Document:

<PAGE>   1

                                                                  EXHIBIT 10.11

[IN CIRCLE LETTER J]

[handwritten: Agreement III, then illegible]

(Adjustments according to Specifications, Version 1.99

                           UNPROTECTED LEASE AGREEMENT

<TABLE>
<CAPTION>
TABLE OF CONTENTS
-----------------
<S>                                                   <C>
1.  INTRODUCTION                                      20.  CANCELING THE LEASE
                                                           AND THE AGREEMENT
2.  DEFINITIONS
                                                      21.  VACATING THE PREMISES
3.  NON APPLICABILITY OF PROTECTED TENANT LAW
                                                      22.  GUARANTEES
4.  THE LEASE
                                                      23.  CUSTOMARY OWNERSHIP
5.  COMPLIANCE OF  THE PREMISES
                                                      24.  LIABILITIES TO BANK
6.  TRANSFER DATE AND COMPLETION OF CONSTRUCTION
                                                      25.  YEAR 2000
7.  CANCELLED

8.  THE PURPOSE OF THE LEASE                          26.  MISCELLANEOUS

9.  THE PERIOD OF THE LEASE

10. LEASE PAYMENTS

11. PAYMENT OF LEASE FEES

12. OTHER PAYMENTS

13. VALUE ADDED TAX

14. ALTERATIONS TO THE PREMISES AFTER TRANSFER DATE

15. THE USE OF THE PREMISES

16. MAINTENANCE AND REPAIRS

17. INSURANCE AND LIABILITY

18. TRANSFER AND ASSIGNMENT OF RIGHTS

19. FUNDAMENTAL PROVISIONS AND PRE-APPROVED COMPENSATION

</TABLE>

<PAGE>   2

(Adjustments according to Specifications, Version 1.99

                           UNPROTECTED LEASE AGREEMENT

        Drawn up and signed in Tel Aviv, on the 28th day of August, 2000

                                 BY AND BETWEEN

                      KAPS-PHARMA LTD.
                      8 HANECHOSHET ST., TEL AVIV
                      (HEREINAFTER, "THE LESSOR")
                                                        PARTY OF THE FIRST PART

                                       AND

                      JOLT LTD.
                      PRIVATE COMPANY:  511573594
                      FROM:  19 YAD HARUTZIM, JERUSALEM
                      (HEREINAFTER, "THE LESSEE")

                                                        PARTY OF THE SECOND PART

Whereas        The Lessor declares that it is entitled to be listed as the
               legitimate owner of the leasing rights for the land known as
               block 30243, section 62, lot 5 in accordance with Jerusalem
               Municipal Building Plan 2787 constituting a lot of some 7,863 sq.
               m. located in the Har Hahotzvim Industrial Zone in Jerusalem
               (Hereinafter, "the Lot"), upon which is "the Building" as defined
               below;

Whereas        The Lessee wishes to lease from the Lessor and the Lessor
               declares its desire to lease the spaces of the Building defined
               hereinunder, described and designated as "the Premises," and
               pursuant and subject to the terms of this Agreement;

THEREFORE, IT IS DECLARED, STIPULATED AND AGREED BETWEEN THE PARTIES AS FOLLOWS:

1.      The Introduction to this Agreement constitute an integral part hereof.

<PAGE>   3

2.      DEFINITIONS

        In this Agreement, the terms specified below shall have the meaning set
        forth beside them.

        "The Agreement":            This Agreement in its entirety including
                                    all appendices.

        "The Building":             The Building with 9 floors for light
                                    industry and for offices and 2 underground
                                    parking.on the Lot.

        "The                        Premises" The office space of 226 sq.
                                    m.(gross) on the 2nd floor of the Building,
                                    as delineated and indicated in red on the
                                    plan attached as Appendix A to this
                                    Agreement and parking space as detailed in
                                    paragraph 7 hereinunder.

[illegible signature]
Kaps-Pharma Ltd.

<PAGE>   4

        "The Project Manager"       Ehud Tayar or anyone authorized by him in
                                    writing.

        "Index"                     The Consumer Price Index (including fruit
                                    and vegetables) published by the Central
                                    Bureau of Statistics.

        "Base Index"                The index in effect on the day this
                                    Agreement is signed, i.e. the index for the
                                    month of July that was published on the 15th
                                    of August, 2000 and which stood at points.

        "Interest on Arrears"       The total interest on arrears at the highest
                                    acceptable rate prevailing in the period of
                                    arrears in question at the Israel Discount
                                    Bank Ltd. for unauthorized overdrafts in
                                    debitory accounts. Written confirmation by a
                                    branch manager of the Bank regarding the
                                    interest rate as above shall serve as
                                    absolute evidence for the interest rate.

3.      NON-APPLICABILITY OF THE TENANTS PROTECTION LAW

        A.      It is hereby declared that the Premises are located in a
                building, the construction of which was completed after August
                20, 1968, and that this lease is instituted upon the express
                condition that the Tenants Protection Law (Combined Version)
                5732 - 1972 and other tenant protection legislation according to
                their regulations and stipulations (hereinafter: "Tenants
                Protection Law"), and any other law that shall grant the Lessee
                the status of protected Tenant shall not apply to this lease.

        B.      The Lessee hereby declares that it neither paid, nor shall pay
                the Lessor "key money" or any other such consideration for the
                lease which is not a rental payment, and that the Lessee and any
                proxy acting on its behalf shall not be a protected tenant in
                the Premises according to the law.

        C.      The Lessee hereby declares that any investment it makes in the
                Premises, including equipment and installations, shall be made
                for its needs only, and it shall be precluded from claiming that
                these investments represent "key money" or payment in accordance
                with Section 82 of the Tenants Protection Law (Combined Version)
                5732 - 1972, or any payment granting the Lessee any right to the
                Premises, and shall be precluded from requesting any total or
                partial participation or refund by the Lessor for the
                aforementioned investments.

<PAGE>   5

        [continued - p.3]

        D.      The Lessee is aware that the Premises are leased to the Lessee
                inter alia based on its aforementioned declarations, and it
                shall be precluded from raising any demands or claims whatsoever
                with respect to its status as protected tenant, or that it has
                any rights in the Premises other than those it explicitly
                acquires herein.

4.      THE LEASE

        A.      Under a lease that is not protected by the Tenants Protection
                Law the Lessor hereby leases to the Lessee, and the Lessee
                hereby leases from the Lessor, the Premises solely for the
                purpose of the Lease for the period and under the terms
                stipulated herein.

        B.      The Tenant hereby declares that it has seen the Premises and/or
                the plans and/or the specifications and/or the diagrams of the
                Premises, that it examined its legal status, found it
                commensurate with the Lessor's declarations for its needs, and
                that it hereby waives any claim related to the suitability of
                the Premises to its needs and/or to the declarations of the
                Lessor and/or the quality of the Premises and/or any other
                claim.

        C.      The rental is conditional upon the Lessee maintaining an
                approved enterprise in the Premises as defined in the Capital
                Investment Act. In any case where the Lessee shall cease to
                maintain an approved enterprise as stated, such action shall
                constitute a fundamental breach of this Agreement.

<PAGE>   6

[illegible signature]
Kaps-Pharma Ltd.

[page 4]

5.      COMPLIANCE OF THE PREMISES

        A.      The Lessee shall take possession of the Premises as it
                corresponds to the attached technical specifications, APPENDIX
                B, and the public spaces in the building complying with the
                attached technical specifications, APPENDIX C.

        B.      The project manager, determined by the Lessor, shall have the
                right of exclusive and final determination in every matter
                related to the condition of the Premises and its compliance with
                the technical specifications, as indicated in the aforementioned
                clause A.

6.      DATE OF TRANSFER AND COMPLETION OF CONSTRUCTION

        A.      After the Lessee has transferred to the Lessor the lease
                payments as detailed in Clause 11 C hereinafter and the
                guarantees pursuant to Clause 22, the Lessor shall complete the
                Premises and transfer possession to the Lessee by [handwritten:]
                January 28, 2000 (hereinafter, "the Transfer Date"). In order to
                remove any ambiguity, the Transfer Date of the Premises to the
                Lessee shall be the start of the lease period of the Premises
                acquired by the Lessee for any issue related thereto, including
                in the event that the Transfer Date shall take place during the
                three months following the signature of this Agreement.

                "Completion" means the ability to use and benefit from the
                Premises in reasonable fashion and subject to the provisions of
                this Clause below.

        B.      Without derogating from the aforementioned, a delay of up to 90
                days in the Transfer Date shall not be considered a breach of
                the Agreement, and shall not entitle the Lessee to any relief.
                The lease termination date shall be postponed in accordance with
                the delay in transfer.

        C.      Without derogating from the aforementioned Clause B, it is
                hereby agreed that the Transfer Date shall be delayed in the
                event of an Act of God, including, but not be limited to,
                strikes or boycotts in the construction industry that shall
                affect the pace of construction of the Building, states of war
                or mobilization of reserves, unexpected shortages of materials
                or labor, non-provision of electricity and/or non-connection of
                the Premises to the electrical grid, provided the liability
                thereof is not exclusively that of the Lessor, or any other
                reason or cause which is beyond the control or

<PAGE>   7

                reasonable anticipation of the Lessor. According to its
                exclusive discretion the Project Manager shall determine the
                time period the event or Act of God is in effect, and the
                Transfer Date shall be delayed accordingly. Such a delay shall
                not be considered a breach of the

[P.4 continued]

                Agreement and shall not entitle the Lessee to any relief. The
                termination date of the lease shall be postponed in accordance
                with the transfer delay.

        D.      The Transfer Date or the Delayed Transfer Date pursuant to
                Clauses B or C above shall hereinafter be called the "Transfer
                Date."

        E.      The Lessee shall take possession of the Premises on the Transfer
                Date and the Lessor shall deliver the Premises with the
                participation of a representative of the Lessee, if present,
                after receiving advance notice. They shall prepare Minutes
                recording the comments of the Lessee's representative, if any.
                The Lessor shall repair anything requiring repair in accordance
                with the stipulations of the Project Manager within 45 days of
                the Transfer Date.

        F.      To remove any ambiguity, it is hereby stated that the Lessor
                shall have the right, even after completion of the building, to
                perform construction and other work in areas of the building
                which do not constitute the Premises, including, but not limited
                to, development work provided that such work shall not derogate
                from the reasonable use of the Premises by the Lessee.

                Furthermore, the addition of stories and/or partial stories,
                and/or expansion of the usable spaces of the building, and/or
                alteration of the permitted intention of certain spaces in the
                building shall not be considered a violation of the Lessor's
                obligations above as long as this does not derogate from the
                reasonable use of the Premises or of its rights by the Lessee
                pursuant to this Agreement.

                The Lessor shall have the right to make alterations in the
                building plans and/or in the Premises if required to do so by
                any competent authority, and as long as such alterations shall
                not detract from the reasonable use of the Premises by the
                Lessee.

[illegible signature]
Kaps-Pharma Ltd.

<PAGE>   8

        [Page 5]

        G.      The Project Manager shall determine, at its discretion, as
                expert and not as arbitrator, whether the Premises are ready for
                transfer in accordance with the aforementioned terms, whether it
                is built pursuant to the specifications, whether deviations from
                or alterations in the specifications constitute significant or
                minor deviations and/or whether they and/or the works and/or
                alterations and/or additions as stated above constitute an
                impediment to the Lessee's reasonable use of the Premises.

7.      Cancelled.

8.      THE PURPOSE OF THE LEASE

        A.      Without derogating from the foregoing, the purpose of the Lease
                is the management of a business for the production of
                communication products, and on condition that no disturbance is
                caused to the other tenants of the building and that the usage
                shall not deviate from the building's building permit.

                The Lessee shall be responsible for acquiring all necessary
                licenses for managing its businesses on the Premises, if
                necessary. Failure to acquire them shall not be a pretext for
                shortening the Lease or delaying or reducing leasing fees, even
                if the business shall close as a result of losing its license.

        B.      In the event the Lessee does not obtain a permit to conduct its
                business and/or business license for any reason whatsoever, the
                Lessee shall have no claim of any kind on any grounds against
                the Lessor, and by signing this Agreement it hereby waives such
                right in advance including but not limited to the Lessee's
                investment in the Premises.

                None of the aforementioned shall be considered as the permission
                of the Lessor for the Lessee to use the Premises and/or to
                manage a business in the Premises without a permit and/or in
                deviation therefrom.

        C.      To avoid any ambiguity, and without derogating from the
                foregoing, the parties hereby agree that liability for
                conducting the Lessee's business without the necessary legal
                permits shall apply solely to the Lessee, and it agrees to
                indemnify the Lessor for any claim and/or charge imposed on him
                for conducting a business without a legal permit and/or not
                acquiring the legal permits immediately upon first demand of the
                Lessor.

<PAGE>   9

9.      THE TERM OF THE LEASE

        [Page 5 continued]

        A.      Subject to the fulfillment by the Lessee of all its obligations
                pursuant to this Agreement, the Lessor hereby leases to the
                Lessee, and the Lessee hereby leases from the Lessor, the
                Premises under an unprotected Lease for a period of thirty six
                (36) months (hereinafter, "the Basic Lease Period") which shall
                begin on the Transfer Date.

        B.      Subject to the fulfillment by the Lessee of all its obligations
                pursuant to this Agreement, the approval of the Parties, and
                provision of notification as set forth below, the Lessee shall
                have the option of extending the Lease Term for two additional
                consecutive Lease Terms of 24 months each.

                Each 24-month period as stated above shall be hereinafter called
                "the Extended Period."

                The Lessee's notice to the Lessor regarding the Lessee's
                exercise of the option for the Extended Period shall be made in
                writing and be delivered to the Lessor at least 4 months prior
                to the end of the Basic Lease Period or the previous Extended
                Period, as the case may be. The Lessee shall attach to the above
                letter guaranties as specified in Clause 22 below.

                Lease payments during the Extended Period shall be updated per
                Clause 10 B below.

                Subject to the above, all the terms of the Lease set forth in
                this Agreement shall also apply to the Lessee for the Extended
                Period.

                In this Agreement, the Basic Lease Period as well as the
                Extended Periods shall be called, for the sake of brevity, "the
                Lease Term."

<PAGE>   10

[Page 6]

10.     LEASE PAYMENTS

        A.      During the Basic Term of the Lease the Lessee shall pay the
                Lessor monthly lease payments for the Premises in the amount of
                14 dollars per meter (gross) of the space of the Premises as
                stipulated in the aforementioned Clause 2, that is, 3,164
                dollars (hereinafter, "Basic Lease Fees")

        B.      At the beginning of each Extended Lease Term, the Lease Fees
                shall be increased by 10% in relation to the Lease Fees on the
                date of the termination of the previous term (hereinafter, "the
                Adjusted Lease Fee"). The Basic Lease Fees and the Adjusted
                Lease Fees shall be called hereinafter, for the sake of brevity,
                "Lease Fees."

        C.      The Lease Fees and all other payments denominated in dollars in
                this Agreement shall be converted and paid in New Shekels at the
                exchange rate published on the date of any payment notices sent
                to the Lessee, i.e., at the start of each quarter during the
                lease period, as stipulated in Clause 11 below. Without
                derogating from the provisions of this Clause, in the event that
                between the date of aforementioned payment notice and the date
                of actual payment, there shall be a devaluation of one percent
                or more in the value of the of the Dollar, then within 7 days
                from the date of the payment notice the Lessee shall pay the
                Lessor for these adjustments and the adjustments of the lease
                fees between the date of transfer of the payment to the Lessor
                and the date of actual payment.

11.     PAYMENT OF LEASE FEES

        A.      As stated in Clause 10 above, the Lessee shall prepay the Lessor
                the Lease Fees and, during the Basic Lease Period, the Premises
                Adjustment Fees for every 3 months of the Lease on the first day
                of each 3-month period as stipulated herein.

        B.      All payments payable by the Lessee pursuant to this Agreement
                shall be paid by the Lessee on the payment date established by
                the Lessor by 11:00 in the morning through a deposit to the
                Lessor's account 319120 at the Israel Discount Bank Ltd., Ramat
                Hasharon Branch (hereinafter, "the Bank"). If the payment
                date falls on a non-business day, the payment shall be made on
                the next business day thereafter (the provisions of this
                sub-Clause are secured and may not be altered without advance
                written notice from the Bank).

        C.     On the date this Agreement is signed and prior to the beginning
               of each Extended Period, as the case may be, and on the date
               determined by the
<PAGE>   11

[Page 6 continued]

                Lessor, the Lessee shall pay the Lessor the Lease Fees for the
                first and last quarters of the Lease Term.

                Payment of the Lease Fees for the last quarter of the Lease Term
                shall serve the Lessor as specified in Clause 22 C below.

        D.      Payment by check, authorization of bank transfer and/or any
                other method of payment shall not be considered payment. Only
                after a check has cleared and/or the payment is actually
                transferred into the Lessor's account by the Bank, shall the
                payment be considered paid.

        E.      The Lessee shall pay the Lessor the Lease Fees and all other
                amounts payable by the Lessee under this Agreement for each
                Lease Term, even due to some reason for which the Lessor is not
                liable, the Lessee shall use only a portion of the Premises
                and/or only for a portion of the time, whether voluntarily or
                involuntarily.

        F.      The Lessee hereby waives all present and/or future claim and
                cause for writing off any amount, whether fixed or outside the
                Lease payments and/or administrative fees and/or any other
                payment payable to the Lessor pursuant to this Agreement.

12.     OTHER PAYMENTS

        A.      In addition to all the other payments set forth in this
                Agreement, the following amounts shall be payable by the Lessee:

[illegible signature]
Kaps-Pharma Ltd.

<PAGE>   12

[Page 7]

                (1)     All taxes, fees, and levies, municipal and governmental,
                        of any type payable now or in the future by the
                        possessor of the Premises, and/or charged due to the
                        actual use of the Premises, including but not limited to
                        general municipal tax, garbage removal, and other
                        municipal taxes, and/or related to the business to be
                        conducted by the Lessee on the Premises and/or the
                        purpose of the Lease, including business tax, sign tax,
                        fees and licenses for the business and the management
                        thereof.

                (2)     All fees and payments related to electricity consumption
                        on the Premises.

                        The Lessee shall pay amounts to the Lessor for
                        electricity consumption on the Premises as determined by
                        the internal consumption meters to be installed for the
                        Premises as well as the relative share of public
                        electricity consumption.

                        In addition, the Lessee shall pay the Lessor for
                        electricity consumption for air conditioning in the
                        Premises (except for air conditioning in public spaces)
                        based on the formula stipulated in Appendix E hereof. To
                        avoid any ambiguity, the expenses for electricity for
                        air conditioning are in addition to the Lease Fees and
                        Maintenance Fees stipulated herein.

                        If the Lessee does not pay the aforementioned
                        electricity expense within 7 days from the date the
                        Lessor's invoice pertaining thereto is delivered, the
                        Lessor has the right to disconnect the supply of
                        electricity and/or air conditioning to the Premises, and
                        stipulations of this Clause constitutes a warning and
                        ongoing advance notice to the Lessee of the
                        aforementioned disconnection in the event of non-payment
                        by the due date with no need for additional warnings or
                        notices prior to any such disconnection.

                        The Lessor shall be neither responsible nor liable for
                        any direct, consequential and/or indirect damage that
                        may be caused to the Lessee or any person, organization
                        or corporation as a result of the disconnection of
                        electricity and/or air conditioning to the Premises by
                        the Lessor due to non-payment by the due date.

                (3)     The cost of current fire protection maintenance in the
                        Premises (undertaken by Lessor).

                (4)     Maintenance services at the rate stated in Clause 16
                        below.

<PAGE>   13

[Page 7 continued]

                (5)     All payments and expenses related to the provision of
                        gas, water and telephone on the Premises, and any other
                        payable amount for the use and maintenance of the
                        Premises, including its systems, including air
                        conditioners in the Premises.

        B.      In the event that any of the sums payable by the Lessee to the
                Lessor pursuant to sub-Clause A above is based upon an invoice
                relating to the entire building, the Lessee shall pay the Lessor
                an appropriate relative portion of the sum of the entire
                invoice, provided that the calculation of the Lessee's relative
                share of the aforementioned payments takes into account the
                ratio of the Premises to the overall areas for lease in the
                building.

        C.      The Lessee promises to arrange and pay for cleaning the Premises
                by itself and at its expense.

13.     VALUE ADDED TAX

                The Lessee promises to pay the Lessor VAT in addition to, and
                together with, the Lease Fees, including linkage adjustments
                and/or interest on arrears, as well as any other payment which
                the Lessee is required to pay the Lessor pursuant to this
                Agreement, and/or which the Lessor paid instead of the Lessee
                and which Lessee must refund to the Lessor. This must be done
                against a tax receipt as required by law.

                The provisions of this Clause shall also be in effect in the
                event any other tax is imposed and added to, or replaces VAT
                under conditions whereby the law applies it to Lease Fees or
                imposes or permits the transfer of the debit to the Lessee.
                V.A.T. shall be treated as Lease Fees in all respects.

<PAGE>   14

        [Page 8]

14.     ALTERATIONS TO THE PREMISES AFTER TRANSFER DATE

                In addition to the provisions of Clause 5 above, and after
                Transfer Date, at its own expense and liability, and after
                obtaining the Lessor's consent, the Lessee shall have the right
                to carry out, works and alterations in the Premises only (not
                including public spaces, which include restrooms, kitchenettes,
                and entries) that are required by the Lessee in order to
                construct and/or move permanent or portable internal walls, to
                install telephone, air conditioning, electricity and/or
                communication systems; to connect and install its machines,
                computers and equipment; and to undertake any other or
                additional work or changes that the Lessee shall consider
                necessary for conducting its business on the Premises, excluding
                alterations likely to damage the building construction, walls,
                water and electricity systems and/or alterations which might
                affect the exterior or interior building facade, or the
                reasonable use thereof by the other users of units in the
                building, per the following conditions:

                (1)     The Lessee shall submit construction plans for the above
                        for the prior, written approval of the Lessor

                (2)     The Lessor shall have the right to require changes in
                        the specifications and the details of the work, and the
                        Lessee promises to alter them as required by the Lessor,
                        and to begin the work only after the Lessor has given
                        written approval.

                (3)     The Lessor's approval for such work is conditional upon,
                        in addition to the foregoing, delivery by the Lessee to
                        the Lessor of copies of insurance policies as provided
                        in Clause 17 below.

                (4)     All work shall be carried out by skilled professionals
                        at a standard accepted for similar Hi Tech buildings in
                        the area of the Premises, pursuant to Israeli
                        regulations, and subject to the guidelines issued by the
                        project manager.

                (5)     The Lessee shall carry out the work on the Premises in a
                        manner and form that will not interfere with operations
                        in any area of the building and/or other lessees, and
                        the Lessee hereby agrees to strictly carry out all the
                        stipulations of the Lessor, and to take all precautions
                        to prevent the aforementioned disturbances.

                (6)     The Lessee shall be liable for any damage caused during
                        and following work on the Premises, to any person and
                        property, including the building and/or to the Premises
                        and/or to other lessees and/or to other leased premises
                        and/or to the Lessor or its

<PAGE>   15

[Page 8 continued]

                        representatives, whether the work was carried out by the
                        Lessee or by someone else acting on its behalf.

                (7)     The Lessee agrees and affirms that any sum that it
                        spends in carrying out alterations in order to adapt the
                        Premises for its needs, as stated above, shall not grant
                        the Lessee vis-a-vis the Lessor any right to a refund or
                        payment for the sums and/or changes it made as stated
                        above - neither during the Lease Term, while vacating
                        the Premises or thereafter.

                (8)     The Lessee shall acquire and pay for all the necessary
                        licenses, certificates, and permits for carrying out the
                        alterations from the competent institutions and
                        authorities, should such be required.

15.     THE USE OF THE PREMISES

        Without derogating from the validity of the other terms of the
        Agreement, the Lessee promises as follows:

        A.      To manage the work only within the boundaries of the Premises,
                and to use the Premises only for the purpose set forth in the
                Lease and for no other purpose.

        B.      To maintain the cleanliness of the Premises and its
                surroundings, and not to place and/or keep any equipment,
                inventory or any movable property and/or any other objects in
                the yard and/or on the balconies of the Premises and/or the
                building and/or any other space outside of the Premises, and not
                to use any area of the building, except for the Premises, for
                any purpose whatsoever, except for use for the purpose of access
                to the Premises.

<PAGE>   16

[Page 9]

                It is hereby clarified that the Lessee has no right to install
                in the Premises dining rooms, kitchens, kitchenettes and the
                like without obtaining prior written approval from the Lessor.
                If such approval is obtained, it shall have the right to act
                only in accordance with the terms, if any, set forth in the said
                approval.

                If, in spite of the contents of this Clause, any of the Lessee's
                movable property are found on the balconies and/or outside of
                the Premises and if the Lessee does not remove them at first
                request of the Lessor, the Lessor shall have the right, though
                not the obligation, to remove these objects from the building
                and/or the space, at the Lessee's expense, and shall not be
                liable for the integrity of such objects.

                The failure of the Lessor to exercise the aforementioned right
                shall not constitute its consent to keeping the aforementioned
                movable property on the balconies and/or outside the Premises,
                nor shall this confer on the Lessee any right to continue to
                keep objects there, nor shall this prevent the Lessor from
                taking any action to which it is entitled under law and/or this
                Agreement.

        C.      To refrain from creating any disturbance, nuisance or discomfort
                to people in or visiting the space around the Premises,
                including the neighbors and/or environs.

                The Lessee hereby promises not to introduce waste which does not
                comply with the directives of the Ministry of Health nor to
                allow such waste to flow into the sewage system.

                The Lessor shall have the right to charge the Lessee special
                fees to cover the additional expense of removing garbage from
                the building in which the Premises is located, if in the
                Lessor's opinion the amount of garbage and/or refuse produced by
                the Lessee on a current basis is excessive,

        D.      To fulfill all laws, regulations and by-laws in force, and/or
                that shall be imposed upon the Premises during the Lease Term
                regarding the use thereof and the business, work and activities
                carried out therein by the Lessee, and to be held liable by
                government and municipal institutions for the payment of any
                fines due to non-fulfillment of the stipulations of this Clause.

        E.      To access the Premises only via the access ways marked on the
                approved plan and those that will exist in the future, to park
                cars and other vehicles in spaces designated for same, and not
                to use any motor or other vehicle likely to damage the access or
                the parking spaces, and to comply with the

<PAGE>   17

[Page 9 continued]

                stipulations issued by the Lessor from time to time relating to
                the access and parking arrangements within the boundaries of the
                lot.

        F.      To pay any specific amounts that the Lessee owes the Lessor
                and/or the appropriate authorities on the due dates for such
                payments.

        G.      To allow the Lessor and/or the Lessor's representative to visit
                the Premises at any reasonable time and to check its condition
                and use made thereof in order to maintain the performance of the
                provisions of this Agreement, and/or to take the action and
                exercise the means set forth in this Agreement or in any law
                requiring entry into the Premises, including:

                (1)     To make any repairs within the Premises, necessary for
                        the building or any portion thereof.

                (2)     To carry out any construction and/or demolition work
                        which the Lessor has the right to do pursuant to this
                        Agreement.

                (3)     To show the Premises to potential buyers and/or lessees.

                (4)     If access to building systems is available through the
                        Premises, the Lessee shall permit the Lessor access to
                        those systems at any time for the purpose of repair and
                        examination. For this purpose, the Lessee shall deposit
                        a key with the Lessor that enables the Lessor to have
                        access to carry out the foregoing. The key shall be
                        stored in a locked cabinet that is under the
                        responsibility of the Lessor.

        H.      To fulfill the stipulations of the Lessor and of the competent
                authorities relating to fire fighting and prevention procedures,
                civil defense, safety and security, and to purchase at its own
                expense per the instructions of the aforementioned authorities,

<PAGE>   18

[Page 10]

                all the necessary prevention and safety equipment for the
                application and execution of the aforementioned stipulations,
                and to connect it to the panel on that floor of the building.

        I.      At the Lessor's request, and at the Lessee's expense, to
                demolish and/or to change any addition or alteration made by the
                Lessee to the Premises and/or the building not constructed in
                compliance with the terms of this Agreement, and to restore the
                Premises and the building to its original state.

        J.      The Lessee hereby promises not to hang or install any signs
                and/or other means of advertising in the area and/or in any
                portion of the building. The signs and the placement, type, size
                and shape thereof shall be determined by the Lessor, at the
                Lessor's sole discretion, and shall be installed by the Lessor
                at the Lessee's expense.

        K       In order to remove all ambiguity, it is hereby explicitly
                clarified that the Lessee shall have no right to install air
                conditioners in the walls and/or windows of the Premises.

16.     MAINTENANCE AND REPAIRS

        A.      The Lessee promises to use the Premises in a cautious and
                reasonable manner, and to pay close attention throughout the
                entire Lease Term that the Premises and all of the installations
                related thereto are in working condition, operational, clean and
                orderly.

        B.      In exchange for payment of the sums set forth in Clause D below,
                the Lessor hereby promises to supply the maintenance services
                listed in Clause C below, as per the terms set forth therein.

        C.      Maintenance Services to be provided by the Lessor shall be of
                the type, scope and per the conditions set forth below:

                (1)     Structural maintenance, maintenance of mechanical
                        systems, public plumbing, public sewage, public
                        electricity, elevator maintenance, landscaping, sign
                        maintenance, and cleanliness of public spaces.

                (2)     Air conditioning services, including central air
                        conditioning services, excluding servicing and
                        maintenance of air conditioning equipment in the
                        Premises during normal working days and hours. Heating
                        shall be installed in the end units.

<PAGE>   19

[Page 10 continued]

                        The Lessor shall also provide air conditioning services
                        during the winter to the Lessee, in the scope and under
                        the conditions that the parties shall agree upon.

                        In order to remove any ambiguity, it is hereby
                        explicitly clarified that subject to the obligations of
                        the Lessor to perform repairs on any malfunctions in the
                        air conditioning system, if any. The provisions of this
                        Agreement do not make him liable regarding potential
                        disruptions in the air conditioning system, whether as a
                        result of breakdown or due to maintenance work or for
                        any other reason, without exception. The Lessee shall
                        have no right to demand and/or receive from the Lessor
                        any compensation, and/or damages and/or payment for any
                        reason whatsoever.

                        The Lessee shall have no right to touch the air
                        conditioning units on the Premises, and/or service,
                        and/or maintain, and/or repair them, and/or perform
                        maintenance and/or any operation on them and/or to allow
                        others (even air conditioning professionals or
                        specialists) to do any of the above to the units. Should
                        the Lessee violate the terms of this paragraph and, as a
                        result, any damage shall be caused to the air
                        conditioning units, the Lessee shall bear the full cost
                        of the repair of the damage, plus interest on arrears.
                        In order to remove any ambiguity, the Lessee shall be
                        liable for all servicing and maintenance costs of the
                        air conditioning units in the Premises.

                (3)     Preserving the environment - in a scope to be determined
                        from time to time by the Lessor, at the Lessor's
                        exclusive and sole discretion.

                (4)     Insurance - an appropriate relative portion of the
                        expenses and insurance fees that the Lessor shall pay
                        for building insurance on systems for loss or damage due
                        to fire risk, explosions, earthquake,

<PAGE>   20

[Page 11]

                        storms and hurricanes, flood, water damage, strikes,
                        disturbances and intentional damage, as well as any
                        additional risk required by the Lessor. This insurance
                        shall not include the contents of the Premises, repairs,
                        changes and additions to the Premises made by and/or for
                        the Lessee.

                        It is hereby explicitly agreed that in issuing the
                        insurance as stated in this Clause there is nothing
                        making the Lessor liable for any loss and/or damage to
                        the Building.

                        (hereinafter, "Maintenance Services").

        D.      In exchange for the Maintenance Services, the Lessee shall pay
                the Lessor, in addition to the Lease Fees stipulated in Clause
                10 above and the Lease fees stipulated in Clause 12 above, the
                sum of 2.50 dollars per month per square meter of the Premises,
                i.e. 565 dollars per month for the entire Premises (hereinafter,
                "Maintenance Fees").

                The Maintenance Fees shall be converted into Shekels on the date
                this Agreement is signed, shall constitute the basis for payment
                of Maintenance Fee ("the Principal"), and shall be paid to the
                Lessor plus linkage adjustments in the consumer price index to
                be added to the Principal. The linkage adjustments shall be
                calculated based on the increase in the new index published at
                the time of actual payment, compared with the basic index.

                The Lessee shall pay the Lessor the Maintenance Fees in advance
                for each 3 months of the Lease Term, as specified in Clause 11
                above.

        E.      Together with the maintenance fees, the Lessee shall pay the
                Lessor VAT that is applicable to these payments on the first day
                of the month.

        F.      To remove any ambiguity, it is hereby agreed that the Lessor
                shall not be considered the trustee of the Premises and/or the
                contents thereof for the purpose of the Trustee Act 5727 - 1967.

        G.      The Lessee promises to notify the Lessor, as the case may be,
                immediately and without delay, of any loss, degradation, or
                damage caused to the Premises or any portion thereof.

        H.      Without derogating from the foregoing, the Lessee promises to
                repair immediately and at its own expense, any damage or
                degradation for which the Lessee is responsible as provided in
                Clause 17 A above within seven (7) days of the occurrence,.

<PAGE>   21

[Page 11 continued]

        I.      In the event that the Lessee does not completely fulfill the an
                obligation stipulated in Paragraphs A and H above, the Lessor
                shall have the right (but is not obligated) to carry out the
                maintenance and repairs required of the Lessee, and the Lessee
                shall refund to the Lessor the monies spent immediately upon the
                Lessor's first request, and pursuant to the terms of such
                request. Nothing in this Clause shall derogate from the Lessee's
                duty to perform the repairs in the Premises himself.

17.     INSURANCE AND LIABILITY

        A.      In the relationship between the parties, and without derogating
                from the Lessee's liability under any law, the Lessee shall be
                solely liable for any damage caused to any person and/or object
                and/or property during and as a result of the performance of
                work on the Premises by the Lessee and/or any representative
                thereof, as well as for any damage caused to any person, object
                and/or property connected with the Lessee's possession of and/or
                use of the Premises. The Lessee promises to indemnify the Lessor
                for any damage or financial expense caused to the Lessor as a
                result of any suit or demand filed against the Lessor as a
                result of events which are within the boundaries of the Lessee's
                liability.

                In any event, the Lessee shall be responsible for returning the
                Premises to the condition in which it was on the Transfer Date.

        B.      (1) Prior to transferring occupancy or 11/15/2000, whichever is
                earlier, and without derogating from the terms of sub-clause A
                above, of the obligations of the Lessee pursuant to this
                Agreement and requirement of any law.

<PAGE>   22

[Page 11 continued]

                In addition, the Lessee promises to purchase and maintain in
                effect throughout the period of the lease, the following
                insurance policies in the scope of coverage as defined below:

                (a)     Employer's Liability - the Lessee shall insure the
                        Lessee's liability to its employees, under any law, with
                        respect to bodily harm to an employee in connection with
                        its work, and as the usual limit at the time the policy
                        is written.

                (b)     Third Party Liability - to insure the Lessee's liability
                        vis-a-vis the Lessor and any third party. The amount
                        shall not be less that the amount of New Shekels equal
                        to $500,000. The policy shall include a "cross
                        liability" clause. The policy shall be expanded to
                        indemnify the Lessor for its liability as owner and/or
                        manager of the Premises.

                (c)     Property Insurance - insurance of the contents of the
                        Premises, including improvements and investments made
                        therein of any type or kind whatsoever, of equal value.
                        This is to be against the usual risks, including fire,
                        explosion, earthquakes, water damage, aircraft,
                        collisions, strikes, riots, intentional damage,
                        burglary, and glass breakage.

                (d)     Consequential Damage Insurance - Insurance against
                        consequential damage for a period of not less than 12
                        months as a result of loss or damage to the property of
                        the Lessee, the Premises, and the Building from the
                        risks indicated in Paragraph 17 B(1)(c) above.

                (e)     Insurance of the work being performed by the Lessee
                        and/or on its behalf in the Premises, and third-party
                        liability insurance at the time the work is performed at
                        a liability limit not less than $500,000, as well as
                        employee insurance at the usual liability limit at the
                        time the policy is written. Third-party liability
                        insurance shall be expanded to include cross liability
                        and indemnification of the Lessor for its liability as
                        owner and/or manager of the Premises.

        (2)     The following instructions shall apply to the policies indicated
                in the aforementioned Clause 17 B (a):

                a.      The Lessee shall execute the aforementioned guaranties
                        through a recognized and legally authorized insurance
                        company, update the insurance amounts, carefully carry
                        out all the directives of the policies, and pay the
                        premiums on time.

<PAGE>   23
 [Page 12 continued]

                b.      The Lessee shall arrange for the insurer to waive the
                        right of substitution in relation to the Lessor, other
                        lessees and occupants, managers and their employees, and
                        anyone who represents them. The Lessor shall be added as
                        an insured party in the policy.

                c.      At the request of the Lessor, the Lessee shall present
                        all policies issued to him to the Lessor pursuant to
                        Clause 17 herein. it shall also present to the Lessor,
                        and at its request, any renewal or change to the policy,
                        and at the reasonable request of the Lessor, the Lessee
                        shall be required to add and/or update and/or change the
                        insurance policies to the satisfaction of the Lessor in
                        order that it complies with the criteria stipulated in
                        Clause 17 herein.

                d.      The Lessee promises to use the funds received by the
                        insurance company pursuant to the policies only for the
                        purpose of immediately fixing the damage and/or
                        policies. Nothing stated in the foregoing limits and/or
                        derogates from the right of the Lessor to use its rights
                        pursuant to the policies. The policy shall include a
                        provision that the Lessee and insurance company promise
                        to act pursuant to this Clause.

                e.      The insurance of the Lessee shall be defined as
                        "first-party insurance," and shall include an explicit
                        condition according to which such insurance takes
                        precedence over any other insurance written by the
                        Lessor. This insurance shall award the Lessor with the
                        full indemnification to which it is entitled pursuant to
                        the terms of the insurance, without requiring the
                        insurers of the Lessor to participate in covering damage
                        or liability pertaining to the Lease Agreement.
                        Similarly, the policies shall include a provision
                        according to which they shall not be reduced, cancelled
                        or expire unless the Lessor receives written
                        notification by registered mail 60 days in advance.

                f.      The Lessee declares that it shall make no claim, demand
                        or complaint against the Lessor, the service company or
                        other residents for any damage for which it is entitled
                        to indemnification pursuant to the insurance that it
                        promises to take according to this Clause, and it hereby
                        exempts the Lessor and other lessees and occupants in
                        the Building from any liability for the aforementioned
                        damage.

<PAGE>   24

[Page 13]

                        The fact that the Lessee takes out the aforementioned
                        insurance in no way reduces or derogates from the
                        obligations of the Lessee pursuant to this Agreement,
                        and in no way releases him from its obligation to
                        indemnify the Lessor and/or any other person for any
                        damage it causes either directly or indirectly in
                        relation to the property for which it is liable and/or
                        as a result of the activity and/or the use by the Lessee
                        of the Premises and/or as a result of non-fulfillment of
                        the terms of this Agreement by the Lessee and/or as a
                        resulting of the execution of work at the Premises by
                        the Lessee. Payment of any insurance benefits to the
                        Lessor shall in no way be deducted from the
                        indemnification and/or compensation to which the Lessor
                        shall be entitled, as the case may be, for damage or
                        loss.

                        The provisions of this Clause shall add to, and not
                        derogate from, any other provision of this Agreement
                        pertaining to exemption from liability vis-a-vis the
                        Lessor and the imposition of liability on the Lessee.

                        Without any requirement for a request by the Lessor, the
                        Lessee promises to submit to the Lessor no later than
                        the Transfer Date, or before the delivery date of any
                        property to the Premises, certification of issued
                        insurance for the Premises pursuant to the form
                        "Premises Insurance Certification" appended hereto as
                        Appendix F signed by the insurer. The Lessee declares
                        that it is aware that presentation of the aforementioned
                        Premises Insurance Certification is a starting and
                        pre-condition for the beginning of the activities of the
                        Lessee in the Premises and delivery of any of the
                        aforementioned property to the Premises. The Lessor
                        shall have the right to prevent the Lessee from carrying
                        out its activity in the Premises and delivery of the
                        aforementioned property in the event that the
                        aforementioned certification is not presented to him
                        before the aforementioned date.

                g.      The Lessee promises to fulfill the terms of the
                        policies, to pay the insurance fees in full and on time,
                        and to make sure and ascertain that the insurance
                        policies for the Premises are renewed from time to time
                        as needed, and that they are in effect through the
                        entire lease period.

                h.      If the Lessee does not fulfill its obligation pursuant
                        to this entire Clause, the Lessor shall have the right,
                        though not the obligation, to take out insurance or a
                        portion thereof in place of the Lessee at its own
                        expense, and to pay any sum in its stead without
                        derogating from the right of the Lessor to any other
                        relief. In this

<PAGE>   25

[Page 13 continued]

                        event, the Lessor shall be entitled to be reimbursed for
                        its expenses relating thereto, plus arrears interest as
                        stipulated in Clause 2 above.

        (3)     Without derogating from the terms of sub-clause a. above, the
                Lessor shall be liable for any claim that the Lessor may be
                obligated for as a result of the violation of the obligations of
                the Lessee pursuant to the terms of this Agreement, and it shall
                indemnify the Lessor for any expense or damage that may exist
                pertaining thereto.

        (4)     If possible, it should be stated in all insurance that following
                each payment of indemnification by the insurer, the limits of
                liability are to be restored to their former state. The Lessor
                shall be liable for payment of the required additional premium
                resulting therefrom.

18.     Transfer and Assignment of Rights

    A. The Lessee shall not be entitled to transfer rights and liabilities under
    this Agreement, or to permit anyone to use the Premises or any part thereof,
    whether for consideration or not, either directly or indirectly, without the
    prior written consent of the Lessor. The Lessor shall not unreasonably
    withhold its consent.

    B. The Lessor shall be entitled to sell or transfer its rights to the Lot
    and/or the Building or in any of the units therein, including the Premises
    and/or its rights under this Agreement, or to transfer or mortgage them
    without giving prior notice to the Lessee, provided that such does not harm
    the rights of the Lessee under the provisions of this Agreement and/or any
    law.

    C. Without derogating from the aforementioned, the Lessor shall be entitled
    to transfer, assign, alienate and mortgage all of its rights to Lease Fees
    under this Agreement to any other person and the Lessee shall act in
    accordance with the written instructions of the Lessor.

<PAGE>   26

    [Page 14]

19.     Fundamental Provisions and Liquidated Damages

    A. It is hereby agreed that the provisions of Clauses 6(A), 8(A), 9, 10, 11,
    12(A), 13, 14, 15(A)(B)(H), 16(C)(D)(E), 17, 18(A), 21 and 22 are
    fundamental provisions of this Agreement pursuant to the definition of that
    term in the Contracts (Remedies for Breach of Contract) Law, 5731-1970. A
    breach of any one of these provisions shall be considered a fundamental
    breach of contract pursuant to the definition of that term in the Contracts
    (Remedies for Breach of Contract) Law 5731-1970.

    B. In the event of a breach of the provisions of Sections 9, 10, 11, 12(A),
    14, 16(C)(D)(E), 17 and 21 of this Agreement, the Lessor shall be entitled,
    in addition to any other relief or remedy available to him, to compensation
    which the parties hereby agree upon and set in advance in the sum of the
    equivalent of 6 months Lease Fees plus VAT, as they shall be from time to
    time (hereinafter, "Agreed Indemnification"). The Agreed Indemnification
    shall be linked to the index calculated from the basic index through to the
    index published on the date of actual payment. The Parties hereby declare
    that the amount of Liquidated Damages was determined by them according to
    the damage anticipated in the event of a fundamental breach of the
    Agreement.

    C. Without derogating from the Lessee's obligations under this Agreement, it
    is hereby agreed that any delay in the payment of Lease Fees and/or any
    other payment set out in this Agreement shall bear interest for delay in the
    rate defined in this Agreement, in addition to and without derogating from
    any other relief or remedy available to the Lessor under this Agreement
    and/or pursuant to any law.

20.     Cancelation of Lease and Agreement

        The Lessee hereby agrees and promises that, notwithstanding the
        provisions of this Agreement regarding the Lease Term, the Lessor shall
        be entitled, without obligation, to cancel this Agreement, and to evict
        the Lessee from the Premises with unilateral 14-day advance written
        notice, provided that the Lessee is granted a seven day opportunity to
        remedy the breach in each of the following circumstances:

        A.      If the Lessee or anyone acting on its behalf has breached and/or
                has not fulfilled one of the terms and/or obligations set out in
                the Fundamental Provisions on time.

        B.      If a receiver and/or liquidator (including a temporary receiver
                and/or liquidator) is appointed over the Lessee and/or its
                assets, in whole or in part, and/or the Lessee is declared
                bankrupt, as the case may be, and such appointment and/or
                declaration is not withdrawn within 30 days of being made.

<PAGE>   27

[Page 14 continued]

        C.      If the Lessee and/or any of the guarantors is a corporation, and
                a change of ownership of the Lessee and/or one of the
                guarantors, as the case may be, and the Lessor did not agree to
                same in writing within 14 days from the day it learned of the
                change, the Lessee promises to inform the inform the Lessor
                about any such change within 7 days of when the change occurred.

21.     Vacating the Premises

        A.      The Lessee hereby promises to vacate the Premises at the end of
                the Lease Term or upon cancelation of this Agreement, whichever
                is earlier and as the case may be, and to return the Premises to
                the Lessor's exclusive possession in the condition that it was
                in on the Delivery Date, clean and repainted with Tambor
                Supercryl paint (in the color the Premises were received),
                subject to reasonable and acceptable wear and tear.

        B.      In addition, and without derogating from the relief and remedies
                available to the Lessor under the provisions of this Agreement
                and/or the provisions of any law, the Lessee hereby promises
                that should it fail to vacate the Premises as stated in
                sub-Clause A above, it shall pay the Lessor usage fees agreed
                upon and set in advance in the sum of three times the daily
                Lease Fees to which the Lessor is entitled for each day. This
                sum shall be linked to the index from the basic index through to
                the index published on the date the Premises are actually
                vacated.

<PAGE>   28

[Page 15]

        C.      Upon vacating the Premises, the Lessee may take with it all
                movable appliances, excluding permanent systems, that it placed
                in the Premises at its expense and which are able to be
                disassembled (hereinafter: "the Appliances"), provided that the
                Lessee bears the expense of any repair required due to the
                aforementioned disassembly in order to restore the Premises to
                the condition it was in on the Delivery Date as set out in
                sub-Clause A above. Such repairs shall be completed prior to the
                end of the Lease Term or prior to cancelation thereof pursuant
                to this Agreement. If the Lessee fails to disassemble the
                fixtures or any part thereof as set out above, the Lessor shall
                be entitled, at its discretion, to demand the disassembly and
                removal thereof, or, alternatively, to receive title to them
                without any obligation to pay any indemnification and/or refund.
                Should the Lessor demand the removal of such fixtures within 7
                days of the termination or cancelation of the Lease Term, then,
                for the purposes of the payment of usage fees as set out in
                sub-Clause B above, the Lessee shall be deemed not to have
                vacated the Premises for so long as the Lessee does not
                disassemble and remove the Fixtures from the Premises and does
                not return the Premises to the condition that it was in on the
                Delivery Date.

22.     Guaranties

        In guarantee of the performance of all of its undertakings under this
        Agreement, the Lessee shall deposit the following guaranties upon
        signing this Agreement, as a pre-condition for taking possession of the
        Premises:

        A.      An unconditional autonomous bank bond payable at first request,
                and without explanation, in the amount in New Shekels equal to
                $17,452 (seventeen thousand four hundred and fifty two U.S.
                dollars) (hereinafter, "Bond" or "Security"). The Bond shall be
                payable to Kaps-Pharma Ltd. The Bond shall be unconditional,
                endorsable and forfeitable in full or in installments at any
                time. The Bond shall be linked to the consumer price index. The
                validity of the Bond shall begin when this Agreement is signed
                and for the entire Lease Period plus an additional 3 months. It
                shall be renewed from time to time, one month prior to the date
                on which it was to expire, and until the end of the extended
                Lease Period, and with 3 additional months after the end of the
                Extended Lease Period. The Bond shall be stamped as required by
                law. All the expenses pertaining to the issuing of the Bond
                shall be borne only by the Lessee.

        B.      Without derogating from the other provisions of this Agreement,
                the Lessor shall be authorized to exercise the Promissory Note
                in whole or in part, at its election as follows:

                (1)     In the event that the Premises are not vacated on the
                        appointed date, the Lessor shall be authorized to
                        exercise the Bond in whole or in part, in such a way
                        that the monies so paid shall be deemed, inter alia, to
                        be Liquidated Damages, as set out in this Agreement.

<PAGE>   29

[Page 15 continued]

                (2)     Should the Lessee fail to make a payment under this
                        Agreement, the Lessor shall be entitled to exercise the
                        Bond up to the equivalent sum of the payment owed
                        together with linkage adjustments, fines, arrears
                        interest and any other expenses incurred by the Lessor.

                        If non-payment constitutes a fundamental breach of this
                        Agreement, the Lessor shall be entitled to exercise the
                        Security in the equivalent sum of the payment owed or
                        the sum of the Agreed Indemnification under this
                        Agreement, whichever is greater.

                (3)     In the event of damage or loss caused to the Premises
                        and/or the contents thereof for which the Lessee is
                        liable, the Lessor shall be entitled to exercise the
                        Security in the required sum for repair, plus 20%
                        service charge. "Repair" may include replacement.

                (3)     [sic] In order to cover its damage and expenses in any
                        event of a fundamental violation.

                (4)     In order to cover its damage and expenses in any event
                        of a violation that is not a fundamental violation,
                        whether this was not remedied within 7 days from the
                        date a written warning was issued for same by the
                        Lessor.

<PAGE>   30

[Page 16]

        C.      With the payment of Lease Fees for the first quarter, the Lessee
                shall pay the Lessor Lease fees for the last quarter of the
                Lease Period.

                Should the Lessee fail to pay the Lease Fees for a particular
                quarter on time, or does not pay any other sum which it owes
                under the provisions of this Agreement, on time, the Lessor
                shall be entitled, but without obligation, to offset any sum
                paid to it as stated above or any portion thereof, against the
                sum not paid on time, without derogating from any other relief
                or remedy available to the Lessee disposal under this Agreement
                and/or any law.

                If the Lessee pays the Lease Fees and other payments for which
                it is liable under this Agreement as required, such payments
                shall be deemed to have made in full, and complete and final for
                the final quarter of the Lease Term (whatever the Lease Fees may
                be at such time).

        D.      The provision of the Security under this Clause shall not
                constitute a waiver by the Lessor of its right to other relief
                against the Lessee, whether such relief is set out in the body
                of this Agreement or is available to the Lessor under any law.

23.     Customary Ownership - Possession of the Premises by the Lessor

        Without derogating from the validity of the provisions of this
        Agreement, and in addition to the relief and remedies afforded to the
        Lessor under this Agreement and/or any law, it is hereby agreed as
        follows:

        A.      At the end of the Lease Term and/or in any event of the expiry
                or cancelation of this Agreement, whichever is the earlier, the
                Lessor shall be authorized to treat the Premises or any part
                thereof in accordance with customary ownership.

        B.      If the Lessee does not vacate the Premises at the end of the
                Lease Term and/or upon expiration and/or cancelation of this
                Agreement, whichever is earlier, it shall be deemed to be
                trespassing on the Premises and any part thereof, from the date
                on which the Lessee is required to vacate the Premises as
                aforesaid until it is actually vacated. In such an event, the
                Lessor shall be entitled and may prevent the Lessee or any
                person acting on behalf of and/or representing the Lessee from
                entering the Premises, and may make use of the Premises or any
                part thereof. For this purpose, the Lessor shall be entitled to
                and may, inter alia, use reasonable force, change the locks on
                the Premises, disconnect and/or order the disconnection of
                electricity, water, telephone, gas, air conditioning, and
                prevent the Lessee from access and entry, including access and
                entry to the Building.

24.     Year 2000

        The Lessee declares and promises that Y2K and any mishaps that may be
        caused to the Lessee pertaining to Y2K shall not be considered Acts of
        God, and shall not exempt him from any declaration and/or obligation
        whatsoever stipulated herein. In order to remove all ambiguity, any
        obligation of the Lessee of any kind

<PAGE>   31

[P. 16 continued]

        stipulated herein shall continue to be in effect both in the year 2000
        and thereafter as written and stated with no exception.

25.     Miscellaneous

        A.      The headings in this Agreement have been inserted for the sake
                of convenience only and shall not serve for the interpretation
                of the Agreement.

        B.      The Appendices attached to this Agreement constitute an integral
                part of this Agreement.

        C.      If either of the Parties to this Agreement has paid any sum to
                the other Party for which the other Party is liable pursuant the
                provisions of any law or the provisions of this Agreement, after
                providing advance written notice of 7 days, the owing Party
                shall refund the sum so paid to the paying Party, together with
                interest for delay, from the date of payment by the paying Party
                through to the date of actual refund by the owing Party.

<PAGE>   32

[Page 17]

        D.      The Parties elect that Tel Aviv-Jaffa shall be the place of
                exclusive jurisdiction for the purposes of the provisions of
                this Agreement.

        E.      Any alteration or amendment or alteration to this Agreement or
                to any of the terms and conditions hereof shall be in writing
                and signed by both Parties.

        F.      The Lessor's consent to a deviation from any of the conditions
                of this Agreement shall not constitute a precedent and/or shall
                not represent a waiver and shall not be deemed a precedent for
                any similar occurrence.

        G.      The Lessee hereby declares that it has been expressly made aware
                that attorneys Yael Langer and/or Amit Vengrovich and/or Dena
                Dotan and/or Sharon Rosenzweig represent the Lessor only in this
                Agreement and this transaction and that the Lessee has the right
                to be represented by another attorney.

        H.      Stamp fees for this Agreement shall be borne by the Lessee.

        I.      The addresses of the Parties for the purposes of this Agreement
                shall be as set out in the Introduction, and any notice to be
                delivered pursuant to or in connection with this Agreement shall
                be in writing and shall be delivered by hand or by registered
                mail to these addresses. Notwithstanding the foregoing, after
                this Agreement is signed, the address of the Lessee shall be the
                address of the Premises. If a notice is sent by registered mail,
                it shall be deemed to have been received and to be in the
                possession of the receiving party within 72 hours it is sent to
                him.

        J.      This Agreement is a true reflection of the agreement between the
                Parties. No representation and/or obligation not expressed in
                this Agreement shall have any force or effect. Any
                representation and/or agreement and/or obligation prior to this
                Agreement is hereby nullified.

In witness whereof, we have signed hereunder:

Signature & stamp                           Signature & stamp
[Illegible Signature]                       [Illegible Signature]
Kaps-Pharma Ltd.                            Jolt Ltd.

<PAGE>   33

                            Certification of Attorney

        As attorney for Jolt Ltd., Company no. 511573594 (the Lessee), I, the
        undersigned, Attorney ___________, confirm that Mr. __________ signed
        this Agreement on behalf of the Lessee, and that such person is
        authorized by the Lessee to sign this Agreement, and that its signature
        shall bind the Lessee in respect of every matter connected with this
        Agreement.

           Attorney:  ________________      Date: _________
           Signature:  __________________

<PAGE>   34

                               LIST OF APPENDICES

1.  Appendix A: Drawing of Premises

2.  Appendix B: Premises Technical Specifications

3.  Appendix C: Technical Specifications of Public Spaces

4.  Appendix D: Canceled

5.  Appendix E: Formula for calculation of air conditioning electricity
    consumption in the Premises

6.  Appendix F: Insurance Certificate for Premises

<PAGE>   35

APPENDIX A

                               DRAWING OF PREMISES

<PAGE>   36

[P. 20]

APPENDIX B

                      TECHNICAL SPECIFICATIONS FOR PREMISES

1.      FINAL WORK

    -   Standard carpeting glued onto smooth concrete including cleaning at a
        ratio of 1:1 at $18/m(2)

        or

    -   Heavy Duty PVC 2m(2) of one color at a cost of $18/m(2) including
        cleaning and gluing

    -   For addition to anti-static PVC5x10(7) with an additional $5/m(2)
        required

    -   Plaster partitionswith monochromes, including 2" acoustic insulation
        (packed at 60 kg/m(2) at a width of 10 cm(2) from floor to ceiling. For
        each 1.7m(2) of floor space, 1 m(2) plaster partitions.

        Green plaster boards and 2" fiberglass insulation will be installed in
        wet areas, and in those areas where fire protection is needed, red
        plaster boards and 2" fiberglass insulation will be installed.

    -   Honeycomb face doors with 60% filler including wood frame, covered with
        white decoral and/or tree image. Fire doors to be installed where law
        requires.

    -   Paint - Painting of ceilings with polyside, painting of walls with
        supercryl.

    -   Acoustic ceilings to be installed according to the architect's plan wit
        variable height, with girders. Ceiling will be mineral with dimensions
        of 60/60 cm(2) using Brock or Georgian models.

    -   Dreikeep double glass windows and zylon in the interior.

2.      Plumbing

        A kitchenette will be installed that includes:

        Lower and upper kitchen cupboard of total length up to 4 ma.

        The cupboard will be made from sandwich board covered in formica on
        external section according to the choice of the architect.

        Cold water faucet

<PAGE>   37

[P. 20 continued]

        60 liter boiler added (additional 1,000 New Shekels)

        2 meter surface area of sink, including sink and floral faucet.

        Ceramic covering on marble surface at height of 60 cm(2) and length of 2
        meters, according to choice of architect (ceramic at base cost of 60 New
        Shekels/M(2))

3.      Electricity

        Lighting fixtures in rooms/offices to be installed at a lighting level
        of 600 locks.

        The lighting fixture models will be florescent 2x36W inside the ceiling,
        including reflector and farbol louver.

        In the corridor lighting fixtures and/or P.L. assembled at a strength of
        400 locks.

        In the event of the request of the person making the order for
        additional lighting in the rooms, in addition to the specifications, a
        charge of $10 per m(2) will be added

<PAGE>   38

[Page 21]

        for every 100 locks.

        In the event of special lighting fixtures, the price will be determined
        based on the supplier's price list plus 17% head contractor

        Fuse box will be provided to the tenant, the size of the connection will
        be 0.25 amper per m(2)

        Emergency and fire/smoke alarm according to office standards.

        Electrical outlets and telephone

        Outlets will be installed in the offices for each 6 m(2) - regular
        outled and telephone; in open spaces/corridors a telephone jack and
        regular outlet at every 12 m(2).

        Computer communication - bases installed only

In the event of unusual requests beyond what is provided in the general
specifications, a tender of contractor Moshe Sharon & Co. as the basis of
contractor offers for additions

3.1     Telephony and Combined Communications

        In exchange for consideration in addition to the price to be detailed
        hereinafter - a combined communications and telephony infrastructure
        through a subsidiary of Red-Binat, Binat Applications.

        There are essentially two options to install this infrastructure: Option
        A - STP and Option B - UTP

        For double telephone and computer communications point pursuant to
        attached in the STP option, for each unit an addition of $215 per unit.

        For each multiple telephone and computer communications center according
        to the characterization attached hereto as a UTP option. For each unit
        an additional $175 will be charged.

        This price includes an accessory communications cabinet, supply and
        installation of a double paired cable including representation of
        telephony.

4.      Air Conditioning

        Central water cooling device supplies refrigerated water two a pair of
        pipes to the residents by central pumps. The water serves for cooling
        only. Heating made by

<PAGE>   39

[Page 21 continued]

        electric heating structures connected to a private meter.

        Fresh air will be supplied from a central unit on the roof. In air
        filtered and heated by public electricity in the winter. In the summer,
        filtered air only. The quantity of fresh air 4.5-5 cubic millimeters per
        m(2) of floor.

        In air conditioned spaces there will be an accordion coil units in sizes
        of 400CFM-2000CFM. For each unit there will be one ON-OFF control only
        (one thermostat per unit).

        The units will serve several rooms in an area of not less than 35 m(2)
        with similar air conditioning capacity. In the event of one unit for
        several rooms, the unit will be located outside of the rooms and
        climatize the rooms using a tin channel, and the thermostat will be
        located in the foyer with an emphasis on recycled air or in a typical
        room.

        For a room of an area not less than 25 m(2) - one On-Off control
        (thermostat).

<PAGE>   40

Appendix C

                   Technical Specifications for Public Spaces

1.      Entrance lobby to the building with marble floor, double space, acoustic
        ceiling and reception desk manned 24 hours a day.

2.      Monitoring system and central control that includes control of all the
        entries and stairways in the building. Computerized parking control,
        closed-circuit telephone systems, intercom, fire and burglar monitoring
        and alarm system.

3.      Central dining room (milk and meat).

4.      Partially paved roof, with access from elevator used for events.

5.      Open roof patios finished with granolite.

6.      Three service nuclei covered with screen walls, two moving transparent
        elevators connecting parking and the roof.

7.      Three bathroom areas.

8.      Kitchenette on each floor including cupboards and sink, ceramic or
        marble decoration on cupboards.

9.      Ceramic or marble covering in bathrooms up to height of 2.0 meters.

10.     Marble finish floor.

11.     Honeycomb ceiling, including bathtubs, lighting for florescent fixtures.

12.     Stone cut external wall finishing covering

13.     Central air conditioning - energy center (cooling by chillers) and
        capacity ma preparation on each floor.

14.     Use for flooring on each floor - 500 kg/m(2)

15.     Extinguishers on each floor per fire protection requirements.

16.     Parking installed with smooth concrete floor finish.

17.     Central garbage room.

<PAGE>   41

[Page 22 continued]

18.     Area for assembly and disassembly of loads.

19.     Two air raid shelters.

20.     Energy center

21.     Emergency generator

<PAGE>   42

Appendix E

        Formula for calculating air conditioning electricity consumption in
        Premises

        1.      The months of summer operation are May to November - seven
                months.

        2.      System operation hours: S-Th 7 am to 7 pm. On Friday, 7 am to 2
                pm.

        3.      Costs of air conditioning offices per square meter per day:
                0.378 KwH

        4.      Cost of air conditioning production rooms and high spaces per
                meter, 0.4347 KwH.

        5.      Charges per KwH change pursuant to the charge of electric
                company in [illegible] calculations. Following is the
                [illegible] charge as of 10/7/98.

        6.      A company interested in operating air conditioning during winter
                months and nights (December to April) will be charged at the air
                conditioning charge per hour according to the following formula:

                                            area
                                            ----
                                            55 KW + 0.9 X 50

        7.      55 KwH is the cost to operate the spinning pump. In the event
                that there is demand for the air conditioning of more than one
                company the expense will be divided among the countries.

        8.      In addition to the regular air conditioning rate, the
                manufacturing companies that have systems that consume large
                amounts of energy (such as Alam Co.) will also be charged for
                energy consumption of the specific systems that discharge heat.

        9.      The formulae for charged energy consumption were made by an air
                conditioning consultant in response to our request, and
                according to data that we provided him with (the aforementioned
                charges are applicable throughout Israel).

<PAGE>   43

[Page 24]

Appendix F

                             Insurance Certification

To:

Kaps-Pharma, Ltd.
8 Hanechoshet, Tel Aviv

Re: Insurance Certification pursuant to the Lease Agreement between Kaps Pharma
    Ltd. and __________ (hereinafter, "the Lessee") from (date):__________
    (hereinafter, ________ Agreement")

We, the undersigned hereby certify that we, the insurance company of the Lessee,
and that starting ________ on we issued all the insurance policies indicated in
Clause 17 of the Agreement in the name of the Lessee pursuant to the terms
indicated therein.

Signature:___________________________

By:__________________________________

Date:________________________________<PAGE>   1

                                                                 EXHIBIT 10.12

LETTER "O"

[The document has illegible signature and ink stamps on every page for N. Base
Communications Ltd. and Mirobin, Ltd.]

                           UNPROTECTED LEASE AGREEMENT

                DRAWN UP AND SIGNED IN HAIFA ON DECEMBER 20, 1995

                                 BY AND BETWEEN

                  MIROBIN, LTD. PRIVATE COMPANY NO. 51-170019-7
                   YOKNEAM, INDUSTRIAL ZONE, MIROBIN BUILDING

                              HEREINAFTER, "LESSOR"
                           AS PARTY OF THE FIRST PART

                                       AND

                           N. BASE COMMUNICATIONS LTD.
                          PRIVATE COMPANY NO. 51-213490
                   YOKNEAM, INDUSTRIAL ZONE, MIROBIN BUILDING

                              HEREINAFTER, "LESSEE"
                           AS PARTY OF THE SECOND PART

PART A - DEFINITIONS

A. Premises: Possession rights and lease of space of approximately 1,814 m(2) on
the first floor of a building in Yokneam, Industrial Zone, Mirobin Building
(hereinafter, "Premises").

B. Lease Period: The Lessor leases the Premises to the Lessee from [crossed out:
1/16/96] 1/23/96 to 1/15/2003 (Clause 4).

C. Start Date of Lease: [crossed out: 1/16/96] 1/23/96.

D. Purpose of Lease: Hi-Tech plants.

The Lessee must use the Premises only for the objective indicated above, and for
no other objective whatsoever, without the advance written agreement of the
Lessor.

E.  Monthly Lease Fees: 33,740 New Shekels, linked as specified herein under:

F. Lease Fees for the Period: 2,834,160 New Shekels, linked as specified herein
under.

<PAGE>   2

   The annual Lease Fees shall be paid in six-month payments in the amount of
202,440 New Shekels. All sums are linked as specified herein under, and in
advance once every six months.

G. Linkage: Linkage to the Consumer Price Index as defined in Clause 6 of this
Agreement.

H. Payment for Requirement of Clause 20.2: $1,000 dollars linked per the
exchange rate for each late day of return of possession.

I. Load Permitted load weight on the floor of the Premises is 1,000 kg. per m(2)
subject to the terms of the second M Certificate of 8/20/95 presented and signed
by the Parties.

J. Electricity Connection Supplier of up to 300 amper (Clause 12.3) (subject to
the existing certification).

K. Linked Bank Bond, and the aforementioned linkage in the amount of [crossed
out: 100,000] $70,000 dollars (Clause 18.1).

<PAGE>   3

                                        2

WHEREAS the Lessor is the registered owner and/or person entitled to be
registered as ownership/lease right holder in block 11495 in lot [crossed out:
103/2] 11, office 2 (hereinafter, "the property");

WHEREAS the Lessor put an industrial structure on the property (hereinafter,
"the structure"), in which the Premises are included as defined in Clause 2 as
follows;

WHEREAS the Lessee declares that it shall operate a certified plant on the
Premises, and wishes to lease a certain part of the structure described herein
under from the Lessor under a lease unprotected according to the Tenant
Protection Act and regulations;

WHEREAS the Lessor wishes to lease to the Lessee so it can operate a certified
plant on the Premises, a certain part of the structure described herein under
through an unprotected lease;

WHEREAS the Parties wish to define their relationship, rights and mutual
obligations pursuant and specified herein under;

THEREFORE, THE PARTIES HEREBY STIPULATE AND AGREE AS FOLLOWS:

INTRODUCTION

1.1 The establishment and declarations herein constitute an integral part of the
terms of the Agreement itself, and they are to be considered as if they were
explicitly included therein.

1.2 The clause headings of this Agreement are for convenience purposes only, and
are not part of the Agreement.

1.3 All the appendices and supplements of this Agreement constitute an integral
part of the Agreement.

1.4 With the signing of this Agreement, all declarations and/or obligations
and/or any presentation of the Parties made by them prior to the signature of
this Agreement are fundamentally void.

2. Description of the Premises

2.1 A space of 1,814 m(2) on the first floor of the structure in the industrial
yards of Yokneam Elit (hereinafter, "the Premises"). An illustration of the
Premises marked in the red box shall be attached as Appendix A to this
Agreement.

<PAGE>   4

2.2 The Lessor promises to complete construction of the Premises within 2 months
from the date this Agreement is signed, pursuant to the Technical Specifications
to be attached as Appendix B to this Agreement.

3. USE OF THE PREMISES

3.1 According to this Agreement, during the Lease Period, the Premises shall be
used for the purpose of the objective specified in Part A, Clause 4.

       The Lessee promises not to use the Premises and/or any part thereof for
any other purpose, except for the aforementioned purpose, without advance
written certification of the Lessor.

<PAGE>   5

                                        3

3.2 If the Lessee ceases to make the payments of this Agreement for a period of
more than three consecutive months, the Lessor shall be permitted to consider
this action or omission as if the Lessee were waiving his rights pursuant to
this Agreement. The Lessee shall be required (if the Lessor requires same) to
vacate the Premises within three months of the written warning of the Lessor,
without the matter derogating from the rest of the payments that the Lessee is
obligated per this Agreement, and lease fees until the end of the Lease Period.

3.3 Without derogating from any other right held by the Lessor, the Lessee,
within three months as specified in the foregoing sub-clause (3.2) shall be
permitted to take possession of the Premises after notifying the Lessee in
writing about the date of possession.

3.4.1 In the event of lawful possession by the Lessor as specified herein, the
Lessee hereby grants irrevocable power of attorney to the Lessor to seize or
remove property, equipment and items of the Lessee, hereinafter, "the articles,"
in the presence of two witnesses who shall certify the list of items with their
signatures, and then to store them either at the Premises or elsewhere at the
expense of the Lessee, without the Lessor being held liable at all for those
items. Similarly, the Lessor shall not be liable for any damage done to the
Lessee as a result of this action.

3.4.2 For purposes of Clause 3.2 and Clause 3.4.1, the Lessee grants irrevocable
power of attorney to the Lessor to sell the items at his discretion, and to use
the proceeds to cover expenses involved in moving the items, storing them,
insuring and selling them, and for the payment of any amount owed by the Lessee
to the Lessor pursuant to this Agreement.

3.5 In order to remove any ambiguity, it is hereby declared that possession of
the articles of the Lessee at the Premises shall not derogate from the ability
of the Lessor to act pursuant to Clause 3 herein of the sub-Clauses therein.

4.  LEASING PERIOD

4.1 The Lease Period is for 7 years, starting from [printed: 1/16/96]
[handwritten: 1/23/96] (hereinafter, "Lease Start Date"), ending 1/15/2003 ["2"
replaces 15 in handwriting] (hereinafter, "Lease Termination Date") pursuant to
the conditions specified herein. The period from the Lease Start Date to the
Lease Termination Date shall be called hereinafter "Lease Period."

5.  SUITABILITY

5.1 Subject to the declaration of the Lessor that nothing is known about any
hidden defect, and the Lessee declares that it saw and physically and legally
examined the Premises. The Lessee agrees to accept the Premises in its current
state, and acceptance of possession of the Premises shall constitute
certification and/or agreement and/or

<PAGE>   6

acknowledgement by the Lessee that it has seen, checked and examined the
Premises, and found it in good and proper condition, suitable for use, complies
with his requirements, and corresponds to his goals, subject to undertaking
indicated in Clause 5.2.

5.2 Despite the stipulations in Clause 5.1, if on the day of transfer of
possession there is still additional work that needs to be completed, this shall
be recorded in the Transfer Minutes, and it shall not in any way cancel the
terms of the foregoing Clause 5.1.

<PAGE>   7

                                        4

6. LEASE FEES

6.1 The Lessee shall pay the Lessor the principal amount of the lease fees as
specified in Part A, Clause 5, 6. Linkage adjustments shall be added to the
principal amount as defined below:

       INDEX: Means the Consumer Price Index, including fruits and vegetables,
published by the Central Bureau of Statistics. If the index base changes, or its
calculation and evaluation method changes, or if it is published by another
entity, the Lessor shall make the calculation of the increase of the index for
the purposes of this Clause, taking into consideration the aforementioned
changes.

       BASE INDEX: The index published on 11/15/95.

       NEW INDEX: The last index published from time to time before the date of
payment made by the Lessee, as the Lessee was obligated to pay in this
Agreement.

       LINKAGE ADJUSTMENTS: The adjustment between the new index and the base
index, divided by the base index and multiplied by the principal of the Lease
Fees.

6.2 The principal of the Lease Fees plus the linkage adjustments shall be
referred to hereinafter as "Lease Fees."

6.3 Lease fees plus VAT that is applicable on the date of actual payment shall
be paid for each six-month period in advance [words "no later than" crossed out]
on the 16th of the months of January and July each year.

[next 4 lines crossed out]

6.4 In order to remove any ambiguity, it is hereby clarified that the Lessee
shall pay all the Lease Fees for the Lease Period whether or not the Lessee uses
the Premises.

6.5 The payment of the Lease Fees or any other payment required of the Lessee
pursuant to this agreement is to be made in full and on time, that is, a
fundamental condition of this Agreement. Non-payment of any payment in full and
on time shall constitute a fundamental breach of the Agreement by the Lessee,
and the Lessor shall acquire all relief granted the Lessor pursuant to this
Agreement and/or any law, including the right to demand vacating of the Premises
by the Lessee immediately upon overdue payment if the Lessee does not correct
this breach within 10 days of receiving a written warning about same.

6.6 Without derogating from the rights of the Lessor to demand the Premises be
vacated, and of any other relief, if the Lessee does not pay the Lessor the
Lease Fees and/or any other payment it is required to pay on time pursuant to
this Agreement, this sum shall carry arrears interest at a rate that is in
effect at that time at Israel Discount Bank, Ltd.

<PAGE>   8

regarding deviations from an authorized credit line (hereinafter, "Arrears
Interest"), plus linkage pursuant to the terms of this Agreement.

6.8 In order to facilitate collection, the Lessee shall sign an authorization
form for the bank according to the format attached hereto (hereinafter,
"Authorization Form"). All amounts appearing in this Clause shall be paid using
an Authorization Form through a debit to the bank account of the Lessee. As long
as the Lessee does not vacate the Premises, the Lessee may not change or cancel
the Authorization Form without written approval from the Lessor.

6.9 Without derogating from the terms of the aforementioned sub-Clause 6.8 or
the Authorization Form, the Lessee shall submit 14 promissory notes to the
Lessor signed by the Lessee and guarantors approved by the Lessor. The sums of
the promissory notes, and their due dates shall be the same as those of the
Lease Fees plus VAT. Delivery of the promissory notes shall not constitute
payment of the principal amounts of the Lease Fees. Only with full payment of
the Lease Fees pursuant to this Agreement shall the appropriate promissory notes
constitute payment. The Lessee releases the Lessor from debts [illegible] in the
promissory note.

<PAGE>   9

                                        5

6.10 The Lessor promises to make use of the promissory notes only if no payment
is made by the Lessee pursuant to the Authorization Form. The Lessee hereby
grants the Lessor irrevocable power of attorney to make use of the promissory
notes in the aforementioned event(s). After making the payments guaranteed by
the promissory notes, pursuant to this Agreement, the Lessor shall return to the
Lessee those promissory notes that were paid together with the linkage
adjustments.

6.11 Powers of Attorney granted by the Lessee to the Lessor as specified above
are irrevocable and may not be changed insofar as the rights of the Lessor are
related thereto.

6.12 In addition to the Lease Fees, the Lessee shall pay VAT at a rate
established by law on the day of payment.

6.13 Similarly, the Lessee shall pay the linkage adjustments for each payment
within 3 days from the payment date if the bank did not do this per the
Authorization Form.

7. TAXES, REQUIRED PAYMENTS AND EXPENSES

7.1 The Lessor shall pay property tax for the Premises, as well as any
government tax required to be paid and/or to be required to be paid by the
property owners.

7.2 The Lessee shall be liable for, and shall make, the following payments for
the Premises insofar as they pertain to the period from the beginning of the
Lease Period to the end of the Lease Period, and/or until the date on which this
Agreement is considered to have terminated, whichever date is later.

       7.2.1 All taxes, fees and obligatory payments required of possessors of
property pursuant to law, including municipals fees to be paid to the Yokneam
local council.

       7.2.2 All joint expenses, including, and without derogating from the
foregoing, water, electricity and gas use fees, as well as telephone usage and
maintenance charges.

       7.2.3 Cleaning and maintenance expenses for the joint property at the
structure pursuant to the relationship between the Premises and the space of the
structure.

       7.2.4 The pro-rata part of the joint building maintenance expenses, the
importance of which is accepted by the Parties, such as asphalting and
plastering, etc., and expenses of a special nature, shall be arranged in advance
in writing.

       7.2.5 If a joint property maintenance company is established, the Lessee
shall be responsible for his share of any sum that the maintenance company
possessing and/or that shall possess the joint property of the structures (and
that shall be appointed by the Lessor). [sic - the sentence appears to be
missing a verb].

<PAGE>   10

7.3 In the event penalties are imposed on the Lessor by virtue of the actions
and/or omission of the Lessee, the Lessee shall be required to indemnify the
Lessor forthwith for same, plus the legal costs of the Lessor.

7.4 In the event that the Lessee does not make a required payment pursuant to
this Agreement, the Lessor shall be permitted, though not required, to make the
payment on his behalf, and the Lessee shall be required to repay that sum to the
Lessor as soon as it receives the receipt, except for the expenses that are
linked per the terms of this Agreement, plus arrears interest as specified
herein.

<PAGE>   11

                                        6

8. INSURANCE

8.1 At its own expense, the Lessee promises to insure the Premises with
comprehensive insurance (including third-party insurance, against all risks,
including fire, explosion, earthquake, terrorism, acts of war, etc. in a real
sum of the Premises, when the beneficiary is the Lessor. The insurance shall
include the Lessor Beneficiary. The Lessee must accurately comply with all the
terms of the policy). [sic] The Lessor has the right to take out various
insurance policies for the Premises in his favor, as long as this does not
derogate from the obligation of the Lessee to insure the Premises and its
contents.

8.2 The policy shall cover all risks in the regular industrial structure, as
well as all additional special risks originating from the production process and
storage of substances as effectuated on the Premises by the Lessee.

8.3 Without derogating from the foregoing, the policy shall cover the following
risks: fire, lightening, explosion, aircraft impact, supersonic boom,
disturbances, strikes, intentional damage, break-in, earthquake, flood, storm,
hurricane, water damage, and electric shorts and overheating.

8.4 The beneficiary and/or policy beneficiary shall be the Lessor.

8.5 The Lessee promises to submit a copy of the insurance policy to the Lessor
until one-month prior to its entry into the Premises.

8.6 In the event the Lessee does not make the aforementioned insurance payments,
the Lessor shall have the right, though not the obligation, to make the
aforementioned insurance payments at the expense of the Lessee. The Lessee must
return them to the Lessor immediately upon presentation of the payment receipts.

8.7 The Lessee shall have the right to insure himself with additional insurance
for which the Lessee is the insurance policy beneficiary.

9. TRANSFER OF THE PREMISES AND/OR LEASE BY THE LESSOR

The Lessor shall have the right to transfer the Premises, including rights of
the Lessor pursuant to this Agreement, in full or in part, to any person and/or
entity, without having to obtain the agreement of the Lessee, and under the
conditions that the rights of the Lessee are not infringed upon pursuant to this
Agreement.

The Lessee promises to sign any document it requires, if it requires same,
pertaining to transferring to a third-party the rights of the Lessor to the
Premises.

<PAGE>   12

10. OBLIGATIONS OF THE LESSEE

The Lessee promises:

10.1 Not to transfer possession and/or use of the Premises or part thereof,
and/or not to lease the Premises or part thereof under a sub-lease or other
lease, assign and/or mortgage and/or in any other manner transfer his right to
the Premises or part thereof, unless it receives an advance written approval
from the Lessor.

10.2 To keep the Premises in good condition, keep the Premises and surroundings
in clean condition, including, and without derogating the foregoing, and to
arrange the removal of industrial and/or other waste from the Premises and
surroundings.

10.3 To permit the Lessor or its proxy to enter the Premises at any acceptable
time through advance arrangement in order to examine the conditions of the
Premises and/or to show the Premises to other persons or purchasers and/or to
carry out repairs on the Premises.

<PAGE>   13

                                        7

In order to remove all ambiguity, it is hereby clarified that the Lessor is not
required to perform any repairs whatsoever or any other work in the Premises.

10.4 To carry out and fulfill all terms, laws and supporting legislation,
regulations, decrees and municipal building plans of any authorized agency that
are applicable upon the Premises and/or pertaining to use of the Premises.

10.5 To use the Premises in a way that does not cause disturbance and/or
discomfort to neighbors, including the Lessee promising not to cause loud noise,
smells and shocks that may disturb neighboring plants.

       Any time the terms of this sub-Clause are breached, in addition to any
other right held by the Lessor pursuant to this Agreement, and/or pursuant to
the provisions of law, the Lessor shall have the right to undertake any
examination and/or measurement and./or repair and/or any other action that the
Lessor deems necessary to restore the conditions to their previous state and/or
to remove the disturbance. All expenses caused thereby to the Lessor shall be
applied to, and paid by, the Lessee immediately and/or to whom the Lessor shall
direct.

       The Lessee hereby promises to repay the Lessor any sum the Lessor may
have expended pursuant to this Clause, plus arrears interest from the date the
sums are expended until their repayment by the Lessee. Receipts of the Lessor
pertaining to the amount of these payments and other expenses specified herein
shall constitute conclusive evidence, and the Lessee promises to pay them
immediately at first request.

10.6 Not to hang and/or stand any signs or marks on parts of the Lessor, or on
any other part of the structure and/or roof without the written agreement of the
Lessor, who shall be permitted to determine the size of signs and the space
assigned to them.

The Lessor shall be permitted to remove any sign at the expense of the Lessee
that is installed by the Lessee in violation of the terms of this Clause.

The Lessee declares hereby that it does not oppose the setting up of signs on
the roof of the structure by the Lessor and/or by any third-party with the
permission of the Lessor. Similarly, the Lessor is permitted to attach to the
walls of the structure signs including the name and logo of the Lessor, as well
as other information pertaining to the Lessor.

10.7 The Lessee shall not place equipment on the Premises that may cause damage
to the Premises, and shall not load on the floor of the Premises more than its
load intended and specified in Clause I of the definitions.

10.8 The Lessee shall not be permitted to make any use of the sidewalks, streets
and any public space outside the Premises except for an objective for which
these public spaces are intended.

<PAGE>   14

11. OBTAINING PERMITS

11.1 The Lessee shall make sure to obtain all required permits pursuant to law
for the management of its business.

11.2 The Lessee hereby declares that it is aware that the Lessor shall not be
held liable at all for obtaining any permits whatsoever required for managing
the business of the Lessee.

11.3 If for any reason whatsoever the Lessee did not obtain a permit to manage
his business, this does not exempt the Lessee from payment of Lease Fees until
the termination of the Lease pursuant to this Agreement.

12. ELECTRICITY AND WATER

12.1 The Lessee hereby certifies that the supply of electricity and/or water to
the Premises is conditional upon an arrangement between itself and the electric
company and local authority, as the case may be.

<PAGE>   15

                                        8

12.2 The Lessee declares that non-provision of electricity and/or water to the
Premises does not derogate from his liability pursuant to this Agreement if the
reason for same is not dependent on the Lessor.

12.3 The Lessor declares that he will connect tri-phase electricity per the
power indicated in Clause 10. The Lessee shall not have the right to contact the
Israel Electric Company and request an increase in the electric power to the
Premises unless the Lessee received written approval of the Lessor. The Lessor
shall provide his written approval subject to considering consumption of the
Lessee, and all other lessees in the building where the Lessee is located.

12.4 The Parties shall check and record the condition of the Premises and water
and electricity meters on the dates the Lessee enters and departs the Premises.

MAINTENANCE OF THE PREMISES AND REPAIRS

13.1 The Parties agree that the Lessor shall be responsible, at its own expense,
for repairing only damage caused to the outside walls and roof of the structure,
except for damage to plaster and paint.

13.2 The Lessee shall be responsible, at its own expense, for the repair and
maintenance of the other parts of the structure not mentioned in the
aforementioned Sub-Clause 13.1, including joint property as defined in Clause 15
hereinafter, including appliances, electrical, water and plumbing systems,
sanitary facilities, fences and gates. The Lessee shall also be responsible, at
its own expense, for repairs to the Premises that are not the result of
reasonable wear and tear. Wear and tear caused by the use of the Premises by the
Lessee shall not constitute reasonable wear and tear, and the Lessee shall be
obligated to repair any damage caused to the Premises as a result therefrom. In
any case, the Lessee shall repair any damage caused to the Premises when the
value of such damage does not exceed $100 dollars for the said repair.

13.3 Within a reasonable period, the Lessor shall repair those parts of the
Premises that the Lessor is required to maintain, and subject to the foregoing
sub-Clauses 13.1 and 13.2, unless the cause of damage to those parts of the
Premises originates from reasonable wear and tear, subject to the terms of
sub-Clause 13.4.

13.4 The Lessee shall notify the Lessor about any damage caused to parts of the
Premises, as specified in the foregoing sub-Clause 13.1 within a reasonable
time, and no later than 48 hours from when they are discovered. If the Lessee
does not notify the Lessor as stated, the Lessee shall bear all additional
expenses incurred by the Lessor pursuant to non-notification to the Lessor by
the deadline. In addition to the foregoing, the Lessee promises to notify the
Company within 48 hours of any damage caused to the Premises, or any part
thereof, which is not specified in the foregoing sub-Clause 13.1,

<PAGE>   16

whether such damage is caused by the Lessee or by any other factor (hereinafter,
"the event"). If the Lessee does not report the event within the required
one-month, the obligation for repairing damage to parts of the Premises
indicated in the foregoing sub-Clause 13.1 shall be borne by the Lessee.

13.5 The Lessee promises to use the Premises in a cautious and correct manner,
and to prevent any degradation or damage thereto. Any time any damage or
degradation is caused to the Premises, or any part related thereto by the Lessee
and/or the employees and/or guests and/or anyone else entering the Premises with
permission of the Lessee to undertake repairs, the Lessee promises to
immediately repair such damage or degradation at its own expense. In the event
the Lessee does not fulfill the terms of this Clause, the Lessor shall have the
right, but without affecting his right to any other remedy or relief, to demand
from the Lessee either during or after the Lease Period the cost or assessed
cost of the repairs, or the assessed expenses for repairing any damage. This
applies even before the Lessor effectuates the repairs or repairs the damage.

<PAGE>   17

                                        9

14. ALTERATIONS TO THE PREMISES

14.1 The Lessee promises not to alter the Premises in any way whatsoever, and
not to add anything thereto or derogate therefrom without receiving advance
written permission from the Lessor.

14.2 Any addition, alteration or improvement made to the Premises, and
improvements and alterations to the walls and/or ceilings and/or floor of the
Premises, and to any other part of the Premises, shall constitute a part of the
Premises, and shall belong to the Lessor. The Lessee shall be required to leave
them in the Premises at the end of the Lease Period, and may not require the
Lessor to participate for same. In any case, all the foregoing shall not
constitute key money payment.

14.3 Notwithstanding the terms of sub-Clause 14.2, at any time before the end of
the Lease Period, the Lessor shall have the right to require the Lessee to
remove and/or clear away the alterations and/or additions and/or improvements
from the Premises or part thereof. In such case, the Lessee shall be required to
do so at its own expense, and to restore the condition of the Premises to its
former condition as it was on the first day of the Lease. If the Lessee refuses
to do so, the Lessor shall have the right to do it at the expense of the Lessee.
If the Lessee does not pay the Lessor for performing these activities within 7
days from when it receives the written request, then the Lessor shall be
permitted to sue for payment, plus arrears interest.

14.4 The Lessee shall pay the Lessor Lease Fees pursuant to this Agreement, even
if the Lease Period shall have expired for the time required to restore the
condition of the Premises to their former condition.

15. JOINT BATHROOM FACILITIES

15.1 The Lessee is permitted to use the bathroom facilities and other joint
installations, if such exist, (hereinafter, "joint property") in the Building.

15.2 Together with the other lessees in the Building, the Lessee shall be liable
for cleaning and maintenance costs of the joint property of the Building,
including the air-raid shelter, garden, lighting, water supply, plumbing and
drainage.

15.3 The Lessee shall bear the costs pursuant to the foregoing sub-Clause 15.2
based on the ratio between the space of the leased Premises and the total space
of all units in the Building.

15.4 The Lessor shall have the right, according to its exclusive discretion, to
carry out the activities under Clause 15 and its sub-Clauses, or part thereof,
by itself or through

<PAGE>   18

another party, so long as the Lessor notifies the Lessee in writing of its
intentions 30 days in advance.

15.5 If the Lessor notified the Lessee of its intention to provide services as
stated in sub-Clause 15.4, the Lessee shall pay the Lessor any amount paid by
the Lessor for supply of such services, subject to the division indicated in
this Clause.

15.6 All rules applying to any amount owed by the Lessee pursuant to this Clause
shall be considered under the same rules as Lease Fees in every way.

<PAGE>   19

                                       10

16. LIABILITY TOWARD THIRD PARTIES

16.1 The Lessee is liable toward any third-party for any damage of any type or
kind whatsoever, for whatever reason whatsoever, and indicated hereinafter,
without there being a closed list - damage caused to any person and/or property
whatsoever, including, but not derogating from the foregoing, visitors at the
Premises, employees of the Lessee, and any person found within the boundaries of
the Premises, originating from the condition of the Premises, and/or equipment
installed therein, and/or work, business, activity or omission that may occur
there, and/or from the conduct of the Lessee and/or its employees, and/or
clients and/or suppliers and/or service provider found within the boundaries of
the Premises or the nearby environment, in the service and/or with the
permission of the Lessee, whether or not such person is at the Premises with
permission, and whether or not incidentally or otherwise.

16.2 Without derogating from the terms of the foregoing sub-Clause 16.1, the
Lessee promises to take all steps to cancel any demand and/or suit against the
Lessor for any damage as stated in the foregoing sub-Clause 16.1, and to
indemnify the Lessor immediately upon first request of the Lessor in the amount
of any funds that the Lessor is forced to pay under a demand and/or suit, and
for any other expenses appertaining thereto.

17. NON-APPLICABILITY OF PROTECTED TENANT LAWS

17.1 The Parties state that they are aware that pursuant to the Protected Tenant
Act (combined version), 1972 (hereinafter, "the Law"), the Lessee shall not be
protected pursuant to the Law and/or any other rule, with all regulations and/or
its entirety. The protection of the Law shall not apply to this Lease.

17.2 The Lessee hereby explicitly declares that it did not pay and/or give any
key money for the Premises and/or appertaining thereto. Therefore the protection
of the Law shall not apply to the Premises and/or for the Premises, and/or in
relation to the Lease between the Parties, and, inter alias, pursuant to the
terms of the Law.

18. BANK GUARANTY

18.1 In order to guarantee all of the obligations of the Lessee pursuant to this
Agreement including, and without derogating from the rest of the obligations of
the Lessee, that the Premises are vacated by the Lessee on time; that all damage
caused to the Premises is paid for; and that Lease Fees and other payments
incumbent on the Lessee pursuant to this Agreement are paid. The Lessee shall
deposit a bank bond for a period of up to 120 days after the end of the Lease
Period with Attorney Matari, hereinafter, "the Trustee," for purposes of this
deposit at the time this Agreement is signed.

<PAGE>   20

18.2 The Trustee shall deliver the said bank bond to the Lessor if the Lessee
does not fulfill any obligation pursuant to this Agreement, including if the
Lessee does not vacate the Premises on time, and/or does not make any payment of
Lease Fees and payments incumbent upon the Lessee pursuant to this Agreement, as
well as if the Lessee does not pay for the damage caused to the Premises.

18.3 The Lessee promises to present the signature of its managers on the bank
bond, as specified in Clause 28 herein.

19. REMEDIES

19.1 Without derogating from the obligations of the Lessee pursuant to this
Agreement, and with the right of the Lessor to obtain relief and/or other
remedy, subject to the choice of the Lessor to cancel it, this Agreement shall
be considered cancelled, shall be terminated immediately, the right of the
Lessee to retain the Premises shall terminate and the Lessor shall have the
right to demand that the Premises be immediately vacated by the Lessee in the
following cases:

<PAGE>   21

                                       11

       19.1.1 If the Lessee violates or does not fulfill any term or obligation
included herein.

       19.1.2 If the Lessee is declared to be bankrupt and/or a Receiver is
appointed over its assets, or if a Liquidator is appointed over the Lessee.

       19.1.3 If shareholders transferred control of their shares in the Company
of the Lessee without receiving advance written approval from the Lessor for the
foregoing transfer. After appropriate advance written contact, the Lessor may
not oppose such transfer if it is reasonable to know the Trustee, and is not
negatively affected by securities and obligations of the Lessee, as long as the
guarantors continue to be guarantors for the obligations of the Lessee and the
guaranties are not replaced to the satisfaction of the Lessor.

19.2 The Lessee promises to pay the Lessor Lease Fees for the entire period
indicated in this Agreement in the event the Lessee vacates the Premises before
the end of the said Period following a violation of a term or obligation
included in the Agreement.

19.3 Any Party violating this Agreement shall be required to indemnify the other
Party for any damage of any type and kind whatsoever that may be caused to the
other Party following this violation, and without derogating from the rights of
the Parties to any other relief according to law and/or to this Agreement.

19.4 The Lessor declares that it is aware that, only on the basis of this Lease
Agreement that is executed with a lessee [sic] that is an approved plant, does
the Lessor [sic] have the status of an approved plant. The Lessee promises to
indemnify the Lessor for any damage caused to the Lessor if for any reason
whatsoever the Lessee refrains from fulfilling the Agreement and/or takes any
action to cancel or prevent the status of the Lessor as an approved plant.

19.5 Without derogating from the right of any Party to cancel the Agreement
and/or to seek relief and/or other remedy from this power and/or from any law,
if the Lessee violates a fundamental provision of this Agreement, and does not
correct it within 7 days from the day of the event, then the Lessee shall be
liable to indemnify the Lessor for the amount in New Shekels equal to $50,000
dollars per the exchange rate of the dollar at the time of the actual payment.

20. VACATING THE PREMISES

20.1 The Lessee promises to vacate the Premises at the end of the Lease Period,
or if the Lessee violates this Agreement, and the Lessor shall require that the
Premises be vacated even before the end of the Lease Period, whichever date is
earlier, to return the Premises to the Lessor free of any person or object, in
good and proper condition, and able to be

<PAGE>   22

used the same way it was when the Lessee received it, except for wear and tear
arising from regular and reasonable use.

20.2 If the Lessee does not vacate the Premises in a manner and on the date
required pursuant to the terms of this Agreement, or upon lawful cancellation by
the Lessor, then without derogating from any other right held by the Lessor
pursuant to law and/or this Agreement, the Lessee shall be required to pay the
Lessor a sum in New Shekels equal to $1,000 dollars according to the exchange
rate of the U.S. dollar published by the Bank of Israel on the day of actual
payment for each delayed day or arrears in transferring possession of the
Premises to the Lessor; this shall be the same as indemnification fees that are
determined and agreed upon in advance. Payment of the amount pursuant to this
Clause shall not grant the Lessee any right to continue to possess the Premises.

21. CANCELLATION OF THE AGREEMENT

21.1 The Parties agree that this Agreement shall be considered null and void if
one of the following situations occurs:

       a. If a decree of receipt of property is issued against the Lessee.

       b. If a court ruling to liquidate the Lessee is issued.

       c. If a Receiver is appointed over the property of the Lessee or over a
portion of its property.

<PAGE>   23

                                       12

The cancellation shall be valid from the date the request is submitted against
the Lessee until the date a decree of receipt of the property or request for
liquidation or execution of distraint, and/or appointment of a Receiver, and on
the condition that the aforementioned request was not cancelled within 45 days
from the date the request letter is received from the Company.

21.2 In addition to any relief to which the Lessor has the right to demand
pursuant to this Agreement, and/or pursuant to law, without derogating from the
totality of the foregoing, the Lessor shall have the right to bring about the
immediate cancellation of this Agreement in the following cases:

       a. Non-delivery of promissory notes as specified in the aforementioned
Clause 6.9.

       b. Non-delivery of the Authorization Form or its cancellation, as
specified in the aforementioned Clause 6.8.

       c. Non-use of the Premises as specified in the aforementioned in Clause
3.

       d. Transfer of the rights of the Lessee to the Premises to another person
in opposition to the terms of the aforementioned Clause 10.1.

       e. Delay in payment of any amount owed by the Lessee to the Company
within 7 days from the payment date.

       f. Creation of a disturbance that may disturb the neighboring plants of
the Premises.

       g. Any action in opposition to the terms of the aforementioned Clause of
this Agreement.

21.3 If the Lessor notified the Lessee of the cancellation of the Agreement, the
Lessee shall contact the Lessor within 15 days of the date the Lessee receives
the notification.

21.4 No provisions of this Clause derogate from the rights of the Lessor
pursuant to this Agreement or to law.

22. LEGAL FEES AND MISCELLANEOUS

22.1 It is stipulated and agreed between the Parties that in the event that the
Lessee does not vacate the Premises at the end of the Lease Period, or after
notification of the cancellation of the Lease is sent pursuant to the terms of
Clause 21 of this Agreement, then in addition to all relief established in this
Agreement and law, the Lessee shall bear all expenses incurred by the Lessor in
all matters pertaining to legal proceedings against the Lessee in relation to
any discussion or lawsuit or action in execution office. This includes
attorney's fees of the Lessor (hereinafter, "legal fees").

In order to remove all ambiguity, the Lessee shall be required to repay the
Lessor for all reasonable expenses caused to the Lessor for filing a lawsuit
and/or execution procedures, even if these expenses were not approved for
payment by the court or the execution, for any reason whatsoever. The expenses
specified in this sub-Clause shall be

<PAGE>   24

included within the context of the legal fees of the Lessor, and the terms of
Clauses 22.2 and 22.3 shall apply thereto.

22.2 The Lessee shall pay the Lessor for the legal fees immediately after the
Lessor sends a written request; this shall include arrears interest from the
date the request letter is sent until actual payment.

22.3 The Parties agree that the documents of the Lessor shall serve as final and
conclusive evidence about the extent of the legal fees.

23. GUARANTY AND OBLIGATION

The Lessee promises that in order to carry out its obligations pursuant to this
Agreement. the Lessee shall have a Guaranty and Commitment Note signed by
guarantors who shall be approved by the Lessor, in the format specified in
Clause 28.

24. NON-WRITE-OFF OF PAYMENTS

The Parties agree that the sums for which they are liable and/or shall be liable
to each other under this Agreement, or any other purpose, shall not be written
off.

<PAGE>   25

                                       13

25. FUNDAMENTAL CLAUSES

It is agreed that the following clauses of the Agreement shall be considered as
fundamental and principal clauses, and a breach of any one of them: 3, 4, 5, 6,
7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 23, 24 -- shall
constitute a fundamental violation of this Agreement as this concept is
understood in the Contract Act (Contract Violation Remedy), 1970.

26. MISCELLANEOUS

26.1 The terms of the Contract Act (Contract Violation Remedy), 1970 shall apply
to this Agreement to the extent they complete what is specified in this
Agreement.

26.2 No waiver, extension or assumption or restraint from any action, either in
general or on time, by the Lessor or Lessee shall constitute a waiver of rights
of the Lessor or Lessee pursuant to this Agreement.

26.3 Any alteration in the terms of this Agreement shall be valid only if
drafted in writing and signed by both Parties.

26.4 The Parties declare that they have read this Agreement in detail, and
signed it of their own free will, after they understood its contents.

26.5 The Lessee shall bear the fee stamp expenses for this Agreement in the
amount of 11,337 New Shekels, and shall participate in a portion of the legal
fees of the Lessor for drafting this Agreement in the amount of [5,000 crossed
out] [handwritten: 2,000] New Shekels plus VAT.

26.6 The Parties agree that the authorized court in the district of Haifa is
chosen as the exclusive jurisdiction for all matters arising from this
Agreement.

27. NOTIFICATION

The addresses of the Parties for purposes of this Agreement are as specified in
the Introduction of this Agreement. Any notification sent by registered mail
with return receipt requested sent by one Party to the other shall be considered
to have been delivered at the end of 72 hours from the time it was sent, and if
hand-delivered, at the time of its delivery.

The addresses of the Parties as specified herein shall also constitute their
addresses for purposes of delivery of court documents.

IN WITNESS WHEREOF,
[illegible signature]                       [illegible signature]
Mirobin Ltd.                                N. Base Communications Ltd.

<PAGE>   26

                                            Private Company 51-213490-9

<PAGE>   27

                                       14

                                  GUARANTY NOTE

28. PERSONAL GUARANTY

We the undersigned:

1.                    ID No.                From:

2.                    ID No.                From:

(hereinafter, "Lessee Managers")

We jointly and severally guaranty the performance of all obligations of the
Lessee pursuant to this Agreement.

<PAGE>   28

                                       15

                        Agreement Supplement from (Date):

Mirobin Ltd. (hereinafter, "the Lessor") agrees that despite the foregoing
stated in Part A, Clause 2 of the Lease Agreement of 12/20/95, the Lessee N.
Base Communications Ltd. is permitted to shorten the Lease Period with one-year
advance written notice regarding its wish to shorten the Lease Period to 1/25/99
["25" overwrites "15"] on the condition that they present to the Lessor an
alternative tenant [in handwriting: who is also an approved plant] at least
under these same Agreement terms [handwritten: and for a period of at least 4
years].

In witness whereof,

IN WITNESS WHEREOF,
[illegible signature]                              [illegible signature]
Mirobin Ltd.                                       N. Base Communications Ltd.

k-5/mirobin1

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