledge of the Company,  there
is no claim,  action or  proceeding  being  made or brought  against,  or to the
Company's  knowledge,  being threatened against, the Company or its subsidiaries
regarding trademark,  trade name, patents, patent rights, invention,  copyright,
license, service names, service marks, service mark registrations,  trade secret
or other  infringement;  and the Company and its subsidiaries are unaware of any
facts or circumstances which might give rise to any of the foregoing.

         Section 4.10.  Employee  Relations.  Neither the Company nor any of its
subsidiaries  is involved in any labor  dispute  nor,  to the  knowledge  of the
Company or any of its subsidiaries,  is any such dispute threatened. None of the
Company's or its subsidiaries'  employees is a member of a union and the Company
and its subsidiaries believe that their relations with their employees are good.

         Section 4.11.  Environmental Laws. The Company and its subsidiaries are
(i) in compliance with any and all applicable material foreign,  federal,  state
and local laws and  regulations  relating to the  protection of human health and
safety,  the environment or hazardous or toxic substances or wastes,  pollutants
or contaminants ("Environmental Laws"), (ii) have received all permits, licenses
or other  approvals  required  of them under  applicable  Environmental  Laws to
conduct their  respective  businesses and (iii) are in compliance with all terms
and conditions of any such permit, license or approval.

                                       12
<PAGE>

         Section  4.12.  Title.  Except as set forth in the SEC  Documents,  the
Company has good and  marketable  title to its  properties  and material  assets
owned by it, free and clear of any pledge, lien, security interest, encumbrance,
claim or equitable  interest other than such as are not material to the business
of the Company. Any real property and facilities held under lease by the Company
and its  subsidiaries  are held by them under valid,  subsisting and enforceable
leases with such  exceptions as are not material and do not  interfere  with the
use made and proposed to be made of such  property and  buildings by the Company
and its subsidiaries.

         Section 4.13.  Insurance.  The Company and each of its subsidiaries are
insured by insurers of recognized financial  responsibility  against such losses
and risks and in such  amounts  as  management  of the  Company  believes  to be
prudent  and  customary  in  the   businesses  in  which  the  Company  and  its
subsidiaries  are engaged.  Neither the Company nor any such subsidiary has been
refused any insurance coverage sought or applied for and neither the Company nor
any such  subsidiary has any reason to believe that it will not be able to renew
its existing  insurance  coverage as and when such coverage expires or to obtain
similar  coverage  from  similar  insurers as may be  necessary  to continue its
business at a cost that would not materially and adversely affect the condition,
financial or otherwise,  or the earnings,  business or operations of the Company
and its subsidiaries, taken as a whole.

         Section  4.14.  Regulatory  Permits.  The Company and its  subsidiaries
possess all  material  certificates,  authorizations  and permits  issued by the
appropriate  federal,  state or  foreign  regulatory  authorities  necessary  to
conduct  their  respective  businesses,  and  neither  the  Company nor any such
subsidiary has received any notice of proceedings  relating to the revocation or
modification of any such certificate, authorization or permit.

         Section 4.15. Internal Accounting Controls. The Company and each of its
subsidiaries  maintain a system of internal  accounting  controls  sufficient to
provide  reasonable  assurance that (i)  transactions are executed in accordance
with  management's  general or specific  authorizations,  (ii)  transactions are
recorded  as  necessary  to  permit  preparation  of  financial   statements  in
conformity with generally accepted  accounting  principles and to maintain asset
accountability,  (iii) access to assets is  permitted  only in  accordance  with
management's   general  or  specific   authorization   and  (iv)  the   recorded
accountability  for assets is compared  with the existing  assets at  reasonable
intervals and appropriate action is taken with respect to any differences.

         Section 4.16. No Material Adverse Breaches, etc. Except as set forth in
the SEC Documents, neither the Company nor any of its subsidiaries is subject to
any charter,  corporate or other legal  restriction,  or any  judgment,  decree,
order, rule or regulation which in the judgment of the Company's officers has or
is expected  in the future to have a Material  Adverse  Effect on the  business,
properties,  operations, financial condition, results of operations or prospects
of the Company or its  subsidiaries.  Except as set forth in the SEC  Documents,
neither the Company nor any of its  subsidiaries is in breach of any contract or
agreement  which breach,  in the judgment of the Company's  officers,  has or is
expected  to  have  a  Material  Adverse  Effect  on the  business,  properties,
operations,  financial  condition,  results of  operations  or  prospects of the
Company or its subsidiaries.

         Section  4.17.  Absence of  Litigation.  Except as set forth in the SEC
Documents, there is no action, suit, proceeding, inquiry or investigation before

                                       13
<PAGE>

or by any court, public board, government agency,  self-regulatory  organization
or body pending against or affecting the Company, the Common Stock or any of the
Company's subsidiaries, wherein an unfavorable decision, ruling or finding would
(i) have a Material Adverse Effect on the transactions  contemplated hereby (ii)
adversely affect the validity or enforceability  of, or the authority or ability
of the Company to perform its  obligations  under,  this Agreement or any of the
documents contemplated herein, or (iii) except as expressly disclosed in the SEC
Documents,  have  a  Material  Adverse  Effect  on  the  business,   operations,
properties,  financial  condition or results of operation of the Company and its
subsidiaries taken as a whole.

          Section 4.18. Subsidiaries.  Except as disclosed in the SEC Documents,
the Company  does not  presently  own or control,  directly or  indirectly,  any
interest in any other  corporation,  partnership,  association or other business
entity.

          Section 4.19. Tax Status. The Company and each of its subsidiaries has
made or filed all federal and state  income and all other tax  returns,  reports
and declarations required by any jurisdiction to which it is subject and (unless
and only to the extent  that the Company  and each of its  subsidiaries  has set
aside on its books provisions  reasonably adequate for the payment of all unpaid
and unreported taxes) except for withholding taxes, has paid all taxes and other
governmental  assessments  and charges  that are  material  in amount,  shown or
determined to be due on such  returns,  reports and  declarations,  except those
being  contested  in good  faith  and  has  set  aside  on its  books  provision
reasonably  adequate for the payment of all taxes for periods  subsequent to the
periods  to which such  returns,  reports or  declarations  apply.  There are no
unpaid taxes in any material amount claimed to be due by the taxing authority of
any jurisdiction,  and the officers of the Company know of no basis for any such
claim.

          Section  4.20.  Certain  Transactions.  Except as set forth in the SEC
Documents  none of the  officers,  directors,  or  employees  of the  Company is
presently a party to any  transaction  with the Company (other than for services
as employees,  officers and  directors),  including  any contract,  agreement or
other  arrangement  providing for the furnishing of services to or by, providing
for rental of real or  personal  property  to or from,  or  otherwise  requiring
payments to or from any officer,  director or such employee or, to the knowledge
of the Company, any corporation, partnership, trust or other entity in which any
officer,  director,  or any such  employee has a  substantial  interest or is an
officer, director, trustee or partner.

          Section 4.21. Fees and Rights of First Refusal. Except as set forth in
the SEC Documents,  the Company is not obligated to offer the securities offered
hereunder on a right of first  refusal  basis or otherwise to any third  parties
including,  but not limited to, current or former  shareholders  of the Company,
underwriters, brokers, agents or other third parties.

          Section 4.22.  Use of Proceeds.  The Company  represents  that the net
proceeds  from  this  offering  will be used  for  general  corporate  purposes.
However,  in no event shall the net proceeds  from this  offering be used by the
Company for the  payment  (or loaned to any such person for the  payment) of any
judgment,  or other  liability,  incurred  by any  executive  officer,  officer,
director or  employee  of the  Company,  except for any  liability  owed to such
person for services rendered,  or if any judgment or other liability is incurred
by such person originating from services rendered to the Company, or the Company
has indemnified such person from liability.

                                       14
<PAGE>

          Section 4.23.  Further  Representation  and Warranties of the Company.
For so long as any securities  issuable  hereunder  held by the Investor  remain
outstanding, the Company acknowledges,  represents,  warrants and agrees that it
will maintain the listing of its Common Stock on the Principal Market

          Section 4.24.  Opinion of Counsel.  Investor  shall receive an opinion
letter from  Kirkpatrick & Lockhart LLP,  counsel to the Company  (updated where
applicable) on the date hereof.

          Section  4.25.  Opinion of Counsel.  The  Company  will obtain for the
Investor, at the Company's expense, any and all opinions of counsel which may be
reasonably  required in order to sell the securities  issuable hereunder without
restriction.

          Section 4.26.  Dilution.  The Company is aware and  acknowledges  that
issuance  of shares of the  Company's  Common  Stock  could  cause  dilution  to
existing shareholders and could significantly increase the outstanding number of
shares of Common Stock.

                                   ARTICLE V.
                                 Indemnification

          The Investor and the Company represent to the other the following with
respect to itself:

     Section 5.1. Indemnification.

              (a) In consideration  of the Investor's  execution and delivery of
this Agreement,  and in addition to all of the Company's other obligations under
this Agreement,  the Company shall defend, protect,  indemnify and hold harmless
the Investor, and all of its officers, directors, partners, employees and agents
(including,   without   limitation,   those  retained  in  connection  with  the
transactions  contemplated  by  this  Agreement)  (collectively,  the  "Investor
Indemnitees")  from and against any and all  actions,  causes of action,  suits,
claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
connection therewith  (irrespective of whether any such Investor Indemnitee is a
party  to the  action  for  which  indemnification  hereunder  is  sought),  and
including  reasonable   attorneys'  fees  and  disbursements  (the  "Indemnified
Liabilities"),  incurred by the Investor  Indemnitees or any of them as a result
of, or arising out of, or relating to (a) any misrepresentation or breach of any
representation  or  warranty  made  by the  Company  in  this  Agreement  or the
Registration  Rights Agreement or any other certificate,  instrument or document
contemplated  hereby or thereby,  (b) any breach of any  covenant,  agreement or
obligation of the Company contained in this Agreement or the Registration Rights
Agreement or any other certificate,  instrument or document  contemplated hereby
or thereby,  or (c) any cause of action,  suit or claim  brought or made against
such  Investor  Indemnitee  not  arising  out of any  action or  inaction  of an
Investor  Indemnitee,  and  arising  out of or  resulting  from  the  execution,
delivery,  performance or enforcement of this Agreement or any other instrument,
document  or  agreement   executed  pursuant  hereto  by  any  of  the  Investor
Indemnitees.  To the extent that the foregoing undertaking by the Company may be
unenforceable for any reason, the Company shall make the maximum contribution to
the payment and  satisfaction of each of the Indemnified  Liabilities,  which is
permissible under applicable law.

                                       15
<PAGE>

              (b) In  consideration  of the Company's  execution and delivery of
this Agreement, and in addition to all of the Investor's other obligations under
this Agreement, the Investor shall defend, protect,  indemnify and hold harmless
the Company and all of its  officers,  directors,  shareholders,  employees  and
agents  (including,  without  limitation,  those retained in connection with the
transactions  contemplated  by  this  Agreement)  (collectively,   the  "Company
Indemnitees") from and against any and all Indemnified  Liabilities  incurred by
the  Company  Indemnitees  or any of them as a result of, or arising  out of, or
relating  to (a)  any  misrepresentation  or  breach  of any  representation  or
warranty  made  by the  Investor  in this  Agreement,  the  Registration  Rights
Agreement, or any instrument or document contemplated hereby or thereby executed
by the Investor, (b) any breach of any covenant,  agreement or obligation of the
Investor(s)  contained in this Agreement,  the Registration  Rights Agreement or
any other  certificate,  instrument or document  contemplated  hereby or thereby
executed by the Investor,  or (c) any cause of action,  suit or claim brought or
made against such Company  Indemnitee  based on  misrepresentations  or due to a
breach by the  Investor  and arising  out of or  resulting  from the  execution,
delivery,  performance or enforcement of this Agreement or any other instrument,
document  or  agreement   executed   pursuant  hereto  by  any  of  the  Company
Indemnitees. To the extent that the foregoing undertaking by the Investor may be
unenforceable for any reason,  the Investor shall make the maximum  contribution
to the payment and satisfaction of each of the Indemnified Liabilities, which is
permissible under applicable law.

                                   ARTICLE VI.
                            Covenants of the Company

          Section  6.1.   Registration  Rights.  The  Company  shall  cause  the
Registration Rights Agreement to remain in full force and effect and the Company
shall comply in all material respects with the terms thereof.

          Section 6.2.  Listing of Common Stock.  The Company shall maintain the
Common  Stock's  authorization  for  quotation  on the National  Association  of
Securities Dealers, Inc. SmallCap Market.

          Section  6.3.  Exchange Act  Registration.  The Company will cause its
Common Stock to continue to be  registered  under  Section 12(g) of the Exchange
Act, will file in a timely manner all reports and other documents required of it
as a reporting  company  under the  Exchange Act and will not take any action or
file any document  (whether or not  permitted by Exchange Act or the rules there
under to terminate or suspend such  registration  or to terminate or suspend its
reporting and filing obligations under said Exchange Act.

          Section  6.4.  Transfer  Agent  Instructions.  Not later than two days
after each Advance  Notice Date and prior to each Closing and the  effectiveness
of the  Registration  Statement  and resale of the Common Stock by the Investor,
the Company will deliver  instructions  to its transfer agent to issue shares of
Common Stock free of restrictive legends.

          Section  6.5.  Corporate  Existence.  The Company  will take all steps
necessary to preserve and continue the corporate existence of the Company.

          Section  6.6.  Notice  of  Certain  Events   Affecting   Registration;
Suspension of Right to Make an Advance.  The Company will immediately notify the
Investor  upon its  becoming  aware of the  occurrence  of any of the  following

                                       16
<PAGE>

events in respect of a registration  statement or related prospectus relating to
an offering of Registrable Securities: (i) receipt of any request for additional
information  by the SEC or any other  Federal  or state  governmental  authority
during the period of effectiveness of the Registration  Statement for amendments
or supplements to the  registration  statement or related  prospectus;  (ii) the
issuance by the SEC or any other Federal or state governmental  authority of any
stop order suspending the  effectiveness  of the  Registration  Statement or the
initiation  of  any  proceedings   for  that  purpose;   (iii)  receipt  of  any
notification  with respect to the suspension of the  qualification  or exemption
from  qualification  of  any of  the  Registrable  Securities  for  sale  in any
jurisdiction  or the  initiation  or  threatening  of any  proceeding  for  such
purpose;  (iv) the happening of any event that makes any  statement  made in the
Registration  Statement or related  prospectus of any document  incorporated  or
deemed to be incorporated therein by reference untrue in any material respect or
that requires the making of any changes in the Registration  Statement,  related
prospectus or documents so that, in the case of the Registration  Statement,  it
will not contain any untrue  statement  of a material  fact or omit to state any
material fact required to be stated  therein or necessary to make the statements
therein not misleading,  and that in the case of the related prospectus, it will
not  contain  any  untrue  statement  of a  material  fact or omit to state  any
material fact required to be stated  therein or necessary to make the statements
therein,  in the light of the  circumstances  under  which they were  made,  not
misleading; and (v) the Company's reasonable determination that a post-effective
amendment to the  Registration  Statement would be appropriate;  and the Company
will promptly make available to the Investor any such supplement or amendment to
the related  prospectus.  The  Company  shall not  deliver to the  Investor  any
Advance Notice during the continuation of any of the foregoing events.

         Section 6.7.  Expectations  Regarding Advance Notices.  Within ten (10)
days after the commencement of each calendar quarter occurring subsequent to the
commencement of the Commitment Period, the Company must notify the Investor,  in
writing, as to its reasonable expectations as to the dollar amount it intends to
raise  during such  calendar  quarter,  if any,  through the issuance of Advance
Notices.  Such  notification  shall  constitute  only the  Company's  good faith
estimate and shall in no way  obligate the Company to raise such amount,  or any
amount,  or otherwise limit its ability to deliver Advance Notices.  The failure
by the  Company  to comply  with this  provision  can be cured by the  Company's
notifying  the  Investor,   in  writing,  at  any  time  as  to  its  reasonable
expectations with respect to the current calendar quarter.

         Section  6.8.  Consent of  Investor to Sell  Common  Stock.  During the
Commitment  Period,  the  Company  shall not issue or sell (i) any Common  Stock
without  consideration or for a consideration  per share less than its Bid Price
determined  immediately  prior to its issuance,  (ii) issue or sell any warrant,
option,  right,  contract,  call, or other  security or instrument  granting the
holder thereof the right to acquire Common Stock without  consideration or for a
consideration  per share  less than such  Common  Stock's  Bid Price  determined
immediately prior to its issuance,  or (iii) file any registration  statement on
Form S-8.

         Section 6.9. Consolidation;  Merger. The Company shall not, at any time
after the date hereof, effect any merger or consolidation of the Company with or
into,  or a transfer  of all or  substantially  all the assets of the Company to
another  entity (a  "Consolidation  Event")  unless the  resulting  successor or
acquiring  entity  (if  not the  Company)  assumes  by  written  instrument  the

                                       17
<PAGE>

obligation to deliver to the Investor such shares of stock and/or  securities as
the Investor is entitled to receive pursuant to this Agreement.

         Section 6.10.  Issuance of the Company's  Common Stock. The sale of the
shares of Common  Stock  shall be made in  accordance  with the  provisions  and
requirements of Regulation D and any applicable state securities law.

                                  ARTICLE VII.
                Conditions for Advance and Conditions to Closing

         Section 7.1.  Conditions  Precedent to the  Obligations of the Company.
The  obligation  hereunder of the Company to issue and sell the shares of Common
Stock to the Investor  incident to each Closing is subject to the  satisfaction,
or  waiver  by the  Company,  at or before  each  such  Closing,  of each of the
conditions set forth below.

              (a) Accuracy of the Investor's Representations and Warranties. The
representations  and warranties of the Investor shall be true and correct in all
material respects.

              (b)   Performance  by  the  Investor.   The  Investor  shall  have
performed, satisfied and complied in all respects with all covenants, agreements
and conditions  required by this Agreement and the Registration Rights Agreement
to be performed,  satisfied or complied with by the Investor at or prior to such
Closing.

         Section  7.2.  Conditions  Precedent  to the  Right of the  Company  to
Deliver an Advance Notice and the Obligation of the Investor to Purchase  Shares
of Common Stock.  The right of the Company to deliver an Advance  Notice and the
obligation  of the  Investor  hereunder  to  acquire  and pay for  shares of the
Company's  Common Stock incident to a Closing is subject to the  satisfaction or
waiver by the Investor,  on (i) the date of delivery of such Advance  Notice and
(ii) the applicable Advance Date (each a "Condition Satisfaction Date"), of each
of the following conditions:

              (a)  Registration  of the Common  Stock with the SEC.  The Company
shall have  filed  with the SEC a  Registration  Statement  with  respect to the
resale  of the  Registrable  Securities  in  accordance  with  the  terms of the
Registration  Rights  Agreement.   As  set  forth  in  the  Registration  Rights
Agreement, the Registration Statement shall have previously become effective and
shall remain effective on each Condition  Satisfaction  Date and (i) neither the
Company nor the Investor  shall have received  notice that the SEC has issued or
intends to issue a stop order with respect to the Registration Statement or that
the  SEC  otherwise  has  suspended  or  withdrawn  the   effectiveness  of  the
Registration  Statement,  either  temporarily or permanently,  or intends or has
threatened  to do so (unless  the SEC's  concerns  have been  addressed  and the
Investor  is  reasonably  satisfied  that the SEC no  longer is  considering  or
intends  to take  such  action),  and  (ii) no  other  suspension  of the use or
withdrawal  of  the  effectiveness  of the  Registration  Statement  or  related
prospectus  shall exist.  The  Registration  Statement  must have been  declared
effective by the SEC prior to the first Advance Notice Date.

              (b)  Authority.  The Company  shall have  obtained all permits and
qualifications   required  by  any  applicable  state  in  accordance  with  the
Registration  Rights  Agreement  for the offer and sale of the  shares of Common
Stock,  or shall have the  availability  of exemptions  there from. The sale and

                                       18
<PAGE>

issuance of the shares of Common  Stock shall be legally  permitted  by all laws
and regulations to which the Company is subject.

              (c)  Fundamental  Changes.  There shall not exist any  fundamental
changes to the information set forth in the  Registration  Statement which would
require  the  Company to file a  post-effective  amendment  to the  Registration
Statement.

              (d) Performance by the Company.  The Company shall have performed,
satisfied and complied in all material  respects with all covenants,  agreements
and conditions required by this Agreement  (including,  without limitation,  the
conditions  specified  in  Section  2.5  hereof)  and  the  Registration  Rights
Agreement to be performed, satisfied or complied with by the Company at or prior
to each Condition Satisfaction Date.

              (e) No Injunction. No statute, rule, regulation,  executive order,
decree,  ruling or injunction shall have been enacted,  entered,  promulgated or
endorsed by any court or governmental  authority of competent  jurisdiction that
prohibits or directly and adversely affects any of the transactions contemplated
by this Agreement, and no proceeding shall have been commenced that may have the
effect  of   prohibiting  or  adversely   affecting  any  of  the   transactions
contemplated by this Agreement.

              (f) No Suspension of Trading in or Delisting of Common Stock.  The
trading of the Common Stock is not suspended by the SEC or the Principal  Market
(if the Common Stock is traded on a Principal Market). The issuance of shares of
Common Stock with respect to the applicable  Closing,  if any, shall not violate
the shareholder  approval  requirements  of the Principal  Market (if the Common
Stock is traded on a Principal market).  The Company shall not have received any
notice  threatening  the continued  listing of the Common Stock on the Principal
Market (if the Common Stock is traded on a Principal Market).

              (g) Advances. The amount of the individual Advance, , requested by
the Company  does not exceed the Maximum  Advance  Amount  unless  waived by the
Investor.  In addition,  in no event shall the number of shares  issuable to the
Investor  pursuant to an Advance cause the Investor to own in excess of four and
9/10 percent (4.9%) of the then outstanding Common Stock of the Company.

              (h) No  Knowledge.  The Company has no knowledge of any event more
likely than not to have the effect of causing such Registration  Statement to be
suspended or otherwise ineffective.

              (i) Prior Approval.  The Company shall have obtained all approvals
necessary  under the rules and  regulations  established  and  maintained by the
Listing  Qualifications of the National Association of Securities Dealers, Inc.,
Market  Place Rules for the  issuance  issuance of the shares of Common Stock to
the Investor  pursuant to Advances under this Agreement,  the Investor's  shares
pursuant  to Section  12.4 and the  Placement  Agent's  shares  pursuant  to the
Placement Agent Agreement.

              (j) Other. On each Condition Satisfaction Date, the Investor shall
have received and been  reasonably  satisfied with such other  certificates  and
documents as shall have been  reasonably  requested by the Investor in order for
the Investor to confirm the Company's  satisfaction  of the conditions set forth

                                       19
<PAGE>

in this Section 7.2, including, without limitation, a certificate executed by an
executive  officer of the Company and to the effect that all the  conditions  to
such Closing shall have been  satisfied as at the date of each such  certificate
substantially in the form annexed hereto on Exhibit A.

                                  ARTICLE VIII.
         Due Diligence Review; Non-Disclosure of Non-Public Information

         Section  8.1.  Due  Diligence  Review.  Prior  to  the  filing  of  the
Registration  Statement the Company  shall make  available  for  inspection  and
review by the Investor,  advisors to and  representatives  of the Investor,  any
underwriter  participating  in any disposition of the Registrable  Securities on
behalf  of  the  Investor  pursuant  to the  Registration  Statement,  any  such
registration  statement or amendment or supplement thereto or any blue sky, NASD
or other filing,  all financial and other  records,  all SEC Documents and other
filings with the SEC, and all other  corporate  documents and  properties of the
Company as may be reasonably necessary for the purpose of such review, and cause
the Company's  officers,  directors and employees to supply all such information
reasonably  requested  by the  Investor or any such  representative,  advisor or
underwriter in connection with such Registration  Statement (including,  without
limitation,  in response to all questions and other inquiries reasonably made or
submitted  by any of them),  prior to and from time to time after the filing and
effectiveness of the Registration Statement for the sole purpose of enabling the
Investor  and  such   representatives,   advisors  and  underwriters  and  their
respective  accountants  and  attorneys  to  conduct  initial  and  ongoing  due
diligence  with  respect to the  Company and the  accuracy  of the  Registration
Statement.

         Section 8.2. Non-Disclosure of Non-Public Information.

              (a) The Company shall not disclose  non-public  information to the
Investor,  advisors  to or  representatives  of the  Investor  unless  prior  to
disclosure of such information the Company  identifies such information as being
non-public   information   and  provides  the   Investor,   such   advisors  and
representatives  with the  opportunity  to  accept  or  refuse  to  accept  such
non-public information for review. The Company may, as a condition to disclosing
any  non-public  information  hereunder,  require the  Investor's  advisors  and
representatives  to enter into a  confidentiality  agreement in form  reasonably
satisfactory to the Company and the Investor.

              (b)  Nothing   herein  shall   require  the  Company  to  disclose
non-public  information to the Investor or its advisors or representatives,  and
the Company  represents that it does not disseminate  non-public  information to
any investors who purchase stock in the Company in a public  offering,  to money
managers or to securities  analysts,  provided,  however,  that  notwithstanding
anything  herein to the contrary,  the Company will,  as  hereinabove  provided,
immediately notify the advisors and representatives of the Investor and, if any,
underwriters,  of any event or the  existence of any  circumstance  (without any
obligation to disclose the specific event or  circumstance)  of which it becomes
aware,  constituting  non-public  information  (whether or not  requested of the
Company  specifically  or generally  during the course of due  diligence by such
persons or entities),  which, if not disclosed in the prospectus included in the
Registration  Statement  would  cause  such  prospectus  to  include a  material
misstatement  or to omit a material fact required to be stated  therein in order
to make the statements,  therein,  in light of the  circumstances  in which they
were made,  not  misleading.  Nothing  contained  in this  Section  8.2 shall be

                                       20
<PAGE>

construed to mean that such persons or entities other than the Investor (without
the written consent of the Investor prior to disclosure of such information) may
not obtain  non-public  information in the course of conducting due diligence in
accordance with the terms of this Agreement and nothing herein shall prevent any
such persons or entities from  notifying the Company of their opinion that based
on such due  diligence  by such  persons  or  entities,  that  the  Registration
Statement contains an untrue statement of material fact or omits a material fact
required to be stated in the  Registration  Statement  or  necessary to make the
statements  contained therein,  in light of the circumstances in which they were
made, not misleading.

                                   ARTICLE IX.
                           Choice of Law/Jurisdiction

         Section 9.1.  Governing  Law. This  Agreement  shall be governed by and
interpreted in accordance with the laws of the State of Minnesota without regard
to the principles of conflict of laws. The parties further agree that any action
between them shall be heard in Hudson County,  New Jersey, and expressly consent
to the  jurisdiction  and venue of the Superior Court of New Jersey,  sitting in
Hudson  County,  New Jersey and the United States  District Court of New Jersey,
sitting in Newark, New Jersey, for the adjudication of any civil action asserted
pursuant to this paragraph.

                                   ARTICLE X.
                             Assignment; Termination

          Section 10.1. Assignment. Neither this Agreement nor any rights of the
Company hereunder may be assigned to any other Person.

          Section 10.2.  Termination.  The  obligations  of the Investor to make
Advances under Article II hereof shall terminate  twenty-four  (24) months after
the Effective Date.

                                   ARTICLE XI.
                                     Notices

         Section  11.1.  Notices.  Any  notices,  consents,  waivers,  or  other
communications  required  or  permitted  to be  given  under  the  terms of this
Agreement  must be in writing and will be deemed to have been delivered (i) upon
receipt, when delivered  personally;  (ii) upon receipt, when sent by facsimile,
provided a copy is mailed by U.S.  certified  mail,  return  receipt  requested;
(iii) three (3) days after being sent by U.S.  certified  mail,  return  receipt
requested,  or (iv)  one (1) day  after  deposit  with a  nationally  recognized
overnight  delivery  service,  in each case  properly  addressed to the party to
receive the same.  The addresses and facsimile  numbers for such  communications
shall be:

If to the Company, to:          Innovative Gaming Corp of America
                                333 Orville Wright Court.
                                Las Vegas, NV 89119
                                Attention:       Laus M. Abdo, President and CFO
                                Telephone:       (702) 614 - 7199
                                Facsimile:       (702) 614-7114

                                       21
<PAGE>

With a copy to:                 Kirkpatrick & Lockhart, LLP
                                201 South Biscayne Boulevard - Suite 2000
                                Miami, FL  33131-2399
                                Attention: Clayton E. Parker, Esq.
                                Telephone:        (305) 539-3300
                                Facsimile:        (305) 358-7095

                                Maslon Edelman Borman & Brand LLP
                                3300 Wells Fargo Center
                                Minneapolis, MN  55402
                                Attention:        Douglas T. Holod
                                Telephone:        (612) 672-8813
                                Facsimile:        (612) 672-8397

If to the Investor(s):          Cornell Capital Partners, LP
                                101 Hudson Street -Suite 3606
                                Jersey City, NJ 07302
                                Attention:        Mark Angelo
                                                  Portfolio Manager
                                Telephone:        (201) 985-8300
                                Facsimile:        (201) 985-8266

With a Copy to:                 Butler Gonzalez LLP
                                1000 Stuyvesant Avenue - Suite 6
                                Union, NJ 07083
                                Attention:        David Gonzalez, Esq.
                                Telephone:        (908) 810-8588
                                Facsimile:        (908) 810-0973

Each party shall provide five (5) days' prior written  notice to the other party
of any change in address or facsimile number.

                                  ARTICLE XII.
                                  Miscellaneous

         Section 12.1.  Counterparts.  This  Agreement may be executed in two or
more identical  counterparts,  all of which shall be considered one and the same
agreement and shall become effective when  counterparts have been signed by each
party and  delivered  to the other  party.  In the event any  signature  page is
delivered  by  facsimile  transmission,  the party  using such means of delivery
shall  cause  four  (4)  additional  original  executed  signature  pages  to be
physically  delivered to the other party  within five (5) days of the  execution
and delivery hereof.

         Section 12.2. Entire Agreement;  Amendments.  This Agreement supersedes
all other prior oral or written  agreements  between the Investor,  the Company,
their  affiliates and persons acting on their behalf with respect to the matters
discussed  herein,  and this  Agreement and the  instruments  referenced  herein

                                       22
<PAGE>

contain  the entire  understanding  of the parties  with  respect to the matters
covered  herein and therein  and,  except as  specifically  set forth  herein or
therein,  neither  the  Company  nor  the  Investor  makes  any  representation,
warranty,  covenant or undertaking with respect to such matters. No provision of
this  Agreement  may be waived or amended other than by an instrument in writing
signed by the party to be charged with enforcement.

         Section  12.3.  Reporting  Entity for the Common  Stock.  The reporting
entity relied upon for the  determination of the trading price or trading volume
of the Common Stock on any given Trading Day for the purposes of this  Agreement
shall be Bloomberg, L.P. or any successor thereto. The written mutual consent of
the  Investor  and the Company  shall be required to employ any other  reporting
entity.

          Section 12.4. Fees and Expenses.  The Company hereby agrees to pay the
following fees:

              (a) Legal  Fees.  Each of the  parties  shall pay its own fees and
expenses (including the fees of any attorneys, accountants, appraisers or others
engaged by such party) in connection  with this  Agreement and the  transactions
contemplated  hereby,  except that the Company will pay the outstanding fees and
expenses of Kirkpatrick & Lockhart, LLP directly from the Advances to be paid to
the Company  under this  Agreement  and fees to Butler  Gonzalez  LLP for legal,
administrative,  and  escrow  fees in the  amount of  Fifteen  Thousand  Dollars
($15,000) either upon the execution of this Agreement or directly from the gross
proceeds held in escrow from the sale of Convertible Debentures. Subsequently on
each advance  date,  the Company will pay Butler  Gonzalez  LLP, the sum of Five
Hundred Dollars ($500) for legal, administrative and escrow fees.

              (b) Commitment Fees.

                  (i)  On  each  Advance  Date  the  Company  shall  pay  to the
Investor,  directly from the gross  proceeds held in escrow,  an amount equal to
five percent (5%) of the amount of each Advance.  The Company hereby agrees that
if such  payment,  as is  described  above,  is not made by the  Company  on the
Advance  Date,  such  payment  will be made at the  direction of the Investor as
outlined and mandated by Section 2.3 of this Agreement.

                  (ii) In addition  upon the  execution  of this  Agreement  the
Company shall issue to the Investor  shares of the Company's  Common Stock in an
amount equal to Three Hundred Ninety Thousand Dollars  ($390,000) divided by the
Closing  Bid  Price  of the  Company's  Common  Stock on the  date  hereof  (the
"Investor's Shares").

                  (iii) Fully  Earned.  The  Investor's  Shares  shall be deemed
fully earned upon delivery to the Investor.

                  (iv)  Registration  Rights.  The  Investor's  Shares will have
demand and "piggy-back" registration rights.

         Section 12.5.  Brokerage.  Except for the Placement Agent,  each of the
parties hereto  represents  that it has had no dealings in connection  with this
transaction  with any  finder or broker  who will  demand  payment of any fee or
commission from the other party.  The Company on the one hand, and the Investor,

                                       23
<PAGE>

on the other  hand,  agree to  indemnify  the other  against  and hold the other
harmless  from  any  and  all  liabilities  to  any  person  claiming  brokerage
commissions  or  finder's  fees on account of  services  purported  to have been
rendered on behalf of the  indemnifying  party in connection with this Agreement
or the transactions contemplated hereby.

         Section  12.6.  Confidentiality.  If for any  reason  the  transactions
contemplated by this Agreement are not  consummated,  each of the parties hereto
shall keep  confidential  any information  obtained from any other party (except
information  publicly  available  or in such  party's  domain  prior to the date
hereof,  and except as required by court order) and shall promptly return to the
other  parties  all  schedules,  documents,  instruments,  work  papers or other
written information without retaining copies thereof, previously furnished by it
as a result of this Agreement or in connection herein.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       24
<PAGE>

         IN WITNESS WHEREOF,  the parties hereto have caused this Line of Credit
Agreement to be executed by the undersigned,  thereunto duly  authorized,  as of
the date first set forth above.

                                  COMPANY:
                                  INNOVATIVE GAMING CORP OF AMERICA

                                  By:        / s /
                                     --------------------
                                  Name:    Laus M. Abdo
                                  Title:   President and CFO

                                  INVESTOR:
                                  CORNELL CAPITAL PARTNERS, LP

                                  By:      Yorkville Advisors, LLC
                                  Its:     General Partner

                                  By:         / s /
                                     --------------------
                                  Name:    Mark Angelo
                                  Title:   Portfolio Manager

                                       25
<PAGE>

                                    EXHIBIT A
                                    ---------

                      ADVANCE NOTICE/COMPLIANCE CERTIFICATE
                      -------------------------------------

                        INNOVATIVE GAMING CORP OF AMERICA
                        ---------------------------------

          The undersigned,  ________________________________  hereby  certifies,
with respect to the sale of shares of Common Stock of Innovative  Gaming Corp of
America (the  "Company"),  issuable in connection  with this Advance  Notice and
Compliance  Certificate  dated  ___________________  (the  "Notice"),  delivered
pursuant to the Equity Line of Credit Agreement (the "Agreement"), as follows:

          1. The undersigned is the duly elected Chief Executive  Officer of the
Company.

          2. There are no fundamental  changes to the  information  set forth in
the  Registration  Statement  which  would  require  the  Company to file a post
effective amendment to the Registration Statement.

          3. The Company has  performed in all material  respects all  covenants
and  agreements  to be  performed by the Company on or prior to the Advance Date
related  to the  Notice  and has  complied  in all  material  respects  with all
obligations and conditions contained in the Agreement.

          4. The Advance requested is _____________________.

          The  undersigned  has  executed  this  Certificate  this  ____  day of
_________________.

                                         INNOVATIVE GAMING CORP OF AMERICA

                                         By:
                                            ---------------------------------
                                         Name:      Laus M. Abdo
                                         Title:     President and CFO

                                       26
<PAGE>

                                SCHEDULED 2.6(b)
                                ----------------

                       INNOVATIVE GAMING CORP OF AMERICA
                       ---------------------------------

         The undersigned  hereby agrees that for a period commencing on the date
hereof and expiring on the  termination  of the Equity Line of Credit  Agreement
dated   ________________   between   Innovative  Gaming  Corp  of  America  (the
"Company"),  and Cornell Capital  Partners,  LP, (the  "Investor") (the "Lock-up
Period"),  he, she or it will not,  directly  or  indirectly,  without the prior
written consent of the Investor,  issue,  offer,  agree or offer to sell,  sell,
grant  an  option  for  the  purchase  or sale  of,  transfer,  pledge,  assign,
hypothecate,  distribute or otherwise  encumber or dispose of except pursuant to
Rule 144 of the General Rules and Regulations  under the Securities Act of 1933,
any  securities  of the  Company,  including  common  stock or options,  rights,
warrants or other  securities  underlying,  convertible  into,  exchangeable  or
exercisable  for or evidencing any right to purchase or subscribe for any common
stock (whether or not beneficially owned by the undersigned),  or any beneficial
interest therein (collectively, the "Securities").

         In  order  to  enable  the  aforesaid  covenants  to be  enforced,  the
undersigned  hereby  consents  to the  placing of legends  and/or  stop-transfer
orders with the transfer agent of the Company's  securities  with respect to any
of the  Securities  registered in the name of the  undersigned  or  beneficially
owned by the undersigned,  and the undersigned hereby confirms the undersigned's
investment in the Company.

Dated: _______________, 2002

                                    Signature

                                    --------------------------------------------
                                    Address:
                                           -------------------------------------
                                    City, State, Zip Code:
                                                           ---------------------

                                    --------------------------------------------
                                    Print Social Security Number
                                    or Taxpayer I.D. NumberSTANDARD OFFICE LEASE

                                 BY AND BETWEEN

                        ARDEN REALTY LIMITED PARTNERSHIP,

                         a Maryland limited partnership

                                  AS LANDLORD,

                                       AND

                         E-PERCEPTION TECHNOLOGIES, INC.
                             a Delaware corporation,

                                    AS TENANT

                                    SUITE 203

                                  TOWER PLAZA 1

<PAGE>

                                      INDEX
                                      -----

                                                                       Page(s)
                                                                       -------

Additional Rent..............................................................3
Alterations.................................................................11
Base Year....................................................................3
Basic Rental.................................................................1
Brokers......................................................................1
Commencement Date............................................................1
Direct Costs.................................................................3
Estimate.....................................................................6
Estimate Statement...........................................................6
Estimated Excess.............................................................6
Event of Default............................................................22
Excess.......................................................................6
Expiration Date..............................................................1
First Month's Rent...........................................................2
Force Majeure...............................................................27
Hazardous Material..........................................................28
Interest Notice.............................................................36
Landlord.....................................................................1
Laws........................................................................29
Lease........................................................................1
Lease Year...................................................................2
Market Rent.................................................................36
Operating Costs..............................................................4
Option......................................................................36
Option Rent.................................................................36
Option Rent Notice..........................................................36
Option Term.................................................................36
Original Tenant.............................................................36
Parking Passes...............................................................2
Partnership Tenant..........................................................34
Permitted Use................................................................2
Premises.....................................................................1
Project......................................................................1
Real Property................................................................4
Representative..............................................................27
Review Period................................................................7
Security Deposit.............................................................2
Square Footage...............................................................1
Statement....................................................................6
Tax Costs....................................................................3
Tenant.......................................................................1
Tenant Improvements.........................................................10
Tenant's Acceptance.........................................................36

<PAGE>

Tenant's Proportionate Share.................................................2
Tenant's Signage............................................................37
Tenant's Work...............................................................10
Term.........................................................................1
Transfer....................................................................18
Transfer Premium............................................................18
Transferee..................................................................18

<PAGE>

                              STANDARD OFFICE LEASE
                              ---------------------

     This  Standard  Office Lease  ("Lease") is made and entered into as of this
18th day of May,  2000,  by and between  ARDEN  REALTY  LIMITED  PARTNERSHIP,  a
Maryland limited partnership ("Landlord"), and E-PERCEPTION TECHNOLOGIES,  INC.,
a Delaware corporation ("Tenant").

     Landlord hereby leases to Tenant and Tenant hereby leases from Landlord the
premises  described as Suite No. 203, as designated on the plan attached  hereto
and incorporated herein as Exhibit "A" ("Premises"),  of the project ("Project")
now  known  as  Tower  Plaza I whose  address  is  27555  Ynez  Road,  Temecula,
California for the Term and upon the terms and conditions hereinafter set forth,
and Landlord and Tenant hereby agree as follows:

                                   ARTICLE I
                                   ---------

                             BASIC LEASE PROVISIONS
                             ----------------------

A.       Term:                              Four (4) years

         Commencement Date:                 June 1, 2000

         Expiration Date:                   May 31, 2004

B.       Square Footage:                    4,011 rentable square feet

C.       Basic Rental:

                            Annual         Monthly        Monthly Basic Rental
            Period       Basic Rental   Basic Rental    Per Rentable Square Foot
            ------       ------------   ------------    ------------------------

          6/1/2000 -      $74,604.60      $6,217.05               $1.55
           5/31/2001

          *6/1/2001 -     $77,011.20      $6,417.60               $1.60
           5/31/2002

         **6/1/2001 -     $79,417.80      $6,618.15               $1.65
           5/31/2003

          6/1/2003 -      $81,824.40      $6,818.70               $1.70
           5/31/2004

*    The Base Rent for the thirteenth  (13th) month of the Lease Term is subject
     to partial abatement pursuant to the terms of Section 3(a) of this Lease.

<PAGE>

**   Subject to the terms and  conditions of Article 4, below,  a portion of the
     Security  Deposit  shall be applied to  Monthly  Basic  Rental for the 25th
     month of the Term.

D.       Base Year:                         2000

E.       Tenant's Proportionate Share:      5.54%

F.       Security Deposit:                  A security  deposit of $13,637.40
                                            shall be due and payable by Tenant
                                            to Landlord upon Tenant's execution
                                            of this Lease.

G.       Permitted Use:                     General office use.

H.       Brokers:                           WestMar Commercial Real Estate

I.       Parking Passes:                    Tenant shall have the use of sixteen
                                            (16)  unreserved parking passes, at
                                            the rate provided in Article 23
                                            hereof.

J.       First Month's Rent:                The first full  month's  rent of
                                            $6,217.05  shall be due and  payable
                                            by Tenant to Landlord  upon Tenant's
                                            execution of this Lease.

                                   ARTICLE II
                                   ----------

                                  TERM/PREMISES
                                  -------------

     The Term of this Lease shall commence on the Commencement Date as set forth
in Article  1.A. of the Basic Lease  Provisions  and shall end on the  Execution
Date set forth in Article  1.A. of the Basic Lease  Provisions.  For purposes of
this Lease, the term "Lease Year" shall mean each consecutive  twelve (12) month
period  during  the Lease  Term,  with the first  Lease Year  commencing  on the
Commencement  Date;  however,  (a) if the Commencement Date falls on a day other
than the first day of a calendar  month,  the first  Lease Year shall end on the
last day of the eleventh (11th) month after the Commencement Date and the second
(2nd) and each succeeding Lease year shall commence on the first day of the next
calendar moth, and (b) the last Lease Year shall end on the Expiration  Date. If
Landlord does not deliver  possession of the Premises to Tenant on or before the
Commencement  Date (as set forth in Article 1.A,  above),  Landlord shall not be
subject to any  liability  for its failure to do so, and such failure  shall not
affect the  validity  of this  Lease nor the  obligations  of Tenant  hereunder,
provided the Tenant shall not be obligated to pay Basic Rental until  possession
of the  Premises  is to be  delivered  to Tenant.  Landlord  and  Tenant  hereby
stipulate  that the  Premises  contains  the number of square feet  specified in
Article  1.B. of the Basic Lease  Provisions.  Landlord  may deliver to Tenant a
Commencement  Letter in a form substantially  similar to that attached hereto as
Exhibit "C",  which Tenant shall execute and return to Landlord  within five (5)
days of receipt  thereof.  Failure of Tenant to timely  execute  and deliver the
Commencement  Letter  shall  constitute   acknowledgement  by  Tenant  that  the
statements included in such notice are true and correct, without exception.

                                       2
<PAGE>

                                  ARTICLE III
                                  -----------

                                     RENTAL
                                     ------

     (a) Basic Rental.  Tenant agrees to pay to Landlord during the Term hereof,
         ------------
at Landlord's  office or to such other person or at such other place as directed
from time to time by written notice to Tenant from Landlord, the initial monthly
and  annual  sums as set forth in  Article  1.C of the Basic  Lease  Provisions,
payable in  advance on the first day of each  calendar  month,  without  demand,
setoff  or  deduction,  and in the event  this  Lease  commences  or the date of
expiration  of this  Lease  occurs  other than on the first day or last day of a
calendar  month,  the rent for such  month  shall be  prorated.  Notwithstanding
anything to the contrary  contained  herein and  provided  that Tenant is not in
default in any of its monetary obligations under this Lease as of the expiration
of the  twelfth  (12th)  month of the  Term,  Landlord  hereby  agrees  to abate
Tenant's  obligation to pay monthly Basic Rental for the thirteenth (13th) month
of the initial Lease Term by fifty percent (50%).  During such abatement period,
Tenant shall still be responsible for the payment of the remaining fifty percent
(50%) of monthly Basic Rental and all of its other  monetary  obligations  under
the  Lease.  In the event of a default  by Tenant  under the terms of this Lease
that results in early termination pursuant to the provisions of Section 20(a) of
this Lease,  then as a part of the recovery of the monthly Basic Rental that was
abated under the  provisions of this Article 3.  Notwithstanding  the foregoing,
the first full month's rent shall be paid to Landlord in accordance with Article
1.J. of the Basic Lease Provisions.

     (b) Increase in Direct Costs.  The term "Base Year" means the calendar year
         ------------------------
set forth in Article  1.D. of the Basic Lease  Provisions.  If, in any  calendar
year during the Term of this Lease, the "Direct Costs" (as hereinafter  defined)
paid or incurred by Landlord  shall be higher than the Direct Costs for the Base
Year,  Tenant shall pay an additional sum for such and each subsequent  calendar
year equal to the  product of the amount set forth in Article  1.E. of the Basic
Lease  Provisions  multiplied by such increased amount of "Direct Costs." In the
event  either the  Premises  and/or the Project is  expanded  or  reduced,  then
Tenant's  Proportionate  Share shall be  appropriately  adjusted,  and as to the
calendar year in which such change occurs, Tenant's Proportionate Share for such
year  shall  be  determined  on the  basis of the  number  of days  during  that
particular  calendar year that such Tenant's  Proportionate Share was in effect.
In the event this Lease shall terminate on any date other than the last day of a
calendar  year,  the  additional  sum  payable  hereunder  by Tenant  during the
calendar year in which this Lease  terminates  shall be prorated on the basis of
the  relationship  which  the  number  of  days  which  have  elapsed  from  the
commencement  of said  calendar  year to and  including  said date on which this
Lease  terminates bears to three hundred  sixty-five  (365). Any and all amounts
due and payable by Tenant  pursuant to Article 3(b), (c) and (d) hereof shall be
deemed  "Additional  Rent" and  Landlord  shall be entitle to exercise  the same
rights and remedies  upon  default in these  payments as Landlord is entitled to
exercise with respect to defaults in monthly Basic Rental payments.

     (c) Definitions.  As used herein the term "Direct Costs" shall mean the sum
         -----------
of the following:

        (i) "Tax  Costs,"  which  shall mean any and all real  estate  taxes and
other similar charges on real property or improvements,  assessments,  water and
sewer  charges,

                                       3
<PAGE>

and all other  charges  assessed,  reassessed  or levied  upon the  Project  and
appurtenances  thereto and the parking or other facilities  thereof, or the real
property thereunder  (collectively the "Real Property") or attributable  thereto
or on the rents,  issues,  profits or income received or derived therefrom which
assessed,  reassessed or levied by the United States, the State of California or
any local government  authority or agency or any political  subdivision thereof,
and shall include  Landlord's  reasonable  legal fees,  costs and  disbursements
incurred in connection  with  proceeding  for reduction of Tax Costs or any part
thereof;  provided,  however,  if at any time  after the date of this  Lease the
methods of taxation now  prevailing  shall be altered so that in lieu of or as a
supplement to or a substitute for the whole or any part of any Tax Costs,  there
shall be assessed,  reassessed  or levied (a) a tax,  assessment,  reassessment,
levy,  imposition  or charge  wholly or  partially  as a net income,  capital or
franchise  levy or otherwise  on the rents,  issues,  profits or income  derived
therefrom,  or (b) a tax,  assessment,  reassessment,  levy  (including  but not
limited to any municipal,  state or federal levy), imposition or charge measured
by or based  in  whole or in part  upon  the  Real  Property  and  imposed  upon
Landlord,  or (c) a license fee measured by the rent  payable  under this Lease,
then all such taxes, assessments, reassessments or levies or the part thereof so
measured or based, shall be deemed to be included in the term "Direct Costs." In
no event shall Tax Costs included in Direct Costs for any year subsequent to the
Base Year be less than the amount of Tax Costs  included in Direct Costs for the
Base Year. In addition,  when  calculating Tax Costs for the Base Year,  special
assessments  shall only be deemed included in Tax Costs for the Base Year to the
extent  that  such  special  assessments  are  included  in Tax  Costs  for  the
applicable subsequent calendar year during the Term. Notwithstanding anything to
the contrary contained in this Section 3(c)(i), there shall be excluded from Tax
Costs (i) all excess profits taxes,  franchise taxes, gift taxes,  capital stock
taxes to the extent  applicable  to Landlord's  general or net income,  (ii) any
items  included as  Operating  Costs,  and (iii) any items paid by Tenant  under
Article 6 of this Lease.

        (ii) "Operating Costs", which shall mean all costs and expenses incurred
by  Landlord  in  connection  with  the  maintenance,   operation,  replacement,
ownership and repair of the Project,  the equipment,  the intrabuilding  network
cable,  adjacent  walks,  malls and  landscaped and common areas and the parking
structure,  areas and facilities of the Project,  including, but not limited to,
salaries,  wages,  medical,  surgical and general  welfare  benefits and pension
payments,   payroll  taxes,   fringe  benefits,   employment   taxes,   workers'
compensation,  uniforms  and dry  cleaning  thereof  for all persons who perform
duties connected with the operation,  maintenance and repair of the Project, its
equipment, the intrabuilding network cable and the adjacent walks and landscaped
areas, including janitorial,  gardening,  security, parking, operating engineer,
elevator, painting, plumbing,  electrical,  carpentry, heating, ventilation, air
conditioning,  window  washing,  hired  services,  a  reasonable  allowance  for
depreciation of the cost of acquiring or the rental expense of personal property
used in the maintenance,  operation and repair of the Project, accountant's fees
incurred in the  preparation of rent  adjustment  statements,  legal fees,  real
estate tax  consulting  fees,  personal  property  taxes on property used in the
maintenance and operation of the Project,  fees, costs, expenses or dues payable
pursuant to the terms of any covenants,  conditions or  restrictions  or owners'
associations pertaining to the Project,  capital expenditures incurred to effect
economies of operation  of, or stability of services to, the Project and capital
expenditures required by government  regulations,  laws, or ordinances in effect
as of the date of this Lease,  including,  but not limited to the Americans with
Disabilities Act; the cost of all charges for electricity,  gas, water and other
utilities furnished to the Project, including any taxes thereon; the cost of all
charges for fire and extended  coverage,  liability and

                                       4
<PAGE>

all  other  insurance  for the  Project  carried  by  Landlord;  the cost of all
building  and  cleaning  supplies  and  materials;  the cast of all  charges for
cleaning,  maintenance and service contracts and other services with independent
contractors and  administrations  fees; a property management fee (which fee may
be imputed if Landlord has internalized  management or otherwise acts as its own
property  manager)  and  license,  permit and  inspection  fees  relating to the
Project.  In the  event,  during any  calendar  year,  the  Project is less than
ninety-five  percent  (95%)  occupied  at all times,  Operating  Costs  shall be
adjusted to reflect  the  Operating  Costs of the Project as though  ninety-five
percent  (95%) were  occupied at all times,  and the increase or decrease in the
sums owed  hereunder  shall be based upon such  Operating  Costs as so adjusted.
Notwithstanding  anything to the contrary set exclude (a) market-wide labor-rate
increases  due to  extraordinary  circumstances  including,  but not limited to,
conservation  surcharges,  boycotts,  embargoes  or  other  shortages,  and  (c)
amortization  of any  capital  items  including,  but not  limited  to,  capital
improvements, capital repairs and capital replacements (including such amortized
costs  where the actual  improvement,  repair or  replacement  was made in prior
years).

     Notwithstanding  anything above to the contrary,  Operating Costs shall not
include (1) the cost of providing  any service  directly to and paid directly by
any tenant (outside of such tenant's Direct Cost payments);  (2) the cost of any
items for which  Landlord is  reimbursed  by  insurance  proceeds,  condemnation
awards, a tenant of the Project,  or otherwise to the extent so reimbursed;  (3)
any real  estate  brokerage  commissions  or other costs  incurred in  procuring
tenants,  or any fee in lieu of commission;  (4)  depreciation,  amortization of
principal and interest on mortgages or ground lease payments (if any); (5) costs
of items considered  capital repairs,  replacements,  improvements and equipment
under generally accepted accounting  principles  consistently  applied except as
expressly  included in Operating  Costs  pursuant to the definition  above;  (6)
costs incurred by Landlord due to the violation by Landlord or any tenant of the
terms and  conditions  of any lease of space in the  Project  or any law,  code,
regulation, ordinance or the like; (7) Landlord's general corporate overhead and
general  and  administrative  expenses;  (8) any  compensation  paid to  clerks,
attendants  or other  persons in  commercial  concessions  operated  by Landlord
(other than in the parking  facility  for the  Project);  (9) costs  incurred in
connection with upgrading the Project to comply with disability,  like, seismic,
fire and safety codes,  ordinances,  statutes,  or other laws in effect prior to
the  Commencement  Date,  including,  without  limitation,  the  ADA,  including
penalties  or  damages  incurred  due to such  non-compliance;  and  (10)  costs
incurred  to (i) comply  with laws  relating  to the  removal of any  "Hazardous
Material,"  as that term is defined in  Article 28 of this  Lease,  which was in
existence  on the  Project  prior to the  Commencement  Date,  and was of such a
nature that a federal, state or municipal governmental authority, if it had then
had  knowledge of the presence of such  Hazardous  Material,  in the state,  and
under the  conditions  that it then  existed  on the  Project,  would  have then
required the removal of such Hazardous material or other remedial or containment
action with respect thereto, and (ii) to remove,  remedy,  contain, or treat any
Hazardous  Material,  which Hazardous Material is brought onto the Project after
the date hereof by Landlord or any other  tenant of the Project and is of such a
nature, at that time, that a federal, state or municipal governmental authority,
if it had then had knowledge of the presence of such Hazardous Material,  in the
state, and under the conditions,  that it then exists on the Project, would have
then  required  the  removal of such  Hazardous  Material  or other  remedial or
containment action with respect thereto.

                                       5
<PAGE>

(d)      Determination of Payment.
         ------------------------

        (i) If for any  calendar  year  ending or  commencing  within  the Term,
Tenant's  Proportionate  Share of Direct  Costs for such  calendar  year exceeds
Tenant's  Proportionate  Share of Direct  Costs for the Base Year,  then  Tenant
shall pay to Landlord,  in the manner set forth in Sections  3(d)(ii) and (iii),
below, and as additional rent, an amount equal to the excess (the "Excess").

        (ii) Landlord shall give Tenant a yearly expense estimate statement (the
"Estimate  Statement") which shall set forth Landlord's reasonable estimate (the
"Estimate")  of what the  total  amount of  Direct  Costs  for the  then-current
calendar  year shall be and the  estimated  Excess (the  "Estimated  Excess") as
calculated by comparing  Tenant's  Proportionate  Share of Direct Costs for such
calendar year, which shall be based upon the Estimate, to Tenant's Proportionate
Share of Direct  Costs for the Base  Year.  The  failure of  Landlord  to timely
furnish the Estimate Statement for any calendar year shall not preclude Landlord
from enforcing its rights to collect any Estimated  Excess under this Article 3.
If pursuant to the Estimate  Statement an Estimated Excess is calculated for the
then-current  calendar  year,  Tenant shall pay,  with its next  installment  of
Monthly  Basic  Rental  due,  a  fraction  of  the  Estimated   Excess  for  the
then-current  calendar  year  (reduced by any amounts paid  pursuant to the last
sentence of this Section  3(d)(ii)).  Such fraction  shall have as its numerator
the number of months  which have elapsed in such  current  calendar  year to the
month of such payment, both months inclusive,  and shall have twelve (12) as its
denominator.  Until a new  Estimate  Statement  is  furnished,  Tenant shall pay
monthly,  with  the  Monthly  Basic  Rental  installments,  an  amount  equal to
one-twelfth  (1/12)  of the total  Estimated  Excess  set forth in the  previous
Estimate Statement delivered by Landlord to Tenant.

        (iii) In  addition,  Landlord  shall  endeavor  to give to  Tenant on or
before  the  first  day of April  following  the end of each  calendar  year,  a
statement  (the  "Statement")  which  shall state the Direct  Costs  incurred or
accrued for such  preceding  calendar year, and which shall indicate the amount,
if any, of the Excess.  Upon receipt of the  Statement  for each  calendar  year
during the Term, if amounts paid by Tenant as Estimated Excess are less than the
actual  Excess as specified on the  Statement,  Tenant shall pay,  with its next
installment  of Monthly Basic Rental due, the full amount of the Excess for such
calendar  year,  less the  amounts,  if any,  aid during such  calendar  year as
Estimated  Excess.  If,  however,  the Statement  indicates that amounts paid by
Tenant as Estimated  Excess are greater  than the actual  Excess as specified on
the  Statement,  such  overpayment  shall  be  credited  against  Tenant's  next
installments of Estimated Excess.  The failure of Landlord to timely furnish the
Statement for any calendar year shall not prejudice  Landlord from enforcing its
rights  under this  Article 3. Even  though the Term has  expired and Tenant has
vacated  the  Premises,  when  the  final  determination  is  made  of  Tenant's
Proportionate  Share of the  Direct  Costs for the  calendar  year in which this
Lease terminates,  if (a) an Excess is present,  Tenant shall immediately pay to
Landlord an amount as  calculated  pursuant to the  provisions  of this  Article
3(d), or (b) such final  determination  indicates that amounts paid by Tenant as
Estimated  Excess are greater  than the actual  Excess for such  calendar  year,
Landlord  shall refund such  overpayment  to Tenant within sixty (60) days after
Landlord's delivery of the final  determination.  The provisions of this Section
3(d)(iii) shall survive the expiration or earlier termination of the Term.

                                       6
<PAGE>

        (iv) Within one hundred  twenty (120) days after  receipt of a Statement
by Tenant  ("Review  Period"),  if Tenant  disputes  the amount set forth in the
Statement,  Tenant's  employees or an independent  certified  public  accountant
(which  accountant  is  a  member  of  a  nationally  or  regionally  recognized
accounting  firm and is hired on a  non-contingency  fee basis),  designated  by
Tenant,  may,  after  reasonable  notice to Landlord  and at  reasonable  times,
inspect  Landlord's records at Landlord's  offices,  provided that Tenant is not
then  in  default  after  expiration  of  all  applicable  cure  periods  of any
obligation under this Lease (including,  but not limited to , the payment of the
amount in dispute)  and  provided  further that Tenant and such efforts to cause
their respective agents and employees to, maintain all information  contained in
Landlord's records in strict confidence.  Notwithstanding the foregoing,  Tenant
shall only have the right to review  Landlord's  records one (1) time during any
twelve (12) month period.  Tenant's  failure to dispute the amounts set forth in
any Statement  within the Review Period shall be deemed to be Tenant's  approval
of such Statement and Tenant, thereafter, waives the right or ability to dispute
the amounts set forth in such Statement.  If after such  inspection,  but within
thirty (30) days after the Review Period,  Tenant  notifies  Landlord in writing
that Tenant still disputes such amounts, a certification as to the proper amount
shall be made in accordance with Landlord's  standard accounting  practices,  at
Tenant's  expenses,  by an independent  certified public accountant  selected by
Landlord and who is a member of a nationally or regionally recognized accounting
firm, which  certification  shall be binding upon Landlord and Tenant.  Landlord
shall  cooperate in good faith with Tenant and the accountant to show Tenant and
the  accountant the  information  upon which the  certification  is to be based.
However,  if such  certification by the accountant  proves that the Direct Costs
set forth in the Statement were overstated by more than ten percent (10%),  then
the cost of the accountant and the cost of such certification  shall be paid for
by Landlord.  Promptly following the parties receipt of such certification,  the
parties shall make such appropriate payments or reimbursements,  as the case may
be, to each other, as are determined to be owing pursuant to such certification.
Tenant agrees that this section shall be the sole method to be used by Tenant to
dispute the amount of any Direct Costs  payable by Tenant  pursuant to the terms
of this Lease,  and Tenant  hereby  waives any other  rights at law or in equity
relating thereto.

        (v) If the  Project  is a part of a  multi-building  development,  those
Direct Costs  attributable to such development as a whole ( and not attributable
solely to any individual building therein) shall be allocated by Landlord to the
Project and to the other  buildings  within  such  development  on an  equitable
basis.

                                   ARTICLE IV
                                   ----------

                                SECURITY DEPOSIT
                                ----------------

         Tenant has deposited with Landlord the sum set forth in Article 1.F. of
the Basic Lease Provisions as security for the full and faithful  performance of
every provision of this Lease to be performed by Tenant.  If Tenant breaches any
provision  of this  Lease,  including  but not  limited to the  payment of rent,
Landlord may use all or any part of this security deposit for the payment of any
rent or any other sums in default,  or to compensate Landlord for any other loss
or damage  which  Landlord  may  suffer by reason of  Tenant's  default.  If any
portion of said  deposit is so used or applied,  Tenant  shall,  within ten (10)
days after  written  demand  therefore,  deposit cash with Landlord in an amount
sufficient to restore the security deposit to its original amount.

                                       7
<PAGE>

Tenant agrees that Landlord  shall not be required to keep the security  deposit
in trust,  segregated it or keep it separate from  Landlord's  general funds but
Landlord may  commingle  the security  deposit with its general funds and Tenant
shall not be entitle to interest on such  deposit.  Notwithstanding  anything to
the  contrary  contained  in this  Article 4, in the event that  Tenant,  at the
expiration of the  twenty-fourth  (24th) month of the initial Lease Term, is not
then in default of any of its monetary  obligations  under this Lease,  Landlord
shall  reduce the amount of the  Security  Deposit by the amount of the  Monthly
Basic  Rental due and payable to Landlord for the  twenty-fifth  (25th) month of
the  initial  Lease  Term,  and  provided  there  exists  no  default  by Tenant
hereunder,  the  security  deposit or any balance  thereof  shall be returned to
Tenant  (or,  at  Landlord's  option,  to  Tenant's  assignee),   provided  that
subsequent  to the  expiration  of this  Lease,  Landlord  may retain  from said
security  deposit  (i) an  amount  reasonably  estimated  by  Landlord  to cover
potential Direct Cost  reconciliation  payments due with respect to the calendar
year in which this Lease  terminates or expires  (such amount so retained  shall
not, in any event,  exceed ten percent  (10%) of estimated  Direct Cost payments
due from Tenant for such calendar year through the date of expiration or earlier
termination  of this Lease and any amounts so  retained  and not applied to such
reconciliation  shall be  returned  to Tenant  within  thirty  (30)  days  after
Landlord's  delivery of the Statement for such calendar year),  (ii) any and all
amounts  reasonably  estimated by Landlord to cover the anticipated  costs to be
incurred by Landlord to remove any signage  provided to Tenant  under this Lease
and to repair any damage caused by such removal (in which case any excess amount
so  retained by Landlord  shall be  returned to Tenant  within  thirty (30) days
after such removal and repair) and (iii) any and all amounts permitted by law or
this  Article 4. Tenant  herby waives the  provisions  of Section  1950,7 of the
California  Civil Code and all other  provisions  of law,  now or  hereafter  in
effect, which provide that Landlord may claim from a security deposit only those
sums  reasonably  necessary to remedy defaults in the payment of rent, to repair
damage caused by Tenant or to clean the Premises,  it being agreed that Landlord
may, in  addition,  claim those sums  specified  in this  Article 4 above and/or
those sums  reasonably  necessary to  compensate  Landlord for any other loss or
damage, foreseeable or unforeseeable,  caused by the acts or omissions of Tenant
or any officer, employee, agent, contractor or invitee of Tenant.

                                   ARTICLE V
                                   ---------

                                  HOLDING OVER
                                  ------------

     Should  Tenant,   without  Landlord's  written  consent,  hold  over  after
termination  of this Lease,  Tenant  shall  become a tenant from month to month,
only upon each and all of the terms herein  provided as may be  applicable  to a
month to month  tenancy  and any such  holding  over  shall  not  constitute  an
extension of this Lease.  During such holding over, Tenant shall pay in advance,
monthly,  Basic Rental at two hundred  percent  (200%) of the rate in effect for
the last month of the Term of this Lease,  in  addition  to, and not in lieu of,
all other  payments  required to be made by Tenant  hereunder  including but not
limited to Tenant's Proportionate Share of any increase in Direct Costs. Nothing
contained  in this  Article 5 shall be  construed  as consent by Landlord to any
holding over of the  Premises by Tenant,  and  Landlord  expressly  reserves the
right to require  Tenant to surrender  possession of the Premises to Landlord as
provided in this Lease upon the  expiration or earlier  termination of the Term.
If Tenant fails to surrender the Premises upon the  expiration or termination of
this Lease,  Tenant agrees to indemnify,  defend and hold Landlord harmless from
all costs, loss, expenses or liability, including without

                                       8
<PAGE>

limitation,  claims made by any succeeding tenant and real estate brokers claims
and attorney's fees and costs.

                                   ARTICLE VI
                                   ----------

                             PERSONAL PROPERTY TAXES
                             -----------------------

     Tenant  shall pay,  prior to  delinquency,  all taxes  assessed  against or
levied  upon  trade  fixtures,  furnishings,  equipment  and all other  personal
property of Tenant located in the Premises.  In the event any or all of Tenant's
trade  fixtures,  furnishings,  equipment and other  personal  property shall be
assessed  and taxed with  property of  Landlord,  or if the cost or value of any
leasehold  improvements  in  the  Premises  exceeds  the  cost  or  value  of  a
Project-standard  buildout  as  determined  by Landlord  and, as a result,  real
property  taxes for the Project are  increased,  Tenant  shall pay  Landlord its
share of such taxes within ten (10) days after delivery to Tenant by Landlord of
a statement  in writing  setting  forth the amount of such taxes  applicable  to
Tenant's property or above-standard improvements. Tenant shall assume and pay to
Landlord  at the time of paying  Basic  Rental any  excise,  sales,  use,  rent,
occupancy, garage, parking, gross receipts or other taxes (other than net income
taxes)  which may be imposed on or on account of letting of the  Premises or the
payment of Basic  Rental or any other sums due or payable  hereunder,  and which
Landlord  may be  required  to pay or  collect  under  any law now in  effect or
hereafter  enacted.  Tenant shall pay  directly to the party or entity  entitled
thereto all business  license fees,  gross  receipts taxes and similar taxes and
impositions  which  may from time to time be  assessed  against  or levied  upon
Tenant, as and when the same become due and before delinquency.  Notwithstanding
anything to the contrary contained herein, any sums payable by Tenant under this
Article 6 shall not be included in the computations of "Tax Costs."

                                  ARTICLE VII
                                  -----------

                                       USE
                                       ---

     Tenant  shall use and  occupy  the  Premises  only for the use set forth in
article  1.G.  of the Basic  Lease  Provisions  and shall not use or occupy  the
Premises or permit the same to be used or occupied for any other purpose without
the prior written consent of Landlord, which consent may be given or withheld in
Landlord's sole and absolute discretion,  and Tenant agrees that it will use the
Premises in such a manner so as not to interfere  with or infringe the rights of
other  tenants  in the  Project.  Tenant  shall,  at its sole cost and  expense,
promptly comply with all laws, statutes, ordinances and governmental regulations
or  requirements  now in force or which may hereafter be in force relating to or
affecting  (i) the  condition,  use or  occupancy of the Premises or the Project
excluding  structural changes to the Project not related to Tenant's  particular
use of the  Premises,  and (ii)  improvements  installed or  constructed  in the
Premises  by or for the benefit of Tenant.  Tenant  shall not do or permit to be
done  anything  which  would  invalidate  or  increase  the cost of any fire and
extended  coverage  insurance  policy  covering the Project  and/or the property
located therein and Tenant shall comply with all rules, orders,  regulations and
requirements  of any  organization  which sets out  standards,  requirements  or
recommendations  commonly  referred  to by major  fire  insurance  underwriters.
Tenant shall promptly upon demand reimburse  Landlord for any additional premium
charges  for any such  insurance  policy  assessed  or  increased  by  reason of
Tenant's failure to comply with the provisions of this Article.

                                       9
<PAGE>

                                  ARTICLE VIII
                                  ------------

                              CONDITION OF PREMISES
                              ---------------------

     Subject  to  Landlord's  review  and  approval  of (a) the paint and carpet
selected by Tenant and (b) the  contractors  retained by Tenant to install  such
paint and carpet,  Tenant  shall be entitle to repaint the painted  walls in the
Premises and re-carpet the Premises  (collectively,  "Tenant's Work").  Landlord
shall allow Tenant to access to the  Premises  beginning on May 22, 2000 for the
purpose  of Tenant  performing  such  Tenant's  Work in the  Premises.  Prior to
Tenant's  entry into the  Premises as  permitted by the terms of this Article 8,
Tenant shall  submit a schedule to  Landlord,  for  Landlord's  approval,  which
schedule  shall  detail the timing and purpose of Tenant's  entry.  Tenant shall
hold Landlord  harmless from and indemnify,  protect and defend Landlord against
any loss or damage to the Project or Premises and against  injury to any persons
caused by Tenant's  actions  pursuant  to this  Article 8. In  addition,  Tenant
hereby  acknowledges  that Tenant may perform Tenant's Work during the Term, and
that  Tenant  shall not be deemed  constrictively  evicted  nor shall  Tenant be
entitled to any abatement of rent due to any interference with Tenant's business
and/or  operations  resulting from the  performance  of Tenant's Work.  Landlord
shall reimburse  Tenant for costs incurred in connection with the performance of
Tenant's  Work up to One Thousand  Dollars  ($1,000.00)  within thirty (30) days
after Landlord's receipt of an invoice therefore.  Tenant hereby agrees that the
Premises shall be taken "as is", "with all faults", "without any representations
or warranties",  and Tenant hereby agrees and warrants that it has  investigated
and inspected the  conditions  of the Premises and the  suitability  of same for
Tenant's  purposes,  and Tenant does hereby waive and disclaim any objection to,
cause of action based upon, or claim that its  obligations  hereunder  should be
reduced or limited  because of the  conditions of the Premises or the Project or
the suitability of same for Tenant's purposes.  Tenant acknowledges that neither
Landlord nor any agent nor any employee of Landlord has made any representations
or warranty  with  respect to the Premises or the Project or with respect to the
suitability of either for the conduct of Tenant's  business and Tenant expressly
warrants and represents  that Tenant has relied solely on its own  investigation
and  inspection  of the  Premises  and the Project in its decision to enter into
this Lease and let the Premises in an "As Is" condition.  The existing leasehold
improvements  in the  Premises  as of the  date of  this  Lease,  together  with
Tenant's  Work  pursuant  to the  first  sentence  of  this  Article  8,  may be
collectively  referred  to herein as the  "Tenant  Improvements."  The taking of
possession  of the  Premises by Tenant  shall  conclusively  establish  that the
Premises  and the Project  were at such time in  satisfactory  condition  latent
defects excepted. Tenant hereby waives subsection 1 of Section 1932 and Sections
1941 and 1942 of the Civil Code of California or any successor provision of law.

     Landlord  reserves  the right from time to time,  but subject to payment by
and/or  reimbursement  from Tenant as otherwise  provided herein: (i) to install
use, maintain,  repair,  replace and relocate for service to the Premises and/or
other parts of the Projects pipes, ducts, conduits, wires, appurtenant fixtures,
and mechanical systems, wherever located in the Premises or the Project, (ii) to
alter,  close or relocate  any  facility in the  Premises or the Common Areas or
otherwise  conduct any of the above activities for the purpose of complying with
a general plan for  fire/life  safety for the Project or otherwise  and (iii) to
comply with any federal,  state or local law, rule or order with respect thereto
or the  regulation  thereof not currently in effect.  Landlord  shall attempt to
perform any such work with the least inconvenience to Tenant as possible, but in

                                       10
<PAGE>

not event shall  Tenant be permitted to withhold or reduce Basic Rental or other
charges  due  hereunder  as a result of same,  make any  claim for  constructive
eviction  or  otherwise  make  claim  against   Landlord  for   interruption  or
interference with Tenant's business and/or operations.

                                   ARTICLE IX
                                   ----------

                             REPAIRS AND ALTERATIONS
                             -----------------------

     Landlord shall maintain the  structural  portions of the Project  including
the  foundation,  floor/ceiling  slabs,  roof,  curtain  wall,  exterior  glass,
columns, beams, shafts, stairs,  stairwells,  elevator cabs and common areas and
shall also maintain and repair the basic  mechanical,  electrical,  life safety,
plumbing,  sprinkler  systems  and  heating,  ventilating  and air  conditioning
systems.  Except as expressly provided as Landlord's  obligation in this Article
9, Tenant shall keep the Premises in good  condition  and repair.  All damage or
injury to the Premises or the Project  resulting  from the act or  negligence of
Tenant,  its employees,  agents or visitors,  guests invitees or licensees or by
the use of the Premises shall be promptly  repaired by Tenant,  at its sole cost
and expense, to the satisfaction of Landlord; provided, however, that for damage
to the Project as a result of  casualty  or for any repairs  that may impact the
mechanical,  electrical,  plumbing,  heating,  ventilation  or  air-conditioning
systems of the Project,  Landlord shall have the right (but not the  obligation)
to select the  contractor  and oversee all such  repairs.  Landlord may make any
repairs which are not promptly made by Tenant after Tenant's  receipt of written
notice and the reasonable  opportunity of Tenant to make said repair within five
(5) business days from receipt of said written notice, and charge Tenant for the
cost  thereof,  which  cost  shall be paid by Tenant  within  five (5) days from
invoice from Landlord.  Tenant shall be responsible  for the design and function
of all  non-standard  improvements of the Premises,  whether or not installed by
Landlord at Tenant's  request.  Tenant  waives all rights to make repairs at the
expense of Landlord,  or to deduct the cost thereof from the rent.  Tenant shall
make no  alterations,  changes or additions in or to the Premises  (collectively
"Alterations")  without  Landlord's  prior  written  consent,  and then  only by
contractors  or mechanics  approved by Landlord in writing and upon the approval
by  Landlord  in  writing  of  fully   detailed   and   dimensioned   plans  and
specifications  pertaining to the  Alterations  in question,  to be prepared and
submitted by Tenant at its sole cost and expense.  Tenant shall at its sole cost
and  expense  obtain all  necessary  approvals  and  permits  pertaining  to any
Alterations  approved by Landlord.  Tenant shall construct such Alterations in a
good and workmanlike manner, in conformance with all applicable federal,  state,
county and municipal laws, rules, and regulations,  pursuant to a valid building
permit,  and in conformance with Landlord's  construction rules and regulations.
If Landlord,  in approving any  Alterations,  Tenant shall provide Landlord with
evidence  that  Tenant  carries  "Builder's  All  Risk"  insurance  in an amount
approved by Landlord  covering the  construction of such  Alterations,  and such
other insurance as Landlord may reasonably require, it being understood that all
such  Alterations,  shall be  insured by Tenant  pursuant  to Article 14 of this
Lease  immediately  upon completion  thereof.  In addition,  Landlord may in its
discretion,  require  Tenant  to  obtain  a lien  and  completion  bond  or some
alternate form of security  satisfactory to Landlord in an amount  sufficient to
ensure the lien free  completion of such  Alterations  and naming  Landlord as a
co-obligee.  If permitted  Alterations  are made, they shall be made at Tenant's
sole cost and expense and shall be and become the property of  Landlord,  except
that Landlord  may, by written  notice to Tenant given at least thirty (30) days
prior to the end of the Term,  require Tenant as Tenant's  expense to remove all
partitions, counters, railings and other Alterations installed by Tenant, and to
repair any

                                       11
<PAGE>

damages to the Premises caused by such removal.  Any and all costs  attributable
to or related to having  jurisdiction  over the Project)  arising from  Tenant's
plans, specifications,  improvements,  alterations or otherwise shall be paid by
Tenant at its sole cost and expense. With regard to repairs,  Alterations or any
other work arising from or related to this Article 9, Landlord shall be entitled
to receive  an  administrative/supervision  fee (which fee shall vary  depending
upon whether or not Tenant  orders the work  directly from Landlord but shall in
no event  exceed  three  percent  (3%) of the cost of such work)  sufficient  to
compensate Landlord for all overhead,  general conditions,  fees and other costs
and expenses arising from Landlord's involvement with such work.

                                    ARTICLE X
                                    ---------

                                      LIENS
                                      -----

     Tenant shall keep the  Premises  and the Project  free from any  mechanics'
liens,  vendors  liens or any other  liens  arising  out of any work  performed,
materials  furnished or  obligations  incurred by Tenant,  and agrees to defend,
indemnify and hold harmless  Landlord from and against any such lien or claim or
action  thereon,  together  with costs of suit and  reasonable  attorney's  fees
incurred  by  Landlord  in  connection  with any such  claim or  action.  Before
commencing  any work of  alteration,  addition or  improvement  to the Premises,
Tenant shall give  Landlord at least ten (10) business  days' written  notice of
the Proposed  commencement  of such work (to afford  Landlord an  opportunity to
post appropriate notices of  non-responsibility).  In the event that there shall
be  recorded  against the  Premises or the Project or the  property of which the
Premises  is a part any claim or lien  arising  out of any such work  performed,
materials  furnished  or  obligations  incurred by Tenant and such claim or lien
shall not be removed  or  discharged  within  ten (10) days of filing,  Landlord
shall  have the  right but not the  obligation  to pay and  discharge  said lien
without  regard to  whether  such lien  shall be lawful or correct or to require
that Tenant deposit with Landlord in cash, lawful money of the United States, on
hundred  fifty  percent  (150%) of the  amount of such  claim,  which sum may be
retained by Landlord until such claim shall have been removed of record or until
judgment  shall have been  rendered on such claim and such  judgment  shall have
become final,  at which time Landlord shall have the right to apply such deposit
in discharge of the judgment on said claim and any costs,  including  attorney's
fees and costs  incurred by  Landlord,  and shall  remit the balance  thereof to
Tenant.

                                   ARTICLE XI
                                   ----------

                                PROJECT SERVICES
                                ----------------

     (a) Landlord agrees to furnish to the Premises, at a cost to be included in
Operating  Costs,  from 8:00 a.m. to 6:00 p.m.  Mondays through Fridays and 9:00
a.m. to 1:00 p.m. on  Saturdays,  excepting  local and  national  holidays,  air
conditioning  and heat all in such  reasonable  quantities as in the judgment of
Landlord is reasonably necessary for the comfortable  occupancy of the Premises.
In addition,  Landlord shall provide  electric  current for normal  lighting and
normal  office  machines,  elevator  service  and water on the same floor as the
Premises for lavatory and drinking purposes in such reasonable  quantities as in
the reasonable  judgment of Landlord is reasonably  necessary for general office
use.  Janitorial and  maintenance  services shall be furnished five (5) days per
week, excepting local and national holidays.  Tenant

                                       12
<PAGE>

shall  comply  with all rules and  regulations  which  Landlord  may  reasonably
establish  for the proper  functioning  and  protection  of the common  area air
conditioning,  heating,  elevator,  electrical  intrabuilding  network cable and
plumbing  systems.  Landlord shall not be liable for, and there shall be no rent
abatement as a result of, any stoppage,  reduction or  interruption  of any such
services caused by governmental rules, regulations or ordinances,  riot, strike,
labor disputes, breakdowns,  accidents, necessary repairs or other cause. Except
as  specifically  provided  in this  Article  11,  Tenant  agrees to pay for all
utilities and other services utilized by Tenant and additional building services
furnished to Tenant not uniformly furnished to all tenants of the Project at the
rate generally charged by Landlord to tenants of the Project.

     (b) Tenant will not,  without  prior written  consent of Landlord,  use any
apparatus or device in the Premises which will in any way increase the amount of
electricity  of water  usually  furnished or supplied for use of the Premises as
general office space;  nor connect any  apparatus,  machine or device with water
pipes or electric  current (except through  existing  electrical  outlets in the
Premises), for the purpose of using electric current or water.

     (c) If Tenant  shall  require  electric  current  in  excess of that  which
Landlord is obligated to furnish under  Article 11(a) above,  Tenant shall first
obtain the written  consent of Landlord,  which  Landlord may refuse in its sole
and absolute  discretion,  to the use thereof and Landlord may cause an electric
current  meter or submeter to be installed in the Premises to measure the amount
of such excess electric current consumed by Tenant in the Premises.  The cost of
any such meter and of installation, maintenance and repair thereof shall be paid
for by  Tenant  and  Tenant  agrees to pay to  Landlord,  promptly  upon  demand
therefore by Landlord, for all such excess electric current consumed by any such
use as shown by said meter at the rates  charged for such service by the city in
which the Project is located or the local  public  utility,  as the case may be,
furnishing the same, plus any additional expense incurred by Landlord in keeping
account of the electric current so consumed.

     (d) If any lights,  machines  or  equipment  (including  but not limited to
computers)  are used by Tenant  in the  Premises  which  materially  affect  the
temperature  otherwise  maintained by the air conditioning  system,  or generate
substantially  more heat in the Premises that would be generated by the building
standard  lights and usual office  equipment,  Landlord  shall have the right to
install any machinery and equipment which Landlord reasonably deems necessary to
restore temperature  balance,  including but not limited to modifications to the
standard air conditioning equipment, and the cost thereof, including the cost of
installation  and any additional  cost of operation and  maintenance  occasioned
thereby,  shall be paid by Tenant to Landlord upon demand by Landlord.  Landlord
shall not be liable under any circumstances for loss of or injury to property or
injury to, or interference with, Tenant's business  (including,  but not limited
to,  loss of  profits),  however  occurring,  through or in  connection  with or
incidental  to failure to furnish any of the services or utilities  specified in
this Article 11.

     (e) If Tenant requires heating,  ventilation and/or air conditioning during
times other than the times  provide in Article 11 (a) above,  Tenant  shall give
Landlord such advance notice as Landlord shall reasonably  require and shall pay
Landlord's standard charge for such after-hours use.

                                       13
<PAGE>

     (f) Landlord may impose a reasonable  charge for any  utilities or services
(other than electric  current and heating,  ventilation  and/or air conditioning
which shall be governed by Articles  11(c) and (e) above)  utilized by Tenant in
excess of the amount or type that Landlord reasonably  determines is typical for
general office use.

                                  ARTICLE XII
                                  -----------

                               RIGHTS OF LANDLORD
                               ------------------

     Landlord  and its agents  shall have the right to enter the Premises at all
reasonable  times  for the  purpose  of  cleaning  the  Premises,  examining  or
inspecting the same,  serving or posting and keeping  posted thereon  notices as
provided  by law,  or which  Landlord  deems  necessary  for the  protection  of
Landlord or the Property,  showing the same to prospective  tenants,  lenders or
purchasers  of the  Project,  in the case of an  emergency,  and for making such
alterations,  repairs,  improvements  or  additions  to the  Premises  or to the
Project as Landlord  may deem  necessary  or  desirable.  If Tenant shall not be
personally  present to open and permit an entry  into the  Premises  at any time
when such an entry by landlord is necessary or permitted hereunder, Landlord may
enter by means of a master  key or may  enter  forcibly,  only in the case of an
emergency, without liability to Tenant and without affecting this Lease.

                                  ARTICLE XIII
                                  ------------

                 INDEMNITY; EXEMPTION OF LANDLORD FROM LIABILITY
                 -----------------------------------------------

     (a) Indemnity.  Tenant shall indemnify,  defend and hold Landlord  harmless
         ---------
from any and all claims arising from Tenant's use of the Premises or the Project
or from the conduct of its  business or from any  activity,  work or thing which
may be  permitted  or suffered by Tenant in or about the Premises or the Project
and shall further indemnify,  defend and hold Landlord harmless from and against
any and all claims arising from any breach or default in the  performance of any
obligation on Tenant's part to be performed under this Lease or arising from any
negligence or willful  misconduct  of Tenant or any of its agents,  contractors,
employees or invitees, patrons, customers or members in or about the Project and
from any and all costs,  attorney's  fees and costs,  expenses  and  liabilities
incurred  in the  defense  of any  claim or any  action  or  proceeding  brought
thereon,  including negotiations in connection therewith.  Tenant hereby assumes
all risk of damage to  property  or injury to persons  in or about the  Premises
form any cause,  and Tenant hereby waives all claims in respect  thereof against
Landlord, excepting where the damages is caused solely by the gross negligence r
willful misconduct of Landlord or its agent.

     (b) Exemption of Landlord from Liability.  Landlord shall not be liable for
         ------------------------------------
injury  to  Tenant's  business,  or loss of  income  therefrom,  or,  except  in
connection with damage or injury  resulting from the gross negligence or willful
misconduct  of  Landlord,  or its  authorized  agents  for  damage  that  may be
sustained by the person,  goods,  wares,  merchandise or property of Tenant, its
employees,  invitees, customers, agents, or contractors, or any other person, on
or about the Premises  directly or indirectly  caused by or resulting from fire,
steam, electricity,  gas, water, or rain which may leak or flow from or into any
part of the  Premises,  or from  the  breakage,  leakage,  obstruction  or other
defects of the pipes, sprinklers, wires, appliances,

                                       14
<PAGE>

plumbing,  air conditioning,  light fixtures or mechanical or electrical systems
or from intrabuilding  network cable, whether such damage or injury results from
conditions  arising upon the  Premises or upon other  portions of the Project or
from other sources or places and  regardless of whether the cause of such damage
or injury or the means of repairing the same is inaccessible to Tenant. Landlord
shall not be liable to Tenant for any damages arising from any act or neglect of
any other tenant of the building.

     Tenant  acknowledges  that  Landlord  `s  election  to  provide  mechanical
surveillance  or to post  security  personnel  in the  Project is solely  within
Landlord `s discretion;  Landlord shall have no liability in connection with the
decision  whether or not to provide such  services and Tenant  hereby waives all
claims  based  thereon.  Landlord  shall not be liable  for losses due to theft,
vandalism, or like causes.

                                   ARTICLE XIV
                                   -----------

                                    INSURANCE
                                    ---------

     (a) Tenant's Insurance.  Tenant, shall at all times during the Term of this
         ------------------
Lease,  and at its own cost and  expense,  procure  and  continue  in force  the
following insurance coverage:  (i) Commercial General Liability Insurance with a
combined  single limit for bodily  injury and property  damages of not less than
Two Million  Dollars  ($2,000,000)  per  occurrence  and Three  Million  Dollars
($3,000,000) in the annual aggregate,  including  products liability coverage if
applicable,  covering the insuring  provisions of this Lease and the performance
of Tenant of the indemnity and exemption of Landlord from  liability  agreements
set forth in  Article  13  hereof;  (ii) a policy  of  standard  fire,  extended
coverage  and special  extended  coverage  insurance  (all  risks),  including a
vandalism and malicious  mischief  endorsement  and sprinkler  leakage  coverage
where sprinklers are provided in an amount equal to the full  replacement  value
new  without  deduction  for  depreciation  of  all  (A)  Tenant   Improvements,
Alterations,  fixtures  and other  improvements  in the  Premises  and (B) trade
fixtures,  furniture,  equipment and other personal property  installed by or at
the expense of Tenant; (iii) Worker `s Compensation coverage as required by law;
and (iv)  business  interruption,  loss of income  and extra  expense  insurance
covering failure of Tenants telecommunications  equipment and covering all other
perils,  failures or  interruptions.  Tenant shall carry and maintain during the
entire Lease Term  (including any option periods,  if applicable),  at Tenant `s
sole cost and expense, increased amounts of the insurance required to be carried
by  Tenant  pursuant  to this  Article  14 and such  other  reasonable  types of
insurance  coverage  and in such  reasonable  amounts  covering the Premises and
Tenant `s operations therein, as may be reasonably required by Landlord, so long
as  such  increased  amounts  and  other  types  of  insurance  are  then  being
customarily  required by  landlords  of  comparable  buildings.  Notwithstanding
anything to the contrary  contained  herein,  the  Original  Tenant (and not any
assignee,  subtenant or other transferee) may, subject to the provisions of this
Section 14(a),  fulfill its insurance  obligations under Section 14(a)(iv) above
by self-insurance. Any self-insurance so maintained by Tenant shall be deemed to
contain all of the terms and conditions applicable to such insurance as required
in  this  Article  14,  including,   without  limitation,  a  deemed  waiver  of
subrogation;  consequently,  Landlord shall be treated, for all purposes,  as if
Tenant had actually  purchased  such  insurance  from a third  party.  If Tenant
elects to so self-insure,  then with respect to any claims which may result from
incidents occurring during the Lease Term, such self-insurance  obligation shall
survive the  expiration or

                                       15
<PAGE>

earlier  termination of this Lease to the same extent as the insurance  required
hereunder would survive.

     (b) Form of Policies.  The  aforementioned  minimum  limits of policies and
         ----------------
Tenant`s  procurement  and  maintenance  thereof  shall  in no event  limit  the
liability of Tenant  hereunder;  provided that  notwithstanding  the  foregoing,
nothing contained herein shall be construed to nullify the provisions of Section
14(d) hereof.  The  Commercial  General  Liability  Insurance  policy shall name
Landlord,  Landlord `s property  manager,  Landlord `s lender(s)  and such other
persons or firms as Landlord specifies from time to time, as additional insureds
with an appropriate  endorsement to the policy(s).  All such insurance  policies
carried  by  Tenant  shall be with  companies  having a rating  of not less than
A-VIII in Best `s Insurance  Guide.  Tenant shall furnish to Landlord,  from the
insurance companies,  or cause the insurance companies to furnish,  certificates
of  coverage.  No such policy  shall be  cancelable  or subject to  reduction of
coverage or other  modification  or  cancellation  except after thirty (30) days
prior  written  notice to Landlord by the insurer.  All such  policies  shall be
endorsed  to agree  that  Tenant  `s policy is  primary  and that any  insurance
carried by Landlord  is excess and not  contributing  with any Tenant  insurance
requirement  hereunder.  Tenant  shall,  at least  twenty (20) days prior to the
expiration of such policies,  furnish Landlord with renewals or binders.  Tenant
agrees that if Tenant does not take out and maintain  such  insurance or furnish
Landlord with  renewals or binders,  Landlord may (but shall not be required to)
procure said  insurance on Tenant `s behalf and charge  Tenant the cost thereof,
which amount  shall be payable by Tenant upon demand with  interest (at the rate
set forth in Section 20(e) below) from the date such sums are  extended.  Tenant
shall have the right to provide  such  insurance  coverage  pursuant  to blanket
policies  obtained by Tenant,  provided such blanket  policies  expressly afford
coverage to the Premises and to Tenant as required by this Lease.

     (c)  Landlord's  Insurance.  Landlord  shall,  as a cost to be  included in
          ---------------------
Operating  Costs,  procure  and  maintain  at all times  during the Term of this
Lease, a policy or policies of insurance  covering loss or damage to the Project
in the amount of the full replacement  costs without deduction for depreciations
thereof (exclusive of Tenant's trade fixtures,  inventory, personal property and
equipment),   providing  protection  against  all  perils  included  within  the
classification of fire and extended  coverage,  vandalism coverage and malicious
mischief,  sprinkler  leakage,  water damage,  and special extended  coverage on
building.  Additionally,  Landlord may (but shall not be required to) carry: (i)
Bodily Injury and Property Damage  Liability  Insurance  and/or Excess Liability
Coverage Insurance; and (ii) Earthquake and/or Flood Damage Insurance; and (iii)
Rental  Income  Insurance at its election or if required by its lender from time
to time  during  the Term  hereof,  in such  accounts  and with  such  limits as
Landlord or its lender may deem  appropriate.  The costs of such insurance shall
be included in Operating Costs.

     (d) Waiver of  Subrogation.  Landlord  and Tenant  each agree to have their
         ----------------------
respective  insurers  issuing the  insurance  described  in Sections  14(a)(ii),
14(a)(iv)  and  the  first  sentence  of  Section  14(c)  waive  any  rights  of
subrogation that such companies may have against the other party.  Tenant hereby
waives any right that  Tenant may have  against  Landlord  and  Landlord  hereby
waives any right that  Landlord may have against  Tenant as a result of any loss
or damage to the extent such loss or damage is insurable under such policies.

                                       16
<PAGE>

     (e)  Compliance  with Law.  Tenant  agrees  that it will not,  at any time,
          --------------------
during the Term of this  Lease,  carry any stock of goods or do  anything  in or
about the  Premises  that will in any way tend to increase the  insurance  rates
upon the Project. Tenant agrees to pay Landlord forthwith upon demand the amount
of any  increase  in premiums  for  insurance  against  loss by fire that may be
charged  during the Term of this Lease on the amount of  insurance to be carried
by Landlord on the Project  resulting from the  foregoing,  or from Tenant doing
any act in or about said  Premises  that does so increase the  insurance  rates,
whether or not Landlord  shall have consented to such act on the part of Tenant.
If Tenant installs upon the Premises any electrical  equipment which constitutes
an overload of electrical  lines of the  Premises,  Tenant shall at its own cost
and expense in accordance  with all other Lease  provisions,  and subject to the
provisions of Article 9, 10 and 11, hereof,  make whatever changes are necessary
to comply with  requirements of the insurance  underwriters and any governmental
authority having jurisdiction  thereover,  but nothing herein contained shall be
deemed to constitute  Landlord's  consent to such overloading.  Tenant shall, at
its own expense,  comply with all requirements of the insurance authority having
jurisdiction  over the Project  necessary for the maintenance of reasonable fire
and extended coverage  insurance for the Premises,  including without limitation
thereto,  the  installation of fire  extinguishers  or an automatic dry chemical
extinguishing system.

                                   ARTICLE XV
                                   ----------

                            ASSIGNMENT AND SUBLETTING
                            -------------------------

     Tenant  shall  have no power  to,  either  voluntarily,  involuntarily,  by
operation of law or otherwise, sell, assign, transfer or hypothecate this Lease,
or sublet the Premises or any part  thereof,  or permit the Premises or any part
thereof to be used or occupied by anyone other than Tenant or Tenant's employees
without the prior written  consent of Landlord  which shall not be  unreasonably
withheld.  Tenant may transfer its interest pursuant to this Lease only upon the
following  conditions,  which  conditions  agreed by  Landlord  and Tenant to be
reasonable:

     (a) That the  proposed  transferee  shall be subject  to the prior  written
consent of  Landlord,  which  consent  will not be  unreasonably  withheld  but,
without  limiting the  generality of the  foregoing,  it shall be reasonable for
Landlord to deny such consent if:

        (i) The use to be made of the Premises by the proposed transferee is (a)
not generally consistent with the character and nature of all other tenancies in
the Project, or (b) a use which conflicts with any so-called "exclusive" then in
favor of, or for any use which is the same as that stated in any percentage rent
lease to, another tenant of the Project or any other  buildings which are in the
same complex as the Project,  or (c) a use which would be prohibited b any other
portion of this Lease  (including  but not limited to any Rules and  Regulations
then in effect);

        (ii) The  financial  responsibility  of the proposed  transferee  is not
reasonably  satisfactory to Landlord or in any event not at least equal to those
which were possessed by Tenant as of the date of execution of this Lease;

        (iii)  The  proposed  transferee  is  either a  governmental  agency  or
instrumentality thereof; or

                                       17
<PAGE>

        (iv)  Either  the  proposed  transferee  or any  person or entity  which
directly or indirectly  controls,  is  controlled by or is under common  control
with the proposed  transferee  (A) occupies  space in the Project at the time of
the request for consent,  or (B) is negotiating  with Landlord or has negotiated
with Landlord during the six (6) month period immediately  preceding the date of
the proposed transfer, to lease space in the Project.

     (b) Whether or not Landlord consents to any such transfer, Tenant shall pay
to Landlord  Landlord's then standard  processing fee and reasonable  attorneys'
fees and costs  incurred  in  connection  with the  proposed  transfer up to the
aggregate sum of $1,500.00;

     (c) That the proposed  transferee  shall  execute an agreement  pursuant to
which it shall  agree to  perform  faithfully  and be bound by all of the terms,
covenants,  conditions,  provisions and  agreements of this Lease  applicable to
that portion of the Premises so transferred; and

That an executed duplicate original of said assignment and assumption  agreement
or other transfer on a form reasonably approved by Landlord,  shall be delivered
to Landlord  within  five (5) days after the  execution  thereof,  and that such
transfer shall not be binding upon Landlord  until delivery  thereof to Landlord
and the  execution  and delivery of Landlord's  consent  thereto.  It shall be a
condition to Landlord's consent to any subleasing,  assignment or other transfer
of part or all of Tenant's interest in the Premises  (hereinafter referred to as
a "Transfer") that (i) upon Landlord's consent to any Transfer, Tenant shall pay
and  continue to pay fifty  percent  (50%) of any  "Transfer  Premium"  (defined
below), received by Tenant from the transferee; (ii) any sublease of part or all
of Tenant's interest in the Premises shall agree that in the event Landlord give
such sublessee notice that Tenant is in default under this Lease, such sublessee
shall thereafter make all sublease or other payments directly to Landlord, which
will be received by Landlord without  liability whether to honor the sublease or
otherwise  (except to credit such  payments  against sums due under this Lease),
and any  sublessee  shall  agree to attorn to  Landlord  or its  successors  and
assigns at their request should this Lease be terminated for any reason,  except
that in no event shall  Landlord or its successors or assigns to be obligated to
accept such attornment; (iii) any such Transfer and consent shall be effected on
forms supplied by Landlord  and/or its legal counsel;  (iv) Landlord may require
that Tenant not then be in default  hereunder in any respect;  and (v) Tenant or
the proposed subtenant or assignee  (collectively,  "Transferee") shall agree to
pay Landlord,  upon demand,  as additional  rent, a sum equal to the  additional
costs,  if any,  incurred by Landlord for  maintenance and repair as a result of
any change in the nature of occupancy  caused by such  subletting or assignment.
"Transfer Premium" shall mean all rent,  additional rent or other  consideration
payable by a Transferee in connection  with a Transfer in excess of the rent and
Additional  Rent  payable  by Tenant  under  this  Lease  during the term of the
Transfer  and if such  Transfer is less than all of the  Premises,  the Transfer
Premium shall be calculated on a rentable square foot basis.  In any event,  the
Transfer  Premium shall be calculated  after  deducting the reasonable  expenses
incurred by Tenant for (1) any  changes,  alterations  and  improvements  to the
Premises  paid for by Tenant in  connections  with the  Transfer,  (2) any other
out-of-pocket monetary concessions provided by Tenant to the Transferee, and (3)
any brokerage  commissions  paid for by Tenant in connection  with the Transfer.
"Transfer  Premium" shall also include,  but not be limited to, key money, bonus
money or other cash  consideration  paid by a transferee to Tenant in connection
with such Transfer,  and any payment in excess of fair market value for services
rendered  by Tenant to the  Transferee  and

                                       18
<PAGE>

any payment in excess of fair  market  value for  assets,  fixtures,  inventory,
equipment,  or furniture  transferred  by Tenant to the Transferee in connection
with such Transfer. Any sale, assignment,  hypothecation, transfer or subletting
of this Lease which is not in compliance  with the provisions of this Article 15
shall be void and shall, at the option of Landlord,  terminate this Lease. In no
event shall the consent by Landlord to an  assignment or subletting be construed
as relieving  Tenant,  any  assignee,  or sublessee  from  obtaining the express
written  consent of Landlord  to any further  assignment  or  subletting,  or as
releasing Tenant from any liability or obligation  hereunder whether or not then
accrued and Tenant shall continue to be fully liable therefor.  No collection or
acceptance of rent by Landlord from any person other than Tenant shall be deemed
a waiver of any  provision of this Article 15 or the  acceptance of any assignee
or subtenant hereunder, or a release of Tenant (or of any successor of Tenant or
any  subtenant).  Notwithstanding  anything to the  contrary  in this Lease,  if
Tenant or any proposed Transferee claims that Landlord has unreasonably withheld
or delayed its consent  under this Article 15 or otherwise has breached or acted
unreasonably  under this Article 15, their sole remedies  shall be a declaratory
judgment,  an  injunction  for the relief sought and/or  monetary  damages,  and
Tenant hereby waives all other  remedies,  including,  without  limitation,  any
right at law or equity to  terminate  this Lease,  on its own behalf and, to the
extent   permitted  under  all  applicable  laws,  on  behalf  of  the  proposed
Transferee.

     Notwithstanding  anything to the  contrary  contained  in this  Article 15,
Landlord shall have the option, by giving written notice to Tenant within thirty
(30) days  after  Landlord's  receipt  of a request  for  consent  to a proposed
Transfer,  to terminate this Lease as to the portion of the Premises that is the
subject of the  Transfer.  If this Lease is so  terminated  with respect to less
than the entire  Premises,  the Basic  Rental and Tenant's  Proportionate  Share
shall be prorated based on the number of rentable square feet retained by Tenant
as  compared  to the total  number of  rentable  square  feet  contained  in the
original  Premises,  and this Lease as so amended shall  continue  thereafter in
full force and effect,  and upon the request of either party,  the parties shall
execute written confirmation of the same.

                                  ARTICLE XVI
                                  -----------

                              DAMAGE OR DESTRUCTION
                              ---------------------

     If the  Project  is  damaged  by tire or  other  insured  casualty  and the
insurance proceeds have been made available therefor by the holder or holders of
any mortgages or deeds of trust covering the Premises or the Project, the damage
shall be  repaired  by  Landlord  to the  extent  such  insurance  proceeds  are
available therefor and provided such repairs can, in Landlord's sole opinion, be
completed  within one hundred  eighty (180) days after the necessity for repairs
as a result of such  damage  becomes  known to  Landlord  without the payment of
overtime or other  premiums,  and until such repairs are completed rent shall be
abated in proportion to the part of the Premises  which is unusable by Tenant in
the conduct of its  business  (but there shall be no abatement of rent by reason
of any portion of the Premises  being unusable for a period equal to one (1) day
or less).  However,  if the damage is due to the fault or neglect of Tenant, its
employees, agents, contractors, guests, invitees and the like, there shall be no
abatement of rent,  unless and to the extent  Landlord  receives  rental  income
insurance  proceeds.  Upon the occurrence of any damage to the Premises,  Tenant
shall assign to Landlord (or to any party  designated by Landlord) all insurance
proceeds payable to Tenant under Section 14(a)(ii)(A)

                                       19
<PAGE>

above; provided,  however, that if the cost of repair of improvements within the
Premises  by  Landlord  exceeds  the amount of  insurance  proceeds  received by
Landlord from Tenant's insurance carrier,  as so assigned by Tenant, such excess
costs shall be paid by Tenant to  Landlord  prior to  Landlord's  repair of such
damage.  If repairs  cannot,  in  Landlord's  opinion,  be completed  within one
hundred  eighty (180) days after the  necessity  for repairs as a result of such
damage  becomes  known to  Landlord  without  the  payment of  overtime or other
premiums, Landlord may, at its option, either (i) make them in a reasonable time
and in such  event  this Lease  shall  continue  in effect and the rent shall be
abated,  if at all, in the manner provided in this Article 16, or (ii) elect not
to effect such repairs and instead  terminate this Lease, by notifying Tenant in
writing of such termination  within sixty (60) days after Landlord learns of the
necessity  for  repairs  as a  result  of  damage,  such  notice  to  include  a
termination  date  giving  Tenant  sixty  (60) days to vacate the  Premises.  In
addition,  Landlord  may elect to terminate  this Lease if the Project  shall be
damaged by fire or other  casualty  or cause,  whether or not the  Premises  are
affected, and the damage is not fully covered, except for deductible amounts, by
Landlord's  insurance  policies.  Finally,  if the  Premises  or the  Project is
damaged to any  substantial  extent  during the last  twelve  (12) months of the
Term,  then  notwithstanding  anything  contained  in  this  Article  16 to  the
contrary,  Landlord  shall  have the  option to  terminate  this Lease by giving
written  notice to Tenant of the exercise of such option  within sixty (60) days
after Landlord learns of the necessity for repairs as the result of such damage.
A total  destruction  of the Project shall  automatically  terminate this Lease.
Except as provided in this  Article 16,  there shall be no abatement of rent and
no liability of Landlord by reason of my injury to or interference with Tenant's
business or property  arising from such damage or  destruction  or the making of
any repairs,  alterations or improvements in or to any portion of the Project or
the Premises or in or to fixtures,  appurtenances and equipment therein.  Tenant
understands  that  Landlord  will not carry  insurance  of any kind on  Tenant's
furniture, furnishings, trade fixtures or equipment, and that Landlord shall not
be  obligated  to repair any damage  thereto  or  replace  the same.  Except for
proceeds  relating  to  Tenant's  furniture,  furnishings,  trade  fixtures  and
equipment,  Tenant  acknowledges that Tenant shall have no right to any proceeds
of  insurance  relating to property  damage.  With  respect to any damage  which
Landlord  is  obligated  to repair or elects to  repair,  Tenant,  as a material
inducement to Landlord entering into this Lease, irrevocably waives and releases
its rights  under the  provisions  of Sections  1932 and 1933 of the  California
Civil Code.

                                  ARTICLE XVII
                                  ------------

                                  SUBORDINATION
                                  -------------

     This Lease is subject and  subordinate to all ground or underlying  leases,
mortgages and deeds of trust which affect the property or the Project, including
all  renewals,  modifications,   consolidations,   replacements  and  extensions
thereof; provided,  however, if the lessor under any such lease or the holder or
holders of any such  mortgage or deed of trust shall advise  Landlord  that they
desire or require  this Lease to be prior and  superior  thereto,  upon  written
request of Landlord to Tenant,  Tenant agrees to promptly  execute,  acknowledge
and deliver any and all documents or instruments  which Landlord or such lessor,
holder or holders deem  necessary or desirable  for purposes  thereof.  Landlord
shall have the right to cause this Lease to be and become and remain subject and
subordinate  to any and all ground or underlying  leases,  mortgages or deeds of
trust which may hereafter be executed covering the Premises, the Project

                                       20
<PAGE>

or the property or any renewals, modifications,  consolidations, replacements or
extensions  thereof,  for the full  amount  of all  advances  made or to be made
thereunder  and  without  regard  to the  time or  character  of such  advances,
together  with  interest  thereon  and  subject to all the terms and  provisions
thereof; provided, however, that Landlord obtains from the lender or other party
in  question a written  undertaking  in favor of Tenant to the effect  that such
lender or other party will not disturb  Tenant's right of possession  under this
Lease if Tenant is not then or thereafter in breach of any covenant or provision
of this Lease.  Tenant  agrees,  within ten (10) days after  Landlord `s written
request therefor,  to execute,  acknowledge and deliver upon request any and all
documents or instruments  requested by Landlord which are necessary or proper to
assure the subordination of this Lease to any such mortgages,  deed of trust, or
leasehold  estates.  Tenant agrees that in the event any proceedings are brought
for  the  foreclosure  of any  mortgage  or deed of  trust  or any  deed in lieu
thereof,  to attorn to the  purchaser  or any  successors  thereto upon any such
foreclosure  safe  or  deed in lieu  thereof  as so  requested  to do so by such
purchaser and to recognize such purchaser as the lessor under this Lease; Tenant
shall,  within ten (10) days after request  execute such further  instruments or
assurances  as such  purchaser  may  reasonably  deem  necessary  to evidence or
confirm  such  attornment.  Tenant  agrees to provide  copies of any  notices of
Landlord  `s  default  under  this  Lease  to any  mortgagee  or deed  of  trust
beneficiary  whose  address has been provided to Tenant and Tenant shall provide
such mortgagee or deed of trust beneficiary a commercially reasonable time after
receipt of such notice within which to cure any such default.  Tenant waives the
provisions  of any  current  or  future  statute,  rule or law which may give or
purport to give Tenant any right or election to terminate or otherwise adversely
affect this Lease and the  obligations  of the Tenant  hereunder in the event of
any foreclosure proceeding or sale.

                                 ARTICLE XVIII
                                 -------------

                                 EMINENT DOMAIN
                                 --------------

     If the whole of the Premises or the Project or so much thereof as to render
the balance unusable by Tenant shall be taken under power of eminent domain,  or
is sold, transferred or conveyed in lieu thereof, this Lease shall automatically
terminate as of the date of such  condemnation,  or as of the date possession is
taken by the  condemning  authority,  at  Landlord's  option.  No award  for any
partial or entire  taking shall be  apportioned,  and Tenant  hereby  assigns to
Landlord  any award which may be made in such taking or  condemnation,  together
with any and all rights of Tenant now or hereafter  arising in or to the same or
any part thereof;  provided,  however,  that nothing  contained  herein shall be
deemed  to give  Landlord  any  interest  in or to  require  Tenant to assign to
Landlord any award made to Tenant for the taking of personal  property and trade
fixtures  belonging to Tenant and  removable by Tenant at the  expiration of the
Term  hereof as provided  hereunder  or for the  interruption  of, or damage to,
Tenant's  business.  In the event of a partial taking  described in this Article
18, or a sale, transfer or conveyance in lieu thereof,  which does not result in
a  termination  of this Lease,  the rent shall be  apportioned  according to the
ratio that the part of the  Premises  remaining  useable by Tenant  bears to the
total area of the Premises.  Tenant hereby waives of any and all rights it might
otherwise  have  pursuant  to  Section  1265.130  of the  California  Code Civil
Procedure.

                                       21
<PAGE>

                                   ARTICLE XIX
                                   -----------

                                     DEFAULT
                                     -------

     Each of the  following  acts or omissions of Tenant or of any  guarantor of
Tenant's performance  hereunder,  or occurrences,  shall constitute an "Event of
Default":

     (a) Failure or refusal to pay Basic  Rental,  Additional  Rent or any other
amount to be paid by Tenant to Landlord  hereunder within five (5) calendar days
after notice that the same is due or payable hereunder; said five (5) day period
shall be in lieu of, and not in addition to, the notice  requirements of Section
1161 of the California Code of Civil Procedure or any similar or successor law;

     (b) Except as set forth in items (a) above and (c)  through  and  including
(g) below, failure to perform or observe any other covenant or condition of this
Lease to be  performed or observed  within  thirty (30) days  following  written
notice to Tenant of such  failure.  Such thirty (30) day notice shall be in lieu
of, and not in addition to, any required  under  Section 1161 of the  California
Code of Civil Procedure or any similar or successor law;

     (c)  Abandonment  or vacating or failure to accept  tender of possession of
the Premises or any significant portion thereof;

     (d) The taking in  execution  or by similar  process or law (other  than by
eminent domain) of the estate hereby created;

     (e) The filing by Tenant or any guarantor  hereunder in any court  pursuant
to any statute of a petition in bankruptcy  or insolvency or for  reorganization
or arrangement for the appointment of a receiver of all or a portion of Tenant's
property;  the filing  against  Tenant or any  guarantor  hereunder  of any such
petition,  or the commencement of a proceeding for the appointment of a trustee,
receiver or liquidator for Tenant, or for any guarantor hereunder,  or of any of
the property of either,  or a proceeding by any  governmental  authority for the
dissolution  or  liquidation  of  Tenant  or any  guarantor  hereunder,  if such
proceeding shall not be dismissed or trusteeship discontinued within thirty (30)
days after commencement of such proceeding or the appointment of such trustee or
receiver;  or the making by Tenant or any  guarantor  hereunder of an assignment
for the benefit of creditors;

     (f)  Tenant's  failure to cause to be released  any  mechanics  liens filed
against  the  Premises  or the  Project  within  twenty (20) days after the date
Tenant receives or refuses notice that the same have been filed or recorded; or

     (g) Tenant's  failure to observe or perform  according to the provisions of
Articles 7, 17 or 25 within five (5) business days after notice from Landlord.

     All  defaults by Tenant of any covenant or condition of this Lease shall be
deemed by the parties hereto to be material.

                                       22
<PAGE>

                                   ARTICLE XX
                                   ----------

                                    REMEDIES
                                    --------

     (a) Upon the occurrence of an Event of Default under this Lease as provided
in  Article 19 hereof,  Landlord  may  exercise  all of its  remedies  as may be
permitted by law,  including  but not limited to the remedy  provided by Section
1951.4  of  the  California  Civil  Code,  and  including  without   limitation,
terminating  this Lease,  reentering  the  Premises and removing all persons and
property  therefrom,  which property may be stored by Landlord at a warehouse or
elsewhere at the risk, expense and for the account of Tenant. If Landlord elects
to terminate  this Lease,  Landlord shall be entitled to recover from Tenant the
aggregate of all amounts permitted by law,  including but not limited to (i) the
worth at the time of award of the  amount  of any  unpaid  rent  which  had been
earned at the time of such termination; plus (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
Tenant proves could have been  reasonably  avoided;  plus (iii) the worth at the
time of award of the  amount by which the  unpaid  rent for the  balance  of the
Lease Term after the time of award  exceeds  the amount of such rental loss that
Tenant  proves could have been  reasonably  avoided;  plus (iv) any other amount
necessary to  compensate  Landlord for all the detriment  proximately  caused by
Tenant's  failure to perform  its  obligations  under this Lease or which in the
ordinary  course of things  would be  likely to result  therefrom,  specifically
including but not limited to,  brokerage  commissions and  advertising  expenses
incurred,  expenses of remodeling the Premises or any portion  thereof for a new
tenant,  whether for the same or a different  use,  and any special  concessions
made to obtain a new tenant; and (v) at Landlord `s election, such other amounts
in addition to or in lieu of the foregoing as may be permitted from time to time
by applicable law. The term "rent" as used in this Article 20(a) shall be deemed
to be and to mean  all  sums  of  every  nature  required  to be paid by  Tenant
pursuant to the terms of this Lease,  whether to Landlord or to others.  As used
in items (i) and (ii), above, the "worth at the time of award" shall be computed
by allowing  interest at the rate set forth in item (e),  below,  but in no case
greater than the maximum  amount of such  interest  permitted by law. As used in
item  (iii),  above,  the  "worth at the time of  award"  shall be  computed  by
discounting  such amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of award plus one percent (1%).

     (b) Nothing in this Article 20 shall be deemed to affect  Landlord's  right
to indemnification for liability or liabilities arising prior to the termination
of this Lease for personal injuries or property damage under the indemnification
clause or clauses contained in this Lease.

     (c) Notwithstanding  anything to the contrary set forth herein,  Landlord's
re-entry to perform acts of maintenance or preservation of or in connection with
efforts to relet the Premises or any portion  thereof,  or the  appointment of a
receiver upon Landlord's  initiative to protect  Landlord's  interest under this
Lease shall not  terminate  Tenant's  right to possession of the Premises or any
portion  thereof and, until  Landlord does elect to terminate  this Lease,  this
Lease shall  continue in full force and effect and  Landlord  may enforce all of
Landlord's rights and remedies  hereunder  including,  without  limitation,  the
remedy  described in California  Civil Code Section 195 1.4 (lessor may continue
lease in effect after  lessee's  breach and  abandonment  and recover rent as it
becomes due, if lessee has the right to sublet or assign, subject only to

                                       23
<PAGE>

reasonable  limitations).  Accordingly,  if Landlord does not elect to terminate
this Lease on account of any default by Tenant, Landlord may, from time to time,
without  terminating  this Lease,  enforce all of its rights and remedies  under
this Lease, including the right to recover all rent as it becomes due.

     (d) All rights,  powers and  remedies of Landlord  hereunder  and under any
other  agreement now or hereafter in force between  Landlord and Tenant shall be
cumulative and not  alternative  and shall be in addition to all rights,  powers
and remedies given to Landlord by law, and the exercise of one or more rights or
remedies  shall not impair  Landlord  `s right to  exercise  any other  right or
remedy.

     (e) Any amount due from Tenant to Landlord hereunder which is not paid when
due shall bear interest at the lower of eighteen  percent (18%) per annum or the
maximum lawful rate of interest from the due date until paid,  unless  otherwise
specifically  provided herein, but the payment of such interest shall not excuse
or cure any default by Tenant  under this Lease.  In addition to such  interest:
(i) if Basic  Rental is not paid  within  ten (10) days after the same is due, a
late charge equal to five percent (5%) of the amount overdue or $100,  whichever
is greater,  shall be assessed and shall accrue for each calendar  month or part
thereof  until such rental,  including the late charge,  is paid in full,  which
late  charge  Tenant  hereby  agrees is a  reasonable  estimate  of the  damages
Landlord  shall  suffer  as a  result  of  Tenant's  late  payment  and  (ii) an
additional charge of $25 shall be assessed for any check given to Landlord by or
on behalf of Tenant which is not honored by the drawee  thereof;  which  damages
include  Landlord's  additional  administrative  and other costs associated with
such late payment and unsatisfied checks and the parties agree that, it would be
impracticable  or extremely  difficult to fix  Landlord's  actual damage in such
event.  Such charges for interest and late payments and  unsatisfied  checks are
separate  and  cumulative  and are in  addition  to and  shall not  diminish  or
represent a substitute for any or all of Landlord's rights or remedies under any
other provision of this Lease.

                                  ARTICLE XXI
                                  -----------

                         TRANSFER OF LANDLORD'S INTEREST
                         -------------------------------

     In the event of any transfer or termination  of Landlord's  interest in the
Premises or the Project by sale, assignment, transfer, foreclosure, deed-in-lieu
of foreclosure or otherwise whether voluntary or involuntary,  Landlord shall be
automatically relieved of any and all obligations and liabilities on the part of
Landlord  from and after the date of such  transfer  or  termination,  including
furthermore without  limitation,  the obligation of Landlord under Article 4 and
California Civil Code 1950.7 above to return the security deposit, provided said
security deposit is transferred to said  transferee.  Tenant agrees to attorn to
the transferee  upon any such transfer and to recognize  such  transferee as the
lessor under this Lease and Tenant  shall,  within ten (10) days after  request,
execute such further instruments or assurances as such transferee may reasonably
deem necessary to evidence or confirm such attornment.

                                       24
<PAGE>

                                  ARTICLE XXII
                                  ------------

                                     BROKER
                                     ------

     In connection  with this Lease,  Tenant warrants and represents that it has
had  dealings  only with  firm(s)  set forth in Article  1.H. of the Basic Lease
Provisions  and that it knows of no other  person or  entity  who is or might be
entitled  to a  commission,  finder `s fee or other like  payment in  connection
herewith  and does  hereby  indemnify  and agree to hold  Landlord,  its agents,
members,  partners,   representatives,   officers,   affiliates,   shareholders,
employees,  successors  and assigns  harmless from and against any and all loss,
liability  and  expenses  that  Landlord  may incur  should  such  warranty  and
representation prove incorrect, inaccurate or false.

                                  ARTICLE XXIII
                                  -------------

                                     PARKING
                                     -------

     Tenant shall rent from Landlord,  commencing on the Commencement  Date, the
number of unreserved parking passes set forth in Section l(I) of the Basic Lease
Provisions,  which parking passes shall pertain to the Project parking facility.
Tenant shall not be charged for  automobile  parking  passes  during the initial
Lease Term.  However,  Tenant  shall be  responsible  for the full amount of any
taxes imposed by any  governmental  authority in connection  with the renting of
such  parking  passes by Tenant or the use of the  parking  facility  by Tenant.
Tenant's  continued  right to use the parking passes is conditioned  upon Tenant
abiding by all rules and regulations  which are prescribed from time to time for
the orderly  operation and use of the parking  facility where the parking passes
are located, including any sticker or other identification system established by
Landlord,  Tenant's  cooperation in seeing that Tenant's  employees and visitors
also  comply  with such rules and  regulations,  and Tenant not being in default
under this Lease.  Landlord  specifically reserves the right to change the size,
configuration,  design,  layout  and all other  aspects of the  Project  parking
facility  at any time and Tenant  acknowledges  and agrees  that  Landlord  may,
without  incurring  any  liability  to Tenant and without any  abatement of rent
under this Lease, from time to time, close-off or restrict access to the Project
parking   facility  for  purposes  of  permitting  or   facilitating   any  such
construction,  alteration  or  improvements.  Landlord may relocate any reserved
parking  spaces  rented by Tenant to another  location  in the  Parking  project
facility.  Landlord  may delegate  its  responsibilities  hereunder to a parking
operator or a lessee of the parking facility in which case such parking operator
or  lessee  shall  have all the  rights  of  control  attributed  hereby  to the
Landlord.  The parking  passes rented by Tenant  pursuant to this Article 23 are
provided to Tenant  solely for use by Tenant's own personnel and such passes may
not be transferred, assigned, subleased or otherwise alienated by Tenant without
Landlord's prior approval. Tenant may validate visitor parking by such method or
methods as the Landlord may establish,  at the validation rate from time to time
generally applicable to visitor parking.

                                       25
<PAGE>

                                  ARTICLE XXIV
                                  ------------

                                     WAIVER
                                     ------

     No waiver by Landlord of any  provision of this Lease shall be deemed to be
a waiver of any other provision hereof or of any subsequent  breach by Tenant of
the same or any other  provision.  No  provision  of this lease may be waived by
Landlord,  except by an instrument in writing  executed by Landlord.  Landlord's
consent to or  approval  of any act by Tenant  requiring  Landlord's  consent or
approval shall not be deemed to render  unnecessary  the obtaining of Landlord's
consent to or approval of any subsequent  act of Tenant,  whether or not similar
to the act so  consented  to or  approval.  No act or thing done by  Landlord or
Landlord's agents during the Term of this Lease shall be deemed an acceptance of
a surrender of the Premises,  and no agreement to accept such surrender shall be
valid unless in wiring and signed by Landlord. The subsequent acceptance of rent
hereunder by Landlord shall not be deemed to be a waiver of any preceding breach
by Tenant of any term,  covenant  or  condition  of this  Lease,  other than the
failure  of  Tenant  to pay the  particular  rent  so  accepted,  regardless  of
Landlord's  knowledge of such preceding breach at the time of acceptance of such
rent.  Any  payment by Tenant or receipt by  Landlord of an amount less than the
total amount then due  hereunder  shall be deemed to be in partial  payment only
thereof  and not a waiver  of the  balance  due or an accord  and  satisfaction,
notwithstanding any statement or endorsement to the contrary on any check or any
other  instrument  delivered  concurrently  therewith or in  reference  thereto.
Accordingly,  Landlord may accept any such amount and  negotiate  any such check
without prejudice to Landlord's right to recover all balances due and owning and
to pursue its other rights against Tenant under this Lease regardless of whether
Landlord makes any notation on such instrument of payment or otherwise  notifies
Tenant that such  acceptance or negotiation  is without  prejudice to Landlord's
rights.

                                  ARTICLE XXV
                                  -----------

                              ESTOPPEL CERTIFICATE
                              --------------------

     Tenant  shall,  at any time and from  time to time,  upon not less than ten
(10) days' prior written notice from Landlord, execute,  acknowledge and deliver
to Landlord a statement in writing  certifying the following  information,  (but
not limited to the following  information  in the event further  information  is
requested by Landlord):  (i) that this Lease is unmodified and in full force and
effect (or, if modified,  stating the nature of such modification and certifying
that this Lease,  as modified,  is in full force and effect);  (ii) the dates to
which the rental and other charges are paid in advance, if any; (iii) the amount
of Tenant's security deposit, if any; and (iv) acknowledging that there are not,
to Tenant's  knowledge,  any uncured defaults o the part of Landlord  hereunder,
and no events or conditions then in existence which, with the passage of time or
notice or both, would constitute a default on the part of Landlord hereunder, or
specifying  such  defaults,  events or  conditions,  if any are  claimed.  It is
expressly  understood  and agreed that any such  statement may be relied upon by
any  prospective  purchaser  or  encumbracer  of all or any  portion of the Real
Property.  Tenant's  failure to deliver  such  statement  within such time shall
constitute an admission by Tenant that all statements contained therein are true
and correct.  Tenant agrees to execute all documents required in accordance with
this Article 25 within ten (10) days after  delivery of said  documents.  Tenant
hereby irrevocably appoints

                                       26
<PAGE>

landlord as Tenant's  attorney-in-fact  and in Tenant's name, place and stead to
execute any and all documents described in this Article 25 if Tenant fails to do
so with the specified time period.

                                  ARTICLE XXVI
                                  ------------

                              LIABILITY OF LANDLORD
                              ---------------------

     Notwithstanding  anything  in this  Lease to the  contrary,  any  remedy of
Tenant for the  collection of a judgment (or other judicial  process)  requiring
the  payment  of money by  Landlord  in the  event of any  default  by  Landlord
hereunder or any claim, cause of action or obligation, contractual, statutory or
otherwise by Tenant against Landlord  concerning,  arising out of or relating to
any matter relating to this Lease and all of the covenants and conditions or any
obligations,  contractual,  statutory,  or otherwise set forth herein,  shall be
limited solely and  exclusively to an amount which is equal to the lesser of (i)
the interest of Landlord in and to the Project,  and (ii) the interest  Landlord
would have in the Project if the Project were  encumbered by third party debt in
an amount equal to ninety percent (90%) of the then current value of the Project
(as such value is  reasonably  determined  by  Landlord).  No other  property or
assets of Landlord,  or any member,  officer,  director,  shareholder,  partner,
trustee,  agent, servant or employee of Landlord (the "Representative") shall be
subject to levy,  execution or other enforcement  procedure for the satisfaction
of Tenant's remedies under or with respect to this Lease, Landlord's obligations
to Tenant,  whether  contractual,  statutory or otherwise,  the  relationship of
Landlord and Tenant  hereunder,  or Tenant's  use or occupancy of the  Premises.
Tenant further understands that any liability, duty or obligation of Landlord to
Tenant,  shall automatically cease and terminate as of the date that Landlord or
any of Landlord's Representatives no longer have any right, title or interest in
or to the  Project.  Notwithstanding  anything  to the  contrary  in this Lease,
Landlord shall not be liable under any circumstances for injury or damage to, or
interference  with,  Tenant `s business,  including  but not limited to, loss of
Profits, loss of rents or other revenues, loss of business opportunity,  loss of
goodwill or loss of use, in each case, however occurring.

                                 ARTICLE XXVII
                                 -------------

                              INABILITY TO PERFORM
                              --------------------

     This Lease and the obligations of Tenant hereunder shall not be affected or
impaired because Landlord is unable to fulfill any of its obligations  hereunder
or is delayed in doing so, if such inability or delay is caused by reason of any
prevention,  delay, stoppage due to strikes, lockouts, acts of God, or any other
cause previously, or at such time, beyond the reasonable control or anticipation
of Landlord  (collectively,  a "Force Majeure") and Landlord's obligations under
this Lease shall be forgiven and suspended by any such Force Majeure.

                                       27
<PAGE>

                                 ARTICLE XXVIII
                                 --------------

                                 HAZARDOUS WASTE
                                 ---------------

     (a) Tenant shall not cause or permit any Hazardous  Material (as defined in
Article  28(d)  below) to be  brought,  kept or used in or about the  Project by
Tenant,  its agents,  employees,  contractors,  or invitees,  except for general
office supplies typically used in the ordinary course of business (e.g.,  copier
toner,  liquid paper,  glue,  ink, and cleaning  solvents).  Tenant  indemnifies
Landlord from and against any breach by Tenant of the obligations  stated in the
preceding  sentence,  and agrees to defend and hold  Landlord  harmless from and
against  any  and all  claims,  judgments,  damages,  penalties,  fines,  costs,
liabilities,  or losses (including,  without limitation,  diminution in value of
the Project,  damages for the loss or  restriction  or use of rentable or usable
space or of any amenity of the Project,  damages arising from any adverse impact
or marketing of space in  the-Project,  and sums paid in  settlement  of claims,
attorneys' fees and costs,  consultant fees, and expert fees) which arise during
or after the Term of this Lease as a result of such breach. This indemnification
of Landlord by Tenant includes, without limitation, costs incurred in connection
with any investigation of site conditions or any cleanup, remedial,  removal, or
restoration work required by any federal, state, or local governmental agency or
political  subdivision  because  of  Hazardous  Material  present in the soil or
ground water on or under the Project.  Without  limiting the  foregoing,  if the
presence of any Hazardous  Material on the Project caused or permitted by Tenant
results in any  contamination  of the Project and subject to the  provisions  of
Articles 9, 10 and 11,  hereof,  Tenant shall  promptly  take all actions at its
sole expense as are  necessary to return the Project to the  condition  existing
prior to the introduction of any such Hazardous  Material and the contractors to
be used by Tenant for such work must be approved  by  Landlord,  which  approval
shall not be unreasonably withheld so long as such actions would not potentially
have any material adverse  long-term or short-term  effect on the Project and so
long as such actions do not  materially  interfere with the use and enjoyment of
the Project by the other tenants thereof.

     (b) It shall not be  unreasonable  for  Landlord to withhold its consent to
any proposed  Transfer if (i) the proposed  transferee's  anticipated use of the
Premises  involves  the  generation,  storage,  use  treatment,  or  disposal of
Hazardous Material;  (ii) the proposed Transferee has been required by any prior
landlord,  lender,  or  governmental  authority  to  take  remedial  action  in,
connection with Hazardous Material contaminating a property if the contamination
resulted from such Transferee's  actions or use of the property in question;  or
(iii) the proposed  Transferee is subject to an enforcement  order issued by any
governmental  authority in connection  with the use,  disposal,  or storage of a
Hazardous Material.

     (c) As used herein,  the term  "Hazardous  Material" means any hazardous or
toxic substance,  material,  or waste which is or becomes regulated by any local
governmental authority, the State of California or the United States Government.
The term "Hazardous  Material"  includes,  without  limitation,  any material or
substance  which is (i)  defined  as  "Hazardous  Waste,"  "Extremely  Hazardous
Waste," or "Restricted  Hazardous Waste" under Sections 25115, 25117 or 25122.7,
or listed pursuant to Section 25140,  of the California  Health and Safety Code,
Division  20,  Chapter 6.5  (Hazardous  Waste  Control  Law),  (ii) defined as a
"Hazardous  Substance"  under Section 25316 of the California  Health and Safety
Code,  Division 20, Chapter 6.8  (Carpenter-Presley-Tanner  Hazardous  Substance
Account Act), (iii) defined as a

                                       28
<PAGE>

"Hazardous Material," "Hazardous  Substance," or "Hazardous Waste" under Section
25501 of the  California  Health and Safety  Code,  Division  20,  Chapter  6.95
(Hazardous  Materials  Release Response Plans and Inventory),  (iv) defined as a
"Hazardous  Substance"  under Section 25281 of the California  Health and Safety
Code,  Division 20, Chapter 6.7 (Underground  Storage of Hazardous  Substances),
(v)  petroleum,  (vi)  asbestos,  (vii)  listed  under  Article 9 or  defined as
Hazardous  or  extremely  hazardous  pursuant  to  Article 11 of Title 22 of the
California  Administrative  Code, Division 4, Chapter 20, (viii) designated as a
"Hazardous  Substance"  pursuant to Section 311 of the Federal  Water  Pollution
Control Act (33 U.S.C. ss. 1317),  (ix) defined as a "Hazardous  Waste" pursuant
to Section 1004 of the Federal Resource Conservation and Recovery Act, 42 U.S.C.
ss. 6901 et seq. (42 U.S.C. ss. 6903) or (x) defined as a "Hazardous  Substance"
pursuant  to  Section   101  of  the   Comprehensive   Environmental   Response,
Compensation and Liability Act, 42 U.S.C. ss. 9601 et seq. (42 U.S.C. ss. 9601).

     (d) As used herein, the term "Laws" mean any applicable  federal,  state or
local  laws,  ordinances,  or  regulations  relating to any  Hazardous  Material
affecting the Project, including,  without limitation, the laws, ordinances, and
regulations referred to in Article 28(c) above.

                                  ARTICLE XXIX
                                  ------------

                   SURRENDER OF PREMISES: REMOVAL OF PROPERTY
                   ------------------------------------------

     (a) The  voluntary or other  surrender of this Lease by Tenant to Landlord,
or a mutual termination hereof, shall not work a merger, and shall at the option
of  Landlord,  operate  as an  assignment  to it of  any  or  all  subleases  or
subtenancies affecting the Premises.

     (b) Upon the  expiration  of the Term of this  Lease,  or upon any  earlier
termination  of this Lease,  Tenant shall quit and  surrender  possession of the
Premises  to  Landlord  in as good order and  condition  as the same are now and
hereafter  may be improved by Landlord or Tenant,  reasonable  wear and tear and
repairs which are Landlord's obligation excepted,  and shall, without expense to
Landlord,  remove  or cause to be  removed  from the  Premises  all  debris  and
rubbish, all furniture,  equipment,  business and trade fixtures,  free-standing
cabinet  work,  moveable  partitioning,  telephone  and data  cabling  and other
articles of personal  property  owned by Tenant or installed or placed by Tenant
at its own  expense  in the  Premises,  and all  similar  articles  of any other
persons  claiming under Tenant unless Landlord  exercises its option to have any
subleases or subtenancies  assigned to it, and Tenant shall repair all damage to
the Premises  resulting  from the  installation  and removal of such items to be
removed.

     (c) Whenever  Landlord shall reenter the Premises as provided in Article 20
hereof,  or as  otherwise  provided  in this Lease,  any  property of Tenant not
removed  by Tenant  upon the  expiration  of tire Term of this  Lease (or within
forty-eight  (48) hours after a termination by reason of Tenant `s default),  as
provided in this Lease,  shall be  considered  abandoned and Landlord may remove
any or ail of such items and dispose of the same in any manner or store the same
in a public  warehouse or elsewhere  for the account and at the expense and risk
of Tenant, and if Tenant shall fail to pay the cost of storing any such property
after it has been stored for a period of ninety (90) days or more,  Landlord may
sell any or all of such  property at public or private  sale, in such manner and
at such times and places as Landlord, in its sole

                                       29

<PAGE>

discretion,  may deem proper,  without notice to or demand upon Tenant,  for the
payment of all or any part of such charges or the removal of any such  property,
and shall apply the  proceeds of such sale as  follows:  first,  to the cost and
expense  of  such  sale,  including  reasonable  attorneys'  fees  for  services
rendered;  second, to the payment of the cost of or charges for storing any such
property;  third,  to the  payment of any other sums of money  which may then or
thereafter  be due to Landlord  from Tenant under any of the terms  hereof;  and
fourth, the balance, if any, to Tenant.

     (d) All fixtures,  equipment,  leasehold  improvements,  Alterations and/or
appurtenances  attached  to or built  into the  Premises  prior to or during the
Term,  whether by  Landlord  or Tenant and whether at the expense of Landlord or
Tenant,  or of both,  shall be and remain part of the  Premises and shall not be
removed by Tenant at the end of the Term unless otherwise expressly provided for
in this.  Lease or unless such removal is required by Landlord.  Such  fixtures,
equipment, leasehold improvements,  Alterations,  additions, improvements and/or
appurtenances shall include but not be limited to: all floor coverings,  drapes,
paneling,  built-in cabinetry,  molding,  doors, vaults (including vault doors),
plumbing  systems,  security  systems,  electrical  systems,  lighting  systems,
silencing  equipment,  communication  systems,  all fixtures and outlets for the
systems mentioned above and for all telephone,  radio,  telegraph and television
purposes, and any special flooring or ceiling installations.

                                  ARTICLE XXX
                                  -----------

                                  MISCELLANEOUS
                                  -------------

     (a) Severability: Entire Agreement. Any provision of this Lease which shall
         ------------------------------
prove to be  invalid,  void,  or  illegal  shall  in no way  affect,  impair  or
invalidate any other provision  hereof and such other provisions shall remain in
full force and effect.  This Lease and the Exhibits  and any  Addendum  attached
hereto  constitute the entire agreement  between the parties hereto with respect
to the subject matter hereof, and no prior agreement or understanding pertaining
to any  such-matter  shall be effective  for any  purpose.  No provision of this
Lease may be amended or supplemented except by an agreement in writing signed by
the parties hereto or their successor in interest.

     (b) Attorneys' Fees; Waiver of Jury Trial.
         --------------------------------------

            (i) In any action to enforce the terms of this Lease,  including any
suit by Landlord for the recovery of rent or  possession  of the  Premises,  the
losing party shall pay the successful party a reasonable sum for attorneys' fees
and costs in such  suit and such  attorneys'  fees and costs  shall be deemed to
have accrued prior to the  commencement of such action and shall be paid whether
or not such action is prosecuted to judgment.

            (ii) Should  Landlord,  without fault on Landlord's  part, be made a
party to any  litigation  instituted  by Tenant or by any  third  party  against
Tenant,  or by or against  any person  holding  under or using the  Premises  by
license  of Tenant,  or for the  foreclosure  of any lien for labor or  material
furnished to or for Tenant or any such other person or otherwise  arising out of
or resulting  from any act or transaction of Tenant or of any such other person,
Tenant

                                       30
<PAGE>

covenants to save and hold Landlord  harmless from any judgment rendered against
Landlord or the  Premises or any part  thereof and from all costs and  expenses,
including   reasonable  attorneys  `fees  and  costs  incurred  by  Landlord  in
connection with such litigation.

            (iii) When legal  services are rendered by an attorney at law who is
an employee of a party,  attorneys'  fees and costs incurred by that party shall
be deemed to  include an amount  based  upon the  number of hours  spent by such
employee on such matters multiplied by an appropriate billing rate determined by
taking into  consideration  the same factors,  including but not limited by, the
importance  of  the  matter,  time  applied,  difficulty  and  results,  as  are
considered  when an  attorney  not in the employ of a party is engaged to render
such service.

            (iv) EACH  PARTY  HEREBY  WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY
ACTION SEEKING SPECIFIC  PERFORMANCE OF ANY PROVISION OF THIS LEASE, FOR DAMAGES
FOR ANY BREACH UNDER THIS LEASE,  OR OTHERWISE FOR  ENFORCEMENT  OF ANY RIGHT OR
REMEDY HEREUNDER.

     (c) Time of Essence.  Each of Tenant's  covenants herein is a condition and
         ---------------
time is of the essence with  respect to the  performance  of every  provision of
this Lease.

     (d) Headings:  Joint and Several.  The article  headings  contained in this
         ----------------------------
Lease are for  convenience  only and do not in any way limit or amplify any term
or  provision  hereof.  The terms  "Landlord"  and "Tenant" as used herein shall
include  the  plural as well as the  singular,  the  neuter  shall  include  the
masculine and feminine  genders and the  obligations  herein imposed upon Tenant
shall be joint and several as to each of the persons,  firms or  corporations of
which Tenant may be composed.

     (e) Reserved Area. Tenant hereby  acknowledges and agrees that the exterior
         --------------
walls of the Premises and the area between the finished  ceiling of the Premises
and the slab of the floor of the project thereabove have not been demised hereby
and the use thereof  together with the right to install,  maintain,  use, repair
and replace pipes, ducts, conduits and wires leading through, under or above the
Premises in locations  which will not materially  interfere with Tenant's use of
the  Premises  and serving  other parts of the Project are hereby  excepted  and
reserved unto Landlord.

     (f) NO  OPTION.  THE  SUBMISSION  OF THIS  LEASE BY  LANDLORD,  1% AGENT OR
         ----------
REPRESENTATIVE  FOR  EXAMINATION  OR EXECUTION BY TENANT DOES NOT  CONSTITUTE AN
OPTION OR OFFER TO LEASE THE PREMISES  UPON THE TERMS AND  CONDITIONS  CONTAINED
HEREIN OR A RESERVATION  OF THE PREMISES IN FAVOR OF TENANT,  IT BEING  INTENDED
HEREBY THAT THIS LEASE SHALL ONLY BECOME  EFFECTIVE UPON THE EXECUTION HEREOF BY
LANDLORD AND TENANT AND DELIVERY OF A FULLY EXECUTED LEASE TO TENANT.

     (g) Use of Project Name;  Improvements.  Tenant shall not be allowed to use
         ----------------------------------
the name, picture or representation of the Project,  or words to that effect, in
connection with any business carried on in the Premises or otherwise  (except as
Tenant `s address)  without the prior

                                       31
<PAGE>

written  consent  of  Landlord.  In  the  event  that  Landlord  undertakes  any
additional  improvements  on the Real Property  including but not limited to new
construction or renovation or additions to the existing  improvements,  Landlord
shall not be liable to Tenant for any noise,  dust,  vibration  or  interference
with access to the Premises or disruption in Tenant `s business caused thereby.

     (h) Rules and  Regulations.  Tenant  shall  observe  faithfully  and comply
         ----------------------
strictly  with the Rules and  Regulations  attached to this Lease as Exhibit "B"
and made a part  hereof,  and such other Rules and  Regulations  as Landlord may
from time to time reasonably  adopt for the safety,  care and cleanliness of the
Project,  the facilities  thereof,  or the  preservation  of good order therein.
Landlord  shall  not be liable to Tenant  for  violation  of any such  Rules and
Regulations,  or for the breach of any covenant or condition in any lease by any
other tenant in the Project.  A waiver by Landlord of any Rule or Regulation for
any  other  tenant  shall not  constitute  nor be deemed a waiver of the Rule or
Regulation for this Tenant.

     (i) Quiet Possession.  Upon Tenant's paying the Basic Rent, Additional Rent
         ----------------
and other sums  provided  hereunder  and  observing  and  performing  all of the
covenants,  conditions  and  provisions  on  Tenant's  part to be  observed  and
performed hereunder,  Tenant shall have quiet possession of the Premises for the
entire Term hereof, subject to all of the provisions of this Lease.

     (j) Rent.  All payments  required to be made hereunder to Landlord shall be
         ----
deemed to be rent, whether or not described as such.

     (k) Successors and Assigns. Subject to the provisions of Article 15 hereof,
         ----------------------
all of the  covenants,  conditions and provisions of this Lease shall be binding
upon and shall inure to the benefit of the parties  hereto and their  respective
heirs, persona! representatives, successors and assigns.

     (l) Notices. Any notice required or Notices permitted to be given hereunder
         -------
shall be in writing and may be given by personal  service  evidenced by a signed
receipt or sent by registered or certified mail,  return receipt  requested,  or
via overnight courier, and shall be effective upon proof of delivery,  addressed
to Tenant at the  Premises  or to  Landlord  at the  management  office  for the
Project,  with a copy to  Landlord,  c/o  Arden  Realty,  Inc.,  11601  Wilshire
Boulevard,  Fourth Floor, Los Angeles, California 90025, Attn: Legal Department.
Either party may by notice to the other  specify a different  address for notice
purposes  except that,  upon Tenant's  taking  possession  of the Premises,  the
Premises shall constitute  Tenant's  address for notice purposes.  A copy of all
notices to be given to Landlord  hereunder shall be concurrently  transmitted by
Tenant to such party hereafter designated by notice from Landlord to Tenant. Any
notices sent by Landlord regarding or relating to eviction procedures, including
without limitation three day notices, may be sent by regular mail.

     (m) Persistent Delinquencies.  In the event that Tenant shall be delinquent
         ------------------------
by more than  fifteen  (15) days in the  payment  of rent on three (3)  separate
occasions  in any twelve  (12) month  period,  Landlord  shall have the right to
terminate  this Lease by thirty (30) days  written  notice  given by Landlord to
Tenant within thirty (30) days of the last such delinquency.

<PAGE>

     (n) Right of  Landlord to  Perform.  All  covenants  and  agreements  to be
         ------------------------------
performed  by Tenant  under any of the terms of this Lease shall be performed by
Tenant at Tenant's  sole cost and expense and without any  abatement of rent. If
Tenant shall fail to pay any sum of money,  other than rent  required to be paid
by it  hereunder  or  shall  fail to  perform  any  other  act on its part to be
performed hereunder,  and such failure shall continue beyond any applicable cure
period set forth in this Lease,  Landlord  may, but shall not be  obligated  to,
without  waiving or releasing  Tenant from any  obligations of Tenant,  make any
such  payment  or  perform  any such  other act on  Tenant's  part to be made or
performed  as is in this Lease  provided.  All sums so paid by Landlord  and all
reasonable  incidental costs,  together with interest thereon at the rate of ten
percent  (10%) per annum  from the date of such  payment by  Landlord,  shall be
payable to Landlord  on demand and Tenant  covenants  to pay any such sums,  and
Landlord  shall have (in addition to any other right or remedy of Landlord)  the
same rights and remedies in the event of the nonpayment  thereof by Tenant as in
the case of default by Tenant in the payment of the rent.

     (o) Access. Changes in Project, Facilities, Name.
         ---------------------------------------------

          (i) Every part of the Project except the inside surfaces of all walls,
windows and doors bounding the Premises (including exterior building walls, core
corridor  walls and doors and any core corridor  entrance),  and any space in or
adjacent to the Premises used for shafts,  stacks, pipes,  conduits,  fan rooms,
ducts, electric or other utilities,  sinks or other building facilities, and the
use thereof,  as well as access thereto through the Premises for the purposes of
operation, maintenance, decoration and repair, are reserved to Landlord.

          (ii) Tenant shall permit Landlord to install,  use and maintain pipes,
ducts and conduits within the walls, columns and ceilings of the Premises.

          (iii) Landlord reserves the right,  without incurring any liability to
Tenant therefor,  to make such changes in or to the Project and the fixtures and
equipment thereof,  as well as in or to the street entrances,  halls,  passages,
elevators, stairways and other improvements thereof, as it may deem necessary or
desirable.

          (iv) Landlord may adopt any name for the Project and Landlord reserves
the right to change the name or address of the Project at any time.

     (p) Signing Authority.  If Tenant is a corporation,  partnership or limited
         -----------------
liability company, each individual executing this Lease on behalf of said entity
represents and warrants that he or she is duly authorized to execute and deliver
this  Lease on behalf  of said  entity in  accordance  with:  (i) if Tenant is a
corporation,  a duly  adopted  resolution  of the  Board  of  Directors  of said
corporation  or in  accordance  with the  By-laws of said  corporation,  (ii) if
Tenant is a partnership,  the terms of the partnership  agreement,  and (iii) if
Tenant is a limited liability company, the terms of its operating agreement, and
that this  Lease is  binding  upon said  entity in  accordance  with its  terms.
Concurrently  with  Tenant's  execution of this Lease,  Tenant shall  provide to
Landlord a copy of: (i) if Tenant is a corporation, such resolution of Directors
authorizing the execution of this Lease on behalf such  corporation,  resolution
shall  be  duly  certified  by  the  secretary  or  assistant  secretary  of the
corporation a true copy of a resolution  duly adopted by t he Board of Directors
of  said  corporation  and shall be in the form of " Exhibit E"

                                       33
<PAGE>

or in some other form  reasonably  acceptable  to Landlord,  (ii) if Tenant is a
partnership,  a copy of the provisions of the partnership agreement granting the
requisite  authority to each  individual  executing this Lease on behalf of said
partnership,  and (iii) if Tenant is a limited liability  company, a copy of the
provisions of its operating  agreement granting the requisite  authority to each
individual  executing this Lease on behalf of said limited liability company. In
the  event  Tenant  fails to  comply  with the  requirements  set  forth in this
subparagraph (p), then each individual  executing this Lease shall be personally
liable for all of Tenant's obligations in this Lease.

     (q) Identification of Tenant.
         ------------------------

          (i) If Tenant  constitutes more than of one person of or entity,  (A )
each of them  shall  be  jointly  and  severally  liable  for the  keeping  all,
observing and performing  covenants,  conditions and provisions of this Lease to
be kept, observed and performed by Tenant, (B) the term "Tenant" as used in this
L ease shall mean and include  each of them jointly and  severally,  and (C) the
act of or notice from,  or notice or refund to, or the  signature of, any one or
more of them,  with  respect to the tenancy of this  Lease,  including , but not
limited to, any renewal, extension,  expiration , termination or modification of
this  Lease,  shall be  binding  upon each and all of the  persons  or  entities
executing  this Lease as Tenant  with the same effect as if each and all of them
had so acted or so given or received such notice or refund or signed .

          (ii)  If  Tenant  is a  partnership  (or is  comprised  of two or more
persons,  individually  and as  co-partners  of a  partnership)  or if  Tenant's
interest in this Lease  assigned to a  partnership  (or to two or more  persons,
individually  and as co-part  partnership)  pursuant  to Article 15 here of (any
such  partnership  and such  persons  hereinafter  referred  to in this  Article
30(q)(ii) as "Partnership Tenant"), the following provisions of this Lease shall
apply to such Partnership Tenant:

              (A) The  liability of each of the parties  comprising  Partnership
Tenant shall be joint and several.

              (B)  Each of the  parties  comprising  Partnership  Tenant  hereby
consents in advance to, and agrees to be bound by, any written  instrument which
may hereafter be executed,  changing,  modifying or discharging  this Lease,  in
whole or in part, or  surrendering  or any part of the Premises to the Landlord,
and by notices,  demands, requests or other communication which may hereafter be
given,  by the to individual or individuals  authorized to execute this Lease on
behalf of Partnership Tenant under Subparagraph (p) above.

              (C) Any bills,  statements,  notices,  demands,  requests or other
communications  given or rendered to Partnership Tenant or to any of the parties
compromising Partnership Tenant shall be deemed given or rendered to Partnership
Tenant and to all such parties and shall be binding upon Partnership  Tenant and
all such parties.

              (D) If  Partnership  Tenant admits new  partners,  all of such new
partners  shall,  by their  admission to Partnership  Tenant,  be deemed to have
assumed  performance  of the terms,  covenants  and  conditions of this Lease on
Tenant's part to be observed and performed.

                                       34
<PAGE>

              (E) Partnership Tenant shall give prompt notice to Landlord of the
admission of any such new partners,  and,  upon demand of Landlord,  shall cause
each such new partner to execute and  deliver to Landlord an  agreement  in form
satisfactory  to  Landlord,   where  in  each  such  new  partner  shall  assume
performance  of all of the  terms,  covenants  and  conditions  of this Lease on
Partnership  Tenant's part to be observed and performed (but neither  Landlord's
failure to request any such agreement nor the failure of any such new partner to
execute or deliver any such agreement to Landlord shall terminate the provisions
of clause (D) of this  Article  30(q)(ii) or relieve any such new partner of its
obligations thereunder).

     (r) Substitute  Premises.  Landlord shall have the at right any time during
         --------------------
the Term hereof,  upon giving Tenant not less than sixty (60) days prior notice,
to  provide  and  furnish  Tenant  with  space   elsewhere  in  the  Project  of
approximately  the same size as the Premises and remove and place Tenant in such
space,  with  Landlord to pay all verified  and  previously  approved  costs and
expenses incurred as a result of such movement to such new space. Landlord moves
Tenant to such new space,  this  Lease and each and all of its terms,  covenants
and  conditions  shall  remain  in full  force  and  effect  and shall be deemed
applicable to such new space and such new space shall thereafter be deemed to be
the "Premises" as though Landlord and Tenant had entered into an express written
amendment of this Lease with respect thereto.

     (s) Survival of Obligations.  Any obligations of Tenant  occurring prior to
         -----------------------
the  expiration  or  earlier  termination  of  this  Lease  shall  survive  such
expiration or earlier termination.

     (t) Intentionally Deleted.
         ---------------------

     (u)  Governing  Law.  This Lease  shall be  governed  by and  construed  in
          --------------
accordance  with the laws of the State of California.  No conflicts of law rules
of any state or country (including, without limitation,  California conflicts of
la w rules) shall be applied to result in the  application of any substantive or
procedural   laws  of  any  state  or  country   other  than   California.   All
controversies,  claims,  actions or causes of action arising between the parties
hereto and/or their respective successors and assigns,  shall be brought,  heard
and  adjudicated  by the  courts of the State of  California,  with venue in the
County of  Riverside.  Each of the parties  hereto  hereby  consents to personal
jurisdiction  by the courts of the State of California  in  connection  with any
such  controversy,  claim,  action or cause of action,  and each of the  parties
hereto consents to service of process by any means  authorized by California law
and consent to the  enforcement of any judgment so obtained in the courts of the
State of  California on the same terms and  conditions  as if such  controversy,
claim , action or cause of action had been originally heard and adjudicated to a
final judgment in such courts.  Each of the parties hereto further  acknowledges
that the laws and courts of  California  were freely and  voluntarily  chosen to
govern this Lease and to adjudicate any claims or disputes hereunder.

     (v)  Exhibits and  Addendum.  The Exhibits  and  Addendum,  if  applicable,
          ----------------------
attached hereto are incorporated  herein by this reference as if fully set forth
herein.

                                       35
<PAGE>

                                  ARTICLE XXXI
                                  ------------

                                OPTION TO EXTEND
                                ----------------

     (a) Option  Right.  Landlord  hereby  grants the Tenant named in this Lease
         ------------
(the "Original  Tenant") one (1) option  ("Option") to extend the Lease Term for
the entire  Premises for a period of three (3) years (an "Option  Term"),  which
option  shall be  exercisable  only by  written  notice  delivered  by Tenant to
Landlord  set forth  below.  The rights  contained  in this  Article 31 shall be
personal to the Original Tenant and may only be exercised by the Original Tenant
(and not any assignee,  sublessee or other  transferee of the Original Tenant `s
interest in this Lease) if the Original  Tenant  occupies the entire Premises as
of the date of Tenant's Acceptance (as defined in Section 31(c) below).

     (b) Option Rent. The rent payable by Tenant during the Option Term ("Option
         -----------
Rent") shall be equal to the "Market  Rent"  (defined  below ), but in now event
shall the Option Rent be less than Tenant is paying under the Lease on the month
immediately  preceding the Option Term for Monthly  Basic Rental,  including all
escalations,  Direct Costs,  additional  rent and other  charges.  "Market Rent"
shall mean the  applicable  Monthly  Basic Rental,  including  all  escalations,
Direct Costs, additional rent and other charges at which tenants, as of the time
of Landlord's  "Option Rent Notice" (as defined below), are entering into leases
for non-sublease, non-encumbered, space comparable in size, location and quality
to the Premises in renewal transactions for a term comparable to the Option Term
which comparable space is located in office buildings  comparable to the Project
in Temecula,  California  taking,  into  consideration the value of the existing
improvements in the Premises to Tenant, as compared to the value of the existing
improvements  in such  comparable  space, w it h such value to be based upon the
age,  quality  and layout of the  improvements  and the extent to which the same
could be  utilized  by  Tenant  with  consideration  given to the fact  that the
improvements existing in the Premises are specifically suitable to Tenant.

     (c) Exercise of Option. The Option shall be exercised by Tenant only in the
         ------------------
following manner: (i) Tenant shall not be in default, and shall not have been in
default  under this Lease more than once,  on the delivery  date of the Interest
Notice and  Tenant's  Acceptance;  (ii)  Tenant  shall  deliver  written  notice
("Interest  Notice") to Landlord not more than ten (10) months nor less than six
(6) months  prior to the  expiration  of the Lease Term,  stating that Tenant is
interested in exercising the Option,  (iii) within fifteen (15) business days of
Landlord's  receipt of Tenant's  written  notice,  Landlord shall deliver notice
("Option  Rent  Notice") to Tenant  setting  forth the Option Rent;  and (iv) if
Tenant desires to exercise such Option,  Tenant shall provide  Landlord  written
notice  within five (5)  business  days after  receipt of the Option Rent Notice
("Tenant's  Acceptance").  Tenant's  failure to deliver the  Interest  Notice or
Tenant's  Acceptance on or before the dates  specified  above shall be deemed to
constitute  Tenant's  election not to exercise the Option.  If Tenant timely and
properly  exercises its Option,  the Lease Term shall be extended for the Option
Term upon all of the terms and conditions  set forth in this Lease,  except that
the rent for the Option Term shall be as indicated in the Option Rent Notice.

                                       36
<PAGE>

                                 ARTICLE XXXII
                                 -------------

                                SIGNAGE/DIRECTORY
                                -----------------

     Provided Tenant is not in default hereunder,  Tenant, at Tenant's cost sole
and expense,  shall have the right to one (1) line in the lobby directory during
the Lease Term. If other tenants occupy space on the floor on which the Premises
is located,  Tenant's  identifying  signage  shall be provided by  Landlord,  at
Landlord's  cost,  and such signage shall be comparable to that used by Landlord
for other similar floors in the Project and shall comply with Landlord's Project
standard signage program.  Provided Tenant is not in default  hereunder,  Tenant
shall have the right, at Tenant `s sole cost and expense,  to install signage in
the  elevator  lobby of the floor on which the  Premises  is located  ("Tenant's
Signage").  Tenant's Signage shall be subject to Landlord's approval as to size,
design,  location,  graphics,  materials,  colors and similar specifications and
shall be consistent  with the exterior  design,  materials and appearance of the
Project and the Project's signage program. Tenant's Signage shall be personal to
the Original Tenant and may not be assigned to any assignee or sublessee, or any
other  person or entity.  Landlord  has the right,  but not the  obligation,  to
oversee the  installation  of Tenant's  Signage.  The cost to maintain  Tenant's
Signage shall be paid for by Tenant.  Upon the  expiration of the Lease Term, or
other earlier termination of this Lease, Tenant shall be responsible for any and
all costs associated with the removal of Tenant `s Signage,  including,  but not
limited  to,  the  cost to  repair  and  restore  the  Project  to its  original
condition, normal wear and tear excepted,

                                       37
<PAGE>

     IN WITNESS WHEREOF, the parties have executed this Lease, consisting of the
foregoing provisions and Articles,  including all exhibits and other attachments
referenced therein, as of the date first above written.

"LANDLORD"                      ARDEN REALTY LIMITED PARTNERSHLP,
                                a Maryland limited partnership

                                By: ARDEN REALTY, INC.,
                                    a Maryland corporation
                                    Its: Sole General Partner

                                By:
                                    --------------------------------------------
                                VICTOR J. COLEMAN
                                Its: President and COO

"TENANT"                        E-PERCEPTION TECHNOLOGIES.,
                                a Delaware corporation

                                By:
                                     -------------------------------------------
                                     Print Name:
                                                 -------------------------------
                                     Title:
                                            ------------------------------------

                                By:
                                    --------------------------------------------
                                     Print Name:
                                                 -------------------------------
                                     Title:
                                            ------------------------------------

                                       38
<PAGE>

                                   EXHIBIT "A"
                                   -----------

                                    PREMISES
                                    --------

<PAGE>

                                   EXHIBIT "B"
                                   -----------

                        [FIRST PAGE OF EXHIBIT B MISSING]
                        ---------------------------------

         7.  Tenant  shall  not use or  keep  in the  Premises  or  Project  any
kerosene,  gasoline or inflammable,  explosive or combustible fluid or material,
or use any method of heating or air  conditioning  other than that  supplied  by
Landlord.

         8. Tenant shall not lay linoleum,  tile,  carpet or other similar floor
covering  so that the same shall be affixed to the floor of the  Premises in any
manner except as approved by Landlord.

         9.  Tenant  shall not  install or use any  blinds,  shades,  awnings or
screens in, connection with any window or door of the Premises and shall not use
any drape or window  covering  facing any exterior  glass surface other than the
standard drapes, blinds or other window covering established by Landlord.

         10.  Tenant  shall   cooperate  with  Landlord  in  obtaining   maximum
effectiveness  of the cooling system by closing window  coverings when the sun's
rays fall directly on windows of the Premises. Tenant shall not obstruct, alter,
or in any way impair the efficient operation of Landlord's heating,  ventilating
and air-conditioning  system. Tenant shall not tamper with or change the setting
of any thermostats or control valves.

         11. The Premises shall not be used for manufacturing or for the storage
of merchandise  except as such storage may be incidental to the permitted use of
the  Premises.  Tenant shall not,  without  Landlord `s prior  written  consent,
occupy or permit any  portion of the  Premises  to be  occupied  or used for the
manufacture  or sale of liquor or tobacco in any form,  or a barber or  manicure
shop, or as an employment  bureau. The Premises shall not be used for lodging or
sleeping or for any improper, objectionable or immoral purpose. No auction shall
be conducted on the Premises.

         12.  Tenant  shall not make,  or permit  to be made,  any  unseemly  or
disturbing  noises,  or  disturb  or  interfere  with  occupants  of  Project or
neighboring buildings or premises or those having business with it by the use of
any musical  instrument,  radio,  phonographs or unusual noise,  or in any other
way.

         13. No bicycles,  vehicles or animals of any kind shall be brought into
or kept in or about the  Premises,  and no cooking shall be done or permitted by
any tenant in the  Premises,  except that the  preparation  of coffee,  tea, hot
chocolate and similar items for tenants,  their  employees and visitors shall be
permitted. No tenant shall cause or permit any unusual or objectionable odors to
be  produced in or permeate  from or  throughout  the  Premises.  The  foregoing
notwithstanding,  Tenant  shall  have the right to use a  microwave  and to heat
microwavable  items  typically  heated in an office.  No hot  plates,  toasters,
toaster ovens or similar open element  cooking  apparatus  shall be permitted in
the Premises.

         14. The sashes, sash doors,  skylights,  windows and doors that reflect
or admit light and air into the halls, passageways or other public places in the
Project shall not be covered or obstructed by any tenant, nor shall any bottles,
parcels or other articles be placed on the window sills.

<PAGE>

         15. No  additional  locks or bolts of any kind shall be placed upon any
of the doors or windows by any tenant, nor shall any changes be made in existing
locks or the mechanisms thereof unless Landlord is first notified thereof, gives
written  approval,  and is furnished a key therefor.  Each tenant must, upon the
termination  of his tenancy,  give to Landlord all keys and key cards of stores,
offices,  or toilets or toilet rooms, either furnished to, or otherwise procured
by, such  tenant,  and in the event of the loss of any keys so  furnished,  such
tenant shall pay Landlord the cost of replacing the same or of changing the lock
or locks  opened by such lost key if Landlord  shall deem it  necessary  to make
such  change.  If more  than two keys for one lock are  desired,  Landlord  will
provide them upon payment therefor by Tenant. Tenant shall not key or re-key any
locks. All locks shall be keyed by Landlord `s locksmith only.

         16.  Landlord  shall have the right to prohibit any  advertising by any
tenant  which,  in Landlord `s opinion,  tends to impair the  reputation  of the
Project or its  desirability  as an office building and upon written notice from
Landlord any tenant shall refrain from and discontinue such advertising.

         17. Landlord reserves the right to control access to the Project by all
persons after reasonable hours of generally  recognized business days and at all
hours on Sundays and legal  holidays.  Each tenant shall be responsible  for all
persons for whom it requests  after hours access and shall be liable to Landlord
for all acts of such persons. Landlord shall have the right from time to time to
establish  reasonable rules pertaining to freight elevator usage,  including the
allocation and  reservation of such usage for tenants  `initial their move-in to
premises, and final departure therefrom.

         18. Any person  employed  by any tenant to do  janitorial  work  shall,
while in the Project and  outside of the  Premises,  be subject to and under the
control  and  direction  of  the  Office  of  the  Project  or  its   designated
representative  such as  security  personnel  (but not as an agent or servant of
Landlord, and the Tenant shall be responsible for al! acts of such persons).

         19.  All doors  opening  on to public  corridors  shall be kept  closed
except when being used for ingress and egress. Tenant shall cooperate and comply
with any reasonable safety or security  programs,  including fire drills and air
raid drills, and the appointment of "fire wardens" developed by Landlord for the
Project,  or required by law.  Before  leaving the Premises  unattended,  Tenant
shall close and securely  lock all doors or other means of entry to the Premises
and shut off all lights and water faucets in the Premises.

         20.  The  requirements  of  tenants  will  be  attended  to  only  upon
application
to the Office of the Project.

         21.  Canvassing,  soliciting and peddling in the Project are prohibited
and each tenant shall cooperate to prevent the same.

         22. All office  equipment of any electrical or mechanical  nature shall
be placed by tenants in the Premises in settings approved by Landlord, to absorb
or prevent any vibration, noise or annoyance.

<PAGE>

         23.  No  air-conditioning  unit or  other  similar  apparatus  shall be
installed or used by any tenant  without the prior written  consent of Landlord.
Tenant shall pay the cost of all electricity  used for  air-conditioning  in the
Premises if such  electrical  consumption  exceeds  normal office  requirements,
regardless  of  whether  additional  apparatus  is  installed  pursuant  to  the
preceding sentence.

         24. There shall not be used in any space, or in the public halls of the
Project,  either by any tenant or others,  any hand trucks except those equipped
with rubber tires and side guards.

         25. All electrical ceiling fixtures hung in offices or spaces along the
perimeter of the Project must be fluorescent  and/or of a quality,  type, design
and bulb color approved by Landlord.  Tenant shall not permit the consumption in
the Premises of more than 2 1/2 watts per net usable square foot in the Premises
in respect of office  lighting nor shall Tenant  permit the  consumption  in the
Premises  of more than 1 1/2 watts per net  usable  square  foot of space in the
Premises in respect of the power outlets therein,  at any one time. In the event
that such limits are exceeded,  Landlord  shall have the right to require Tenant
to remove lighting  fixtures and equipment  and/or to charge Tenant for the cost
of the additional electricity consumed.

          26. Parking.

              (a)  Project  parking  facility  hours  shall be 7:00 a.m. to 7:00
p.m., Monday through Friday, and closed on weekends,  state and federal holidays
excepted, as such hours may be revised from time to time by Landlord.

              (b) Automobiles  must be parked entirely within the stall lines on
the floor.

              (c) All directional signs and arrows must be observed.

              (d) The speed limit shall be 5 miles per hour.

              (e) Parking is prohibited in areas not striped for parking.

              (f) Parking  cards or any other  device or form of  identification
supplied by Landlord (or its operator) shall remain the property of Landlord (or
its operator). Such parking identification device must be displayed as requested
and may not be  mutilated  in any  manner.  The  serial  number  of the  parking
identification  device may not be obliterated.  Devices are not  transferable or
assignable  and any device in the possession of an  unauthorized  holder will be
void. There will be a replacement  charge to the Tenant or person  designated by
Tenant of $25.00 for loss of any parking card. There shall be a security deposit
of $25.00 due at issuance for each card key issued to Tenant.

              (g) The  monthly  rate for  parking  is  payable  one (1) month in
advance and must be paid by the third business day of each month.  Failure to do
so will  automatically  cancel parking privileges and a charge at the prevailing
daily rate will be due. No deductions  or allowances  from the monthly rate will
be made for days parker does not use the parking facilities.

<PAGE>

              (h) Tenant may validate  visitor parking by such method or methods
as the Landlord may approve,  at the validation rate from time to time generally
applicable to visitor parking.

              (i) Landlord  (and its  operator)  may refuse to permit any person
who violates the within rules to park in the Project parking  facility,  and any
violation of the rules shall subject the  automobile to removal from the Project
parking facility at the parker's expense. In either of said events, Landlord (or
its operator) shall refund a prorata portion of the current monthly parking rate
and the sticker or any other form of identification supplied by Landlord (or its
operator) will be returned to Landlord (or its operator).

              (j)  Project  parking  facility  managers  or  attendants  are not
authorized to make or allow any exceptions to these Rules and Regulations.

              (k) All  responsibility  for any loss or damage to  automobiles or
any personal property therein is assumed by the parker.

              (l)  Loss  or  theft  of  parking   identification   devices  from
automobiles   must  be  reported  to  the  Project  parking   facility   manager
immediately,  and a lost or stolen  report  must be filed by the  parker at that
time.

              (m) The Parking facilities are for the sole purpose of parking one
automobile per space. Washing,  waxing, cleaning or servicing of any vehicles by
the parker or his agents is prohibited.

              (n) Landlord (and its  operator)  reserves the right to refuse the
issuance of monthly  stickers  or other  parking  identification  devices to any
Tenant  and/or  its  employees  who  refuse to comply  with the above  Rules and
Regulations and al! City, State or Federal ordinances, laws or agreements.

              (o) Tenant agrees to acquaint all  employees  with these Rules and
Regulations.

              (p) No vehicle shall be stored in the Project parking facility for
a period of more than one (1) week.

         27. The Project is a non-smoking  Project.  Smoking or carrying lighted
cigars or cigarettes in the Premises or the Project,  including the elevators in
the Project, is prohibited.

<PAGE>

                                   EXHIBIT "C"
                                   -----------

                           NOTICE OF LEASE TERM DATES
                        AND TENANT'S PROPORTIONATE SHARE
                        --------------------------------

TO:                                               DATE:
    ------------------------------                    --------------------------

RE:  Lease dated ___________, 2000, between _____________________  ("Landlord"),
     and  __________________  ("Tenant"),  concerning  Suite ______,  located at
     ____________.

Ladies and Gentlemen:

         In accordance with the Lease,  Landlord wishes to advise and/or confirm
the following:

     1. That the  Premises  have been  accepted  herewith by the Tenant as being
substantially  complete  in  accordance  with the  Lease  and  that  there is no
deficiency in construction.

     2. That the Tenant has taken  possession  of the Premises and  acknowledges
that under the  provisions of the Lease the Term of said Lease shall commence as
of   ______________   for  a   term   of   _______________________   ending   on
_______________________.

     3. That in accordance with the Lease,  Basic Rental  commenced to accrue on
______________________.

     4. If the Commencement Date of the Lease is other than the first day of the
month,  the  first  billing  will  contain a prorata  adjustment.  Each  billing
thereafter  shall be for the full amount of the monthly  installment as provided
for in said Lease.

     5. Rent is due and  payable  in  advance on the first day of each and every
month during the Term of said Lease.  Your rent checks should be made payable to
________________ at _____________________________________.

     6. The exact  number  of  rentable  square  feet  within  the  Premises  is
____________ square feet.

<PAGE>

     7. Tenant's Proportionate Share, as adjusted based upon the exact number of
rentable square feet within the Premises is _________%.

AGREED AND ACCEPTED:

TENANT:

--------------------------------------------,

a
  ------------------------------------------

By:
    ----------------------------------------
      Its:
           ---------------------------------

                                  EXHIBIT ONLY
                         ***DO NOT SIGN -INITIAL ONLY***

<PAGE>

                                   EXHIBIT "D"
                                   -----------

                              INTENTIONALLY DELETED
                              ---------------------

<PAGE>

                                   EXHIBIT "E"
                                   -----------

                                CERTIFIED COPY OF
                         BOARD OF DIRE'CTORS RESOLUTIONS
                                       OF
                         E-PERCEPTION TECHNOLOGIES, INC.

         The  undersigned,   being  the  duly  elected  Corporate  Secretary  of
E-PERCEPTION TECHNOLOGIES, INC., a Delaware corporation ("Corporation"),  hereby
certifies  that  the `  following  is a true,  full  and  correct  copy o f `the
resolutions adopted by the Corporation by unanimous written consent in lieu of a
special meeting,  of its Board of Directors,  and that said resolutions have not
been amended or revoked as of the date hereof.

         RESOLVED,  that the  Corporation,  is  hereby  authorized  to  execute,
deliver and fully perform that certain document  entitled  Standard Office Lease
("Lease") by and between the Corporation and Arden Realty Limited Partnership, a
Maryland limited partnership, for the lease of space at Tower Plaza I.

         RESOLVED  FURTHER,  that  the  Corporation  is  hereby  authorized  and
directed  to make,  execute and  deliver  any and all,  consents,  certificates,
documents,  instruments,  amendments,   confirmations,   guarantees,  papers  or
writings as may be required in connection  with or in  furtherance  of the Lease
(collectively  with the Lease, the  "Documents") or any  transactions  described
therein,  and to do any and all other acts  necessary or desirable to effectuate
the foregoing resolution.

         RESOLVED  FURTHER,   that  the  following   officers  acting  together:
_____________  as   _____________;   and   _____________  as  _____________  are
authorized  to execute and deliver the  Documents on behalf of the  Corporation,
together with any other documents and/or instruments  evidencing or ancillary to
the  Documents,  and in such  forms and on such terms as such  officer(s)  shall
approve, the execution thereof to be conclusive evidence of such approval and to
execute and deliver on behalf of the Corporation  all other documents  necessary
to effectuate said transaction in conformance with these resolutions.

Date___________, 2000
                                         -------------------------------------,
                                         Corporate Secretary

                                  EXHIBIT ONLY
                         ***DO NOT SIGN -INITIAL ONLY***

<PAGE>

                                TABLE OF CONTENTS

                                                                            Page

ARTICLE I  BASIC LEASE PROVISIONS.............................................1

ARTICLE II  TERM/PREMISES.....................................................2

ARTICLE III  RENTAL...........................................................3
                  (a)      Basic Rental.......................................3
                  (b)      Increase in Direct Costs...........................3
                  (c)      Definitions........................................3
                  (d)      Determination of Payment...........................6

ARTICLE IV  SECURITY DEPOSIT..................................................7

ARTICLE V  HOLDING OVER.......................................................8

ARTICLE VI  PERSONAL PROPERTY TAXES...........................................9

ARTICLE VII  USE..............................................................9

ARTICLE VIII  CONDITION OF PREMISES..........................................10

ARTICLE IX  REPAIRS AND ALTERATIONS..........................................11

ARTICLE X  LIENS.............................................................12

ARTICLE XI  PROJECT SERVICES.................................................12

ARTICLE XII  RIGHTS OF LANDLORD..............................................14

ARTICLE XIII  INDEMNITY; EXEMPTION OF LANDLORD FROM LIABILITY................14
                  (a)      Indemnity.........................................14
                  (b)      Exemption of Landlord from Liability..............14

ARTICLE XIV  INSURANCE.......................................................15
                  (a)      Tenant's Insurance................................15
                  (b)      Form of Policies..................................16
                  (c)      Landlord's Insurance..............................16
                  (d)      Waiver of Subrogation.............................16
                  (e)      Compliance with Law...............................17

ARTICLE XV  ASSIGNMENT AND SUBLETTING........................................17

ARTICLE XVI  DAMAGE OR DESTRUCTION...........................................19

ARTICLE XVII  SUBORDINATION..................................................20

ARTICLE XVIII  EMINENT DOMAIN................................................21

<PAGE>

                                TABLE OF CONTENTS
                                  (continued)
                                                                            Page

ARTICLE XIX  DEFAULT.........................................................22

ARTICLE XX  REMEDIES.........................................................23

ARTICLE XXI  TRANSFER OF LANDLORD'S INTEREST.................................24

ARTICLE XXII  BROKER.........................................................25

ARTICLE XXIII  PARKING.......................................................25

ARTICLE XXIV  WAIVER.........................................................26

ARTICLE XXV  ESTOPPEL CERTIFICATE............................................26

ARTICLE XXVI  LIABILITY OF LANDLORD..........................................27

ARTICLE XXVII  INABILITY TO PERFORM..........................................27

ARTICLE XXVIII  HAZARDOUS WASTE..............................................28

ARTICLE XXIX  SURRENDER OF PREMISES: REMOVAL OF PROPERTY.....................29

ARTICLE XXX  MISCELLANEOUS...................................................30
                  (a)      Severabilitv: Entire Agreement....................30
                  (b)      Attorneys' Fees; Waiver of Jury Trial.............30
                  (c)      Time of Essence...................................31
                  (d)      Headings: Joint and Several.......................31
                  (e)      Reserved Area.....................................31
                  (f)      NO OPTION.........................................31
                  (g)      Use of Project Name; Improvements.................31
                  (h)      Rules and Regulations.............................32
                  (i)      Quiet Possession..................................32
                  (j)      Rent..............................................32
                  (k)      Successors and Assigns............................32
                  (l)      Notices...........................................32
                  (m)      Persistent Delinquencies..........................32
                  (n)      Right of Landlord to Perform......................33
                  (o)      Access.  Changes in Project, Facilities, Name.....33
                  (p)      Signing Authority.................................33
                  (q)      Identification of Tenant..........................34
                  (r)      Substitute Premises...............................35
                  (s)      Survival of Obligations...........................35
                  (t)      Intentionally Deleted.............................35
                  (u)      Governing Law.....................................35
                  (v)      Exhibits and Addendum.............................35

ARTICLE XXXI  OPTION TO EXTEND...............................................36

<PAGE>

                                TABLE OF CONTENTS
                                  (continued)
                                                                            Page

                  (a)      Option Right......................................36
                  (b)      Option Rent.......................................36
                  (c)      Exercise of Option................................36

ARTICLE XXXII  SIGNAGE/DIRECTORY.............................................37

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