Document:

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                                                                    EXHIBIT 10.1

                  COMMON STOCK AND WARRANTS PURCHASE AGREEMENT

                                     BETWEEN

                            VIISAGE TECHNOLOGY, INC.

                                       AND

                         THE INVESTORS SIGNATORY HERETO

     COMMON STOCK AND WARRANTS PURCHASE AGREEMENT dated as of December 14, 2001
(the "Agreement"), between the Investors signatory hereto (each an "Investor"
and together the "Investors"), and Viisage Technology, Inc., a corporation
organized and existing under the laws of the State of Delaware (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 Investors,
and the Investors shall purchase in the aggregate, up to (i) 2,380,952 shares of
Common Stock (as defined below) and (ii) Warrants (as defined below) to purchase
up to 357,143 shares of the Common Stock (as defined below) at $12.08 per share.

     WHEREAS, such investments will be made in reliance upon the provisions of
Section 4(2) ("Section 4(2)") and/or 4(6) of the United States Securities Act
and/or Regulation D ("Regulation D") and the other rules and regulations
promulgated thereunder (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 in securities to be made
hereunder.

     NOW, THEREFORE, the parties hereto agree as follows:

                                   ARTICLE I

                               Certain Definitions

Section 1.1. "Capital Shares" shall mean the Common Stock and any shares of any
other class of common stock whether now or hereafter authorized, having the
right to participate in the distribution of earnings and assets of the Company.

Section 1.2. "Capital Shares Equivalents" shall mean any securities, rights, or
obligations that are convertible into or exchangeable for or give any right to
subscribe for any Capital Shares of the Company or any Warrants, options or
other rights to subscribe for or purchase Capital Shares or any such convertible
or exchangeable securities.

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Section 1.3. "Closing" shall mean the closing of the purchase and sale of the
Common Stock and Warrants pursuant to Section 2.1

Section 1.4. "Closing Date" shall mean the date on which all conditions to the
Closing have been satisfied (as defined in Section 2.1 (b) hereto) and the
Closing shall have occurred.

Section 1.5. "Common Stock" shall mean the Company's common stock, $.001 par
value per share.

Section 1.6. "Damages" shall mean any loss, claim, damage, judgment, penalty,
deficiency, liability, costs and expenses (including, without limitation,
reasonable attorney's fees and disbursements and reasonable costs and expenses
of expert witnesses and investigation; but excluding indirect or consequential
damages).

Section 1.7. "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 the Registration Rights Agreement.

Section 1.8. "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.

Section 1.9. "Legend" shall mean the legend set forth in Section 8.1.

Section 1.10. "Material Adverse Effect" shall mean any effect on the business,
operations, properties, prospects, or financial condition of the Company that is
material and adverse to the Company and its subsidiaries and affiliates, taken
as a whole, and/or any condition, circumstance, or situation that would prohibit
or otherwise interfere with the ability of the Company to enter into and perform
any of its obligations under this Agreement, the Registration Rights Agreement,
or the Warrants in any material respect.

Section 1.11. "Outstanding" when used with reference to shares of Common Stock
or Capital Shares, shall mean, at any date as of which the number of such shares
is to be determined, all issued and outstanding shares, and shall include all
such shares issuable in respect of outstanding scrip or any certificates
representing fractional interests in such shares; provided, however, that
"Outstanding" shall not mean any such shares then directly or indirectly owned
or held by or for the account of the Company.

Section 1.12. "Person" shall mean an individual, a corporation, a partnership, a
limited liability company, an association, a trust or other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.

Section 1.13. "Principal Market" shall mean the American Stock Exchange, the New
York Stock Exchange, the NASDAQ National Market, or the NASDAQ Small-Cap Market,
whichever is at the time the principal trading exchange or market for the Common
Stock, based upon share volume.

Section 1.14. "Purchase Price" shall mean ten dollars and fifty cents ($10.50)
per unit consisting of one share of Common Stock and fifteen-one hundredths of a
Warrant.

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Section 1.15. "Registrable Securities" shall mean the Common Stock and the
Warrant Shares until (i) the Registration Statement has been declared effective
by the SEC, and all shares of Common Stock and Warrant Shares have been disposed
of pursuant to the Registration Statement, (ii) all shares of Common Stock and
Warrant Shares have been sold under circumstances under which all of the
applicable conditions of Rule 144 (or any similar provision then in force) under
the Securities Act ("Rule 144") are met, (iii) all shares of Common Stock and
Warrant Shares have been otherwise transferred to holders 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 or (iv) such time as, in the opinion of counsel
to the Company, all shares of Common Stock and Warrant Shares may be sold
without any time, volume or manner limitations pursuant to Rule 144(k) (or any
similar provision then in effect) under the Securities Act.

Section 1.16. "Registration Rights Agreement" shall mean the agreement regarding
the filing of the Registration Statement for the resale of the Registrable
Securities, entered into between the Company and the Investors as of the Closing
Date in the form annexed hereto as Exhibit A.

Section 1.17. "Registration Statement" shall mean a registration statement on
Form S-3 (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 by the Investors
of the Registrable Securities to be registered thereunder in accordance with the
provisions of this Agreement, the Registration Rights Agreement and in
accordance with the intended method of distribution of such securities), for the
registration of the resale by the Investors of the Registrable Securities under
the Securities Act.

Section 1.18. "Regulation D" shall have the meaning set forth in the recitals of
this Agreement.

Section 1.19. "SEC" shall mean the Securities and Exchange Commission.

Section 1.20. "Section 4(2)" and "Section 4(6)" shall have the meanings set
forth in the recitals of this Agreement.

Section 1.21. "Securities Act" shall have the meaning set forth in the recitals
of this Agreement.

Section 1.22. "SEC Documents" shall mean the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 2000 and each report, proxy
statement or registration statement filed by the Company with the SEC pursuant
to the Exchange Act or the Securities Act since the filing of such Annual Report
through the date hereof.

Section 1.23. "Shares" shall mean the shares of Common Stock being purchased
pursuant to this Agreement.

Section 1.24. "Trading Day" shall mean any day during which the Principal Market
shall be open for business.

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Section 1.25. "Warrants" shall mean the Warrants substantially in the form of
Exhibit B to be issued to the Investors hereunder.

Section 1.26. "Warrant Shares" shall mean all shares of Common Stock or other
securities issued or issuable pursuant to exercise of the Warrants.

                                   ARTICLE II

                 PURCHASE AND SALE OF COMMON STOCK AND WARRANTS

Section 2.1. Investment.

     (a)  Upon the terms and subject to the conditions set forth herein, the
          Company agrees to sell, and the Investors, severally and not jointly,
          agree to purchase units consisting of separately transferable shares
          of Common Stock together with the Warrants, on the basis of one share
          of Common Stock plus 0.15 Warrant, at the Purchase Price on the
          Closing Date as follows:

          (i)  Upon execution and delivery of this Agreement and the
               Registration Rights Agreement by each Investor and the Company,
               the Investor shall deliver to the Company immediately available
               funds in their proportionate amount of the Purchase Price, net of
               five percent (5%) of such Purchase Price, which the Investor
               shall pay directly to Ladenburg Thalmann & Co. Inc. as Placement
               Agent for the Company, as set forth on the signature pages
               hereto, by wire transfer to the following Company account:

          SEE APPENDIX A ATTACHED

          (ii) Upon receipt of each wire transfer, the Company shall deliver the
               Common Stock certificates and the Warrants to the applicable
               Investor at the address indicated on the signature pages hereto.

     (b)  The Closing is subject to the satisfaction or waiver by the party to
          be benefited thereby of the following conditions:

          (i)   acceptance and execution by the Company and by each Investor,
                severally, of this Agreement and the Registration Rights
                Agreement;

          (ii)  payment by each Investor of immediately available funds in the
                amount of the Purchase Price of the Common Stock and the
                Warrants;

          (iii) all representations and warranties of the Investors contained
                herein shall remain true and correct in all material respects as
                of the Closing Date (as a condition to the Company's
                obligations);

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     (iv)   all representations and warranties of the Company contained herein
            shall remain true and correct in all material respects as of the
            Closing Date (as a condition to the Investors' obligations);

     (v)    the Company shall have obtained all permits and qualifications
            required by any state for the offer and sale of the Common Stock and
            Warrants, or shall have the availability of exemptions therefrom;

     (vi)   the sale and issuance of the Common Stock and the Warrants
            hereunder, and the proposed issuance by the Company to the
            Investors of the Common Stock underlying the Common Stock and the
            Warrants upon the exercise thereof shall be legally permitted by
            all laws and regulations to which the Investors and the Company are
            subject and there shall be no ruling, judgment or writ of any court
            prohibiting the transactions contemplated by this Agreement;

     (vii)  delivery of the original fully executed Common Stock certificates
            and Warrants, and Registration Rights Agreement to the Investor;

     (viii) delivery to the Investor of an opinion of Hill & Barlow, counsel to
            the Company, in the form of Exhibit C hereto.

                                  ARTICLE III

                   REPRESENTATIONS AND WARRANTIES OF INVESTOR

Each Investor, severally and not jointly, represents and warrants to the Company
that:

Section 3.1. Intent. The Investor is entering into this Agreement for its own
account and not with a view to or for sale in connection with any distribution
of the Shares. The Investor has no present arrangement (whether or not legally
binding) at any time to sell the Shares, the Warrants, or any Warrant Shares to
or through any person or entity; provided, however, that by making the
representations herein, the Investor does not agree to hold such securities for
any minimum or other specific term and reserves the right to dispose of the
Shares, the Warrants and Warrant Shares at any time in accordance with federal
and state securities laws and the terms of this Agreement applicable to such
disposition.

Section 3.2. Sophisticated Investor. The Investor is a sophisticated investor
(as described in Rule 506(b)(2)(ii) of Regulation D) and an accredited investor
(as defined in Rule 501 of Regulation D), and Investor has such experience in
business and financial matters that it has the capacity to protect its own
interests in connection with this transaction and is capable of evaluating the
merits and risks of an investment in the Common Stock and the Warrants. The
Investor acknowledges that an investment in the Common Stock and the Warrants is
speculative and involves a high degree of risk.

Section 3.3. Authority. This Agreement and the Registration Rights Agreement has
been duly authorized and validly executed and delivered by the Investor and is a
valid and binding

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agreement of the Investor enforceable against it in accordance with its terms,
subject to applicable bankruptcy, insolvency, or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and remedies or by
other equitable principles of general application.

Section 3.4. Not an Affiliate. The Investor is not an officer, director or
"affiliate" (as that term is defined in Rule 405 of the Securities Act) of the
Company.

Section 3.5. Absence of Conflicts. The execution and delivery of this Agreement
and the Registration Rights Agreement, and the consummation of the transactions
contemplated hereby and thereby, and compliance with the requirements hereof and
thereof by the Investor, will not violate any law, rule, regulation, order,
writ, judgment, injunction, decree or award binding on Investor or (a) violate
any provision of any indenture, instrument or agreement to which Investor is a
party or is subject, or by which Investor or any of its assets is bound; (b)
conflict with or constitute a material default thereunder; (c) result in the
creation or imposition of any lien pursuant to the terms of any such indenture,
instrument or agreement, or constitute a breach of any fiduciary duty owed by
Investor to any third party; or (d) require the approval of any third-party
(which has not been obtained) pursuant to any material contract, agreement,
instrument, relationship or legal obligation to which Investor is subject or to
which any of its assets, operations or management may be subject.

Section 3.6. Disclosure; Access to Information. The Investor has received all
documents, records, books and other publicly available information pertaining to
Investor's investment in the Company that have been requested by the Investor.
The Company is subject to the periodic reporting requirements of the Exchange
Act, and the Investor has reviewed copies of all SEC Documents deemed relevant
by Investor.

Section 3.7. Manner of Sale. At no time was Investor presented with or solicited
by or through any leaflet, public promotional meeting, or television
advertisement or, to the Investor's knowledge, with any other form of
communication which appeared to Investor to constitute general solicitation or
advertising.

                                   ARTICLE IV

                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants to the Investors that, except as set forth
on the Disclosure Schedule prepared by the Company and attached hereto:

Section 4.1. Organization of the Company. The Company is a corporation duly
incorporated and existing in good standing under the laws of the State of
Delaware and has all requisite corporate authority to own its properties and to
carry on its business as now being conducted. The Company does not have any
subsidiaries and does not own more than fifty percent (50%) of or control any
other business entity except as set forth in the SEC Documents. The Company is
duly qualified and is in good standing as a foreign corporation to do business
in every jurisdiction in which the nature of the business conducted or property
owned by it makes such

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qualification necessary, other than those in which the failure so to qualify
would not have a Material Adverse Effect.

Section 4.2. Authority. (i) The Company has the requisite corporate power and
corporate authority to enter into and perform its obligations under this
Agreement, the Registration Rights Agreement and the Warrants and to issue the
Common Stock, the Warrants and the Warrant Shares pursuant to their respective
terms, (ii) the execution, issuance and delivery of this Agreement, the
Registration Rights Agreement, the Common Stock certificates and the Warrants by
the Company and the consummation by it of the transactions contemplated hereby
have been duly authorized by all necessary corporate action and no further
consent or authorization of the Company or its Board of Directors or
stockholders is required, and (iii) this Agreement, the Registration Rights
Agreement, the Common Stock certificates and the Warrants have been duly
executed and delivered by the Company and at the Closing shall constitute valid
and binding obligations of the Company enforceable against the Company in
accordance with their terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, or similar laws relating to, or affecting
generally the enforcement of, creditors' rights and remedies or by other
equitable principles of general application. The Company has duly and validly
authorized and reserved for issuance shares of Common Stock sufficient in number
for the exercise of the Warrants.

Section 4.3. Capitalization. The authorized and issued capital stock of the
Company is as set forth in the SEC Documents, and except as set forth in the SEC
Documents, there are no outstanding Capital Shares Equivalents nor any
agreements or understandings pursuant to which any Capital Shares Equivalents
may become outstanding. The Company is not a party to any agreement granting
registration or anti-dilution rights to any person (other than the Investors
herein) with respect to any of its equity or debt securities. All of the
outstanding shares of Common Stock of the Company have been duly and validly
authorized and issued and are fully paid and non-assessable.

Section 4.4. Common Stock; S-3 Eligible. The Company has registered its Common
Stock pursuant to Section 12(b) or (g) of the Exchange Act and is in full
compliance with all reporting requirements of the Exchange Act, and the Company
is in compliance with all requirements for the continued listing or quotation of
its Common Stock, and such Common Stock is currently listed or quoted on, the
Principal Market. As of the date hereof, the Principal Market is the Nasdaq
National Market, and the Company has not received any notice regarding, and to
its knowledge there is no threat, of the termination or discontinuance of the
eligibility of the Common Stock for such listing. The Company is eligible to
register the Shares and the Warrant Shares for resale by the Investors on Form
S-3.

Section 4.5. SEC Documents. The Company has not provided to the Investors any
information that, according to applicable law, rule or regulation, should have
been disclosed publicly prior to the date hereof by the Company, but which has
not been so disclosed. As of their respective dates, the SEC Documents complied
in all material respects with the requirements of the Exchange Act or the
Securities Act, as applicable, and rules and regulations of the SEC promulgated
thereunder and the SEC Documents did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they

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were made, not misleading. The financial statements of the Company included in
the SEC Documents complied in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC or other
applicable rules and regulations with respect thereto at the time of such
inclusion. Such financial statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis 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 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 operations and cash
flows for the periods then ended (subject, in the case of unaudited interim
statements, to normal year-end audit adjustments). Neither the Company nor any
of its subsidiaries has any material indebtedness, obligations or liabilities of
any kind (whether accrued, absolute, contingent or otherwise, and whether due or
to become due) that would have been required to be reflected in, reserved
against or otherwise described in the financial statements or in the notes
thereto in accordance with GAAP, which was not fully reflected in, reserved
against or otherwise described in the financial statements or the notes thereto
included in the SEC Documents or was not incurred in the ordinary course of
business consistent with the Company's past practices since the last date of
such financial statements.

Section 4.6. Exemption from Registration; Valid Issuances. Subject to the
accuracy of the Investors' representations in Article III, the sale of the
Common Stock, the Warrants and the Warrant Shares will not require registration
under the Securities Act and/or any applicable state securities law. When issued
and paid for in accordance with the Warrants, the Warrant Shares will be duly
and validly issued, fully paid, and non-assessable. Neither the sales of the
Common Stock, the Warrants or the Warrant Shares pursuant to, nor the Company's
performance of its obligations under, this Agreement, the Registration Rights
Agreement or the Warrants will (i) result in the creation or imposition by the
Company of any liens, charges, claims or other encumbrances upon the Common
Stock, the Warrants or the Warrant Shares or, except as contemplated herein, any
of the assets of the Company, or (ii) entitle the holders of Outstanding Capital
Shares to preemptive or other rights to subscribe for or acquire the Capital
Shares or other securities of the Company. The Common Stock, the Warrants and
the Warrant Shares shall not subject the Investors to personal liability to the
Company or its creditors by reason of the possession thereof.

Section 4.7. No General Solicitation or Advertising in Regard to this
Transaction. Neither the Company nor any of its affiliates nor, to the knowledge
of the Company, any person acting on its or their behalf (i) has conducted or
will conduct any general solicitation (as that term is used in Rule 502(c) of
Regulation D) or general advertising with respect to the sale of the Common
Stock or the Warrants, or (ii) made any offers or sales of any security or
solicited any offers to buy any security under any circumstances that would
require registration of the Common Stock, the shares of Common Stock, the
Warrants or the Warrant Shares under the Securities Act.

Section 4.8. No Conflicts. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby, including without limitation the issuance of the shares of
Common Stock, the Warrants and the Warrant Shares, do not and will not (i)
result in a violation of the Company's Certificate of Incorporation or By-Laws
or (ii) conflict with, or constitute a material default (or an event that

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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 material agreement, indenture or instrument, or any "lock-up" or similar
provision of any underwriting or similar agreement to which the Company is a
party, or (iii) result in a violation of any federal, state or local law, rule,
regulation, order, judgment or decree (including federal and state securities
laws and regulations) applicable to the Company or by which any material
property or asset of the Company is bound or affected, nor is the Company
otherwise in violation of, conflict with or default under any of the foregoing
(except in each case for such conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations as would not have, individually or
in the aggregate, a Material Adverse Effect). The business of the Company is not
being conducted in violation of any law, ordinance or regulation of any
governmental entity, except for possible violations that either singly or in the
aggregate would not have a Material Adverse Effect. The Company is not required
under any Federal, state or local law, rule or regulation 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 this Agreement or issue and sell the Common Stock or the
Warrants in accordance with the terms hereof (other than any SEC, Principal
Market or state securities filings that may be required to be made by the
Company subsequent to Closing and any registration statement that may be filed
pursuant hereto); provided that, for purposes of the representation made in this
sentence, the Company is assuming and relying upon the accuracy of the relevant
representations and agreements of the Investors herein.

Section 4.9. No Material Adverse Change. Since September 30, 2001, no Material
Adverse Effect has occurred or exists with respect to the Company, except as
disclosed in the SEC Documents.

Section 4.10. No Undisclosed Events or Circumstances. Since September 30, 2001,
no event or circumstance has occurred or exists with respect to the Company or
its businesses, properties, prospects, operations or financial condition, that,
under applicable law, rule or regulation, requires public disclosure or
announcement prior to the date hereof by the Company but which has not been so
publicly announced or disclosed in the SEC Documents.

Section 4.11. No Integrated Offering. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would cause this offering of the
Shares and the Warrants to be integrated with prior offerings by the Company for
purposes of the Securities Act or any applicable shareholder approval
provisions, including, without limitation, under the rules and regulations of
any exchange or automated quotation system on which any of the securities of the
Company are listed or designated, nor will the Company take any action or steps
that would cause the offering of the Shares and Warrants to be integrated with
other offerings.

Section 4.12. Litigation and Other Proceedings. Except as disclosed in the SEC
Documents, there are no lawsuits or proceedings pending or, to the knowledge of
the Company, threatened, against the Company or any subsidiary, nor has the
Company received any written or oral notice of any such action, suit, proceeding
or investigation, which could reasonably be expected to have a Material Adverse
Effect. Except as set forth in the SEC Documents, no judgment, order, writ,

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injunction or decree or award has been issued by or, to the knowledge of the
Company, requested of any court, arbitrator or governmental agency which could
result in a Material Adverse Effect.

Section 4.13. No Misleading or Untrue Communication. The Company and, to the
knowledge of the Company, any person representing the Company or any other
person selling or offering to sell the Common Stock or the Warrants in
connection with the transaction contemplated by this Agreement, have not made,
at any time, any oral communication in connection with the offer or sale of the
same which contained any untrue statement of a material fact or omitted to state
any material fact necessary in order to make the statements, in the light of the
circumstances under which they were made, not misleading.

Section 4.14. Material Non-Public Information. The Company has not disclosed to
the Investors any material non-public information that (i) if disclosed, would
reasonably be expected to have a material effect on the price of the Common
Stock or (ii) according to applicable law, rule or regulation, should have been
disclosed publicly by the Company prior to the date hereof but which has not
been so disclosed.

Section 4.15. Property. Neither the Company nor any of its subsidiaries owns any
real property. Each of the Company and its subsidiaries has good and marketable
title to all personal property owned by it, free and clear of all liens,
encumbrances and defects except such as do not materially affect the value of
such property and do not materially interfere with the use made and proposed to
be made of such property by the Company; and to the Company's knowledge any real
property, mineral or water rights, and buildings held under lease by the Company
as tenant are held by it under valid, subsisting and enforceable leases with
such exceptions as are not material and do not interfere with the use made and
intended to be made of such property, mineral or water rights, and buildings by
the Company.

Section 4.16. Intellectual Property. Each of the Company and its subsidiaries
owns or possesses adequate and enforceable rights to use all material patents,
patent applications, trademarks, trademark applications, trade names, service
marks, copyrights, copyright applications, licenses, know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures) and other similar rights and proprietary
knowledge (collectively, "Intangibles") necessary for the conduct of its
business as now being conducted. To the Company's knowledge, except as disclosed
in the SEC Documents neither the Company nor any of its subsidiaries is
infringing upon or in conflict with any right of any other person with respect
to any Intangibles. Except as disclosed in the SEC Documents, no adverse claims
have been asserted by any person to the ownership or use of any Intangibles and
the Company has no knowledge of any basis for such claim.

Section 4.17. Internal Controls and Procedures. The Company maintains books and
records and internal accounting controls which provide reasonable assurance that
(i) all transactions to which the Company or any subsidiary is a party or by
which its properties are bound are executed with management's authorization;
(ii) the recorded accounting of the Company's consolidated assets is compared
with existing assets at regular intervals; (iii) access to the Company's
consolidated assets is permitted only in accordance with management's
authorization; and (iv) all transactions to which the Company or any subsidiary
is a party or by which its properties are bound are

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recorded as necessary to permit preparation of the financial statements of the
Company in accordance with U.S. generally accepted accounting principles.

Section 4.18. Payments and Contributions. Neither the Company, any subsidiary,
nor any of its directors, officers or, to its knowledge, other employees has (i)
used any Company funds for any unlawful contribution, endorsement, gift,
entertainment or other unlawful expense relating to political activity; (ii)
made any direct or indirect unlawful payment of Company funds to any foreign or
domestic government official or employee; (iii) violated or is in violation of
any provision of the Foreign Corrupt Practices Act of 1977, as amended; or (iv)
made any bribe, rebate, payoff, influence payment, kickback or other similar
payment to any person with respect to Company matters.

Section 4.19. No Misrepresentation. The representations and warranties of the
Company contained in this Agreement, any schedule, annex or exhibit hereto and
any agreement, instrument or certificate furnished by the Company to the
Investors pursuant to this Agreement, do not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.

                                   ARTICLE V

                            COVENANTS OF THE COMPANY

Section 5.1. Registration Rights. The Company shall cause the Registration
Rights Agreement to remain in full force and effect as provided therein and the
Company shall comply in all material respects with the terms thereof.

Section 5.2. Reservation of Common Stock. As of the date hereof, the Company has
reserved and the Company shall continue to reserve and keep available at all
times, free of preemptive rights, shares of Common Stock for the purpose of
enabling the Company to issue the Warrant Shares pursuant to any exercise of the
Warrants.

Section 5.3. Listing of Common Stock. The Company hereby agrees to use its best
efforts to maintain the listing of the Common Stock on a Principal Market, and
as soon as reasonably practicable following the Closing to list the shares of
Common Stock and the Warrant Shares on the Principal Market. The Company further
agrees, if the Company applies to have the Common Stock traded on any other
Principal Market, it will include in such application the shares of Common Stock
and the Warrant Shares, and will take such other action as is necessary or
desirable in the opinion of the Investors to cause the shares of Common Stock
and Warrant Shares to be listed on such other Principal Market as promptly as
possible. The Company will take all action reasonably necessary to continue the
listing and trading of its Common Stock on a Principal Market (including,
without limitation, maintaining sufficient net tangible assets) and will comply
in all respects with the Company's reporting, filing and other obligations under
the

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bylaws or rules of the Principal Market and shall provide Investors with copies
of any correspondence to or from such Principal Market which questions or
threatens delisting of the Common Stock, within three (3) Trading Days of the
Company's receipt thereof, until the Investors have disposed of all of their
Registrable Securities.

Section 5.4. Exchange Act Registration. The Company will cause its Common Stock
to continue to be registered under Section 12(b) or (g) of the Exchange Act,
will use its best efforts to comply in all respects with its reporting and
filing obligations under the Exchange Act, and will not take any action or file
any document (whether or not permitted by the Exchange Act or the rules
thereunder) to terminate or suspend such registration or to terminate or suspend
its reporting and filing obligations under said Act until the Investors have
disposed of all of their Registrable Securities.

Section 5.5. Legends. The certificates evidencing the Registrable Securities
shall be free of legends, except as set forth in Article VIII.

Section 5.6. Corporate Existence; Conflicting Agreements. The Company will take
all steps necessary to preserve and continue the corporate existence of the
Company, subject to the business judgment of its Board of Directors. The Company
shall not enter into any agreement, the terms of which agreement would restrict
or impair the right or ability of the Company to perform any of its obligations
under this Agreement or any of the other agreements attached as exhibits hereto.

Section 5.7. Securities Filings. The Company shall make any necessary SEC and
"blue sky" filings required to be made by the Company in connection with the
sale of the Securities to the Investors as required by all applicable laws, and
shall provide a copy thereof to the Investors promptly after such filing.

                                   ARTICLE VI

                            SURVIVAL; INDEMNIFICATION

Section 6.1. Survival. The representations, warranties and covenants made by
each of the Company and each Investor in this Agreement, the exhibits hereto and
in each instrument, agreement and certificate entered into and delivered by them
pursuant to this Agreement, shall survive the Closing and the consummation of
the transactions contemplated hereby. In the event of a breach or violation of
any of such representations, warranties or covenants, the party to whom such
representations, warranties or covenants have been made shall have all rights
and remedies for such breach or violation available to it under the provisions
of this Agreement, irrespective of any investigation made by or on behalf of
such party on or prior to the Closing Date.

Section 6.2. Indemnity. (a) The Company hereby agrees to indemnify and hold
harmless the Investors, their respective Affiliates and their respective
officers, directors, partners and members (collectively, the "Investor
Indemnitees"), from and against any and all Damages, and

                                       12

<PAGE>

agrees to reimburse the Investor Indemnitees for all reasonable out-of-pocket
expenses (including the reasonable fees and expenses of legal counsel), in each
case promptly as incurred by the Investor Indemnitees and to the extent arising
out of or in connection with:

          (i)   any misrepresentation, omission of fact or breach of any of the
                Company's representations or warranties contained in this
                Agreement, the annexes, schedules or exhibits hereto or any
                instrument, agreement or certificate entered into or delivered
                by the Company pursuant to this Agreement; or

          (ii)  any failure by the Company to perform in any material respect
                any of its covenants, agreements, undertakings or obligations
                set forth in this Agreement, the annexes, schedules or exhibits
                hereto or any instrument, agreement or certificate entered into
                or delivered by the Company pursuant to this Agreement; or

          (iii) any action instituted against the Investors, or any of them, by
                any stockholder of the Company who is not an Affiliate of an
                Investor, with respect to any of the transactions contemplated
                by this Agreement.

     (b) Each Investor, severally and not jointly, hereby agrees to indemnify
and hold harmless the Company, its Affiliates and their respective officers,
directors, partners and members (collectively, the "Company Indemnitees"), from
and against any and all Damages, and agrees to reimburse the Company Indemnitees
for reasonable all out-of-pocket expenses (including the reasonable fees and
expenses of legal counsel), in each case promptly as incurred by the Company
Indemnitees and to the extent arising out of or in connection with any
misrepresentation, omission of fact, or breach of any of the Investor's
representations or warranties contained in this Agreement, the annexes,
schedules or exhibits hereto or any instrument, agreement or certificate entered
into or delivered by the Investor pursuant to this Agreement. Notwithstanding
anything to the contrary herein, the Investor shall be liable under this Section
6.2(b) for only that amount as does not exceed the net proceeds to such Investor
as a result of the sale of Registrable Securities pursuant to the Registration
Statement (including any amount that could be received by such Investor for
Registrable Securities not yet sold).

Section 6.3. Notice. Promptly after receipt by either party hereto seeking
indemnification pursuant to Section 6.2 (an "Indemnified Party") of written
notice of any investigation, claim, proceeding or other action in respect of
which indemnification is being sought (each, a "Claim"), the Indemnified Party
promptly shall notify the party from whom indemnification pursuant to Section
6.2 is being sought (the "Indemnifying Party") of the commencement thereof; but
the omission so to notify the Indemnifying Party shall not relieve it from any
liability that it otherwise may have to the Indemnified Party, except to the
extent that the Indemnifying Party is actually prejudiced by such omission or
delay. In connection with any Claim as to which both the Indemnifying Party and
the Indemnified Party are parties, the Indemnifying Party shall be entitled to
assume the defense thereof. Notwithstanding the assumption of the defense of any
Claim by the Indemnifying Party, the Indemnified Party shall have the right to
employ separate legal counsel and to participate in the defense of such Claim,
and the Indemnifying Party shall bear the reasonable fees, out-of-pocket costs
and expenses of such separate legal counsel to the

                                       13

<PAGE>

Indemnified Party if (and only if): (x) the Indemnifying Party shall have agreed
to pay such fees, out-of-pocket costs and expenses, (y) the Indemnified Party
reasonably shall have concluded that representation of the Indemnified Party and
the Indemnifying Party by the same legal counsel would not be appropriate due to
actual or, as reasonably determined by legal counsel to the Indemnified Party,
potentially differing interests between such parties in the conduct of the
defense of such Claim, or if there may be legal defenses available to the
Indemnified Party that are in addition to or disparate from those available to
the Indemnifying Party, or (z) the Indemnifying Party shall have failed to
employ legal counsel reasonably satisfactory to the Indemnified Party within a
reasonable period of time after notice of the commencement of such Claim. If the
Indemnified Party employs separate legal counsel in circumstances other than as
described in clauses (x), (y) or (z) above, the fees, costs and expenses of such
legal counsel shall be borne exclusively by the Indemnified Party. Except as
provided above, the Indemnifying Party shall not, in connection with any Claim
in the same jurisdiction, be liable for the fees and expenses of more than one
firm of legal counsel for the Indemnified Party (together with appropriate local
counsel). The Indemnifying Party shall not, without the prior written consent of
the Indemnified Party (which consent shall not unreasonably be withheld), settle
or compromise any Claim or consent to the entry of any judgment that does not
include an unconditional release of the Indemnified Party from all liabilities
with respect to such Claim or judgment.

     All fees and expenses of the Indemnified Party (including reasonable costs
of defense and investigation in a manner not inconsistent with this Section and,
except as otherwise provided above, all reasonable attorneys' fees and expenses)
shall be paid to the Indemnified Party, as incurred, within ten (10) Trading
Days of written notice thereof to the Indemnifying Party (regardless of whether
it is ultimately determined that an Indemnified Party is not entitled to
indemnification hereunder; provided, that the Indemnifying Party may require
such Indemnified Party to undertake to reimburse all such fees and expenses,
with interest at market rates, to the extent it is finally judicially determined
that such Indemnified Party is not entitled to indemnification hereunder).

Section 6.4. Direct Claims. In the event one party hereunder should have a claim
for indemnification that does not involve a claim or demand being asserted by a
third party, the Indemnified Party promptly shall deliver notice of such claim
to the Indemnifying Party. If the Indemnifying Party disputes the claim, such
dispute shall be resolved by mutual agreement of the Indemnified Party and the
Indemnifying Party or by binding arbitration conducted in accordance with the
procedures and rules of the American Arbitration Association as set forth in
Article IX. Judgment upon any award rendered by any arbitrators may be entered
in any court having competent jurisdiction thereof.

                                  ARTICLE VII

         DUE DILIGENCE REVIEW; NON-DISCLOSURE OF NON-PUBLIC INFORMATION.

Section 7.1. Due Diligence Review. Subject to Section 7.2, the Company shall
make available for inspection and review by the Investors, advisors to and
representatives of the Investors (who may or may not be affiliated with the
Investors and who are reasonably acceptable to the

                                       14

<PAGE>

Company), and any underwriter participating in any disposition of the
Registrable Securities on behalf of the Investors pursuant to the Registration
Statement, any such registration statement or amendment or supplement thereto or
any blue sky, Nasdaq or other filing, all SEC Documents and other filings with
the SEC, and all other publicly available 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
publicly available information reasonably requested by the Investors 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 Investors 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 7.2. Non-Disclosure of Non-Public Information.

     (a) The Company shall not disclose material non-public information to the
Investors, advisors to or representatives of the Investors unless prior to
disclosure of such information the Company identifies such information as being
non-public information and provides the Investors, such advisors and
representatives with the opportunity to accept or refuse to accept such
non-public information for review. Other than disclosure of any comment letters
received from the SEC staff with respect to the Registration Statement, the
Company may, as a condition to disclosing any non-public information hereunder,
require the Investors' advisors and representatives to enter into a
confidentiality agreement in form and content reasonably satisfactory to the
Company and the Investors.

     (b) Nothing herein shall require the Company to disclose material
non-public information to the Investors or their advisors or representatives,
and the Company represents that it does not disseminate material 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, promptly notify the advisors and representatives of the
Investors 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 material 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 7.2 shall be construed to mean that such persons or entities
other than the Investors (without the written consent of the Investors prior to
disclosure of such information as set forth in Section 7.2(a)) 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 a 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.

                                       15

<PAGE>

                                  ARTICLE VIII

                      LEGENDS; TRANSFER AGENT INSTRUCTIONS

Section 8.1. Legends. Unless otherwise provided below, each certificate
representing Registrable Securities will bear the following legend or
equivalent (the "Legend");

U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY OTHER
APPLICABLE SECURITIES LAWS AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER
SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN
MAY BE SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED, OR OTHERWISE DISPOSED
OF, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO A TRANSACTION THAT IS EXEMPT FROM SUCH REGISTRATION.

Section 8.2. No Other Legend or Stock Transfer Restrictions. No legend other
than the one specified in Section 8.1 has been or shall be placed on the share
certificates representing the Registrable Securities and no instructions or
"stop transfer orders," "stock transfer restrictions," or other restrictions
have been or shall be given to the Company's transfer agent with respect thereto
other than as expressly set forth in this Article VIII. The Company will provide
its transfer agent with instructions and any necessary legal opinions to enable
the transfer agent to issue or re-issue all of the Shares without such
restrictive legend upon effectiveness of the Registration Statement.

Section 8.3. Investors' Compliance. Nothing in this Article shall affect in any
way each Investor's obligations to comply with all applicable securities laws
upon resale of the Common Stock.

                                   ARTICLE IX

                           CHOICE OF LAW; ARBITRATION

Section 9.1. Governing Law/Arbitration. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made in New York by persons domiciled in New York City and without
regard to its principles of conflicts of laws. Any dispute under this Agreement
shall be submitted to arbitration under the American Arbitration Association
(the "AAA") in New York City, New York, and shall be finally and conclusively
determined by the decision of a board of arbitration consisting of three (3)
members (hereinafter

                                       16

<PAGE>

referred to as the "Board of Arbitration") selected according to the rules
governing the AAA. The Board of Arbitration shall meet on consecutive business
days in New York City, New York, and shall reach and render a decision in
writing (concurred in by a majority of the members of the Board of Arbitration)
with respect to the amount, if any, which the losing party is required to pay to
the other party in respect of a claim filed. In connection with rendering its
decisions, the Board of Arbitration shall adopt and follow the laws of the State
of New York unless the matter at issue is the corporation law of the company's
state of incorporation, in which event the corporation law of such jurisdiction
shall govern such issue. To the extent practical, decisions of the Board of
Arbitration shall be rendered no more than thirty (30) calendar days following
commencement of proceedings with respect thereto. The Board of Arbitration shall
cause its written decision to be delivered to all parties involved in the
dispute. Any decision made by the Board of Arbitration (either prior to or after
the expiration of such thirty (30) calendar day period) shall be final, binding
and conclusive on the parties to the dispute, and entitled to be enforced to the
fullest extent permitted by law and entered in any court of competent
jurisdiction. The Board of Arbitration shall be authorized and is hereby
directed to enter a default judgment against any party failing to participate in
any proceeding hereunder within the time periods set forth in the AAA rules. The
non-prevailing party to any arbitration (as determined by the Board of
Arbitration) shall pay the expenses of the prevailing party, including
reasonable attorney's fees, in connection with such arbitration. Any party shall
be entitled to seek injunctive relief from a court in any case where such relief
is available, and the non-prevailing party to any such injunctive proceeding
shall pay the expenses of the prevailing party, including reasonable attorney's
fees, in connection with such proceeding.

                                   ARTICLE X

                                   ASSIGNMENT

Section 10.1. Assignment. Neither this Agreement nor any rights of the Investors
or the Company hereunder may be assigned by either party to any other person.
Notwithstanding the foregoing, (a) the provisions of this Agreement shall inure
to the benefit of, and be enforceable by, any permitted transferee of any of the
Common Stock or Warrants purchased or acquired by any Investor hereunder with
respect to the Common Stock or Warrants held by such person, and (b) upon the
prior written consent of the Company, which consent shall not unreasonably be
withheld or delayed, each Investor's interest in this Agreement may be assigned
at any time, in whole or in part, to any other person or entity (including any
Affiliate of the Investor) who agrees to make the representations and warranties
contained in Article III and who agrees to be bound by the terms of this
Agreement.

                                   ARTICLE XI

                                     NOTICES

Section 11.1. Notices. All notices, demands, requests, consents, approvals, and
other communications required or permitted hereunder shall be in writing and,
unless otherwise specified herein, shall be (i) hand delivered, (ii) deposited
in the mail, registered or certified, return receipt requested, postage prepaid,
(iii) delivered by reputable air courier service with

                                       17

<PAGE>

charges prepaid, or (iv) transmitted by facsimile, addressed as set forth below
or to such other address as such party shall have specified most recently by
written notice. Any notice or other communication required or permitted to be
given hereunder shall be deemed effective (a) upon hand delivery or delivery by
facsimile, with accurate confirmation generated by the transmitting facsimile
machine, at the address or number designated below (if delivered on a business
day during normal business hours where such notice is to be received), or the
first business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to be received)
or (b) on the first business day following the date of sending by reputable
courier service, fully prepaid, addressed to such address, or (c) upon actual
receipt of such mailing, if mailed. The addresses for such communications shall
be:

If to the Company:                        Viisage Technology, Inc.
                                          30 Porter Road
                                          Littleton, MA  01460
                                          Attention: Thomas J. Colatosti
                                          Telephone: 978-952-2061
                                          Facsimile: 978-952-2218

with a copy to (shall not constitute
notice):                                  Hill & Barlow
                                          One International Place
                                          Boston, MA  02110
                                          Attention:  Charles J. Johnson
                                          Telephone: 617-428-3000
                                          Facsimile: 617-428-3500

if to the Investors:                      As set forth on the signature pages
                                          hereto

Either party hereto may from time to time change its address or facsimile number
for notices under this Section 11.1 by giving written notice of such changed
address or facsimile number to the other party hereto as provided in this
Section 11.1.

                                  ARTICLE XII

                                  MISCELLANEOUS

Section 12.1. Counterparts/ Facsimile/ Amendments. This Agreement may be
executed in multiple counterparts, each of which may be executed by less than
all of the parties and shall be deemed to be an original instrument which shall
be enforceable against the parties actually executing such counterparts and all
of which together shall constitute one and the same instrument. Except as
otherwise stated herein, in lieu of the original documents, a facsimile
transmission or copy of the original documents shall be as effective and
enforceable as the original. This Agreement may be amended only by a writing
executed by all parties.

                                       18

<PAGE>

Section 12.2. Entire Agreement. This Agreement and the agreements attached as
Exhibits hereto, which include the Warrants and the Registration Rights
Agreement, set forth the entire agreement and understanding of the parties
relating to the subject matter hereof and supersede all prior and
contemporaneous agreements, negotiations and understandings between the parties,
both oral and written relating to the subject matter hereof. The terms and
conditions of all Exhibits to this Agreement are incorporated herein by this
reference and shall constitute part of this Agreement as if fully set forth
herein.

Section 12.3. Severability. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that such severability shall be ineffective if
it materially changes the economic benefit of this Agreement to any party.

Section 12.4. Headings. The headings used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement.

Section 12.5. Number and Gender. There may be one or more Investor parties to
this Agreement, which Investors may be natural persons or entities. All
references to plural Investors shall apply equally to a single Investor if there
is only one Investor, and all references to an Investor as "it" shall apply
equally to a natural person.

Section 12.6. Replacement of Certificates. Upon (i) receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of a certificate representing the Common Stock or any shares of
Common Stock or Warrants or any Warrant Shares and (ii) in the case of any such
loss, theft or destruction of such certificate, upon delivery by the Investor of
an indemnity agreement or security reasonably satisfactory in form to the
Company (which shall not include the posting of any bond other than that
required by the Company's transfer agent) or (iii) in the case of any such
mutilation, on surrender and cancellation of such certificate, the Company at
its expense will execute and deliver, in lieu thereof, a new certificate of like
tenor.

Section 12.7. Fees and Expenses. Each of the Company and the Investors agrees to
pay its own expenses incident to the performance of its obligations hereunder.

Section 12.8. Brokerage. 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 except for
Ladenburg Thalmann & Co. Inc., whose fee shall be paid on the Company's behalf
as provided herein. The Company on the one hand, and the Investors, 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.

                                       19

<PAGE>

Section 12.9. Publicity. The Company agrees that it will not issue any press
release or other public announcement of the transactions contemplated by this
Agreement without the prior consent of the Investors, which shall not be
unreasonably withheld nor delayed by more than two (2) Trading Days from their
receipt of such proposed release. No release shall name the Investors without
their express consent. The Company will issue a press release describing the
transaction contemplated by this Agreement within one business day of Closing,
and shall file a Form 8-K with respect to the same within five business days of
Closing.

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

                                            Viisage Technology, Inc.

                                            By:
                                               -------------------------

[signature pages continued]

                                       20

<PAGE>

  Address:                                  Investor:

  Fax:                                      By:
                                               --------------------------
                                               Name:
                                               Authorized Signatory

  Number of Shares:

  Total Purchase Price:

                                       21

<PAGE>
                                                                       EXHIBIT B

NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT")
OR ANY OTHER APPLICABLE STATE SECURITIES LAWS IN RELIANCE UPON AN EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT PURSUANT TO REGULATION D AND
SUCH OTHER SECURITIES LAWS. NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON
EXERCISE HEREOF MAY BE SOLD, PLEDGED, TRANSFERRED, ENCUMBERED OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR IN A TRANSACTION WHICH IS EXEMPT FROM REGISTRATION UNDER THE
PROVISIONS OF THE SECURITIES ACT OR ANY APPLICABLE STATE LAWS. THIS WARRANT MAY
NOT BE EXERCISED BY OR ON BEHALF OF A UNITED STATES PERSON UNLESS REGISTERED
UNDER THE SECURITIES ACT OR AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE, AS
REQUIRED BY REGULATION D.

                             STOCK PURCHASE WARRANT

                To Purchase __________ Shares of Common Stock of

                            VIISAGE TECHNOLOGY, INC.

     THIS CERTIFIES that, for value received, ______________ (the "Holder"), is
entitled, upon the terms and subject to the limitations on exercise and the
conditions hereinafter set forth, at any time on or after the date hereof (the
"Initial Exercise Date") and on or prior to the close of business on December
15, 2005 (the "Termination Date") but not thereafter, to subscribe for and
purchase from Viisage Technology, Inc., a corporation incorporated in the State
of Delaware (the "Company"), up to _________ shares (the "Warrant Shares") of
Common Stock, $0.001 par value, of the Company (the "Common Stock"). The
purchase price of one share of Common Stock (the "Exercise Price") under this
Warrant shall be $12.08. The Exercise Price and the number of shares for which
the Warrant is exercisable shall be subject to adjustment as provided herein. In
the event of any conflict between the terms of this Warrant and the Common Stock
Purchase Agreement dated as of December 14, 2001 pursuant to which this Warrant
has been issued (the "Purchase Agreement"), the Purchase Agreement shall
control. Capitalized terms used and not otherwise defined herein shall have the
meanings set forth for such terms in the Purchase Agreement.

                                        1

<PAGE>

     1. Title to Warrant. Prior to the Termination Date and subject to
compliance with applicable laws and the terms hereof, this Warrant and all
rights hereunder are transferable, in whole or in part, at the office or agency
of the Company by the holder hereof in person or by duly authorized attorney,
upon surrender of this Warrant together with the Assignment Form annexed hereto
properly endorsed.

     2. Authorization of Shares. The Company covenants that all shares of Common
Stock which may be issued upon the exercise of the purchase rights represented
by this Warrant will, upon exercise of the purchase rights represented by this
Warrant, be duly authorized, validly issued, fully paid and nonassessable and
free from all taxes, liens and charges in respect of the issue thereof (other
than taxes in respect of any transfer occurring contemporaneously with such
issue).

     3. Exercise of Warrant.

          (a) Except as provided in Section 4 herein, exercise of the purchase
     rights represented by this Warrant may be made at any time or times on or
     after the Initial Exercise Date, and before the close of business on the
     Termination Date by the surrender of this Warrant and the Notice of
     Exercise Form annexed hereto duly executed, at the office of the Company
     (or such other office or agency of the Company as it may designate by
     notice in writing to the registered holder hereof at the address of such
     holder appearing on the books of the Company) and upon payment of the
     Exercise Price of the shares thereby purchased by wire transfer or
     cashier's check drawn on a United States bank, the holder of this Warrant
     shall be entitled to receive a certificate for the number of shares of
     Common Stock so purchased. Certificates for shares purchased hereunder
     shall be delivered to the holder hereof within three (3) Trading Days after
     the date on which this Warrant shall have been exercised as aforesaid. This
     Warrant shall be deemed to have been exercised and such certificate or
     certificates shall be deemed to have been issued, and Holder or any other
     person so designated to be named therein shall be deemed to have become a
     holder of record of such shares for all purposes, as of the date the
     Warrant has been exercised by payment to the Company of the Exercise Price
     and all taxes required to be paid by Holder, if any, pursuant to Section 5
     prior to the issuance of such shares, have been paid.

          (b) If this Warrant shall have been exercised in part, the Company
     shall, at the time of delivery of the certificate or certificates
     representing Warrant Shares, deliver to Holder a new Warrant evidencing the
     rights of Holder to purchase the unpurchased shares of Common Stock called
     for by this Warrant, which new Warrant shall in all other respects be
     identical with this Warrant.

          (c) If there is no registration statement in effect which would permit
     the free resale of the Warrant Shares by the Holder, at any time which is
     ninety (90) days after the date of this Warrant, then this Warrant shall
     also be exercisable by means of a "cashless exercise" in which the holder
     shall be entitled to receive a certificate for the number of shares equal
     to the quotient obtained by dividing [(A-B) (X)] by (A), where:

                                        2

<PAGE>

(A) = the volume weighted average price per share of Common Stock on the Trading
Day preceding the date of such election on the Nasdaq Stock Market, or if the
Common Stock is not traded on the Nasdaq Stock Market, then the Principal Market
in terms of volume, and converted into US Dollars;

(B) =  the Exercise Price of the Warrants; and

(X) = the number of shares issuable upon exercise of the Warrants in accordance
with the terms of this Warrant.

     4. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. As to any fraction of a share which Holder would otherwise be entitled
to purchase upon such exercise, the Company shall pay a cash adjustment in
respect of such final fraction in an amount equal to such fraction multiplied by
the Exercise Price.

     5. Charges, Taxes and Expenses. Issuance of certificates for shares of
Common Stock upon the exercise of this Warrant shall be made without charge to
the holder hereof for any issue or transfer tax or other incidental expense in
respect of the issuance of such certificate, all of which taxes and expenses
shall be paid by the Company, and such certificates shall be issued in the name
of the holder of this Warrant or in such name or names as may be directed by the
holder of this Warrant; provided, however, that in the event certificates for
shares of Common Stock are to be issued in a name other than the name of the
holder of this Warrant, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by the holder
hereof; and the Company may require, as a condition thereto, the payment of a
sum sufficient to reimburse it for any transfer tax incidental thereto.

     6. Closing of Books. The Company will not close its stockholder books or
records in any manner which prevents the timely exercise of this Warrant.

     7. Transfer, Division and Combination. (a) Subject to compliance with any
applicable securities laws, transfer of this Warrant and all rights hereunder,
in whole or in part, shall be registered on the books of the Company to be
maintained for such purpose, upon surrender of this Warrant at the principal
office of the Company, together with a written assignment of this Warrant
substantially in the form attached hereto duly executed by Holder or its agent
or attorney and funds sufficient to pay any transfer taxes payable upon the
making of such transfer. Upon such surrender and, if required, such payment, the
Company shall execute and deliver a new Warrant or Warrants in the name of the
assignee or assignees and in the denomination or denominations specified in such
instrument of assignment, and shall issue to the assignor a new Warrant
evidencing the portion of this Warrant not so assigned, and this Warrant shall
promptly be cancelled. A Warrant, if properly assigned, may be exercised by a
new holder for the purchase of shares of Common Stock without having a new
Warrant issued.

          (b) This Warrant may be divided or combined with other Warrants upon
     presentation hereof at the aforesaid office of the Company, together with a
     written notice specifying the names and denominations in which new Warrants
     are to be issued, signed by Holder or its agent or attorney. Subject to
     compliance with Section 7(a), as to any transfer which

                                        3

<PAGE>

may be involved in such division or combination, the Company shall execute and
deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be
divided or combined in accordance with such notice.

          (c) The Company shall prepare, issue and deliver at its own expense
     (other than transfer taxes) the new Warrant or Warrants under this
     Section 7.

          (d) The Company agrees to maintain, at its aforesaid office, books for
     the registration and the registration of transfer of the Warrants.

     8. No Rights as Shareholder until Exercise. This Warrant does not entitle
the holder hereof to any voting rights or other rights as a shareholder of the
Company prior to the exercise hereof. Upon the surrender of this Warrant and the
payment of the aggregate Exercise Price, the Warrant Shares so purchased shall
be and be deemed to be issued to such holder as the record owner of such shares
as of the close of business on the later of the date of such surrender or
payment.

     9. Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants
that upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Warrant certificate or any
stock certificate relating to the Warrant Shares, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it (which shall
not include the posting of any bond), and upon surrender and cancellation of
such Warrant or stock certificate, if mutilated, the Company will make and
deliver a new Warrant or stock certificate of like tenor and dated as of such
cancellation, in lieu of such Warrant or stock certificate.

     10. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the
taking of any action or the expiration of any right required or granted herein
shall be a Saturday, Sunday or a legal holiday, then such action may be taken or
such right may be exercised on the next succeeding day not a Saturday, Sunday or
legal holiday.

     11. Adjustments of Exercise Price and Number of Warrant Shares. (a) Stock
Splits, etc. The number and kind of securities purchasable upon the exercise of
this Warrant and the Exercise Price shall be subject to adjustment from time to
time upon the happening of any of the following. In case the Company shall (i)
pay a dividend in shares of Common Stock or make a distribution in shares of
Common Stock to holders of its outstanding Common Stock, (ii) subdivide its
outstanding shares of Common Stock into a greater number of shares of Common
Stock, (iii) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock or (iv) issue any shares of its capital stock
in a reclassification of the Common Stock, then the number of Warrant Shares
purchasable upon exercise of this Warrant immediately prior thereto shall be
adjusted so that the holder of this Warrant shall be entitled to receive the
kind and number of Warrant Shares or other securities of the Company which he
would have owned or have been entitled to receive had such Warrant been
exercised in advance thereof. Upon each such adjustment of the kind and number
of Warrant Shares or other securities of the Company which are purchasable
hereunder, the holder of this Warrant shall thereafter be entitled to purchase
the number of Warrant Shares or other securities resulting from such adjustment
at an Exercise Price per Warrant Share or other security obtained by multiplying
the

                                        4

<PAGE>

Exercise Price in effect immediately prior to such adjustment by the number of
Warrant Shares purchasable pursuant hereto immediately prior to such adjustment
and dividing by the number of Warrant Shares or other securities of the Company
resulting from such adjustment. An adjustment made pursuant to this paragraph
shall become effective immediately after the effective date of such event
retroactive to the record date, if any, for such event.

     12. Reorganization, Reclassification, Merger, Consolidation or Disposition
of Assets. In case the Company shall reorganize its capital, reclassify its
capital stock, consolidate or merge with or into another corporation (where the
Company is not the surviving corporation or where there is a change in or
distribution with respect to the Common Stock of the Company), or sell, transfer
or otherwise dispose of all or substantially all its property, assets or
business to another corporation and, pursuant to the terms of such
reorganization, reclassification, merger, consolidation or disposition of
assets, shares of common stock of the successor or acquiring corporation, or any
cash, shares of stock or other securities or property of any nature whatsoever
(including warrants or other subscription or purchase rights) in addition to or
in lieu of common stock of the successor or acquiring corporation ("Other
Property"), are to be received by or distributed to the holders of Common Stock
of the Company, then Holder shall have the right thereafter to receive, upon
exercise of this Warrant, the number of shares of common stock of the successor
or acquiring corporation or of the Company, if it is the surviving corporation,
and Other Property receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a holder of
the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such event. In case of any such reorganization,
reclassification, merger, consolidation or disposition of assets, the successor
or acquiring corporation (if other than the Company) shall expressly assume the
due and punctual observance and performance of each and every covenant and
condition of this Warrant to be performed and observed by the Company and all
the obligations and liabilities hereunder, subject to such modifications as may
be deemed appropriate (as determined in good faith by resolution of the Board of
Directors of the Company) in order to provide for adjustments of shares of
Common Stock for which this Warrant is exercisable which shall be as nearly
equivalent as practicable to the adjustments provided for in this Section 12.
For purposes of this Section 12, "common stock of the successor or acquiring
corporation" shall include stock of such corporation of any class which is not
preferred as to dividends or assets over any other class of stock of such
corporation and which is not subject to redemption and shall also include any
evidences of indebtedness, shares of stock or other securities which are
convertible into or exchangeable for any such stock, either immediately or upon
the arrival of a specified date or the happening of a specified event and any
warrants or other rights to subscribe for or purchase any such stock. The
foregoing provisions of this Section 12 shall similarly apply to successive
reorganizations, reclassifications, mergers, consolidations or disposition of
assets.

     13. Voluntary Adjustment by the Company. The Company may at any time during
the term of this Warrant reduce the then current Exercise Price to any amount
and for any period of time deemed appropriate by the Board of Directors of the
Company.

     14. Notice of Adjustment. Whenever the number of Warrant Shares or number
or kind of securities or other property purchasable upon the exercise of this
Warrant or the Exercise Price is adjusted, as herein provided, the Company shall
promptly mail by registered or certified mail, return receipt requested, to the
holder of this Warrant notice of such adjustment or

                                        5

<PAGE>

adjustments setting forth the number of Warrant Shares (and other securities or
property) purchasable upon the exercise of this Warrant and the Exercise Price
of such Warrant Shares (and other securities or property) after such adjustment,
setting forth a brief statement of the facts requiring such adjustment and
setting forth the computation by which such adjustment was made. Such notice, in
the absence of manifest error, shall be conclusive evidence of the correctness
of such adjustment.

     15. Notice of Corporate Action. If at any time:

          (a) the Company shall take a record of the holders of its Common Stock
     for the purpose of entitling them to receive a dividend or other
     distribution, or any right to subscribe for or purchase any evidences of
     its indebtedness, any shares of stock of any class or any other securities
     or property, or to receive any other right, or

          (b) there shall be any capital reorganization of the Company, any
     reclassification or recapitalization of the capital stock of the Company or
     any consolidation or merger of the Company with, or any sale, transfer or
     other disposition of all or substantially all the property, assets or
     business of the Company to, another corporation or,

          (c) there shall be a voluntary or involuntary dissolution, liquidation
     or winding up of the Company;

     then, in any one or more of such cases, the Company shall give to Holder
     (i) at least 20 days' (or as many days as is reasonably practicable) prior
     written notice of the date on which a record date shall be selected for
     such dividend, distribution or right or for determining rights to vote in
     respect of any such reorganization, reclassification, merger,
     consolidation, sale, transfer, disposition, liquidation or winding up, and
     (ii) in the case of any such reorganization, reclassification, merger,
     consolidation, sale, transfer, disposition, dissolution, liquidation or
     winding up, at least 20 days' prior written notice of the date when the
     same shall take place. Such notice in accordance with the foregoing clause
     also shall specify (i) the date on which any such record is to be taken for
     the purpose of such dividend, distribution or right, the date on which the
     holders of Common Stock shall be entitled to any such dividend,
     distribution or right, and the amount and character thereof, and (ii) the
     date on which any such reorganization, reclassification, merger,
     consolidation, sale, transfer, disposition, dissolution, liquidation or
     winding up is to take place and the time, if any such time is to be fixed,
     as of which the holders of Common Stock shall be entitled to exchange their
     shares of Common Stock for securities or other property deliverable upon
     such disposition, dissolution, liquidation or winding up. Each such written
     notice shall be sufficiently given if addressed to Holder at the last
     address of Holder appearing on the books of the Company and delivered in
     accordance with Section 17(d).

     16. Authorized Shares. The Company covenants that during the period the
Warrant is outstanding, it will reserve from its authorized and unissued Common
Stock a sufficient number of shares to provide for the issuance of the Warrant
Shares upon the exercise of any purchase rights under this Warrant. The Company
further covenants that its issuance of this Warrant shall constitute full
authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for the Warrant
Shares upon the exercise of the purchase rights under this Warrant. The Company
will take all such

                                        6

<PAGE>

reasonable action as may be necessary to assure that such Warrant Shares may be
issued as provided herein without violation of any applicable law or regulation,
or of any requirements of the Principal Market upon which the Common Stock may
be listed.

     The Company shall not by any action, including, without limitation,
amending its articles of incorporation or through any reorganization, transfer
of assets, consolidation, merger, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Warrant, but will at all times in good faith assist
in the carrying out of all such terms and in the taking of all such actions as
may be necessary or appropriate to protect the rights of Holder against
impairment. Without limiting the generality of the foregoing, the Company will
(a) not increase the par value of any shares of Common Stock receivable upon the
exercise of this Warrant above the amount payable therefor upon such exercise
immediately prior to such increase in par value, (b) take all such action as may
be necessary or appropriate in order that the Company may validly and legally
issue fully paid and nonassessable shares of Common Stock upon the exercise of
this Warrant, and (c) use commercially reasonable efforts to obtain all such
authorizations, exemptions or consents from any public regulatory body having
jurisdiction thereof as may be necessary to enable the Company to perform its
obligations under this Warrant.

     Before taking any action which would result in an adjustment in the number
of shares of Common Stock for which this Warrant is exercisable or in the
Exercise Price, the Company shall obtain all such authorizations or exemptions
thereof, or consents thereto, as may be necessary from any public regulatory
body or bodies having jurisdiction thereof.

     17. Miscellaneous.

          (a) Jurisdiction. This Warrant shall be binding upon any successors or
     assigns of the Company. This Warrant shall constitute a contract under the
     laws of Delaware, without regard to its conflict of law, principles or
     rules, and be subject to arbitration pursuant to the terms set forth in the
     Purchase Agreement.

          (b) Restrictions. The holder hereof acknowledges that the Warrant
     Shares acquired upon the exercise of this Warrant, if not registered, will
     have restrictions upon resale imposed by state and federal securities laws.

          (c) Notices. Any notice, request or other document required or
     permitted to be given or delivered to the holder hereof by the Company
     shall be delivered in accordance with the notice provisions of the Purchase
     Agreement.

          (d) Remedies. Holder, in addition to being entitled to exercise all
     rights granted by law, including recovery of damages, will be entitled to
     specific performance of its rights under this Warrant. The Company agrees
     that monetary damages would not be adequate compensation for any loss
     incurred by reason of a breach by it of the provisions of this Warrant and
     hereby agrees to waive the defense in any action for specific performance
     that a remedy at law would be adequate.

                                        7

<PAGE>

          (e) Successors and Assigns. Subject to applicable securities laws,
     this Warrant and the rights and obligations evidenced hereby shall inure to
     the benefit of and be binding upon the successors of the Company and the
     successors and permitted assigns of Holder. The provisions of this Warrant
     are intended to be for the benefit of all Holders from time to time of this
     Warrant and shall be enforceable by any such Holder or holder of Warrant
     Shares.

          (f) Amendment. This Warrant may be modified or amended or the
     provisions hereof waived with the written consent of the Company and the
     Holder.

          (g) Severability. Wherever possible, each provision of this Warrant
     shall be interpreted in such manner as to be effective and valid under
     applicable law, but if any provision of this Warrant shall be prohibited by
     or invalid under applicable law, such provision shall be ineffective to the
     extent of such prohibition or invalidity, without invalidating the
     remainder of such provisions or the remaining provisions of this Warrant.

          (h) Headings. The headings used in this Warrant are for the
     convenience of reference only and shall not, for any purpose, be deemed a
     part of this Warrant.

                                        8

<PAGE>

     IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its officer thereunto duly authorized.

Dated: ________ __, 2001
                                            VIISAGE TECHNOLOGY, INC.

                                            By:
                                               ------------------------

                                        9

<PAGE>

                               NOTICE OF EXERCISE

To:      Viisage Technology, Inc.

     (1)______The undersigned hereby elects to purchase ________ shares of
Common Stock (the "Common Stock"), of Viisage Technology, Inc. pursuant to the
terms of the attached Warrant, and tenders herewith payment of the exercise
price in full, together with all applicable transfer taxes, if any.

     (2)______Please issue a certificate or certificates representing said
shares of Common Stock in the name of the undersigned or in such other name as
is specified below:

                           -------------------------------
                           (Name)

                           -------------------------------
                           (Address)

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

Dated:
                                        ------------------------------
                                        Signature

<PAGE>

                                 ASSIGNMENT FORM

                    (To assign the foregoing warrant, execute
                   this form and supply required information.
                 Do not use this form to exercise the warrant.)

     FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby
are hereby assigned to

_______________________________________________ whose address is

________________________________________________________________.

________________________________________________________________

                                             Dated:  ______________, _______

                 Holder's Signature: _____________________________

                 Holder's Address:   _____________________________

                                     _____________________________

Signature Guaranteed:  ___________________________________________

NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in an fiduciary or other representative
capacity should file proper evidence of authority to assign the foregoing
Warrant.<PAGE>

                                                                   EXHIBIT 10.10

                                     LEASE
                                     -----

THIS LEASE is made as of the 30th day of October 1995, by and between
BERKSHIRE-NEWBURY LIMITED PARTNERSHIP, a Massachusetts limited partnership with
a principal office at 1500 Main Street, Springfield, Massachusetts, or its
Assignee, ("Landlord"), and GENUS, INC., a California corporation with a place
of business at 4 Mulliken Way, Newpburyport, Massachusetts ("Tenant").

                                  WITNESSETH:
                                  ----------
1. Premises
   --------

Landlord hereby leases to Tenant and Tenant hereby leases from Landlord, upon
and subject to the terms and provisions of this Lease, the building premises
consisting of approximately Seventy Thousand (70,000) square feet (the
"Building") and the real estate on which the building is to be located, which is
Lot 62 Stanley Tucker Drive, Newburyport, Massachusetts (the "Property"), as
more particularly described on Exhibit A attached hereto and incorporated herein
                               ---------
(the Building and the Property are collectively called the "Premises").

2. Terms of Lease
   --------------

The primary term of this Lease ("Initial Term") shall be seventeen (17) years
commencing on the Commencement Date (as hereinafter defined) and ending on the
day immediately preceding the 18th anniversary of the Commencement Date.

Provided Tenant is not in default under this Lease at the time of its exercise
of any option to extend. Tenant shall have the option of extending the term of
this Lease for four (4) additional periods of five (5) years each upon written
notice to Landlord at least nine (9) months prior to the end of the Initial Term
of this Lease and upon not less than (3) months written notice prior to the
expiration of each option period hereunder. As used herein the term "Lease Term"
shall mean the Initial Term plus any extension of the term of this lease in
accordance with this paragraph.

If the rent during any extended term is determined by appraisal and if Tenant
does not, in its sole discretion, approve the rental amount established by such
appraisal, Tenant may rescind its exercise of the Option by giving Landlord
written notice of such election to rescind within ten (10) days after receipt of
all appraisals, but only if all of the following are met: If Tenant rescinds its
exercise of the Option, then (1) the Lease shall terminate on the ninetieth
(90th) day after Tenant's notice of rescission or on the date the Lease would
have otherwise terminated absent Tenant's exercise of the Option, whichever date
is later, and (ii) Tenant shall pay all costs and expenses of the appraisal, and
(iii) Tenant shall pay rent during that ninety (90) day period in the amount
Tenant would have paid for that period, had Tenant not rescinded the extension.

<PAGE>

3.   Rent
     ----

     (a)   Base Rent. From and after the Commencement Date (as defined herein),
           ---------
Tenant agrees to pay to Landlord at the following address: 1500 Main Street,
Suite 2012, Springfield, MA 01115, or as directed by Landlord, without notice,
demand, offset or deduction except as provided herein, on the Commencement Date
and thereafter, semiannually, in advance, on the first day of January and July
of each and every calendar year during the Lease Term, prorated for any partial
year, one-half of the following sums equal to the annual base rent ("Base
Rent"):

        Lease Year*
        Initial Term                         Annual Base Rent
     --------------------   ---------------------------------------------------

     For Lease Years 1-5    $805,000 +/- (12.3846% times (Construction Cost**
                            minus $6,500,000))***

     For Lease Years 6-10   $925,750 +/- (14.2423% times (Construction Cost**
                            minus $6,500,000))***

     For Lease Years 11-15  $975,038 +/- (14.9544% times (Construction Cost**
                            minus $6,500,000))***

     For Lease Years 16-17  $805,000 +/- (12.3846% times (Construction Cost**
                            minus $6,500,000))***

<TABLE>
<CAPTION>
               Lease Year*
               Option Term                               Annual Base Rent
     ---------------------------------             -----------------------------
     <S>                                           <C>
     For First Option Term (Lease Years 18-22)     Greater of
     For Second Option Term (Lease Years 23-27)    (a) 95% of fair market value***
     For Third Option Term (Lease Years 28-32)     (as determined on the first day of
     For Fourth Option Term (Lease Years 33-37)    each option term), or (b) the Base
                                                   Rent payable for the 1st year of the
                                                   Initial Term
</TABLE>

     As used in this Section the following terms shall have the following
     meanings:

     *   "Lease Year" is a year commencing on the Commencement Date (or an
          ----------
         anniversary thereof) and ending on the date immediately preceding the
         next succeeding anniversary of the Commencement Date.

     **  "Construction Cost" is defined in the Improvement Agreement executed
          -----------------
         concurrently herewith by Landlord and Tenant

                                      -2-
<PAGE>

***  When the Construction Cost has been determined, the total thereof shall be
     compared to $6,500,000 and the Annual Rent for the Initial Term shall be
     adjusted in accordance with the foregoing formulas, upward if the
     Construction Cost exceeds $6,500,000, and downward, if the Construction
     Cost is less than $6,500,000.

**** "Fair market value" shall be determined at the time of Tenant's exercise of
     each option to extend. Upon Tenant's written notice of the exercise of an
     option to extend, Landlord and Tenant shall attempt to determine and agree
     on fair market value rental for the Premises. Fair market value shall mean
     that rental rate currently being charged for comparable manufacturing
     facilities in the region, exclusive of the Specialized Improvements, as
     defined in Exhibit B or as otherwise designated pursuant to the Improvement
                ---------
     Agreement (which are constructed by Landlord, but amortized in the Annual
     Rent during the Initial Term), and exclusive of any other improvements in
     the Premises that are installed after the Substantial Completion of the
     Improvements (as defined in the Improvements Agreement) at Tenant's cost.
     In the event Landlord and Tenant cannot agree on said fair market value,
     each party shall select a MAI appraiser with experience in commercial
     valuations of this nature in the region who shall attempt to agree upon the
     fair market value within 20 days and, if they cannot agree the two (2)
     appraisers selected shall select a third. In such events the three (3)
     appraisers shall each determine fair market value rental for the Premises
     and the average of the three (3) shall constitute fair market value for
     purposes of Base Rent during said option term. The costs of such appraisers
     shall be borne equally by each party.

(b)  Commencement Date. Tenant's obligation to pay rent hereunder shall commence
     -----------------
on the earlier of when Landlord delivers to Tenant the Premises with the
Improvements Substantially Completed as defined in the Improvement Agreement or
Tenant actually occupies the Premises for the purposes of conducting its
manufacturing business (herein the "Commencement Date").

(c)  Additional Rent. Tenant shall pay all expenses related to the repair,
     ---------------
replacement (structural or otherwise), the operation and maintenance of the
Premises, including without limitation real property taxes and insurance
premiums, as additional rent hereunder (the "Additional Rent").

(d)  Absolute Net Lease. It is the intention of the parties that the rent
     ------------------
payable hereunder shall be absolutely net to Landlord, so that this Lease shall
yield to Landlord the net annual rent specified herein during the Lease Term,
and that all costs, expenses and obligations of every kind and nature whatsoever
relating to the Premises and its physical structures shall be paid by Tenant.
Without limiting any other provision of this Lease, it is expressly understood
and agreed that all repairs, replacements, real estate taxes, operating expenses
insurance premiums, and all other amounts that Tenant is required to pay
hereunder, together with all interest and penalties that may accrue thereon,
shall be deemed to be Additional Rent, and in the event of nonpayment thereof by
Tenant, Landlord shall have all of the rights and remedies with respect thereto
as would accrue to Landlord for nonpayment of Base Rent. As used in this Lease,
"Rent" shall mean the Base Rent plus Additional Rent. It is expressly understood
and agreed that Landlord shall have no

                                      -3-

<PAGE>

     obligation for any cost or expense associated with the Premises during the
     Initial Term of the Lease or any extensions thereof.

     (e)  Limitation on Expenses. Notwithstanding anything to the contrary in
          ----------------------
     this Lease or the Improvement Agreement, Landlord at its sole expense shall
     pay and be solely responsible for the following "Costs":

          (i)    Losses Caused by Others. Costs occasioned by the act, omission
                 -----------------------
          or violation of Law by Landlord or its, agents, employees or
          contractors, or by the Landlord's or its contractor's violation of
          this Lease or any loan or construction contract relating to this Lease
          or the Improvements.

          (ii)   Insurance, Casualties and Condemnations. Except to the extent
                 ---------------------------------------
          for any shortfall in insurance proceeds caused by Tenant's breach of
          its obligations under Section 11, Costs occasioned by fire, acts of
          God, or other casualties and Costs occasioned by the exercise of the
          power of eminent domain.

          (iii)  Capital Improvements. The Construction Costs or any other cost
                 --------------------
          or expenses incurred by the Landlord to construct the Improvements in
          accordance with the Improvements Agreement.

          (iv)   Reimbursable Expenses. Costs for which Landlord has a right of
                 ---------------------
          reimbursement from others.

          (v)    Leasing Expenses. Fees, commissions, attorneys' fees, Costs or
                 ----------------
          other disbursements incurred in connection with negotiations of this
          Lease or any financing agreement or construction agreement relating to
          the Improvements.

          (vi)   Reserves. Depreciation, amortization or other expense reserves.
                 --------

          (vii)  Mortgages. Interest, charges, attorneys' fees, fees, and other
                 ---------
          charges incurred by Landlord in connection with the financing of the
          construction of the Improvements or on any other debt, payments on
          mortgages and rent under ground leases.

          (viii) Hazardous Materials. Costs incurred to investigate the presence
                 -------------------
          of any Hazardous Material, Costs to respond to any claim of Hazardous
          Material contamination or damage, Costs to remove any Hazardous
          Material from the Premise, or the soil, groundwater, air, or building
          materials of the Improvements, and any judgments or other Costs
          incurred in connection with any Hazardous Material exposure or
          releases, but only to the extent caused that the Hazardous Material
          present on the Property or the soil, groundwater, surface water, air
          or building materials thereof on the Commencement Date.

     (f)  Late Charge. In the event any Annual Base Rent payment is not paid
          -----------
     within fifteen (15) days of its due date, Tenant shall pay Landlord a late
     charge equal to two percent (2%) of such

                                       -4-
<PAGE>

     payment per month, which late charge shall be deemed to be due and
     collectible as Additional Rent hereunder.

4.   Additional Rent - Taxes, Utilities
     ----------------------------------

     (a)  Tenant shall pay, as Additional Rent, all general and special taxes,
     including all real estate taxes, assessments for local improvements and
     other governmental charges which may be charged, assessed, or imposed upon
     the Premises. Said payments shall be made directly to the taxing authority
     with evidence of payment submitted to Landlord within thirty (30) days of
     such payment. Any special assessments by a governmental authority may be
     paid over time periods acceptable to said governmental authority, subject
     to Landlord's reasonable consent. Landlord shall forward all tax bills to
     Tenant upon its receipt of such bills.

     (b)  Tenant shall pay all license fees which may be imposed upon the
     business of Tenant conducted upon the Premises.

     (c)  Tenant shall pay, as Additional Rent and before the same shall become
     delinquent, for the maintenance and repair of all grounds, building,
     parking and driveways or service roads within the Premises and all of its
     requirements for utilities, including, but not limited to, heat,
     electricity, telephone, water and sewer use. Tenant shall cause all such
     utility accounts to be issued or transferred into its name immediately upon
     commencement of this Lease.

     (d)  Taxes and charges shall be equitably adjusted for and with respect to
     the first and last partial tax year (if any) of the Lease Term. Where the
     applicable tax bills and computations are not available prior to the end of
     the term hereof, a tentative computation shall be made on the basis of the
     previous year's taxes payable by Tenant, with a final adjustment to be made
     between Landlord and Tenant promptly after all bills and computations are
     available for such period.

     (e)  Tenant will have the right to contest the amount or validity, in whole
     or in part, of any tax by appropriate proceedings diligently conducted in
     good faith. Upon the termination of those proceedings, Tenant will pay the
     amount of the tax or part of the tax as finally determined, the payment of
     which may have been deferred during the prosecution of the proceedings,
     together with any costs, fees, interest, penalties, or other related
     liabilities. Landlord will not be required to join in any contest or
     proceedings unless the provisions of any law or regulations then in effect
     require that the proceedings be brought by or in the name of Landlord. In
     that event, Landlord will join in the proceedings or permit them to be
     brought in its name; however, Landlord will not be subjected to any
     liability for the payment of any costs or expenses in connection with any
     contest or proceedings, and Tenant will indemnify Landlord against and save
     Landlord harmless from any of those costs and expenses.

     (f)  Tenant will not be obligated to pay local, state or federal net income
     taxes assessed against Landlord; local, state or federal capital levy of
     Landlord; or sales, excise, franchise, gift, estate, succession,
     inheritance or transfer taxes of Landlord.

                                       -5-
<PAGE>

5.   USE OF PROPERTY

     (a) During the term of this Lease, Tenant shall use the Premises for
         purposes of manufacturing of components and equipment for the
         semiconductor industry and any other use permitted by law as a matter
         of right and in compliance with all governmental regulations.

     (b) Tenant agrees that during the Lease Term:

         (i)    No auction, fire or bankruptcy sales may be conducted within the
                Premises without the prior written consent of Landlord;

         (ii)   Tenant shall provide at its expense for the collection of trash
                and refuse on a timely basis and all refuse shall be kept in
                cans, dumpsters and similar appropriate storage at all times;

         (iii)  Tenant shall at all times fully and adequately heat the Premises
                so as to prevent damage to the Premises, the Building and any
                structures, fixtures or equipment located at the Premises;

         (iv)   Tenant may place on the exterior of the Premises (including, but
                without limitation, windows, doors and entrance lobbies) any
                signs provided they shall be in compliance with all zoning,
                building or other regulations;

         (v)    Tenant shall not perform any act or carry on any practice which
                may injure the Property or cause any offensive odors or loud
                noise other than those necessarily a function of Tenant's
                operations, or constitute a nuisance or menace to any other
                persons;

         (vi)   Tenant shall not use or permit the Property to be used for any
                unlawful purpose and will obtain all necessary permits or
                licenses required for its use of the Property;

         (vii)  Tenant has, at the termination of this Lease, the option
                to remove its possessions and possessions of others (including,
                if there is then no uncured Event of Default under Section 14
                hereof all of Tenant's Specialized Improvements, as identified
                on Exhibit B or otherwise designated pursuant to the Improvement
                Agreement), as the same may be amended by Tenant from time to
                time and leave the Premises in the same condition as at the
                Commencement Date of the Lease, excepting only reasonable wear
                and tear, damage by fire or casualty, eminent domain, Hazardous
                Materials which were not placed on the Premises by Tenant, and
                alterations which Landlord has previously agreed in writing may
                be surrendered; and

         (viii) Tenant shall be responsible at its expense for snow removal from
                the walks, drives, entrances, exits and parking areas on a
                timely basis.

<PAGE>

6.   Hazardous Substances
     --------------------

     (a)  Tenant shall duly comply with the requirements of all applicable
     environmental, health, safety and sanitation laws, ordinances, codes, rules
     and regulations and interpretations and orders of regulatory and
     administrative authority with respect to its use, storage, and release of
     Hazardous Materials.

     (b)  Tenant shall not use, handle or store or dispose of any Hazardous
     Materials in or about the Premises except as reasonably required in
     Tenant's business judgment for its operation of its business and then
     strictly in accordance with all applicable laws and regulations. If during
     the Lease Term the release or disposal of Hazardous Materials anywhere on
     the Premises by Tenant, its agent, employee, contractor, invitee, or any
     other person for whom Tenant is legally responsible (including, without
     limitation, a third party who comes onto the surface of the Premises and
     releases a Hazardous Material into the soil, ground water, surface water,
     ambient air or building materials of the Premises during the Lease Term),
     results in (1) contamination of the soil, ambient air, surface water or
     ground water with Hazardous Materials in excess of legally permitted levels
     ("Tenant's Contamination") or (2) loss or damage to person(s) or
     property, then Tenant agrees to respond in accordance with the following
     paragraph:

     Tenant shall (i) notify Landlord immediately of any contamination, claim of
     contamination, loss or damage, and (ii) after consultation and approval by
     Landlord; Tenant shall at its sole expense clean up Tenant's Contamination
     in full compliance with all applicable statutes, regulations and standards
     No consent or approval of Landlord shall in any way be construed as
     imposing upon Landlord any liability for the means, methods or manner of
     removal, containment or other compliance with applicable law for and with
     respect to the foregoing.

     (c)  In the event that Tenant does not comply with the provisions of
     Section 6(b), and in addition to its other rights hereunder, Landlord shall
     have the right (but not the obligation), upon 30 calendar days advance
     notice to Tenant, except in the case of an emergency (in which case
     reasonable notice shall be given to the extent reasonably possible), to
     cause the illegal release to be contained and/or removed on behalf of
     Tenant. The contractors selected by landlord shall have the right to enter
     upon the Premises with such persons, machinery and equipment as they shall
     reasonably deem necessary for the purpose and undertake such remedial
     containment and cleanup actions as they shall reasonably deem appropriate,
     without thereby incurring any liability to Tenant on account thereof.
     Tenant shall reasonably cooperate with any such contractors and render such
     assistance to such contractors as may be requested to facilitate the
     remedial containment and cleanup actions. Tenant shall be liable to
     Landlord for all costs and expenses, including all reasonable attorneys'
     fees reasonably incurred on account of such remedial action undertaken on
     Tenant's behalf as a consequence of Tenant's default and shall reimburse
     Landlord therefor on demand.

     (d)  Tenant shall indemnify, defend and hold harmless Landlord from and
     against all loss, liability, damage and expense, including costs associated
     with administrative and judicial proceedings and attorneys' fees, ever
     suffered or incurred by Landlord to the extent caused by

                                       -7-
<PAGE>

     (i) Tenant's failure at any time during the Lease Term to comply with any
     environmental, health, safety or sanitation laws, ordinances, codes, rules
     or regulations or interpretations or orders of regulatory or administrative
     authorities with respect thereto as required by this Lease; (ii) any
     release of Hazardous Materials in violation of applicable Environmental Law
     on, upon or into the Property occurring during this Lease by Tenant, its
     agent, employee, or any other person for whom Tenant is legally responsible
     (including, without limitation, a third party who comes onto the surface of
     the Premises and releases a Hazardous Material into the soil, ground water,
     surface water, ambient air or building materials of the Premises during the
     Lease Term); (iii) any and all damage to natural resources or real property
     and/or harm or injury to persons resulting or alleged to have resulted from
     such failure to comply as described in subpart (i) and/or such release as
     described in subpart (ii) hereof and (iv) any release of a Hazardous
     Material into the soil, groundwater, surface water, ambient air or building
     materials of the Property during the Lease Term, whether by Tenant, or its
     agent, employee, contractor, invitee, or any other person for whom Tenant
     is legally responsible (including, without limitation, a third party who
     comes onto the surface of the Premises and releases a Hazardous Material
     into the soil, ground water, surface water, ambient air or building
     materials of the Premises during the Lease Term). Notwithstanding the
     foregoing and any other thing to the contrary in this Lease, Tenant shall
     not be liable for any migration of a Hazardous Material from other property
     to this Property. Tenant acknowledges that its obligations and liabilities
     under this Section shall survive the expiration or earlier termination of
     this Lease. If Tenant fails to meet its obligations to Landlord under this
     Section, Landlord shall have the remedies provided in Section 14.

     (e)  Neither Landlord nor any employee or agent of Landlord or entity under
     its control has or will generate, store or spill upon, dispose of or
     transfer to or from the Premises any hazardous waste materials.

     Landlord shall indemnify and hold Tenant (including any successor to or
     assignee of Tenant) harmless from and against all loss, cost, liability,
     damage and expense, including reasonable attorneys' fees and the costs of
     litigation arising from any hazardous waste materials in or on the Premises
     due to the presence of any Hazardous Material in the soil, groundwater,
     ambient air or buildings materials of the Improvements on the Commencement
     Date, or any act, omission or negligence of Landlord, or its employee,
     contractor, invitee, or other person for whom Landlord is legally
     responsible. Landlord acknowledges that its obligations and liabilities
     under this Section shall survive the expiration or earlier termination of
     this Lease.

     Within the time permitted by applicable law, Landlord, at its sole cost,
     shall perform or cause to be performed, any investigation, remediation,
     removal action, detoxification of the Premises, and shall comply with any
     Environmental Law, relating to any Hazardous Material present at on or
     about the Premises or the soil, air, improvements, groundwater, surface
     water, or building materials thereof on the Commencement Date.

     (f)  Except to the extent of Tenant's failure to perform its obligations
     under this Lease concerning Hazardous Materials, Landlord, for itself
     hereby waives and releases all Claims against Tenant and each Tenant
     Indemnitee, and all rights to join Tenant or any Tenant

                                       -8-
<PAGE>

     Indemnitee in any litigation or proceeding (Including without limitation
     any Claim arising under CERCLA, the Resource Conservation and Recovery Act
     or any other state or federal Environmental Law), arising out of or in
     connection with any matter arising in connection with a Hazardous Material
     on or about the Premises except to the extent expressly provided in
     subsections 6(a) through 6(d) above,

     (g)  Except as disclosed In the reports attached hereto as Exhibit D, true
                                                                ---------
     and correct copies of which have been delivered by Landlord to Tenant, to
     the best knowledge of Landlord: (i) no Hazardous Material is present on
     Premises, or the soil, surface water or groundwater thereof; (ii) no
     underground storage tanks or asbestos containing building materials are
     present on the Premise, and (iii) no action, proceeding, or claim is
     pending or threatened regarding the Premise concerning any Hazardous
     Material or pursuant to any Enviromental Law. Landlord has delivered to
     Tenant all reports and environmental assessments of the Premises conducted
     at the request of or otherwise available to Landlord and Landlord has
     complied with all environmental disclosure obligations imposed upon
     Landlord by applicable Law with respect to this transaction.

     (h)  As used in this Lease, the term "Hazardous Material" shall mean any
     material or substance that is now or hereafter prohibited or regulated by
     any statute, law, rule, regulation or ordinance or that is now or hereafter
     designated by any governmental authority to be radioactive, toxic,
     hazardous or otherwise a danger to health, reproduction or the environment.
     As used herein "Environmental Laws" shall mean all local, state, or federal
     laws, statutes, ordinances, rules, regulations, judgments, injunctions,
     stipulations, decrees, orders, permits, approvals, treaties, or protocols
     now or hereafter enacted, issued or promulgated by any governmental
     authority which relate to any Hazardous Material or to the use, handling,
     transportation, production, disposal, discharge, release, emission, sale,
     or storage of, or the exposure of any person to, a Hazardous Material.

7.   Maintenance, Repair, Alterations and Removals
     ---------------------------------------------

     (a)  Except as otherwise provided in this Lease, Tenant shall, at its sole
     expense, keep neat and clean and maintain in good order, condition and
     repair the Premises and every part thereof. including, without limitation,
     the foundations, roof and drains and structural portions of the Premises,
     the exterior and interior portions of air conditioning, heating, sprinkler
     (if any) and electrical systems, all doors, windows, plate and glass
     surrounding the Premises, all plumbing and sewage facilities within the
     Premises, fixtures and interior walls, floors, ceilings and signs.

     (b)  Subject to the express provisions of this Lease, Tenant shall keep the
     Property in a clean, sanitary and safe condition in accordance with the
     laws of the Commonwealth of Massachusetts and ordinances of the Town of
     Newburyport, and in accordance with all directions, rules and regulations
     of the Health Officer, Fire Marshall, Building Inspector and other proper
     officers of the governmental agencies having jurisdiction thereover.

     (c)  Except as otherwise expressly provided In this Lease, Landlord shall
     not be responsible for maintaining or making any improvements or repairs of
     any kind upon the Property, but this

                                       -9-
<PAGE>

     paragraph is not intended to refer to damage by fire or other Insured risk
     to the Premises, provision for which is hereafter made. Notwithstanding
     anything to the contrary in this Lease, Landlord shall perform and
     construct, and Tenant shall have no responsibility to perform or construct,
     any repair, maintenance or improvement (i) necessitated by the acts or
     omissions of Landlord, or its agents, employees, or contractors, (ii)
     required as a consequence of any violation of law, private servitude
     encumbering the Premises, or construction defect in the Improvements caused
     by Landlord or its agent, employee or contractor, and (iii) for which
     Landlord has a right of reimbursement from others. Tenant's obligation, If
     any, to reimburse Landlord for the costs of such repairs, maintenance and
     improvements shall be governed by the other provisions of this Lease.

     (d)  Tenant shall not make any alterations or other structural or capital
     improvements or additions upon the Premises ("Alterations") without first
     obtaining, in each instance, the written consent of Landlord which shall
     not be unreasonably withheld. Notwithstanding the foregoing, Tenant shall
     have the right to make any and all Alteration to the Interior space of the
     Premises, so long as such Alterations do not impact the structural
     integrity of the Premises. Notwithstanding anything to the contrary in this
     Lease, all Alterations, trade fixtures and personal property installed in
     the Premises at Tenant's expense ("Tenant's Property") shall at all times
     remain Tenant's property and Tenant shall be entitled to all depreciation,
     amortization and other tax benefits with respect thereto. Except for
     Alterations which cannot be removed without structural injury to the
     Premises, at any time Tenant may remove Tenant's property from the
     Premises, provided Tenant repairs all damage caused by such removal.
     Landlord shall have no lien or other interest whatsoever in any item of
     Tenant's Property, or any portion thereof or interest therein located in
     the Premises or elsewhere, and Landlord hereby waives all such liens and
     interests. Within ten (10) days following Tenant's request, Landlord shall
     execute documents in form reasonably acceptable to Tenant to evidence
     Landlord's waiver of any right, title, lien or interest in Tenant's
     Property located at the Premises.

     (c)  Except as expressly provided in this Lease, Landlord has not made and
     does not make any representation or warranty as to any matter affecting or
     relating to the Premises, including but not limited to the physical
     condition thereof, and Tenant acknowledges that no such representation or
     warranty has been made and agrees to lease the Premises in "AS IS"
     condition as of the date of this Lease, subject to the completion of
     Landlord's construction and delivery obligations and its assignment of
     warranties as set forth in the Improvement Agreement, and subject to all of
     the Landlord's other obligations hereunder.

8.   [Intentionally Deleted.]

9.   Landlord's Access to Premises
     -----------------------------

     (a)  Landlord and its designees shall have the right to enter upon the
     Premises at all reasonable hours and upon reasonable notice (except in an
     emergency) for the purpose of inspecting the same. If repairs are required
     to be made by Tenant pursuant to this Lease, Landlord may demand

                                      -10-
<PAGE>

     that Tenant make the same forthwith, and if Tenant refuses or neglects to
     commence such repairs and complete the same with reasonable dispatch, after
     such demand, Landlord may (but shall not be required to) make or cause such
     repairs to be made. If Landlord makes or causes such repairs to be made,
     Tenant shall within seven (7) days following demand of Landlord pay to
     Landlord the cost thereof reasonably incurred by Landlord, and if it shall
     default in such payment, Landlord shall have the remedies provided in
     Section 14.

     (b)  For a period commencing nine (9) months prior to the termination of
     the Lease Term (including any extension thereof), upon written notice to
     Tenant, Landlord may have reasonable access to the Premises for the purpose
     of exhibiting the same to prospective tenants.

10.  INDEMNIFICATION: PUBLIC LIABILITY INSURANCE: WORKERS' COMPENSATION
     ------------------------------------------------------------------
     INSURANCE
     ---------

     (a)  Subject to Section 10(e), below, Tenant shall indemnify and save
     harmless Landlord from and against all claims of whatever nature to the
     extent arising from (i) any act, omission or negligence occurring on the
     Premises during the Lease Term, or (ii) any negligent act or omission by
     Tenant, or Tenant's agents, employees, contractors, invitees, or other
     persons for whom Tenant is legally responsible wherever occurring during
     the Lease Term. This indemnity and hold harmless agreement shall include
     indemnity against all costs, expenses and liabilities reasonably incurred
     in or in connection with any such claim or proceeding brought thereon, and
     the defense thereof.

     (b)  Tenant shall maintain in full force during the Lease Term a policy or
     public liability insurance insuring all Tenant's indemnities described in
     this Section 10. Under such policy Landlord (and such other persons as are
     in privity of estate with Landlord as may be set out in notice from time to
     time delivered to Tenant) and Tenant shall be named as insureds. Each such
     policy shall be non-cancellable with respect to Landlord and Landlord's
     said designees without thirty (30) days' prior written notice to Landlord,
     and a duplicate original or certificate thereof shall be delivered to
     Landlord at the beginning of the Lease Term and upon request thereafter.
     The minimum limits of liability of such insurance shall be ONE MILLION
     DOLLARS ($1,000,000) per occurrence for personal injury (or death) and
     [THREE MILLION DOLLARS ($3,000,000)] per occurrence with respect to damage
     to property.

     In the event Tenant fails to provide such insurance, Landlord may purchase
     such insurance and Tenant agrees that within seven (7) days following
     demand of Landlord it will pay to Landlord the cost thereof, and if it
     shall default in such payment, Landlord shall have the remedies provided in
     Section 14.

     (c)  Tenant shall maintain all workers' compensation and other insurance in
     compliance with all applicable laws.

     (d)  Tenant shall use and occupy the Premises at its own risk, and Landlord
     shall have no responsibility or liability for any loss of or damage to
     fixtures or other personal property of Tenant.

                                     -11-

<PAGE>

     (e)  Notwithstanding anything to the contrary in this Lease, Tenant shall
     neither release Landlord from, nor indemnify Landlord with respect to: (i)
     the negligence or willful misconduct of Landlord, or its employees, agents,
     contractors, or other persons for whom Landlord is legally liable; or (ii)
     a breach of Landlord's obligations or representations under this Lease, or
     (iii) a violation of any law, rule or regulation by Landlord, its agents,
     contractors, employees, or other persons for whom Landlord is legally
     liable. Landlord shall indemnify and save harmless Tenant from and against
     all claims of whatever nature to the extent arising from (i) any act,
     omission or negligence occurring on the Premises prior to or after the
     Lease Term, or (ii) any negligent act or omission by Landlord, or
     Landlord's agents, employees, contractors, invitees, or other persons for
     whom Landlord is legally responsible wherever occurring during the Lease
     Term. This indemnity and hold harmless agreement shall include indemnity
     against all costs, expenses and liabilities incurred in or in connection
     with any such claim or proceeding brought thereon, and the defense thereof.

11.  Property Insurance
     -----------------

     (a)  Tenant shall keep, at its expense (which shall be deemed additional
     rent), the Premises insured against loss or damage by fire with the usual
     extended coverage endorsements in amounts not less than one hundred percent
     (100%) of the full replacement value thereof above foundation walls.

     (b)  Tenant shall keep Tenant's own fixtures, merchandise and equipment
     insured against loss or damage by fire, vandalism and theft with the usual
     extended coverage endorsements, in such amounts and with such insurance
     carriers as Tenant shall determine. It is understood and agreed that Tenant
     assumes all risk of damage to its own property arising from any cause
     whatsoever, including, without limitation, loss by theft or otherwise.

     (c)  Insofar as and to the extent that the following provision may be
     effective without invalidating or making it impossible to secure insurance
     coverage obtainable from responsible insurance companies doing business in
     the Commonwealth of Massachusetts (even though extra premium may result
     therefrom), Landlord and Tenant mutually agree that with respect to any
     loss which is covered by insurance then being carried by them respectively,
     or which would be covered by a standard form of full replacement cost,
     extended coverage, all-risk casualty insurance, each releases the other and
     their respective officers, directors, employees, successors and assigns of
     and from any and all claims with respect to such loss; and they further
     mutually agree that their respective insurance policies shall provide that
     the insurer waives its right to be subrogated to the rights of the insured
     against the other party or its agents, servants or employees for any loss
     payable under the policy and that the insurance shall not be validated by
     reason of the insured's waiver of subrogation. In the event that an extra
     premium is payable by either party as a result of this provision, the other
     party shall reimburse the party paying such premium for the amount of such
     extra premium. If either party is unable to obtain a waiver of subrogation
     from its insurer, the said party shall name the other as an additional
     insured on their casualty insurance.

                                      -12-
<PAGE>

12.  Damage to Property
     ------------------

     (a)  In case during the Lease Term the Premises shall be damaged by fire or
     other casualty Landlord shall proceed forthwith to repair such damage and
     restore the Premises to substantially their condition at the time of such
     damage subject to any zoning laws then in existence, but Landlord shall not
     be responsible for any delay which may result from any cause beyond
     Landlord's reasonable control and Landlord shall not be required to
     commence such work until it receives any proceeds it will receive with
     respect to the loss. Landlord and Tenant shall use all reasonable efforts
     to obtain such proceeds within a reasonable time. In no event shall
     Landlord be obligated to pay for any such repairs or restorations in excess
     of available insurance proceeds.

     (b)  If damage to the Premises is not covered by the insurance Tenant is
     required to carry pursuant to Section 11 and the cost to restore such
     damage exceeds 20% of the replacement cost of the Premises, then Landlord,
     within sixty (60) days after the occurrence of such event may give written
     notice to Tenant of its election to terminate this Lease, unless Tenant
     agrees in its discretion to reimburse the Landlord for the amount of such
     uncovered costs in excess of 20% of the replacement cost of the Premises.

     (c)  If the Premises are damaged to such an extent that the restoration
     thereof is not reasonably estimated to be completed within 180 days
     following the destructive event or if the restoration of the Premises is
     for any reason not actually completed within 180 days following the
     destructive event, then Tenant shall have the right to terminate this Lease
     by delivery of written notice to Landlord.

     (d)  In the event that the provisions of Section 12(a), (b), or (c) shall
     become applicable, the Base Rent shall be abated or reduced proportionately
     to the interference with the Tenant's use of the Premises caused by the
     casualty (and Landlord shall return a pro rata portion of the semi-annual
     advance Base Rent payment) during any period in which, by reason of such
     damage or destruction, there is substantial interference with the operation
     of the business of Tenant in the Premises, having regard to the extent to
     which Tenant may be required to discontinue its business in the Premises,
     and such abatement or reduction shall continue for the period commencing
     with such destruction or damage and ending with the completion by Landlord
     of such repair or reconstruction as Landlord is obligated to complete. In
     the event of termination of this Lease pursuant to this Section 12, this
     Lease and the Lease Term hereof shall cease and come to an end within a
     reasonable time after notice of termination as is required to permit Tenant
     to remove its property from the Premises.

13.  Eminent Domain
     --------------

     (a)  If the Premises, or such portion thereof as to render the balance
     (when reconstructed) unsuitable for the purposes of Tenant, shall be taken
     by condemnation or right of eminent domain, Tenant, upon written notice to
     Landlord, shall be entitled to terminate this Lease, provided that such
     notice is given not later than sixty (60) days after Tenant has been
     deprived of possession. Should any part of the Premises by so taken or
     condemned, and should this Lease not be

                                     -13-

<PAGE>

     terminated in accordance with the foregoing provision, Landlord covenants
     and agrees promptly after such taking or condemnation, and the
     determination of Landlord's award therein, to expend so much as may be
     necessary of the net amount which may be awarded to Landlord in such
     condemnation proceedings in restoring the Premises to an architectural
     unit as nearly like their condition prior to such taking as shall be
     practicable. Should the net amount so awarded to Landlord be insufficient
     to cover the cost of restoring the Premises, as estimated by Landlord's
     architect, Landlord may, but shall not be obligated to, supply the amount
     of such insufficiency and restore said Premises as above provided, with all
     reasonable diligence, or Landlord may terminate this Lease, if Tenant does
     not supply the necessary additional funds or agree to a reduction in the
     Landlord's restoration obligation. Where Tenant has not already exercised
     any right of termination accorded to it under the foregoing portion of this
     paragraph, Landlord shall notify Tenant of Landlord's election not later
     than ninety (90) days after the final determination of the amount of the
     award.

     (b)  Out of any award for any taking of the Premises, in condemnation
     proceedings or by right of eminent domain, Landlord shall be entitled to
     receive and retain the amounts awarded for such Premises and for Landlord's
     loss of Landlord's estate in this Lease. Tenant shall (i) execute any
     instruments of assignment as may be reasonably required by landlord, (ii)
     join in any petition for recovery of damages as Landlord may reasonably
     request, and (iii) turn over to Landlord any damages that may be recovered
     in any proceeding which are the property of Landlord under this Section.
     Tenant shall be entitled to receive and retain any amounts which may be
     specifically awarded to it in any such condemnation proceedings, because of
     the taking of its trade fixtures or furniture and its leasehold
     improvements loss of goodwill, severance damages, and moving costs to the
     extent Tenant was not reimbursed for the same by Landlord.

     (c)  In the event of any such taking of the Premises, the minimum rent or a
     fair and just proportion thereof, according to the nature and extent of the
     damage sustained, shall be suspended or abated, and Landlord shall return a
     pro rata portion of the semiannual advance Base Rent payment to Tenant.

14.  Default and Landlord's Remedies
     -------------------------------

     (a)  Any one of the following shall be deemed to be a "Default" or an
          "Event of Default":

          (i)  Failure on the part of Tenant to make payment of rent or any
          other monetary amount due under this Lease within thirty (30) days
          after written notice that such payment is past due.

          (ii) With respect to a non-monetary default under this Lease, failure
          of Tenant to cure the same within thirty (30) days from the time of
          receipt of written notice of default from Landlord or such additional
          period reasonably required to cure the default. With respect to
          defaults requiring more than thirty (30) days to cure, Tenant shall be
          obligated to commence forthwith and to complete as soon as reasonably
          possible the curing of such default, and if Tenant fails so to do, the
          same shall be deemed to be an Event of Default.

                                     -14-
<PAGE>

          (iii) The occurrence of any of the following events: (1) the estate
          hereby created being taken on execution or by other process of law;
          (2) Tenant being judicially declared bankrupt or insolvent according
          to law; (3) a general assignment being made of the property of Tenant
          for the benefit of creditors; (4) a receiver, guardian, conservator,
          trustee in involuntary bankruptcy or other similar officer being
          appointed to take charge of all or any substantial part of Tenant's
          property by a court of competent jurisdiction; or (5) Tenant executing
          a trust mortgage, or a petition being filed by or against Tenant in
          bankruptcy, or for reorganization or for arrangements under any
          provisions of the Bankruptcy Act now or hereafter enacted, providing a
          plan for a debtor to settle, satisfy or extend the time for the
          payment of debts, and such petition shall not have been dismissed
          within thirty (30) days.

     (b)  Should any Event of Default occur then, notwithstanding any license of
     any former breach of covenant or waiver of the benefit hereof or consent in
     a former instance, Landlord lawfully may, in addition to any remedies
     otherwise available to Landlord, immediately or at any time thereafter,
     upon ten (10) days prior written notice, enter into and upon the Premises
     or any part thereof in the name of the whole and repossess the same as of
     Landlord's former estate, and expel Tenant and those claiming through or
     under it and remove its or their effects (forcibly as permitted by
     applicable law If necessary) without being deemed guilty of any manner of
     trespass, and without prejudice to any remedies which might otherwise be
     used for arrears of rent or preceding breach of covenant and/or Landlord
     may send written notice to Tenant terminating the Lease Term; and upon the
     first to occur of: (i) entry as aforesaid; or (ii) the thirtieth (30th) day
     following mailing of such notice of termination, this Lease shall
     terminate.

     (c)  Tenant shall, notwithstanding any termination of this Lease as
     aforesaid or any entry or re-entry by Landlord, whether by summary
     proceedings, termination or otherwise, pay and be liable for on the days
     originally fixed herein for the payment thereof, amounts equal to the
     several installments of rent and other charges reserved as they would,
     under the terms of this Lease, become due if this Lease had not been
     terminated or if Landlord had not entered or re-entered, as aforesaid, and
     whether the Premises be relet or remain vacant, in whole or in part, or for
     a period less than the remainder of the Lease Term, and for the whole
     thereof, but Landlord agrees to use reasonable efforts to relet the
     Premises and in the event the Premises be relet by Landlord, Tenant shall
     be entitled to a credit in the net amount of rent received by Landlord in
     reletting, after deduction of all expenses reasonably incurred in reletting
     the Premises (including, without limitation, remodeling costs, brokerage
     fees, attorneys' fees, repairing, cleaning, moving and storage costs, and
     the like), and in collecting the rent in connection therewith.

     Nevertheless, in case of such termination Landlord at its election which
     may be made or changed at any time without notice shall be entitled to
     collect and receive from Tenant such sum or sums to which it may be
     entitled as rent hereunder for the balance of the Lease Term, or demand and
     receive from Tenant indemnity against loss of the aforesaid rent hereunder
     for the balance of the Lease Term, or collect and receive from Tenant as
     damages a sum which at the time of such termination represents the
     difference between the fair rental value of the Premises and the rent

                                      -15-
<PAGE>

     herein stated for the balance of the Lease Term, which difference shall be
     discounted to its present value, or to enforce such other remedies as are
     available to it by law.

     In any event, in the event of default Tenant shall be liable to Landlord
     for all expenses reasonably incurred in connection with such default,
     including those described in the first paragraph of this Section and
     including reasonable attorneys' fees.

     (d)  Landlord shall in no event be in default in the performance of any of
     Landlord's obligations hereunder unless and until Landlord shall have
     failed to perform such obligations within thirty (30) days or such
     additional time as is reasonably required to correct any such default after
     notice by Tenant to Landlord properly specifying wherein Landlord has
     failed to perform any such obligation. If Landlord is in default under this
     Lease, Landlord shall (i) be responsible for its reasonable costs and
     expenses which relate to its default (including court costs and Tenant's
     attorneys' fees), and (ii) return a pro rata portion of the semi-annual
     advance Base Rent payment to Tenant, if Tenant is permitted to terminate
     the Lease.

     (e)  if Tenant abandons or vacates the Premises, any property left by
     Tenant shall be deemed abandoned and Landlord shall have the right to
     depose thereof without accountability to Tenant as permitted by law.

     (f)  Landlord shall use its best efforts to mitigate any damages resulting
     from any default by Tenant, and Tenant shall not in any event be liable for
     any damages reasonably mitigable by Landlord.

15.  Representations of Tenant
     -------------------------

Tenant represents and warrants to Landlord that it is a corporation which is
duly organized, validly existing and in good standing under the laws of the
State of California, with all required power and authority to execute this Lease
and perform its obligations hereunder and such performance will not violate or
result in a default under any contract, mortgage, lien, judgment or order to
which Tenant is a party or by which Tenant is bound.

16.  Right of First Refusal
     ----------------------

In the event Landlord shall receive an offer to purchase, ground lease, or
otherwise acquire the legal and/or beneficial ownership interest in the
Premises, or any interest therein, in whole or in part ("Offer of Purchase")
during the Lease Term, or any extension thereof, and the offer of purchase
shall be satisfactory to Landlord, Landlord shall give Tenant the privilege of
purchasing the Premises or the interest or portion thereof to be acquired at the
price and on the terms of the offer so made. This privilege shall be given by a
notice sent to Tenant at the Premises by registered mail, requiring Tenant to
accept the offer in writing and to sign a suitable contract to purchase the
Premises within the period of fifteen (15) days after the mailing of the notice.

                                      -16-
<PAGE>

The failure of Tenant to accept the offer to purchase or sign a contract within
the period provided shall waive Tenant's rights under this Section on that
occasion, but shall not waive Tenant's right to first refusal on other
occasions, and Landlord shall be at liberty to sell the Premises to any other
person, firm or corporation. Any subsequent sale, except to Tenant, shall be
subject to this Lease and any renewals or extensions hereof and to this Section
18. The successor in interest to Landlord shall not disturb Tenant's possession
under this Lease if Tenant is not in default hereunder and shall perform all
Landlord's unperformed obligations.

This right of first refusal shall not apply to any transfer by Landlord of the
property to any person who controls, is under common control with, or is
controlled by Landlord or to Landlord's spouse or lineal descendants (or to a
trust other legal entity exclusively for their benefit) for estate planning
purposes, provided such transferees shall thereafter be subject to this Section
18 with respect to subsequent transfers.

17.  Miscellaneous Provisions
     ------------------------

     (a)  Sublease and Assignment. Tenant shall not sublease any more than
          -----------------------
     thirty percent (30%) of the square footage of the Leased Premises or assign
     this Lease or any of its rights hereunder without the express prior written
     approval of Landlord, which consent may not be unreasonably withheld and
     shall be deemed given if not reasonably withheld in writing within 10 days
     following delivery to Landlord of a written request for consent. In the
     event Landlord consents to an assignment or a sublease, Tenant shall remain
     fully liable for the obligations of Tenant hereunder, including, without
     limitation, the obligation to pay the rent and other amounts provided under
     this Lease. Consent by Landlord to any such sublease shall not be deemed to
     be a consent to a subsequent sublease nor shall any subleasee have any
     further right to sublease. Notwithstanding anything to the contrary in the
     Lease Form, Tenant may, without Landlord's prior written consent and
     without any participation by Landlord in assignment and subletting
     proceeds, sublet the Premises or assign the Lease to: (i) a subsidiary,
     affiliate, division or corporation controlling, controlled by or under
     common control with Tenant; or (ii) a successor corporation related to
     Tenant by merger, consolidation, nonbankruptcy reorganization, or
     government action. For the purpose of this Lease, sale of Tenant's capital
     stock through any public exchange shall not be deemed an assignment,
     subletting, or any other transfer of the Lease or the Premises.

     (b)  Waiver. Failure on the part of either party to complain of any action
          ------
     or non-action on the part of Tenant, no matter how long the same may
     continue, shall never be deemed to be a waiver by Landlord of any of its
     rights hereunder. No waiver at any time of any of the provisions hereof by
     either party shall be construed as a waiver of any of the other provisions
     thereof, and no waiver at any time of any of the provisions hereof shall be
     construed as a waiver at any subsequent time of the same provisions. The
     consent or approval of a party to or of any action by Tenant requiring
     Landlord's consent or approval shall not be deemed to waive or render
     unnecessary consent or approval to or of any subsequent similar act.

     No payment, or acceptance, of a lesser amount than shall be due shall be
     treated otherwise than as a payment on account. The acceptance of a check
     for a lesser amount with an endorsement

                                      -17-
<PAGE>

     or statement thereon, or upon any letter accompanying such check, that such
     lesser amount is payment in full, shall be given no effect, and a party may
     accept such check without prejudice to any other rights or remedies which
     the party may have.

     (c)  Covenant of Quiet Environment. Tenant, subject to the terms and
          -----------------------------
     provisions of this Lease on payment of the rent and observing, keeping and
     performing all of the terms and provisions of this Lease on its part to be
     observed, kept and performed, shall lawfully, peaceably and quietly have,
     hold, occupy and enjoy the Premises during the Lease Term without hindrance
     or ejection by any persons lawfully claiming under Landlord; but it is
     understood and agreed that this covenant and any and all other covenants of
     Landlord contained in this Lease shall be binding upon Landlord and
     Landlord's successors only with respect to breaches occurring dining
     Landlord's and Landlord's successors' respective ownership of Landlord's
     interest hereunder. Subject to Landlord's duty to complete the
     Improvements, it is further understood and agreed that with respect to any
     services to be furnished, neither Landlord or Tenant shall in no event be
     liable for failure to furnish the same when prevented from so doing by
     strike, lockout, breakdown, accident, order or regulation of or by any
     governmental authority, or failure of supply, or inability by the exercise
     of reasonable diligence to obtain supplies, parts or employees necessary to
     furnish such services, or because of war or other emergency, or for any
     cause beyond their reasonable control, or for any cause due to any act or
     neglect of the other party or its servants, agents, employees, licensees,
     contractors or any person claiming by, through or under the other party.

     (d)  Status Report. Recognizing that both parties may find it necessary to
          -------------
     establish to third parties, such as accountants, banks, mortgagees, or the
     like, the then current status of performance hereunder, either party, on
     the written request of the other made from time to time, will promptly
     furnish a written statement of the status of any matter pertaining to this
     Lease, which the other party reasonably requests.

     (e)  Notice to Mortgagee. After receiving written notice from any person,
          -------------------
     firm or other entity, that it holds a mortgage (which term shall include a
     deed of trust) which includes as part of the mortgaged premises the
     Premises, Tenant shall, so long as such mortgage is outstanding, be
     required to give to such holder the same notice as is required to be given
     to Landlord under the terms of this Lease, but such notice may be given by
     Tenant to Landlord and such bolder concurrently. It is further agreed that
     such holder shall have the same opportunity to cure any default, and the
     same time within which to affect such curing, as is available to Landlord;
     and if necessary to cure such a default, such holder shall have access to
     the Premises.

     (f)  Assignment of Rents.  With reference to any assignment by Landlord of
          -------------------
     Landlord's interest in this Lease, or the rents payable hereunder,
     conditional in nature or otherwise, which assignment is made to the holder
     of a mortgage or deed of trust on the Premises, Tenant agrees:

          (i)   that the execution thereby Landlord, and the acceptance thereof
          by such holder, shall never be deemed an assumption by such holder of
          any of the obligations of Landlord hereunder, unless such holder
          shall, by written notice sent to Tenant, specifically otherwise elect;

                                      -18-
<PAGE>

          (ii)  that, except as aforesaid, such holder shall be treated as
          having assumed Landlord's obligations hereunder only upon foreclosure
          of such holder's mortgage or deed of trust and the taking of
          possession of the Premises by such holder; and

          (iii) Tenant shall, at the request of Landlord, execute a consent to
          any such assignment of the Lease and an agreement to attorn to such
          mortgagee in the event of its exercise of its right under the
          assignment.

     (g)  Lease Subordinate to Mortgage. The rights and interest of Tenant under
          -----------------------------
     this Lease shall be subject and subordinate to any mortgages or deeds of
     trust that may hereafter be placed upon the Premises and to any and all
     advances to be made thereunder, and to the interest thereon, and all
     renewals, modifications, replacements and extensions thereof; if the
     mortgagee or trustee named in said mortgages or deeds of trust shall elect
     by written notice delivered to Tenant at the time the encumbrance is
     created to subject and subordinate the rights and interest of Tenant under
     this Lease to the lien of its mortgage or deed of trust; provided, however,
     that said mortgagee agrees to execute an agreement providing, in substance,
     that in consideration of Tenant's written agreement to continue occupancy
     under the same terms and conditions of this Lease and to attorn to
     mortgagee, the right of possession of Tenant to the Premises and Tenant's
     rights arising out of this Lease, shall not be disturbed by the mortgagee
     in the exercise of its rights under the mortgage or deed provided that
     Tenant shall not be in default hereunder. In the event of such election,
     and upon notification by such mortgagee or trustee to Tenant to that effect
     and delivery of a recognition and non-disturbance agreement in a form
     reasonably acceptable to Tenant, the rights and interest of Tenant under
     this Lease shall be deemed to be subordinate to the lien of said mortgage
     or deed of trust, whether this Lease is dated prior to or subsequent to the
     date of said mortgage or deed of trust, and no further instrument of
     subordination shall be necessary; provided, however, that Tenant shall
     execute and deliver whatever instruments said mortgagee or trustee may
     reasonably require for such purposes, and in the event Tenant fails so to
     do within twenty (20) days after demand in writing, Tenant does hereby
     make, constitute and irrevocably appoint Landlord as its attorney-in-fact
     and in its name, place and stead so to do.

     (h)  Mechanics Liens. Tenant shall immediately discharge (either by payment
          ---------------
     or by filing of the necessary bond, or otherwise) any mechanic's,
     materialmen's or other lien against the Property and/or Landlord's Interest
     therein, which liens may arise out of any payment due for, or purported to
     be due for, any labor, services, materials, supplies or equipment alleged
     to have been furnished to or for Tenant after completion of the
     Improvements in, upon or about the Property. Landlord shall immediately
     discharge (either by payment or by filing of the necessary bond, or
     otherwise) any mechanic's, materialmen's or other lien against the Premises
     and/or Tenant's interest therein, which liens may arise out of any payment
     due for, or purported to be due for, any labor, services, materials,
     supplies or equipment alleged to have been furnished to or for Landlord in,
     upon or about the Premises.

     (i)  No Brokers. Tenant and Landlord warrant and represent that neither has
          ----------
     dealt with any broker in connection with the consummation of this Lease
     other than Mr. Clifford Hurley of the

                                      -19-
<PAGE>

     Leggat Company, Inc., 1 Liberty Square, Boston, Massachusetts. Landlord
     shall pay any commission due to said broker.

     (j)  Invalidity of Particular Provisions. If any term or provision of this
          -----------------------------------
     Lease, or the application thereof to any person or circumstance shall, to
     any extent, be invalid or unenforceable, the remainder of this Lease, or
     the application of such term or provision to persons or circumstances other
     than those as to which it is held invalid or unenforceable, shall not be
     affected thereby, and each term and provision of this Lease shall be valid
     and be enforced to the fullest extent permitted by law.

     (k)  Provisions Binding. Except as herein otherwise expressly provided, the
          ------------------
     terms hereof shall be binding upon and shall inure to the benefit of the
     heirs, executors, administrators, successors and assigns, respectively, of
     Landlord and Tenant. The reference contained to successors and assigns
     of Tenant is not intended to constitute a consent to assignment by Tenant
     not permitted by this Lease, but as reference only to those instances
     permitted by this Lease.

     (1)  Recording. Tenant shall not record the Lease, but the parties shall
          ---------
     execute and record a Notice of Lease (and the rights of first refusal and
     the options hereunder) in recordable form and complying with applicable
     Massachusetts laws, and reasonably satisfactory to Tenant's and Landlord's
     attorneys. In no event shall such document set forth the rental or other
     charges payable by Tenant under this Lease; and such document shall
     expressly state that it is executed pursuant to the provisions contained in
     this Lease, and is not intended to vary the terms and conditions of this
     Lease.

     (m)  Notices. All notices shall be in writing and delivered by certified
          -------
     mail or personal delivery, to the parties at the addresses set forth below,
     or to such other address or addresses as the parties may from time to time
     hereafter designate:

                Landlord:       G. Christopher Peznola
                                Berkshire Acquisition Corporation
                                1500 Main Street, Suite 2012
                                Springfield, MA 01115

                                        With copy to:

                                Robinson Donovan Madden & Barry, P.C.
                                1500 Main Street, Suite 1600
                                Springfield, MA 01115
                                Attn: Robert P. Cunningham, Esq.

                                      -20-
<PAGE>

                Tenant:         Division Controller
                                Genus, Inc.
                                Ion Technology Division
                                4 Mulliken Way
                                Newburyport, MA 01950

                                        With copies to:

                                Genus, Inc.
                                1139 Karistad Dr.
                                Sunnyvale, CA 94089
                                Attn: Chief Financial Officer

                                        and

                                Wilson, Sonsini, Goodrich & Rosati, P.C.
                                650 Page Mill Road
                                Palo Alto, CA 94304-1050
                                Attn: Real Estate Dept.

     (n)  Headings. The headings throughout this instrument are for convenience
          --------
     and reference only, and the words contained therein shall in no way be held
     to explain, modify, amplify or aid in the interpretation, construction or
     meaning of the provisions of this Lease.

     (o)  Entire Agreement. All negotiations, consideration, representations and
          ----------------
     understandings between Landlord and Tenant are incorporated in this Lease,
     the Improvement Agreement, and in the schedules and exhibits attached
     hereto and thereto, all of which are hereby incorporated herein by this
     reference and all of which may be modified or altered only by agreement in
     writing between Landlord and Tenant. No act or omission of any employee or
     agent of Landlord shall alter, change or modify any of the provisions
     hereof.

     (p)  Governing Law. This Lease shall be governed exclusively by the
          -------------
     provisions hereof and by the laws of the Commonwealth of Massachusetts, as
     the same may from time to time exist.

18.  Acquisition of Property
     -----------------------

Concurrently herewith Landlord shall forthwith enter into a Purchase and Sale
Agreement with the Newburyport Area Industrial Development Corporation, in form
and substance reasonably satisfactory to Tenant (the "Purchase Agreement"), for
the 10.62 acres of land in the Lord Dexter Industrial Park, known as Lot 62
Stanley Tucker Drive, Newburyport, Massachusetts, as more particularly described
in Exhibit A to this Lease (the "Property"). Landlord shall perform its
   ---------
obligations under the Purchase Agreement so that the purchase may close on or
before September 30, 1995. Landlord hereby acknowledges that there are no
conditions precedent to the Landlord's obligation to purchase the Property under
the Purchase Agreement, other than that Landlord obtains record and marketable
title to

                                      -21-
<PAGE>

the Property from the seller thereof with only those exceptions to title
permitted by the Purchase Agreement,

19.  Prepaid Rent & Security Deposit
     -------------------------------

Concurrently with the Landlord's acquisition of the Premises pursuant to the
Purchase and Sale Agreement, the Tenant shall deposit into escrow, for delivery
to Landlord on the Commencement Date. (1) good funds in the amount of Five
Hundred Thousand Dollars ($500,000.00) as prepayment of the last Base Rent
payable during the Initial Term (the "Prepaid Rent") and (2) a letter of credit
"Security Deposit" or evidence of a cash "Security Deposit" with a custodian
complying with the requirements of this paragraph. Within three (3) days
following delivery of written notice to the escrow holder that the Commencement
Date has occurred, the escrow holder shall deliver the Prepaid Rent and the
letter of credit Security Deposit or evidence of the cash custodial Security
Deposit, as the case may be, to the Landlord. Tenant shall promptly execute such
documents as the landlord shall reasonably request to accomplish such delivery
of the Prepaid Rent and such Security Deposit items to the Landlord.

The Prepaid Rent shall be retained by Landlord as a prepayment of the last Base
Rent payable during the Initial Term of this Lease. The Security Deposit shall
be held by the Landlord or the custodian, as security for Tenant's performance
of its obligations hereunder, and not as prepayment of rent.

Tenant shall provide the Security Deposit in one of the following forms, or
combination thereof from time to time, at its option:

     (1)  Tenant shall deliver to the Landlord, at Tenant's sole cost, an
     irrevocable letter of credit in the form attached hereto as Exhibit E (an
                                                                 ---------
     "ILC") which (i) is drawn upon a financial institution reasonablY
     acceptable to Landlord, (ii) is irrevocable, unconditional and
     transferrable, (iii) is for a term of at least twelve (12) months, and (iv)
     may be drawn upon by Landlord at sight upon submission of a declaration by
     an officer of Landlord, under penalty of perjury, declaring that the
     Landlord is entitled to draw upon the ILC. If Tenant provides Landlord with
     and ILC meeting the foregoing requirements, then any cash being held as a
     Security Deposit in excess of the total Security Deposit requirements
     stated below shall be returned to Tenant upon demand.

     (2)  Tenant shall deposit with a financial Institution selected by Tenant
     and reasonably acceptable to Landlord, cash or federally insured bonds
     and/or notes to be held by such Institution in accordance with a pledge and
     custodial agreement in the form of attached Exhibit C. All interest
                                                 ---------
     accruing on any such deposit shall be paid to Tenant as earned.

The Security Deposit shall be in the following amounts during the following time
periods of the Lease Term.

     Commencement Date until the                                    $2,800,000
     Fifth Anniversary of the Commencement Date

                                      -22-
<PAGE>

     Fifth Anniversary of the Commencement Date until the             $1,850,000
     Tenth Anniversary of the Commencement Date

     Tenth Anniversary of the Commencement Date until the             $  900,000
     Thirteenth Anniversary of the Commencement Date

     Thirteenth Anniversary of the Commencement Date until the        $  500,000
     Fourteenth Anniversary of the Commencement Date

     After the Fourteenth Anniversary of the Commencement Date        $        0

Landlord may from time to time draw upon the Security Deposit, if, but only if,
one of the following "Drawing Conditions" is satisfied:

     (1)  First Drawing Condition. The Tenant fails to pay any Base Rent payable
          ------------------------
     under this Lease within thirty (30) days following notice to Tenant that
     the amount is past due, and as of the date of the notice of such past due
     rent the most recent public financial statement filing In Tenant's 10K or
     10Q filed with the Securities Exchange Commission ("SEC") reflects an
     amount of shareholder equity of less than Twenty-Five Million Dollars
     ($25,000,000.00). In the event Tenant becomes a private company and no
     longer files with the SEC, such shareholder equity shall be measured based
     on audited annual financial statements prepared in accordance with
     generally accepted accounting principles.

     (2)  Second Drawing Condition. The Tenant fails to pay any Base Rent
          ------------------------
     payable under this Lease within thirty (30) days following notice to Tenant
     that the amount is past due.

     (3)  Third Drawing Condition. Landlord has not received a renewed ILC nor
          -----------------------
     an 1LC commitment issued for a minimum of an additional one (1) year period
     as of the date which is fourteen (14) days prior to the then stated.
     expiration date of the ILC.

In the event of the First Drawing Condition set forth above occurs, the Landlord
shall have the right to draw upon the ILC and retain the proceeds of said ILC or
other form of Security Deposit held hereunder as payment for Tenant's violation
of the security provision set forth herein. In no event, however, shall any
payments rendered hereunder be construed as liquidated damages and Landlord
shall have all rights at law and in equity reserved; provided, however, that the
amount of the Security Deposit paid to Landlord shall reduce, but not below
zero, the amount of damages which may be owing by Tenant to Landlord on account
of the Event of Default.

In the event the Second Drawing Condition occurs, the Landlord shall have the
tight to draw upon the ILC and retain the amount of proceeds of said ILC or
other form of Security Deposit held hereunder equal to the amount of past due
Base Rent payable under the terms of the Lease plus reasonable costs of
collection thereof with the balance of the ILC proceeds to be remitted to
Landlord's lender, Shawmut Bank, N.k (the "Custodian"), as custodian. Such
proceeds shall be held by Custodian in escrow under the Pledge and Custodial
Agreement as required for any non-TLC Security Deposit hereunder unless and

                                      -23-
<PAGE>

until the ILC is replaced with another ILC complying with this section. If the
amount of said past due Base Rent plus costs is not reimbursed by Tenant in the
form of a replacement ILC or additional Security Deposit to the Custodian for a
period of sixty (60) days following notice to Tenant that the amount of Base
Rent is past due, then, upon written notice from Landlord, the remaining
proceeds of the ILC or other form of Security Deposit held by Custodian shall be
Immediately remitted to Landlord as payment for Tenant's violation of the
security provision set forth herein and treated in the manner described above as
if the First Drawing Condition occurred.

If the Third Drawing Condition is satisfied, all of the proceeds of the ILC may
be drawn for immediate remittance to Custodian and such proceeds shall be held
by Custodian in escrow under the Pledge and Custodial Agreement as required for
any non-ILC Security Deposit hereunder, unless and until the ILC is replaced
with another ILC complying with this Section.

In the event the Security Deposit or any portion thereof is applied by Landlord
to cure any failure of the Tenant to pay Base Rent owing by the Tenant
hereunder, Tenant agrees to restore the deposit to the full amount thereof upon
demand. The Security Deposit (or so much of it that has not been applied to cure
Tenant's default in accordance with this paragraph) shall be returned to Tenant
within fourteen (14) days following the expiration of the Lease Term.

If Landlord transfers the Premises during the Lease Term, Landlord shall deliver
the Security Deposit to the transferee of Landlord's interest, in which event
the transferring Landlord will be released from all liability for the return of
the Security Deposit.

In the event Tenant fails to pay any Base Rent payable under this Lease within
thirty (30) days following notice to Tenant that the amount is past due, but
Tenant's shareholder equity is determined in the First Drawing Condition stated
above to be greater than Twenty-Five MIllion Dollars ($25,000,000.00), then the
parties agree that the Security Deposit (including any ILC constituting the
Security Deposit) shall continue to be maintained and survive any Default by
Tenant under this Lease. In addition, if any such Default in a Base Rent payment
occurs, then the amortization of the amount of the Security Deposit as the Lease
Term elapses, as specified above, shall be suspended for the time period of any
such Default. Upon cure of the Default, the Security Deposit may be reduced in
accordance with the foregoing schedule.

The obligations of this Section 19 shall survive any expiration of termination
of this Lease.

20.  [Intentionally deleted.]

21.  [Intentionally deleted.]

22.  Attorneys' Fees
     ---------------

Notwithstanding anything to the contrary in the Lease Form, if either Landlord
or Tenant shall bring any action or legal proceeding for an allege breach of any
provision of this Lease, to recover rent, to terminate this Lease or otherwise
to enforce, protect or establish any term or covenant of this Lease, the

                                      -24-
<PAGE>

prevailing party shall be entitled to recover as a part of such action or
proceeding, or in a separate action brought for that purpose, reasonable
attorneys' fees, court costs, and expert fees as may be fixed by the court.
"Prevailing party" as used in this Paragraph Includes a party who dismisses an
action for recovery hereunder in exchange for sums allegedly due, performance of
covenants allegedly breached or considerations substantially equal to the relief
sought in the action.

23.  Tenant's Rights on Termination
     ------------------------------

Landlord acknowledges that the Property was designated by Tenant for acquisition
by Landlord. Accordingly, If this Lease terminates prior to the Commencement
Date because Landlord is unwilling or unable to complete the Improvements in
accordance with this Lease and the Improvement Agreement for causes other& than
the Default of Tenant, then Tenant shall have the option to purchase the
Premises (including the Property and the Improvements then existing) from
Landlord. This option may be exercised at anytime prior to the twentieth (20th)
day following delivery of Landlord's notice to Tenant that the Lease has
terminated and that if Tenant does not exercise the option herein granted within
twenty (20) days following delivery of said notice then such option shall be
deemed waived, Upon exercise by Tenant of its option to purchase the Landlord
shall sell the Premises to the Tenant and the Tenant shall purchase the Premises
from the Landlord. To facilitate such purchase the parties shall execute a
purchase agreement memorializing their obligations and containing any other
provisions required to complete the conveyance in accordance with local custom;
provided, however that if the parties cannot agree upon such customary terms
within ten (10) days following either a request for an agreement, then the
customary terms shall be determined by the presiding judge of the Essex County
court having jurisdiction over the Premises in the State of Massachusetts The
purchase shall close on the forty-fifth (45th) day following delivery to
Landlord of Tenant's exercise notice. The purchase price of the property shall
be equal to that portion of the Construction Cost (as defined in the Improvement
Agreement) actually paid or incurred by the Landlord prior to the date of the
closing of the sale of the Premises to the Tenant,, less any damages legally
recoverable by Tenant on account of Landlord's default. Title to the Premises
shall be delivered to Tenant in the condition received by Landlord from the
Seller, as evidenced by a title insurance policy in the form obtained by
Landlord when it purchased the Property from said seller.

                        [SIGNATURE BLOCKS ON NEXT PAGE]

                                      -25-
<PAGE>

WITNESS the execution hereof under seal, in any number of counterpart copies,
each of which counterpart copies shall be deemed to be an original for all
purposes as of the day and year first above written.

                                              BERKSHIRE-NEWBURYPORT LIMITED
                                              PARTNERSHIP, Landlord)

                                              GENUS, INC., Tenant

                                              By /s/ [ILLEGIBLE SIGNATURE]
----------------------------------              --------------------------------
Witness                                       Oscar R. Plotkin, President of
                                              Newburyport
                                              General Corp., its general partner

Helena Churchill                              By /s/ [ILLEGIBLE SIGNATURE]
----------------------------------               -------------------------------
Witness
                                              Its
                                                 -------------------------------

          [ATTACH NOTARY ACKNOWLEDGEMENTS AND SEAL AS REQUIRED BY LAW]

State of Massachusetts, County of Hampden, 86.

On this 8th day of November, 1995, before me. Oscar Plotkin. the above signed
officer personally appeared Oscar Plotkin, known to me to be the person whose
name is subscribed to the within instrument and acknowledged that the executed
the same for the purposes therein contained. In witness whereof, I hereunto set
my hand and official seal.

/s/ Michelle M. Schubert
------------------------------
Michelle M. Schubert
Notary Public

Signed November 8, 1995

My commission expires: Nov. 9, 2001

                                      -26-
<PAGE>

                                  EXHIBIT "A"

                                Leased Premises

A certain parcel of land in Newburyport, Massachusetts, being shown as lot 62 on
a plan entitled "Site Survey Plan of Land in Newburyport, Massachusetts",
prepared by Port Engineering Associates, Inc., dated October 27, 1995," which
plan is recorded with the Deed at Book 13275, Page 483.

<PAGE>

                                   EXHIBIT B
                                   ---------

                      Tenant's "Specialized Improvements"

  [need to attach initial list - list will be augmented at Tenant's request,
                 if Construction Cost exceeds [Cost Estimate]]

<PAGE>

                                  EXHIBIT "C"

                        PLEDGE AND CUSTODIAL AGREEMENT
                        ------------------------------

     THIS PLEDGE AND CUSTODIAL AGREEMENT ("Agreement") is made and entered into
this 8th day of November, 1995 by and between Berkshire-Newburyport Limited
     ---
Partnership, a Massachusetts Limited Partnership, acting by and through
Newburyport General Corp., its sole General Partner ("Landlord"), Genus Inc., a
California corporation ("Tenant") and Shawmut Bank, N.A. ("Shawmut Bank"). This
Agreement relates to a certain Lease between Landlord and Tenant of even date
concerning real estate located in Newburyport, Massachusetts ("Lease").

     1.   Definition. The following terms shall have the following meanings:
          ----------

          a.   "Approved Custodian" means Shawmut Bank, N.A.
                ------------------

          b.   "Collateral" means all of Tenant's rights, title and interest in
                ----------
the following "cash and cash equivalents" deposited by Tenant with this Approved
Custodian and held in the name of the Approved Custodian, as custodian for
Landlord, as pledgee, and for Tenant; as pledgor, pursuant to this Agreement:

               (i)  U.S. Dollars from time to time deposited with Approved
               Custodian in account number ____________; and

               (ii) General obligation debt securities, backed by the full faith
               and credit of the United States of America, including obligations
               having a maturity of not more than one (1) year from the date of
               issue and commonly known as "treasury bills," obligations having
               a maturity of greater than one year, but no more than ten (10)
               years, from the date of issue and commonly known as "treasury
               notes," and obligations having a maturity date in excess of ten
               (10) years from the date of issue and commonly known as "treasury
               bonds."

The "Collateral" shall include any interest paid with respect to any of the
foregoing. Prior to the foreclosure of the Collateral, it shall at all times, be
held in an interest bearing account reasonably acceptable to Tenant.

          c.   Minimum Security Deposit Level shall mean the amount of Security
               ------------------------------
Deposit required of Tenant from time to time under the Lease (less the amount,
if any, of any Letter of Credit held from time to time by Landlord to satisfy
Tenant's Security Deposit obligation).

                                       1

<PAGE>

        2.      Pledge. Tenant hereby grants, pledges, conveys, transfers and
                ------
assigns to Landlord as security for the performance of Tenant's obligations
under the Lease (the "Obligations"), a first priority security interest in and
to the Collateral; Landlord in turn hereby grants, pledges, conveys, transfers
and assigns to Approved Custodian as security for the performance of any and all
of Landlord's obligations to the Approved Custodian a first priority security
interest in and to the Collateral.

        3.      Covenants by Tenant. Tenant hereby covenants with Landlord that
                --------------------
it will at all times:

                (a)  Permit the Approved Custodian during the continuance of
this Agreement to hold and retain the Collateral in the name of the Landlord, as
pledge, and Tenant, as pledgor.

                (b)  Deliver such documents, including supplemental pledge
agreements, as Landlord or the Approved Custodian from time to time reasonably
requires to protect its security interest in and to the Collateral, including
the perfection of Landlord's security interest in the Collateral or, upon the
occurence and during the continuation of an Event of Default by Tenant (as
defined in the Lease), enabling Landlord to vest in itself such Collateral in
accordance with the terms of the Lease.

                (c)  Ensure that the market value of the Collateral deposited
with the Approved Custodian shall be in an amount equal to at least the Minimum
Security Deposit Level. For the purposes of determining the value of the
Collateral at any time, any U.S. government obligations shall be valued with
references to the closing market price on the relevant valuation date and will
be taken from a recognized pricing service or market maker for such obligations;
and

                (d)  Not create or permit to subsist any mortgage, security
interest, charge, pledge, lien or other encumbrance (other than in favor of
Landlord or Landlord's Lender, the Approved Custodian) on or over the Collateral
or any part thereof or any interest therein.

        4.      Maintenance of Security Levels, Terms of Securities. The
                ---------------------------------------------------
Approved Custodian shall advise Tenant at least monthly of the amount held as
collateral (including accrued interest). In the event the market value of the
Collateral drops to less then Minimum Security Deposit Level, then Tenant shall
deposit additional Collateral with the Approved Custodian, in form and substance
satisfactory to the Approved Custodian in its sole discretion, within ten (10)
days after receipt of written notice from Landlord or Approved Custodian to
restore the value of the Collateral to the Minimum Security Deposit Level.
Notwithstanding anything to the contrary herein, if the market value of the
Collateral held by the Approved Custodian at any time exceeds the Minimum
Security Deposit Level, Tenant shall, provided no Event of Default by Tenant
under the Lease has occurred and is continuing, be entitled to the release of
such excess Collateral, if the Minimum Security Deposit

                                       2

<PAGE>

Level is maintained on the date of such release. Any reasonable costs incurred
by the Approved Custodian in the course of acting as custodian for Landlord and
Tenant shall be paid by Tenant.

     5.  Collateral Transaction. Provided no Event of Default by Tenant under
         ----------------------
Lease has occurred and is continuing, Tenant shall be entitled to request and
the Approved Custodian shall carry out buy and sell orders of the Collateral and
to thereby change the composition of the Collateral; provided that the
Collateral shall at all times consist of "cash and cash equivalents" as defined
above.

     6.  Withdrawal of Collateral. Landlord shall instruct the Approved
         ------------------------
Custodian to effect any withdrawal from the Collateral fund requested by Tenant
to which Tenant is entitled under the terms of this Agreement, provided that
such withdrawal does not result in the market value of the amount of Collateral
being less than the required Minimum Security Deposit Level and all other terms
and conditions of this Agreement are satisfied.
     7.  Remedies upon Default. If any Event of Default shall have occurred and
         ---------------------
be continuing under the Lease, then:

         (a)   Approved Custodian on behalf of Landlord may exercise in respect
of the Collateral all the rights and remedies of a Landlord under the Uniform
Commercial Code of the Commonwealth of Massachusetts at that time and in such
capacity on behalf of Landlord, the Approved Custodian may also, without notice
except as specified below, sell so much of the Collateral or any part thereof in
one or more packages at public or, to the extent allowed by applicable law,
private sale, at any exchange, broker's board or at any of the Approved
Custodian's offices or elsewhere, for cash, on credit or for future delivery,
and upon such other terms as the Approved Custodian may deem commercially
reasonable. Landlord and the Approved Custodian shall concurrently deliver to
Tenant a copy of any communication between Landlord and Approved Custodian.
Tenant agrees that, to the extent notice of sale shall be required by law, at
least five (5) business days' notice to tenant of the time and place of any
public sale or the time after which any private sale is to be made shall
constitute reasonable notification. The Approved Custodian shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given. The Approved Custodian may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was so
adjourned. Landlord agrees that it will realize upon the Collateral only by
selling it in the recognized secondary market by either the Approved Custodian
or another national brokerage firm.

         (b)   Any cash held by the Approved Custodian as Collateral and all
cash proceeds received by the Approved Custodian in respect of any sale of,
collection from, or other realization upon all or any part of, the Collateral
following the occurrence of a "Drawing Condition" (as defined in the Lease)
shall be applied by the Approved Custodian:

                                       3

<PAGE>

          (i)   First, to the payment of the costs and expenses reasonably
                incurred by an Approved Custodian in connection with any sale of
                Collateral, including reasonable compensation to the Approved
                Custodian and its agents and counsel, and all reasonable
                expenses, liabilities and advances made or incurred by the
                Approved Custodian in connection therewith;

          (ii)  Next to the Landlord to the extent required under the Lease to
                be applied in accordance with the Lease in such order as
                Landlord shall determine (which Tenant acknowledges may include
                application to Landlord's obligations to the Approved Custodian
                in the sole discretion of the Approved Custodian).

          (iii) Finally, after payment of the foregoing the balance of
                Collateral shall be held by the Approved Custodian in accordance
                with this Agreement, as security for Tenant's performance of its
                obligations under the Lease and otherwise in accordance with
                this Agreement.

     8.   Termination. Upon termination of the Lease, Tenant shall be entitled
          -----------
to the return, upon its request and at its expense, of the Collateral, less such
portion thereof as shall have been previously foreclosed upon or otherwise been
applied pursuant to the terms hereof, in accordance with the Lease and/or any
other agreement between Lender, Tenant and Landlord. Landlord and Approved
Custodian shall execute any and all appropriate documents necessary to
re-register the excess Collateral in the name of Tenant free of any claim by
Landlord or Approved Custodian.

     9.   Expenses. Tenant will upon demand pay to the Approved Custodian the
          --------
amount of any reasonable expenses, including the reasonable fees and expenses of
its counsel and of any experts and agents, which the Approved Custodian or the
Landlord may reasonably incur in connection with (i) the administration of this
Agreement, including fees associated with the determination of the value of the
Collateral at any time, (ii) the custody or preservation of, or the sale of,
collection from, or other realization upon, any of the Collateral, (iii) the
exercise or enforcement of any of the rights of the Approved Custodian or the
Landlord hereunder or pursuant to law or equity, or (iv) the failure by Tenant
to perform or observe any of the provisions hereof.

     10.  Amendments and Waivers. No amendment or waiver of any provision of
          ----------------------
this Agreement nor consent to any departure here from, shall in any event be
effective unless the same shall be in writing and signed by the Approved
Custodian, Landlord and Tenant, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.

     11.  Addresses for Notices. All notices and other communications provided
          ---------------------
for hereunder shall be in writing and sent by overnight courier service or
personally delivered, addressed as set forth

                                       4

<PAGE>

below, or at such other address as shall be designated by such party in a
written notice to each other parties hereto complying as to delivery with the
terms of this Paragraph. All such notices and other communications shall, when
sent by overnight courier service or delivered shall be effective when received.

        (a)  If to Tenant:

             Division controller
             Genus, Inc.
             Ion Technology Division
             4 Mulliken Way
             Newburyport, MA 01950

        With copies to:

             Genus, Inc.
             1139 Karlstad Drive
             Sunnyvale, CA. 94089
             Attn: Chief Financial Officer

                and

             Wilson, Sonsini, Goodrich & Rossti, P.C.
             650 Page Mill Road
             Palo Alto, CA 94304-1050
             Attn: Real Estate Dept.

        (b)  If to Landlord:

             G. Christopher Peznola
             Berkshire-Newburyport Limited Partnership
             Suite 2012
             1500 Main Street
             Springfield, MA 01115

        With copies to:

             Robinson Donovan Madden & Barry, P.C.
             1500 Main Street, Suite 1600
             Springfield, MA 01115
             Attn: Robert B. Cunningham, Esquire

                                       5
<PAGE>

         (e)  If to Approved Custodian:

              Shawmut Bank, N.A.
              1 Federal Street
              Boston, MA 02110

         With copies to:

              Coolsy, Shrair P.C.
              1380 Main Street
              Springfield, MA 01103

    12.  Continuing Security Interest: Transfer of Sublease. This Agreement
         --------------------------------------------------
shall create a continuing security interest in the Collateral and shall (i)
remain in full force and effect until payment in full of the Obligations, (ii)
be binding upon Landlord, Tenant, and their successors and assigns, and (iii)
inure, together with the rights and remedies of the Landlord and Tenant
hereunder, to the benefit of the Landlord, Tenant, and their respective
successors, transferees and assigns. Without limiting the generality of the
foregoing clause (iii) if Landlord should assign or otherwise transfer the Lease
to any other person or entity in accordance with the Lease, such other person or
entity shall thereupon become vested with all the benefits in respect thereof
granted to it herein or otherwise. Tenant acknowledges that the Approved
Custodian is the holder of a security interest in, and assignee of, Landlord's
rights to the Collateral and Tenant shall provide Approved Custodian with copies
of any and all notices that it is required to provide to Landlord with respect
to this Pledge and Custodial Agreement or any other agreements between the
Landlord and Tenant concurrently with the giving of such notices to the
Landlord.

    13.  Governing Law: Terms. This Agreement shall be governed by, and
         --------------------
construed in accordance with the laws of the Commonwealth of Massachusetts,
without regard to the provisions hereof relating to conflict of laws, except as
required by mandatory provisions of law and to the extent of the validity or
perfection of the security interest hereunder, or the remedies hereunder, in
respect of any Collateral, are governed by law of a jurisdiction other than
Massachusetts.

    14.  Counterparts. This Agreement may be executed in any number of
         ------------
counterparts, each of which shall be deemed to be an original and all of which
together shall comprise but a single instrument.

    IN WITNESS WHEREOF, Tenant, Landlord and Approved Custodian have caused this
Agreement to be duly executed and delivered by its officers thereunto duly
authorized as of the date first above written.

                                       6

<PAGE>

TENANT:                          GENUS, INC.

                              By: /s/ Kent Robertson
                                 ---------------------------------------------
                                 Kent Robertson
                                 Its Executive Vice President and Chief
                                 Financial Officer

LANDLORD:                        HERKSHIRE-NEWBURYPORT LIMITED
                                 PARTNERSHIP A MASSACHUSETTS LIMITED
                                 PARTNERSHIP ACTING BY AND THROUGH
                                 NEWBURYPORT GENERAL CORP. ITS SOLE
                                 GENERAL PARTNER

                              By: /s/ Oscar H. Plotkin,
                                 ---------------------------------------------
                                 Oscar H. Plotkin, President of Newburyport
                                 General Corp.

APPROVED CUSTODIAN:             SHAWMUT BANK, N.A.

                              By: /s/ [SIGNATURE ILLEGIBLE]
                                 ---------------------------------------------
                                 Its duly authorized Vice President

                                       7

<PAGE>

                                   EXHIBIT D
                                   ---------

                         [Attach Environmental Report]

Exchanged outside of Lease.

<PAGE>

                                  EXHIBIT "E"

         Silicon Valley Bank        3003 Tasman Drive Santa Clara, CA 15064
         International Division

STANDBY L/C NO.  SVB95IS0226                        DATE: NOVEMBER 2, 1995

BENEFICIARY: ShAWMUT BANK, N. A.
             1 FEDERAL STREET
             BOSTON, MA 02211
             ATTN:COMMERCIAL REAL ESTATE DEPT

APPLICANT:   GENUS, INC. 1339 KARLSTAD DRIVE
             SUNNYVALE, CA 94089

AMOUNT:      USD 2,800,000.00
             (TWO MILLION EIGHT HUNDRED THOUSAND U. S. DOLLARS)

EXPIRY DATE: NOVEMBER 2, 1996

LOCATION:    AT OUR COUNTERS IN U. S . A.

DEAR SIR/MADAM:

WE HEREBY ESTABLISH OUR IRREVOCABLE STANDBY LETTER OF CREDIT NO. SVB951S0226 IN
YOUR FAVOR.

AVAILABLE BY NEGOTIATION WITH SILICON VALLEY BANK, 3003 TASMAN DRIVE, SANTA
CLARA, CA 95054, OF BENEFICIARY'S DRAFT AT SIGHT DRAWN ON US, AND ACCOMPANIED BY
THE FOLLOWING:

     1-THE ORIGINAL OF THIS LETTER OF CREDIT AND AMENDMENTS IF ANY.
     2-BENEFICIARY'S SIGNED DECLARATION STATING THAT BENEFICIARY IS ENTITLED TO
       DRAW AGAINST THIS LETTER OF CREDIT.

SPECIAL INSTRUCTIONS:
1-IT IS A CONDITION OF THIS LETTER OF CREDIT THAT IT SHALL BE DEEMED
  AUTOMATICALLY EXTENDED WITHOUT ANY AMENDMENT FOR A PERIOD OF ONE YEAR FROM THE
  PRESENT OR EACH FUTURE EXPIRATION PATE UNLESS AT LEAST FOURTEEN (14) DAYS
  PRIOR TO SUCH EXPIRY DATE WE NOTIFY YOU IN WRITING AT THE ABOVE ADDRESS SENT
  BY OVERNIGHT MAIL THAT WE HAVE ELECTED NOT TO RENEW THIS LETTER FOR ANY
  ADDITIONAL PERIOD.

                                 (Member FDIC)                            Page 1
<PAGE>

         Silicon Valley Bank        3003 Tasman Drive Sane Clara, CA 95054
         International Division

STANDBY L/C NO. SVB9SISO226         DATE: NOVEMBER 2, 1995

ALL DOCUMENTS INCLUDING DRAFT(s) MUST INDICATE THE NUMBER AND DATE OF THIS
CREDIT.

EACH DRAFT PRESENTED HEREUNDER MUST BE ACCOMPANIED BY THIS ORIGINAL LETTER OF
CREDIT FOR OUR ENDORSEMENT THEREON OF THE AMOUNT OF SUCH DRAFT(S).

DOCUMENTS MUST BE FORWARDED TO US VIA OVERNIGHT COURIER. (I.E. FEDERAL EXPRESS,
UPS, DHL OR ANY OTHER EXPRESS COURIER) AT OUR ADDRESS: SILICON VALLEY BANK, 3003
TASMAN DRIVE CA 95054 ATTN: INTERNATIONAL DEPARTMENT.

WE HEREBY ENGAGE WITH DRAWERS AND/OR BONAFIDE HOLDERS THAT DRAFT(S) DRAWN UNDER
AND NEGOTIATED IN CONFORMANCE WITH THE TERMS AND CONDITIONS OF THE SUBJECT
CREDIT WILL BE DULY HONORED ON PRESENTATION.

THIS CREDIT IS SUBJECT TO THE UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY
CREDITS (1993 REVISION), INTERNATIONAL CHAMBER OF COMMERCE PUBLICATION 500.

/s/ [SIGNATURE ILLIGIBLE]                              /s/ [SIGNATURE ILLIGIBLE]
-------------------------                              -------------------------
Authorized Signature                                      Authorized Signature

                              (Member FDIC)                               Page 2
<PAGE>

                             COLLATERAL ASSIGNMENT
                             ---------------------

        Assignment made this 8th day of November 1995, by Berkshire-Newburyport
Limited Partnership, a Massachusetts Limited Partnership, acting by and through
Newburyport General Corp., its sole General Partner, with a usual place of
business at 1500 Main Street, Springfield, Massachusetts (hereinafter called
"Assignor") to Shawmut Bank, N.A., a national banking association (the
"Assignee") with a usual place of business at 1 Federal Street, Boston,
Massachusetts (hereinafter called "Assignee"), for valuable consideration,
receipt of which is hereby acknowledged, and as collateral for payment and
performance of construction note in the amount of Five Million Nine Hundred
Twenty-Five Thousand and 00/100 Dollars ($5,925,000.00) ("Note") made by
Assignor, to Assignee of even date herewith, together with the refinancing of
said Note into a Term Note, all as more fully described in a Loan Agreement of
even date herewith (the "Loan Agreement") between the parties and all other
obligations of Assignor to Assignee pursuant to the Loan Agreement (the
"Obligation"), the Assignor hereby grants a security interest, pledges, transfer
and assigns to the Assignee, all of the Assignor's right, title and interest in
the following:

                A Pledge and Custodial Agreement (including, but not limited to
                all "Collateral" described herein) between Assignor, Assignee
                and Genus, Inc., a California corporation with a usual place of
                business in Newburyport, Massachusetts ("Genus"), as well as
                that certain Letter of Credit issued by Silicon Valley Bank, as
                is reissued from time-to-time by other acceptable issuers in the
                amount of Two Million Eight Hundred Thousand and 00/100 Dollars
                ($2,800,000.00). Along with all interest and dividends thereon,
                now due or to become due (hereinafter called "Collateral").

        The Assignor hereby irrevocably delivers to the Assignee the Collateral,
as well as hereby grants Assignee, a Limited Power of Attorney to withdraw the
Collateral, in full amount of the Collateral, plus interest or dividends, if
any, and the Assignor hereby authorizes the Assignee to demand and collect the
Collateral, or portions thereof necessary to allow it to fully satisfy itself
upon the Obligation, in the event a "Drawing Condition" exists as described in a
Non-Disturbance, Recognition, Attornment and Subordination Agreement between the
parties hereto of even date herewith (the "Drawing Condition").

        Assignor agrees that this Assignment is not to be construed as a waiver
or limitation of the right by the Assignee to act at any time to enforce any and
all rights otherwise accruing to it against Assignor, or any and all other
parties upon any guaranty, endorsements, security agreement, promissory note(s),
or other rights given to the Assignee pursuant to any other instrument,
indenture, agreement, or other covenant, or otherwise available to the Assignee
at law, or upon other failure of payment of other breach of any Obligation, or
term, condition, or covenant contained in any such instrument. At all times, the
rights of the Assignee shall remain cumulative,

                                       1

<PAGE>

     This Agreement shall be binding upon the heirs, estate, personal
representatives, successors, and assigns of the Assignor, and the death or
disability shall not relieve the conservator or estate, from any liability or
obligation accruing prior to such death or disability.

     IN WITNESS WHEREOF, the Assignor have signed this instrument, the day above
first mentioned.

ASSIGNOR:                        BERKSHIRE-NEWBURYPORT LIMITED
                                 PARTNERSHIP A MASSACHUSETTS LIMITED
                                 PARTNERSHIP ACTING BY AND THROUGH
                                 NEWBURYPORT GENERAL CORP. ITS SOLE
                                 GENERAL PARTNER

                                By: /s/ Oscar H. Plotkin
                                   ----------------------------------
                                   Oscar H. Plotkin, President of
                                   Newburyport General Corp.

ASSIGNEE:                        SHAWMUT BANK, N.A.

                                By: /s/ [SIGNATURE ILLEGIBLE]
                                   ----------------------------------
                                   Its duly authorized Vice President

                                ACKNOWLEDGMENT
                                --------------

     For valuable consideration received, Genus, Inc., as well as Assignee and
     Assignor agree that:

     The parties hereto agree that notwithstanding clause 7(b)(ii) of the Pledge
     and Custodial Agreement, that said Collateral, upon the occurrence of a
     Drawing Condition as defined in the Non-Disturbance, Recognition,
     Attornment and Subordination Agreement shall be held by the Approved
     Custodian in accordance with the Pledge and Custodial Agreement. In the
     event, however, that the Lease and/or the Non-Disturbance, Recognition,
     Attornment and Subordination Agreement will permit the Landlord to receive
     and retain the Collateral, then the Collateral shall be immediately applied
     in the sole discretion of Assignee to Landlord's obligations which are due
     to Assignee; provided, however, that this grant shall not expand Landlord's
     or Approved Custodian's rights to the security deposit in any way, nor
     waive any claim that Tenant may have pursuant to the Lease or under
     applicable law with respect to any drawing on the security deposit or any
     residual amount of this security deposit which, under the terms of the
     Lease, needs to be returned to Tenant upon the termination of the Lease;
     further provided, however, that Tenant

                                       2

<PAGE>

        acknowledges that it shall have no right of set off or any other right
        to claim that funds were drawn improperly from the Letter of Credit or
        the Pledge and Custodial Agreement if the drawing was made in accordance
        with clause 19 of the Lease and/or clause 1 of the Non-Disturbance,
        Recognition, Attornment and Subordination Agreement.

                                             GENUS, INC.

                                             By: /s/ [SIGNATURE ILLEGIBLE]
                                                -------------------------------
                                                Its duly authorized EVP & CFO

COMMONWEALTH OF MASSACHUSETTS
HAMPDEN, SS.

        Then personally appeared the above named Oscar H. Plotkin, President and
acknowledged the foregoing instrument to be his free act and deed, and the free
act and deed of Newburyport General Corp., before me this 8th day of November,
1995.

                                           /s/ Robert P. Cunningham
                                           -------------------------------
                                           Notary Public
                                           My Commission Expires: Sept. 13, 1996

COMMONWEALTH OF MASSACHUSETTS
HAMPDEN, SS.

        Then personally appeared the above named Rodney C. Scott, Vice President
and acknowledged the foregoing instrument to be his free act and deed and the
free act and deed of Shawmut Bank, N.A., before me this 8th day of November,
1995.

                                            /s/ [SIGNATURE ILLEGIBLE]
                                           -------------------------------
                                           Notary Public
                                           My Commission Expires: 12/1/00

<PAGE>

                                ACKNOWLEDGMENT

STATE OF CALIFORNIA

COUNTY OF SANTA CLARA

        On November 8, 1995, before me Angelina M. Jimenez, a Notary Public in
and for the county and State aforesaid, personally appeared Kent Robertson, who
is personally known to me (or provided to me on the basis of satisfactory
evidence) to be the person whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his authorized capacity and that
by his signature on such instruement the person, or the entity upon behalf of
which the person acted, executed the instrument.

        WITNESS, my hand and official seal.

 /s/ Angelina M. Jimenez                         [SEAL] Angelina M. Jimenez
-----------------------------------------        Commission #107 1844
Signature                                        Notary Public -- California
                                                 Santa Clara County
                                                 MY Comm. Expires Oct 20, 1999

<PAGE>

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

        This First Amendment to Lease is made as of this 8th day of November,
1995 by and between BERKSHIRE-NEWBURYPORT LIMITED PARTNERSHIP, a Massachusetts
limited partnership with a principal office at 1500 Main Street, Springfield,
Massachusetts ("Landlord") and GENUS, INC. a California corporation with a place
of business at 4 Mullken Way, Newburyport, Massachusetts ("Tenant").

        WHEREAS, Landlord and Tenant are parties to a Lease for real estate
known as Lot 62, Stanley Tucker Drive, Newburyport, Massachusetts, dated October
30, 1995 (the "Lease"), which property is more particularly described in the
Lease; and

        WHEREAS, the parties desire to amend certain terms and provisions of the
Lease.

        NOW, THEREFORE, in consideration of the natural covenants contained
herein and for other good and valuable consideration, the receipt of which is
hereby acknowledged, it is hereby agreed as follows:

        1.      The name of the Landlord in the opening paragraph of the Lease
is hereby changed to "Berkshire-Newburyport Limited Partnership".

        2.      The language "Landlord's mortgagee" is hereby added after the
word "Landlord" in the fourth line of Section 4(a) and in the first sentence of
the second paragraph of Section 6(b).

        3.      The language "and personal property of Tenant" is hereby
inserted at the end of the first sentence of Section 4(a).

        4.      The words "for whom Tenant is legally responsible" are hereby
deleted wherever they appear in Sections 6(b), 6(d) and Section 10(a).

        5.      The word "validated" in Section 11(c) line 11 is changed to be
"invalidated".

        6.      At the end of the second sentence in Section 10(b) insert the
sentence "Such policy shall also name Landlord's mortgagee, loss payee and
additional insured." In the sixth and seventh line of Section 10(b) insert after
the word "Landlord" the following language "and Landlord's mortgagee".

        7.      Insert at the end of Section 11(a) the following "Under such
policy Landlord (and such other persons as are in privity of estate with
Landlord as may be set out in notice from time to time delivered to Tenant) and
Tenant shall be named as insured. In addition, Tenant shall maintain a minimum
of one (1) years' loss of rent insurance covering the Premises. Landlord's
mortgagee shall be named as mortgagee, loss

                                       1
<PAGE>

          payee and additional insured on such policies. Each such policy shall
          be non-cancelable with respect to Landlord and Landlord's said
          designees without twenty (20) days prior written notice to Landlord
          and Landlord's mortgagee, and a duplicate original or certificate
          thereof shall be delivered to Landlord and Landlord's mortgagee at the
          beginning of the Lease Term and annually thereafter."

     8.   This language in the second to last paragraph of Section 19 which
          reads "In the event Tenant fails to pay any Base Rent payable under
          this Lease within thirty (30) days following notice to Tenant that the
          amount is past due, but Tenant's shareholder equity is determined in
          the First Drawing Condition stated above to be greater than Twenty-
          Five Million Dollars ($25,000,000.00), then the parties agree that the
          Security Deposit (including any ILC constituting the Security Deposit)
          shall continue to be maintained and survive any Default by Tenant
          under this Lease" is hereby deleted.

     9.   Insert at the end of Section 16 the following "This right of first
          refusal shall not apply to transfer of the Property to Landlord's
          mortgagee or to a purchaser at a foreclosure sale or as a result of a
          deed in lieu of foreclosure."

     10.  Except as amended hereby, the Lease remains unchanged and its terms
          and conditions are hereby ratified and confirmed by Landlord and
          Tenant and shall remain in full force and effect. Landlord and Tenant
          each agree that they will execute a conformed copy of this Lease
          including all amendments herein at the request of either party.

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

                                 BERKSHIRE-NEWBURYPORT LIMITED
                                 PARTNERSHIP, Landlord

                                 By /s/ Oscar H. Plotkin
                                   -------------------------------
                                   Oscar H. Plotkin, President of
                                   Newburyport General Corp., its
                                   General Partner

                                 GENUS, INC., Tenant

                                 By /s/ Kent Robertson
                                   -------------------------------
                                   Kent Robertson
                                   Its Executive Vice President
                                   and Chief Financial Officer

                                       2

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