Document:

<PAGE>

                                                                   EXHIBIT 10.39

                                      LEASE
                                      -----

         This lease dated this 8 day of February, 2001 between BERKSHIRE
INDUSTRIAL CORPORATION, hereinafter referred to as Landlord, a Connecticut
corporation with offices located at 2 Parklawn Drive, Bethel, CT 06801, and
MEMRY CORPORATION, a Delaware corporation with an office and principal place of
business located at 57 Commerce Drive, Brookfield, CT 06804, hereinafter
referred to as Tenant.

                                     PREFACE
                                     -------

         Landlord is the owner of certain real property as described below known
as Berkshire Corporate Park (the "Park") as set forth below. The Premises
defined in this Lease and the Park are subject to a certain "Master Development
Agreement and Plan" (the "MDA"), which MDA is on file in the Land Records of the
Town of Bethel, County of Fairfield and State of Connecticut at Volume 568, Page
385. This Lease shall at all times be subject to said MDA in all respects, as
the MDA may be amended or revised from time to time. If the MDA is amended or
revised during the Initial or any Option Term of this Lease, Landlord will
provide Tenant with a copy of same. In the event there are any terms or
conditions of this Lease which may be contradictory or inconsistent with or
repetitious of the MDA, the MDA shall supersede and control this Lease. Whenever
used in this Lease, the term "MDA Property" shall mean the Park, as defined in
Paragraph 1.1 below, the "Bethel Health Care Site" as that property is defined
in Paragraph 4.1 of the MDA and the "Duracell Site" as that property is defined
in Paragraph 4.10 of the MDA.

         1: PREMISES
         -----------

         1.1 Landlord is the owner of certain real property located in the Town
of Bethel, Town of Brookfield and City of Danbury, all in the State of
Connecticut, known as Berkshire Corporate Park and described on Exhibit A
attached hereto and made a part hereof. All references in this Lease to the
"Park" shall mean the entire area owned by Landlord and any subsidiaries or
affiliates of Landlord as described in Exhibit A, as the same may, from time to
time, be increased or decreased by the addition of other contiguous lands, and
the entire development on said area, including any and all structures, parking
facilities and common facilities built thereon from time to time, or as the same
may, from time to time, be reduced by eminent domain takings or dedications to
public authorities.

         1.2 Landlord hereby leases to Tenant and Tenant hereby rents from
Landlord, subject to all of the terms, covenants, conditions and provisions of
this Lease, the following space located in the Park: the floor space shown on
Exhibit B-1 attached hereto, which floor space is all of Building Number 1 in
the Park shown as Exhibit B-2 attached hereto having the address of 3 Berkshire

The contents of this document are proprietary information and the reproduction
or substantial quotation of its provisions without the written permission of
Berkshire Industrial Corporation is not allowed.

                                        1

<PAGE>

Boulevard, Bethel, CT 06801, hereinafter referred to as the "Premises". Said
Building Number 1 is located on a certain piece or parcel of land located in the
Town of Bethel, County of Fairfield, State of Connecticut, shown and described
as Lots 8 & 9 on a certain map consisting of two sheets, "Sheet 1 of 2" and
"Sheet 2 of 2", both sheets being entitled "Final Subdivision Showing Berkshire
Industrial Park Bethel, Connecticut Scale: 1"=100', Total Area: 117.273 AC.,
Zone: LP, Date: Mar. 29, 1985" which map is on file in the Bethel Town Clerk's
office as Map 60 in File 19 (Sheet 1 of 2) and Map 60-A in File 19 (Sheet 2 of
2). Landlord and Tenant hereby acknowledge and agree that for the purposes of
this Lease and the calculation(s) of Basic Rental and all Additional Rental (as
hereinafter defined) payable hereunder, the Premises shall be deemed to contain
37,500 rentable square feet. Landlord makes no representations concerning the
specific area of the Premises and Tenant acknowledges that it has inspected the
Premises and is satisfied in all respects therewith and accepts the Premises in
"AS IS" condition.

         1.3 Landlord specifically reserves to itself and excepts from the
demise of this Lease the use of the exterior walls of the building, the roof and
the right to install, maintain, alter, use, repair and replace pipes, ducts,
conduits and wires leading through the Premises in locations which will not
materially interfere with Tenant's use thereof or materially decrease the square
footage of the Premises usable by Tenant. Landlord further reserves to itself
and other Tenants of the building the right to access and use the telephone,
fire protection, electrical systems and other systems common to the Tenants of
the building. Tenant, its agents, servants, employees and invitees shall not
enter upon the roof of the building at any time. It is specifically agreed by
the parties hereto that this lease does not grant a continuance of light and air
over any property adjoining the Premises.

         2: TERM
         -------

         2.1 The term of this Lease shall be for the period of ten (10) years,
commencing on the Commencement Date, as hereinafter defined, and terminating on
the Termination Date, which shall be ten (10) years after the Commencement Date.
The Commencement Date shall be the earlier of (1) June 18, 2001; or (2) upon the
completion of the Landlord Work as defined in Paragraph 4.1 below and the Tenant
Work set forth in Exhibit W-1 hereof. For purposes of determining the
Commencement Date, the delivery of the Premises to Tenant shall be deemed to be
the date the Landlord Work as defined in Paragraph 4.1 below and the Tenant Work
set forth in Exhibit W-1 hereof has been completed, subject to the limitations
and definitions as to completion contained in Paragraph 4.2 hereof. The
Commencement Date shall be extended on a day for day basis for each day beyond
June 18, 2001 that Landlord fails to complete the Landlord Work as defined in
Paragraph 4.1 below and/or Landlord's contractor fails to complete the Tenant
Work set forth in Exhibit W-1 hereof, except that if Landlord or Landlord's
contractor is caused to be delayed in the completion of the Landlord Work as
defined in Paragraph 4.1 below or the Tenant Work set forth in Exhibit W-1
hereof by any act, omission or delay of Tenant then Tenant shall be liable for
the payment of one (1) day's rent for each day of such delay. If the
Commencement Date shall occur on any day which is not the first day of a
calendar month, the monthly Basic Rental and Additional

                                        2

<PAGE>

Rental to be paid under this Lease for that month shall be apportioned on a per
diem basis based upon the actual number of days in that month, and shall be paid
on the Commencement Date. Landlord and Tenant shall execute a Lease Certificate
in the form attached hereto as Exhibit C setting forth the Commencement Date as
soon as the actual Commencement Date have been determined.

         2.2 This lease shall terminate on the Termination Date as set forth in
the Lease Certificate attached as Exhibit C, without the necessity of any notice
from either Landlord or Tenant to terminate the same. Tenant hereby waives any
notice to vacate or quit the Premises on the Termination Date or thereafter, and
agrees that Landlord shall be entitled to the benefit of all provisions of law
respecting the summary recovery of possession of the Premises from a Tenant
holding over on the Termination Date or thereafter to the same extent as if
statutory notice had been given.

         3: BASIC RENTAL
         ---------------

         3.1 Beginning at the Commencement Date, as rent for the Premises Tenant
agrees to pay Landlord the total rental sum of Three Million Three Hundred Fifty
Six Thousand Two Hundred Fifty and 00/100 ($3,356,250.00) DOLLARS for the entire
Initial Term of this Lease payable in monthly installments of $27,968.75 each
month on the first day of each month in advance commencing on the Commencement
Date. Said rent is hereinafter referred to as "Basic Rental", and shall be
payable without demand, deduction, set-off or abatement of any kind, except as
expressly provided herein. If the Landlord does not receive the monthly Basic
Rental due by the tenth (10th) day of the calendar month in which it is due,
Tenant shall be liable to pay Landlord an additional sum equal to five percent
(5.00%) of the overdue monthly for each calendar month that said payment is not
paid. The Basic Rental shall never be less than the monthly rental each year per
month as set forth in this Paragraph 3.1, except as adjusted as set forth in
Paragraph 2.3 herein.

         4: COMPLETION AND OCCUPANCY
         ---------------------------

         4.1 Landlord shall perform the Landlord Work, defined as (1) tuneup of
the existing HVAC units on the Premises; (2) removal of existing office
furniture; and (3) changing of exterior door locks by June 18, 2001. Tenant
shall be responsible for the cost and shall cause to be performed by the
Landlord's contractor the Tenant Work set forth in Exhibit W-1 hereof, which
work shall be completed by June 18, 2001. No later than thirty five (35) days
after Landlord and Landlord's contractor respectively commences the Landlord
Work and Tenant Work set forth in Exhibit W-1 hereof, Landlord shall allow
Tenant access to the Premises to perform the Tenant Process Work, which work
Tenant shall perform or cause to be performed at Tenant's sole cost and expense.
The obligations of Landlord and Landlord's contractor to complete the Landlord
Work and Tenant Work set forth in Exhibit W-1 within the prescribed time shall
be extended one day for each day Landlord or Landlord's contractor is delayed in
completion of said work by any act, omission or delay by

                                        3

<PAGE>

Tenant. The obligation of Tenant to cause to be performed the Tenant Work set
forth in Exhibit W-1 hereof within the prescribed time shall be extended one day
for each day Tenant is delayed in completion of said work by any act, omission
or delay by Landlord or Landlord's contractor.

         4.2 Landlord shall not be subject to any liability for failure to give
possession of the Premises to Tenant on the specific date hereinbefore
designated for the Commencement Date. No part of the Premises shall be deemed
unavailable for occupancy by Tenant if due to the noncompletion of details of,
decoration or mechanical adjustments which are minor in character and the
noncompletion of which does not materially interfere with Tenant's use of such
part of the Premises. In the event there is a delay in the availability of the
Premises for occupancy by Tenant which shall solely be due to any act or
omission of a material nature by Tenant which is a breach of Tenant's
obligations under this Lease, Tenant shall be liable for the payment of one (1)
day's rent for each day of such delay.

         4.3 Tenant, by entering into occupancy of any part of the Premises,
shall be conclusively deemed to have agreed that Landlord, up to the time of
such occupancy, had performed all of its obligations hereunder with respect to
such part and that such part, except for latent defects and the minor details of
construction, decoration and mechanical adjustments hereinbefore referred to,
was in satisfactory condition as of the date of such occupancy, unless within
ten (10) days after such date tenant shall give written notice to Landlord
specifying the respects in which the same was not in such condition.

         4.4 If, by reason of any provision of this Lease, the Basic Rental
shall commence on any day other than the first day of a calendar month or end on
any day other than the last day of a calendar month, the Basic Rental for such
calendar month shall be prorated.

         5: USE
         ------

         5.1 Tenant shall use and occupy the Premises solely for office, design,
light manufacturing, light assembly of products, consistent with a first class
business use, only as permitted by applicable laws and regulations and the MDA
and for no other purposes without Landlord's prior written consent, which
consent may be granted or withheld in Landlord's sole and absolute discretion.
Tenant shall not use the Premises or any part thereof, or permit the Premises or
any part thereof to be used, for any purpose other than the use hereinbefore
specifically mentioned.

         5.2 Tenant covenants and agrees that it shall not do anything which
shall, in any way, impair or interfere with any of the Building's services to be
supplied by Landlord or the proper and economical heating, cleaning, air
conditioning or other service of the Building or Premises or seriously impair or
interfere with the use of the Building or Premises by, or cause disruption or
interference with the normal business operations of either Landlord or any other
occupants of the Building or of the Park.

                                        4

<PAGE>

         5.3 Tenant agrees that its use and occupancy of the Premises, the
Building and the Park shall not, at any time, be violative of or in
contradiction to the terms and provisions of the MDA, and Tenant shall defend
and save Landlord harmless from any and all claims made against Landlord
thereunder, founded upon alleged action or inaction of Tenant on, or in the
Premises, the Building or the Park. In the event the MDA is amended or modified
subsequent to the date of the execution of this Lease, Tenant shall be permitted
to use and occupy the Premises as set forth in this Lease and any such amendment
or modification of the MDA shall not be effective as to Tenant for the balance
of the Initial Term of this Lease for the use and occupancy permitted under this
Lease. In the event the MDA is amended or modified subsequent to the exercise by
Tenant of Tenant's Option to Renew pursuant to Paragraph 36 of this Lease,
Tenant shall be permitted to use and occupy the Premises as set forth in this
Lease and any such amendment or modification of the MDA shall not be effective
as to Tenant for the balance of the Option Term of this Lease for the use and
occupancy permitted under this Lease.

         5.4 Tenant shall abide by all reasonable Rules and Regulations
promulgated by Landlord for the Park, as they may be amended or altered from
time to time, provided Landlord enforces the Rules and Regulations uniformly
among Park tenants subject to said Rules and Regulations and provided further
that the provisions of this Lease shall supersede any conflicting Rule or
Regulation.

         6: DEFINITIONS FOR ADDITIONAL RENTAL
         ------------------------------------

         6.1.1 As used in this Lease, the term "Building Proportionate Share"
shall mean a percentage, the numerator of which shall be the number of rentable
square feet of floor area of the Premises as set forth in Paragraph 1.2 above
(37,500) and the denominator of which shall be the number of rentable square
feet of floor area of Buildings on Lots Number 8 & 9 referred to in Paragraph
1.2 above of which the Premises are a part as it may be expanded or contracted
from time to time, computed from the center line of all interior partition walls
and from the exterior face of all exterior walls. At the time of the execution
of this Lease that denominator number is Thirty Seven Thousand Five Hundred
(37,500).

         6.1.2 "Taxes" shall mean (1) all real and personal property taxes,
assessments (including, but not limited to, assessments for public works,
improvements or benefits, whether or not begun or completed prior to the
commencement of this Lease and whether or not completed within said term) and
other governmental charges or levies of every kind, character and description
whatsoever, which at any time have been or may or will be assessed at full
assessment or otherwise, levied or imposed by any governmental authority upon or
in respect of, or which may become a lien on the lot on which the Building is
located, any portion thereof, the Building or any buildings, improvements or
structures thereon, the parking facilities and other common areas and facilities
on the lot on which the Building is located, or upon any property of Landlord,
real or personal, located within or on the lot on which the Building is located
which is used in connection with the operation of the lot on

                                        5

<PAGE>

which the Building is located; (2) any taxes which may be assessed, levied or
imposed by any governmental authority in addition to or in lieu of all or any
part of such real or personal property taxes, assessments, charges or levies;
(3) all business license, use or other taxes which may be assessed, levied or
imposed upon the developed portion of the lot on which the Building is located,
the parking facilities and other common areas and facilities or the personal
property of the Landlord on account of the leasing or use of the developed
portions on the lot on which the Building is located; (4) all charges made by
state or local governments for any services performed on or for the developed
portion of the lot on which the Building is located , the parking facilities and
other common areas and facilities which are not included in "Operating Costs" as
defined hereafter; and (5) any and all sales, excise and other taxes levied,
imposed or assessed by federal, state or local governments upon any rental
payable under this Lease. However, notwithstanding the foregoing, Taxes shall
not include municipal, county, state or federal income or franchise taxes of
Landlord, or penalties resulting from failure of Landlord to pay taxes in a
timely manner. In case a tax is imposed in lieu of or as a substitute, in whole
or in part, for the real property tax on the lot on which the Building is
located, any portion thereof, the Building or any buildings, improvements or
structures thereon, the parking facilities and other common areas and facilities
on the lot on which the Building is located, or in case a tax is levied on
rentals, the Tenant shall pay Tenant's Building Proportionate Share of the
amount of such substitute as of the Commencement Date. At the time of the
execution of this Lease, Landlord represents that the Premises is not separately
billed, by the Town of Bethel. Landlord will obtain from the Town of Bethel Tax
Assessor's Office the information necessary to determine the pro-rata tax for
the Premises and will bill Tenant for its pro-rata share of the taxes. Tenant
hereby agrees to pay the proportionate share tax for said Building and
proportional lot and improvements. Tenant hereby agrees to pay a pro-rata share
of the taxes assessed for the parking facilities, land and improvements on said
tax lots based upon the square footage Tenant occupies to the total square
footage of all buildings on said tax lots.

         6.1.3 "Insurance" shall mean the aggregate of all costs and expenses of
every kind or nature paid or incurred by Landlord directly or indirectly in
maintaining all insurance for the Premises, the building of which the Premises
is a part, the lot on which the Building is located, the parking facilities and
other common areas and facilities and the buildings and improvements within, on
or under the lot on which the Building is located as they may collectively or
individually be increased or reduced from time to time. Insurance shall mean,
but not be limited to, premiums for fire, theft and other casualty insurance,
including extended coverage, and including rental value coverage for one year
for minimum rent and for payment of Taxes and Landlord's Building Operating
Costs; premiums for public liability and property damage insurance; and all
risks property and casualty insurance.

         6.1.4 "Building Operating Costs" shall mean the aggregate of all costs
and expenses of every kind or nature paid or incurred by Landlord directly or
indirectly in operating, maintaining, managing, equipping, policing, securing,
lighting, cleaning, painting, striping, signing, and repairing the Building, the
lot on which the Building is located, the parking facilities and other common
areas

                                        6

<PAGE>

and facilities and the buildings and improvements within, on or under the lot on
which the Building is located as they may collectively or individually be
increased or reduced from time to time. Building Operating Costs shall include,
but not be limited to, the repair and maintenance of buildings and other
improvements on the lot on which the Building is located; the cost of equipment
and supplies used in the maintenance and operation of the lot on which the
Building is located (including seasonal decorations); the cost of equipment
maintenance contracts; costs and expenses of repair or replacement of paving,
curbs, walkways, drainage, pipes, ducts, conduits and similar items, and plate
glass, lighting facilities and the roof of the Building and/or the lot on which
the Building is located; resurfacing driveways and parking areas on the lot on
which the Building is located; restriping driveways and parking areas on the lot
on which the Building is located; pedestrian and automobile traffic and
directional signs and equipment on the lot on which the Building is located;
electrical, water, heating or other utility charges for parking facilities and
other common areas and facilities on the lot on which the Building is located;
installing, repairing, maintaining and replacing utility systems, including, but
not limited to, water, sanitary sewer and storm water lines and other utility
lines, pipes, conduits and similar facilities on the lot on which the Building
is located; sewer use charges for the lot on which the Building is located; pest
control on the lot on which the Building is located; cleaning costs for the
Building exterior and/or the lot on which the Building is located; refuse
removal for the Building exterior and/or the lot on which the Building is
located; snow removal for the lot on which the Building is located; grass
cutting on the lot on which the Building is located; costs and expenses of
planting, replanting, maintaining and replacing flowers, shrubbery, planters and
trees on the lot on which the Building is located; landscape maintenance on the
lot on which the Building is located; fire protection, including, but not
limited to, installation, maintenance, repair, testing and replacement of
sprinkler systems, alarm systems and/or other fire protection systems and their
components for the Building and/or on the lot on which the Building is located;
environmental inspections and/or auditing; reasonable management,
administration, legal, accounting and engineering fees for the Building and/or
the lot on which the Building is located; costs of building alterations,
modifications or equipment for the Building and/or the lot on which the Building
is located which are required by governmental or regulatory authorities or which
are made primarily for the purpose of reducing Building Operating Costs; all
compensation and related costs (including overtime, holiday and premium pay)
actually paid or incurred to persons engaged in the general operation and
management of the Building and/or the lot on which the Building is located,
including the cost of social security, unemployment and other payroll taxes,
worker's compensation insurance and employee benefits such as, but not limited
to, vacations, pensions, group insurance and other fringe benefits. In
Landlord's operating, maintaining, managing, equipping, policing, securing,
lighting, cleaning, painting, striping, signing, and repairing the Building and
other facilities as set forth herein, Landlord's performance of same shall not
be defined, determined or used in a manner so as to eliminate new design, new
materials, new systems, methods of construction or colors, provided that in all
cases the overall quality and appearance of same shall not be lower than the
overall quality and appearance as originally created.

         6.2.1 The term "Proportionate Share of Limited Common Facilities
Maintenance Costs"

                                        7

<PAGE>

shall mean a percentage, the numerator of which shall be the number of rentable
square feet of floor area of the Premises as set forth in Paragraph 1.2 above
(37,500) and the denominator of which shall be the number of rentable square
feet of floor area actually constructed in the Park as it may be expanded or
contracted from time to time, computed from the center line of all interior
partition walls and from the exterior face of all exterior walls. At the time of
the execution of this Lease, the denominator number is 348,116.

         6.2.2 "Limited Common Facilities Maintenance Costs" shall mean the
aggregate of all costs and expenses of every kind or nature paid or incurred by
Landlord directly or indirectly in operating, maintaining, managing, equipping,
policing, securing, lighting, cleaning, painting, striping, signing and
repairing the common parking facilities and other common areas, facilities,
buildings, improvements, parks, trails, open space and/or recreational
facilities on or under the Park as they may collectively or individually be
increased or reduced from time to time. Limited Common Facilities Maintenance
Costs shall include, but not be limited to, the repair and maintenance of common
areas, facilities, buildings and improvements of the Park; the cost of equipment
and supplies used in the maintenance and operation of the common areas,
facilities, buildings and improvements in the Park (including seasonal
decorations); the cost of equipment maintenance contracts; costs and expenses of
repair or replacement of paving, curbs, walkways, drainage, pipes, ducts,
conduits and similar items, and plate glass, lighting facilities and the roof(s)
of the common facilities, buildings and improvements of the Park; resurfacing
common driveways and parking areas of the Park; restriping common driveways and
parking areas of the Park; pedestrian and automobile traffic and directional
signs and equipment; electrical, water, heating or other utility charges for
common areas, facilities, buildings and improvements of the Park; installing,
repairing, maintaining and replacing utility systems, including, but not limited
to, water, sanitary sewer and storm water lines and other utility lines, pipes,
conduits and similar facilities for the Park; costs to connect the Park and/or
the common parking facilities and other common areas and facilities of the Park
to the public sewer system; sewer use charges for the Park; pest control;
cleaning costs; refuse removal; snow removal; grass cutting; costs and expenses
of planting, replanting, maintaining and replacing flowers, shrubbery, planters
and trees; landscape maintenance; fire protection, including, but not limited
to, installation, maintenance, repair, testing and replacement of sprinkler
systems for common areas, facilities, buildings and improvements; reasonable
management, administration, legal, accounting and engineering fees for common
areas, facilities, buildings and improvements; costs of building alterations,
modifications or equipment for common areas, facilities, buildings and
improvements which are required by governmental or regulatory authorities or
which are made primarily for the purpose of reducing Limited Common Facilities
Maintenance Costs; all compensation and related costs (including overtime,
holiday and premium pay) actually paid or incurred to persons engaged in the
general operation and management of the Park, including the cost of social
security, unemployment and other payroll taxes, worker's compensation insurance
and employee benefits such as, but not limited to, vacations, pensions, group
insurance and other fringe benefits. In Landlord's operating, maintaining,
managing, equipping, policing, securing, lighting, cleaning, painting, striping,
signing, and repairing the private streets and roads within the Park as they may
exist from time to time, the common parking facilities and other common areas,
facilities,

                                        8

<PAGE>

buildings and improvements within, on or under the Park as set forth herein,
Landlord's performance of same shall not be defined, determined or used in a
manner so as to eliminate new design, new materials, new systems, methods of
construction or colors, provided that in all cases the overall quality and
appearance of same shall not be lower than the overall quality and appearance as
originally created. It is understood and agreed that Limited Common Facilities
Maintenance Costs shall include both reasonable, necessary and customary costs
directly incurred by Landlord and reasonable, necessary and customary costs
incurred under outside contracts.

         6.3.1 The term "Road and Park Proportionate Share" shall mean a
percentage, the numerator of which shall be the number of rentable square feet
of floor area of the Premises as set forth in Paragraph 1.2 above (37,500) and
the denominator of which shall be the number of total floor area actually
constructed on the MDA property. At the time of the execution of this Lease that
denominator number is 889,341.

         6.3.2 "Road and Park Operating Costs" shall mean the aggregate of all
costs and expenses of every kind or nature paid or incurred by Landlord directly
or indirectly in operating, maintaining, managing, equipping, policing,
securing, lighting, cleaning, painting, striping, signing, and repairing the
developed portions of all private and public streets and roads that may exist
from time to time within the MDA Property. Road and Park Operating Costs shall
include, but not be limited to, the repair and maintenance of road improvements,
which shall include restriping and traffic and directional signs and equipment,
electrical or other utility charges for such common roads and for the common
signage on the MDA Property (which signage includes, but shall not be limited
to, the four illuminated signs identifying the MDA Property), maintaining
utility lines, drains and similar facilities, removal of exterior litter and
debris, sweeping and sand removal, snow and ice removal, grounds maintenance and
grass cutting, tree and landscape maintenance, reasonable, necessary and
customary premium payments for fire, liability, property damage and other
casualty insurance, real estate or other taxes if applicable, reasonable,
necessary and customary administration, management, legal, accounting and
engineering fees, and costs of alterations, modifications or equipment that are
required by governmental or regulatory authorities but not treated as capital
items under proper accounting practices. Road and Park Operating Costs shall
include a reasonable allocation of all compensation and related costs (including
overtime, holiday and premium pay) actually paid or incurred to persons engaged
in the general operation and management of the roads and streets in the
developed portions of the MDA Property, including the cost of social security,
unemployment and other payroll taxes, worker's compensation insurance, and
employee benefits such as, but not limited to, vacations, pensions, group
insurance and other fringe benefits.

         6.4 Landlord agrees that the following items shall be specifically
excluded from Building Operating Costs, Limited Common Facilities Maintenance
Costs and Road and Park Operating Costs: (1) advertising, commissions, tenant
improvements and all other expenses incurred in leasing or procuring new
tenants; (2) expenses for repairs or improvements to other tenant's leased
space; (3) interest, principal, rental, late fees or other costs of any
indebtedness or ground lease; (4) the costs of any work or service performed for
any tenant at such tenant's cost; (5) the capital costs related to

                                        9

<PAGE>

HVAC, plumbing and electrical systems and the roof and the capital costs of
correcting structural defects in the Premises or design flaws in any major
Premises system; (6) the cost of any items for which Landlord is reimbursed by
insurance, any tenant or otherwise; (7) any late fees, penalties, interest
charges or other similar fees; (8) any Tenant Improvement Allowance or other
payment from Landlord to Tenant; (9) taxes excluded from the definition of
"Taxes" as set forth in Paragraph 6.1.2; (10) bad debt losses or reserves for
bad debt losses: (11) costs of selling, syndicating, financing, mortgaging or
hypothecating any of the Premises or Park or Landlord's interest in the Premises
or the Park; (12) expenses resulting from tortious conduct of Landlord, its
employees, agents or contractors; and (13) the cost of construction of any new
building in the Park.

         7: PAYMENT OF ADDITIONAL RENTAL
         -------------------------------

         7.1 Commencing on the first anniversary of the Commencement Date and on
each anniversary of the Commencement Date thereafter (said anniversary dates
hereinafter referred to as "computation dates"), the Tenant shall pay to
Landlord as Additional Rental a sum calculated based upon the cost of living as
reflected in the "Consumers Price Index for All Urban Consumers New York-
Northern N. J.-Long Island, NY-NJ-CT-PA" (hereinafter called the "CPI")
published in the Monthly Labor Review of the Bureau of Labor Statistics of the
United States Department of Labor. Said Additional Rental sum shall be in effect
commencing from the computation date until the next computation date or the end
of the term. The amount of said Additional Rental shall be arrived at by
multiplying the monthly Basic Rental ($27,968.75) as set forth in Paragraph 3.1
above by a fraction, the numerator of which shall be the CPI number for February
preceding such computation date, and the denominator of which shall be the CPI
number for February, 2001. The sum of the Additional Rental thereby obtained
shall be payable on the first day of each calendar month until the next
computation date. If there be no CPI number or comparable successor thereto,
then the sum of Additional Rental contemplated herein shall be established by
arbitration in accordance with the rules of the American Arbitration
Association.

         7.2 As Additional Rental under this Lease Tenant shall pay to Landlord
Tenant's Building Proportionate Share of Taxes, Insurance, and Building
Operating Costs; Proportionate Share of Limited Common Facilities Maintenance
Costs, and; Road and Park Proportionate Share of Road and Park Operating Costs.

         7.3 Tenant shall pay to Landlord its Building Proportionate Share of
Taxes, Insurance and Building Operating Costs; Proportionate Share of Limited
Common Facilities Maintenance Costs, and; Road and Park Proportionate Share of
Road and Park Operating Costs as Additional Rental under this Lease during each
year of the term of this Lease an amount equal to the product obtained by
multiplying Tenant's Building Proportionate Share by the total of Taxes, the
total of Insurance, and the total of Building Operating Costs; Tenant's
Proportionate Share of Limited Common Facilities Maintenance Costs by the total
of Limited Common Facilities Maintenance Costs and; Tenant's Road and Park
Proportionate Share of Road and Park Operating Costs for such year. The

                                       10

<PAGE>

Tenant shall pay on the first day of each month, in advance, 1/12 of the amount
reasonably estimated by the Landlord and provided in writing by Landlord to
Tenant, on the basis of the most current information concerning Taxes,
Insurance, Building Operating Costs, Limited Common Facilities Maintenance Costs
and Road and Park Operating Costs available to Landlord, to be Tenant's Building
Proportionate Share of the Taxes, Insurance and Building Operating Costs;
Proportionate Share of Limited Common Facilities Maintenance Costs and; Road and
Park Proportionate Share of Road and Park Operating Costs. Landlord shall have
the right to amend its estimate of Taxes, Insurance and Building Operating
Costs; Limited Common Facilities Maintenance Costs and; Road and Park Operating
Costs at any time based upon current information and to adjust Tenant's
Additional Rental payable under this paragraph by written notice to Tenant. Upon
such adjustment and notice to Tenant, Tenant shall thereafter pay as Additional
Rental 1/12 of the adjusted amount of Tenant's Building and/or Limited Common
Facilities and/or Road and Park Proportionate Share (as the case may be)
commencing with the first day of the first calendar month after such written
notice. Within a reasonable time after the end of Landlord's fiscal year,
Landlord shall furnish Tenant a statement in reasonable detail of actual Taxes,
Insurance, Building Operating Costs, Limited Common Facilities Maintenance Costs
and Road and Park Operating Costs for Landlord's fiscal year just ended and the
Landlord and Tenant shall make an adjustment, with payment to Landlord or credit
to Tenant so that the Landlord shall receive the entire amount of Tenant's
Building Proportionate Share of Taxes, Insurance, and Building Operating Costs;
Proportionate Share of Limited Common Facilities Maintenance Costs and; Road and
Park Proportionate Share of Road and Park Operating Costs and no more. A
pro-rata adjustment of Tenant's Building and/or Limited Common Facilities and/or
Road and Park Proportionate Share (as the case may be) payable as Additional
Rental shall be made for the beginning and end of this Lease term, provided the
Lease term has terminated by lapse of time or pursuant to Paragraphs 26 or 27
hereof. However, Landlord's failure to provide such Building Proportionate Share
of Taxes, Insurance, and Building Operating Costs; Proportionate Share of
Limited Common Facilities Maintenance Costs and; Road and Park Proportionate
Share of Road and Park Operating Costs by the date set forth above shall in no
way excuse Tenant from its obligation to pay said costs or charges or any of
them or constitute a waiver of Landlord's right to bill and collect such costs
or charges from Tenant in accordance with this Lease.

     7.4 In the event Landlord incurs any expenses which meet the definitions
above as Taxes, Insurance, Building Operating Costs, Limited Common Facilities
Maintenance Costs and/or Road and Park Operating Costs, which expenses are
unanticipated or not usually incurred by Landlord on a regular or scheduled
basis (hereinafter referred to as "Non-Recurring Expenses"), Tenant shall pay
its pro-rata share of such Non-Recurring Expenses on a lump sum basis. Upon
Landlord incurring such Non-Recurring Expenses, Landlord shall calculate
Tenant's share of same based upon the applicable formula set forth above and the
type of expense incurred. Landlord shall give Tenant written notice of Tenant's
share of said Non-Recurring Expense, and Tenant shall have a period of thirty
(30) days from Tenant's receipt of said written notice to pay its share of the
Non-Recurring Expense in full.

                                       11

<PAGE>

         7.5 In the event said Tenant, or Tenant's use and occupancy of the
Premises, causes, for any reason whatsoever, any additional charge or increase
in the rate of fire insurance on the building of which the Premises are a part,
the Tenant shall, from time to time immediately upon receipt of notice, do
whatever is deemed necessary, and follow whatever recommendations may be made,
by the Landlord or its Agents, or any other duly constituted authorized body, in
order that such additional charge or increase in rate of fire insurance on the
building so caused by such tenancy, use or occupancy of the Premises, by the
Tenant may be removed, or, in the event conditions are such that nothing can be
done, by way of improvements or otherwise, to remove such extra and additional
charge or increase of rate of fire insurance on the building, or the expense
involved is excessive, then the Tenant shall pay the Landlord as Additional
Rental the increased or additional cost of such fire insurance on the building.

         7.6 It is the intention of the Landlord and Tenant that the Basic
Rental shall be completely "net" to Landlord such that all Taxes, Insurance,
Building Operating Costs, Limited Common Facilities Maintenance Costs and Road
and Park Operating Costs which are applicable to the Building and/or the Limited
Common Facilities and/or the Roads and Park (as the case may be) shall either be
paid directly by the various tenants of the Building and/or the Park (as the
case may be) or paid by the Landlord and allocated among such tenants, except
for those costs and expenses excluded in Paragraph 6.4 above.

         7.7 Within sixty (60) days after Landlord provides Tenant with the
financial statement required under Paragraph 7.3 above, Tenant shall have the
right, at Tenant's sole cost and expense, upon reasonable advance notice to
Landlord and subject to Landlord's ability to accommodate Tenant at the time
requested, at any time during regular business hours, to audit and review
Landlord's records pertaining to Taxes, Insurance, Building Operating Costs,
Limited Common Facilities Maintenance Costs, Road and Park Operating Costs and
Non-Recurring Expense as they relate to any charges imposed on Tenant pursuant
to this Lease. Failure of Tenant to request said audit for the fiscal year for
which said Landlord statement was issued within said sixty (60) day period shall
preclude Tenant from requesting said audit at any time thereafter. Landlord
shall maintain its books and records in accordance with generally recognized and
accepted accounting principles and practices. Tenant shall not, at any time or
for any purpose or reason, disclose any of such non public information or
documentation to any person, firm or corporation except employees, financial
advisors, auditors and legal advisors of Tenant necessary to conduct such review
for Tenant's purposes, or as may be required by law. Disclosure of such
information except as explicitly authorized herein shall be a default under this
Lease.

         8. SECURITY
         -----------

         8.1 Landlord acknowledges receipt of the sum of Seventy One Thousand
Six Hundred Twenty Five and 00/100 ($71,625.00) Dollars, which sum is equivalent
to two (2) months of Basic Rental and Additional Rental as of the date of the
execution of this Lease, which shall be returned to

                                       12

<PAGE>

Tenant, without interest, on the day set forth for the expiration of the term
herein, provided, however, that Tenant has fully and faithfully carried out all
of the terms, covenants and conditions on its part to be performed, and which
sum shall be held by Landlord as a security for the full and faithful of Tenant
to so perform under the conditions and terms of this Lease. Landlord shall have
the right to require Tenant to increase the amount of said security deposit to
reflect the then current Basic Rental by written notice to Tenant. In addition,
Landlord shall have the right to require Tenant to increase the amount of said
security deposit, provide a completion bond or irrevocable letter of credit in
form satisfactory to Landlord to financially secure Landlord against the
faithful performance of Tenant's obligation to repair or restore the Premises at
the termination of this Lease under Paragraph 12.2 hereunder, the amount of said
increased security deposit, completion bond or irrevocable letter of credit to
be determined by Landlord in its reasonable commercial judgment. Upon such
written notice to Tenant, Tenant shall pay such additional security deposit,
provide said completion bond or said irrevocable letter of credit within Thirty
(30) days. Landlord may apply security deposit, or so much thereof, or so much
thereof as may be necessary, towards the remedying of any damage or condition
that is the responsibility of Tenant which an inspection shall disclose. Nothing
hereinabove contained shall, in any way, limit the right of Landlord to recover
against Tenant for any damage or other condition arising out of the failure of
Tenant to so perform. In no event shall Tenant have the right to cause or direct
Landlord to apply the security deposit against any monthly rental installment,
including the last month's rental installment.

         9: UTILITIES
         ------------

         9.1 The Tenant shall pay directly or reimburse the Landlord as
Additional Rental for all utility charges or services, including, but not
limited to, electric, water, gas, sewer and telephone charges, furnished to or
used by Tenant in the use of the Building, and any surcharges, other fees or
charges, whether direct or indirect, charged by the utility to the Landlord
related to Tenant's use of utilities in the Building. Landlord shall not be
under any responsibility or liability in any way whatsoever for the quality,
impairment, interruption, stoppage or other interference with service involving
water, heat, gas, electric current for light and power, telephone or any other
service by any utility, provided, however, that the foregoing shall not diminish
Landlord's responsibilities under Paragraph 10.1 below.

         10: REPAIRS AND MAINTENANCE
         ---------------------------

         10.1 The Landlord shall repair and maintain in good order and condition
throughout the term of this Lease, the exterior and structure of the Premises
and the building containing the Premises, including, without limitation, the
Premises' roof, walls and foundation, all common areas and improvements in the
Park, the plumbing, sewer and electrical lines and systems serving the Premises,
and all parts of the heating, plumbing, electrical and heating, ventilation air
conditioning systems within or serving the Premises installed or provided by
Landlord or Landlord's contractor, and the Landlord shall make any repairs
necessary to make all exterior doors and windows air and water tight

                                       13

<PAGE>

and in a safe condition.

         10.2 Throughout the term of this Lease the Tenant shall repair and
maintain in good order and condition the entire interior of the Premises
including all glass in windows, doors or skylights, all parts of the plumbing
and electrical systems within or on the Premises, and the lighting fixtures
within the Premises. Tenant, at Tenant's expense, shall purchase and install all
lamps (including, but not limited to, incandescent and fluorescent) and ballasts
used in the Premises. The Tenant agrees to keep both sides of all outside glass
areas in a neat and clean condition, and to store all trash and garbage within
the Premises or in "dumpsters" or other receptacles located outside the Premises
in a location designated by Landlord which dumpsters and other receptacles shall
be provided at Tenant's expense as set forth in Paragraph 14.1 below. It is
understood and agreed that the heating, ventilation and air conditioning units
located on and/or serving the Premises which are installed or provided by
Landlord or Landlord's contractor shall be repaired and maintained by the
Landlord. It is understood and agreed that the heating, ventilation and air
conditioning units located on and/or serving the Premises which are installed or
provided by Tenant (if any) shall be repaired and maintained by Tenant. Tenant
hereby acknowledges that said heating and air conditioning units and systems
serve only the Premises and no other premises in the Park. Therefore, Tenant
hereby agrees to pay as Additional Rental to Landlord upon demand any and all
bills, invoices or other reasonable costs and expenses incurred by Landlord for
the maintenance, repair of said heating and air conditioning units and systems,
subject to the limitations of Paragraph 6.4 above.

         10.3 Notwithstanding the foregoing, each party hereto shall make any
repairs of any kind necessitated by its own act, default or negligence, or that
of its agents, servants, employees, licensees or contractors. In the event such
repairs are necessitated by the act, default or negligence of Tenant, or that of
its agents, servants, employees, licensees or contractors, Landlord may make or
cause the same to be made, but shall not be obligated to do so, and Tenant
agrees to pay the Landlord promptly upon Landlord's demand, as Additional
Rental, the full cost of such repairs, if made. In the event Landlord elects not
to make such repairs caused by the act, default or negligence of Tenant, or that
of its agents, servants, employees, licensees or contractors, Landlord may
require Tenant to promptly make such repairs at Tenant's sole cost and expense.

         11: PARKING FACILITIES AND COMMON AREAS
         ---------------------------------------

         11.1 Landlord hereby grants to Tenant, its agents, servants, employees,
visitors, licensees, customers and contractors a non-exclusive license to use up
to 117 undesignated spaces of the parking facilities and to use the other common
areas and facilities of the Park in common with others during the term of this
Lease as shown on Exhibit B-2, subject to the exclusive control and management
thereof by Landlord and subject, further, to the rights of the Landlord to make
changes, additions to, subtractions from, rearrangements of, alterations of,
modifications of and/or supplements to the parking facilities and other common
areas and facilities, the Park or the real property of which it is a part
provided that Tenants right to use 117 parking spaces shall not be

                                       14

<PAGE>

reduced as a result thereof.

         11.2 Landlord will, or will cause others to, operate, maintain, manage,
equip, police, light, repair, clean, plow, shovel and repave the parking
facilities and other common areas and facilities in a manner deemed by Landlord
to be reasonable and appropriate and in the best interests of the Park. Landlord
shall have the right (1) to establish, modify and enforce reasonable rules and
regulations with respect to the Park and parking facilities and other common
areas and facilities; (2) to enter into, modify and terminate easement and other
agreements pertaining to the use and maintenance of the Park and parking
facilities and other common areas and facilities; (3) to close temporarily any
or all portions of the Park and parking facilities and other common areas and
facilities; and (4) to do and perform such other acts in and to the Park and
parking facilities and other common areas and facilities and improvements as, in
the reasonable business judgment of the Landlord, is advisable. Tenant shall
conform to all reasonable and uniform rules and regulations which the Landlord
may make in the management and use of the parking facilities and other common
areas and facilities.

         11.3 Tenant and its employees shall not park cars except in areas which
shall be designated by Landlord for Tenant parking as shown in Exhibit B-2
attached hereto. All loading and unloading of goods shall be made at the rear
entrance or truck dock. Tenant agrees that upon written notice from Landlord, it
will, within ten (10) days, furnish Landlord with the state automobile license
numbers assigned to the cars of all its employees. Landlord may require Tenant
to cause its employees to identify their vehicles by way of stickers issued by
Landlord or other means of identification evidencing authority to use the MDA
property. Landlord reserves the right to require Tenant to remove "junk" and/or
unregistered motor vehicles which are or were owned by any employee of Tenant
from the parking area if, in Landlord's judgment, said vehicle make the parking
area unsightly or if said vehicles interfere with free ingress and egress.
Further, Landlord reserves the right to cause the removal of any vehicles which
are parked in a location which interferes with free ingress and egress
throughout the Park and Premises. No portion of any parking area shall be used
for the repair or storage of vehicles or equipment (other than on an emergency
or day-to-day transient basis by Tenant, its agents, servants, employees,
visitors, licensees, customers and contractors). The foregoing shall not
prohibit Tenant from parking a normal and customary fleet of company cars in the
parking area, provided that no vehicle maintenance (which term includes, but is
not limited to, gasoline pumping and automobile repair) may be performed.

         12: TENANT FIT-OUT AND ALTERATIONS
         ----------------------------------

         12.1 When Landlord permits Tenant to enter upon the Demised Premises
prior to the Commencement Date for the purpose of performing the Tenant Process
Work, or in the event Landlord permits Tenant to enter upon the Demised Premises
for the purpose of moving or installing any of Tenant's furniture, equipment
fixtures, business machines or other personal property into or upon the Demised
Premises, or for any other purposes the provisions of Paragraph 25 (Fire
Insurance) and Paragraph 26 (Damage) of this Lease Agreement shall apply and
become effective as

                                       15

<PAGE>

of the date of the first such entry by Tenant.

         12.2 After the completion of the Landlord Work and Tenant Work set
                                                   -
forth in Exhibit W-1 hereof and the Tenant Process Work, the Tenant is
                   -
specifically prohibited from renovating, altering, improving, and/or making any
interior or exterior changes, or installing any equipment (other than normal
office equipment) in the Premises without the prior approval of Landlord, said
approval may be granted or withheld in Landlord's sole and absolute discretion.
Prior to the commencement of the work, Tenant shall deposit with Landlord a sum
of cash equivalent to Ten (10.00%) per cent of the cost of the work as
determined by Landlord, provide a completion bond or irrevocable letter of
credit in form satisfactory to Landlord or at Landlord's option, an amount
determined by Landlord in Landlord's reasonable commercial judgment, as security
to assure the proper completion of the approved work. If Tenant completes said
work in accordance with the approved plans and specifications, Landlord shall
return said sum to Tenant, without interest, release said completion bond and/or
irrevocable letter of credit within Thirty (30) days of the issuance of the
Certificate of Occupancy as set forth below. Prior to the commencement of any
work approved by Landlord, Tenant shall provide Landlord with a copy of any
appropriate and/or required permit for the approved work issued by the
appropriate governmental authority. Upon completion of the approved work, Tenant
shall provide Landlord with a copy of the Certificate of Occupancy for the
approved work issued by the appropriate governmental authority. All of such work
conducted by Tenant or at its direction shall be done at Tenant's sole cost and
expense, shall conform in all respects to Landlord's standards and
specifications, shall be done in a workmanlike manner, shall at all times comply
with all applicable laws, rules, ordinances and regulations and in no way harm
the structure of the Premises or the building of which the Premises are a part,
provided that at the expiration of this Lease, or any extension thereof, Tenant,
at its expense, restores the within Premises to its original condition, ordinary
wear and tear, Landlord Work and the Tenant Work set forth in Exhibit W-1 hereof
excepted, and repairs any damage to the Premises resulting from the installation
or removal of such partitions, fixtures, or equipment as may have been installed
by Tenant, or repairs and restores the Premises to the condition it was in
during the term of this Lease, at Landlord's option if requested to do so by
Landlord. Landlord reserves the right, before approving any such changes,
additions or alterations, and to secure Landlord against Tenant's obligation to
repair or restore the Premises at the end of the term of the Lease to require
the Tenant to furnish it a good and sufficient bond. All of such changes,
additions or alterations shall be made solely at the expense of the Tenant; and
the Tenant agrees to protect, indemnify and save harmless the Landlord on
account of any injury to third persons or property, by reason of any such
changes, additions, or alterations, and to protect, indemnify and save harmless
the Landlord from the payment of any claim of any kind or character on account
of bills for labor or material in connection therewith. Before Tenant may do any
work at the Premises pursuant to this paragraph, Tenant must provide Landlord
with a Certificate of Insurance in an amount reasonably satisfactory to
Landlord, which insurance must provide the coverage required under this
paragraph. All of such work conducted by Tenant or at its direction shall be
performed only by contractors or subcontractors selected by Tenant from a list
of same prepared by Landlord. Tenant is specifically prohibited from using any
contractor or subcontractor not listed by Landlord as

                                       16

<PAGE>

approved, and the use of any contractor or subcontractor not on the approved
list provided by Landlord shall be a default under this Lease. Tenant shall make
no structural changes, roof penetrations, exterior wall penetrations or
alterations unless prior approval from the Landlord is obtained in writing,
which approval may be granted or withheld in Landlord's sole discretion. As to
any structural changes, roof penetrations, exterior wall penetrations or
alterations Landlord shall have the absolute right, in Landlord's sole
discretion, to designate the contractor(s) which may perform said work.

         12.3 Tenant, may, at its expense install any interior lighting fixtures
or other trade fixtures or equipment, and may at its expense repair, redecorate
and/or paint the Premises with the prior approval of the Landlord in writing,
after submission of such plans and specifications to Landlord, said approval not
to be unreasonably withheld. All work done by Tenant hereunder shall be in
accordance with all requirements of Paragraph 12.2 above.

         13: SIGNS
         ---------

         13.1 Tenant shall have the right to install signage (including exterior
signage on the Building) in conformance with all applicable laws, the MDA and
Landlord's requirements, subject to Landlord's approval. The Tenant shall not
display any sign, picture, advertisement, awning, merchandise or notice on the
outside of the building of which the Premises are a part, nor on the outside or
inside of the Premises, except as shall conform to the requirements of the
Landlord and any governmental agencies having jurisdiction thereof. Having been
granted authority to erect and maintain a sign or signs, Tenant shall maintain
said sign(s) in a first class condition and state of repair. Missing, broken,
blocked or malfunctioning letters or other elements of signage shall be replaced
or repaired by Tenant at Tenant's sole cost and expense within 30 days of such
condition occurring. If, after such 30 day period, such repair or replacement
has not been accomplished by Tenant as required hereunder, Tenant shall, upon
notice from Landlord, cover such sign in its entirety with brown or black opaque
material until the repair or replacement has been accomplished. If Tenant fails
or refuses to make such repair or replacement or cause the sign to be covered as
required, Landlord may, but shall not be obligated to, cause such repair or
replacement to be done and Tenant shall pay to Landlord on demand, as Additional
Rental, any costs or expenses incurred or paid by Landlord making such repair or
replacement in accordance with the provisions of this Paragraph.

         14: OUTSIDE APPEARANCE AND DISPLAYS
         -----------------------------------

         14.1 Tenant shall maintain the Premises in a neat and clean condition,
shall keep sidewalks adjoining the Premises clean and free from rubbish and
shall store all trash and garbage within the Premises or in such place as
Landlord may designate, and shall arrange for the regular pick up of trash and
garbage. Tenant shall not burn any trash of any kind in and about the building
and shall not permit rubbish, refuse or garbage to accumulate or fire hazards to
exist about the Premises.

                                       17

<PAGE>

         14.2 The Tenant shall not display any merchandise or show cases or
other obstructions on the outside of the building, or the Premises, or in any
lobby or passageway adjoining the same which shall extend beyond the border line
of the Premises, except a picnic table.

         15. CHANGES OR ALTERATIONS BY LANDLORD
         --------------------------------------

         15.1 Without liability or allowance to Tenant on the part of Landlord,
Landlord reserves the right to make such changes, alterations, additions,
improvements, repairs or replacements in or to the Building (including the
Premises) and the fixtures and equipment thereof, and to erect, maintain and use
pipes, ducts and conduits in and through the Premises which pipes, ducts and
conduits existed on the date of the execution of this Lease or are permitted
under Paragraph 1.3 hereof. In the exercise of said rights Landlord agrees to
reasonably attempt to not cause material interference with Tenant's business.
Landlord agrees, except in case of emergency, to give Tenant prior reasonable
notice before proceeding with any changes or alterations and to proceed with due
diligence so as to minimize interference with Tenant's business. In addition,
Landlord agrees not to unreasonably interfere with the use of the Premises and
covenants that all changes shall be consistent with high quality office/business
Buildings.

         15.2 Landlord reserves the right to name or renumber the Building and
to change the name or address of the Building at any time and from time to time,
and to so indicate on any interior or exterior surface of the Building. If
Landlord exercises said right(s), Landlord will reimburse Tenant a reasonable
amount for Tenant's costs arising directly from such change(s), including,
without limitation, replacing a reasonable amount of Tenant's stationary,
business cards and the like.

         15.3 There shall be no allowance to Tenant for a diminution of rental
value and no liability on the part of Landlord by reason of inconvenience,
annoyance or injury to business arising from Landlord, Tenant or others making
any changes, alterations, additional, improvements, repairs or replacements in
or to any portion of the Building or the Premises, or in or to the fixtures,
appurtenances or equipment thereof; and no liability upon Landlord for failure
of Landlord or others to make any changes, alterations, additions, improvements,
repairs or replacements in or to any portion of the Building or the Premises, or
in or to the fixtures, appurtenances or equipment thereof, except as required by
Landlord under this Lease; however, Landlord agrees to use due diligence when
making any changes, alterations, additions, improvements, repairs or
replacements so as to attempt to cause minimum inconvenience to Tenant's
business operation.

         16: COVENANTS BY TENANT
         -----------------------

         16.1 Tenant shall pay promptly when due all Basic Rental, Additional
Rental and other charges under this Lease at the time and in the manner set
forth in this Lease.

         16.2 Tenant shall procure and maintain in effect at all times any
licenses and permits

                                       18

<PAGE>

required for any use made of the Premises by Tenant. Upon the expiration or
termination of this Lease, to remove its goods and effects and those of all
persons claiming under it, and to yield up peaceable to Landlord the Premises in
the condition required by this Lease, damage by fire, taking, casualty,
structural defects (other than those caused by Tenant, its agents, servants,
employees, invitees and/or contractors) and reasonable wear and tear only
excepted.

         16.3 Tenant shall not make any use of the Premises which causes
disruption or interference with the normal business operations of either
Landlord or any other occupants of the Building or of the Park or is contrary to
any law, ordinance or regulation, nor permit any act or thing to be done on the
Premises which shall constitute a nuisance or which may make void or voidable
any insurance on said Premises, the building of which they are a part, the Park,
or the parking facilities or other common areas or facilities against fire, and
to pay any increased or extra premium payable for any such insurance resulting
from any act done by Tenant, its agents, servants, employees, invitees and/or
contractors.

         16.4 Tenant shall pay promptly when due the entire cost of any work to
the Premises undertaken by Tenant so that the Premises, the building of which
they are a part, the Park, and the parking areas and other common areas and
facilities, shall at all times be free of liens for labor and materials; to
procure all necessary permits before undertaking such work; to do all of such
work in a good and workmanlike manner, employing materials of good quality and
complying with all government requirements; and to save Landlord harmless and
indemnified from all injury, loss, claims or damage (including, but not limited
to, Landlord's costs of defense and reasonable attorney's fees) to any person or
property occasioned by or growing out of such work.

         16.5 Tenant shall give to Landlord prompt written notice of any damage
to, or defective condition in, any part of the Building's plumbing, electrical,
heating, air conditioning or other systems serving, located in, or passing
through the Premises. Such condition shall be remedied by Landlord and, if the
same was caused by Tenant, the cost of remedy thereof shall be paid by Tenant.
In no event shall Tenant be entitled to claim any damages arising out of or from
such damage or defective condition. Nothing, however, in this paragraph is
intended to relieve Landlord from the negligence or willful wrongdoing of itself
or its agents, servants, employees, invitees and/or contractors.

         17: LIABILITY AND INDEMNITY
         ---------------------------

         17.1 The Tenant shall save the Landlord harmless and indemnified from
all injuries, loss, claims or damage (including, but not limited to, Landlord's
costs of defense and reasonable attorney's fees) to any person or property while
within or on the Premises unless caused by the act, negligence or default of the
Landlord, its agents, servants, employees, invitees and/or contractors, and from
and against all injury, loss, claims or damage (including, but not limited to,
Landlord's costs of defense and reasonable attorney's fees) to any person or
property anywhere occasioned by any act, negligence

                                       19

<PAGE>

or default of Tenant. Tenant shall furnish liability insurance naming Landlord
as an additional insured, in the amount of $3,000,000.00, combined single limit
policy for bodily injury and property damage. Landlord shall have the right to
require Tenant to increase the amount of Tenant's insurance coverage set forth
above based upon Landlord's reasonable commercial judgment. The Tenant shall
furnish to Landlord a certificate of insurance which will provide by suitable
endorsements (a) that the contractual liability of Tenant hereunder is covered
thereby, and (b) that the insurance will not be canceled or substantially
changed without at least ten (10) days prior written notice to Landlord.

         17.2 The Landlord shall save the Tenant harmless and indemnified from
all injury, loss, claims or damage (including, but not limited to, Tenant's
costs of defense and reasonable attorney's fees) to any person or property while
on the parking facilities or other common areas and facilities, or any portion
of the Park premises not within the Tenant's Premises, unless caused by the act,
negligence or default of Tenant, its agents, servants, employees, invitees
and/or contractors, and from and against all injury, loss, claims or damage
(including, but not limited to, Tenant's costs of defense and reasonable
attorney's fees) to any person or property anywhere occasioned by any act,
negligence or default of Landlord. Landlord shall maintain public liability
insurance in amounts Landlord in its reasonable commercial judgment deems
necessary and appropriate, in companies qualified to do business in said state
insuring Landlord against injury to persons or damage to property as herein
provided.

         17.3 Tenant shall deliver to Landlord certificates of such insurance at
or prior to the commencement of the term of this Lease, and thereafter within
ten (10) days prior to the expiration of such policies.

         18: BANKRUPTCY OR INSOLVENCY
         ----------------------------

         18.1 To more effectually secure the Landlord against loss of the rent
and other payments herein provided to be made by the Tenant, it is agreed as a
further condition of this Lease that the filing of any petition of bankruptcy or
insolvency by or against the Tenant, or the adjudication in Bankruptcy of the
Tenant, or the appointment of a Receiver for Tenant by any court, or Tenant's
assignment of its property for the benefit of creditors shall be deemed to
constitute a breach of this lease, if said petition is not dismissed or Receiver
discharged within sixty (60) days after the filing or appointment, and thereupon
without entry or other action by the Landlord, this Lease shall, at the option
of the Landlord, become and be terminated; and not withstanding any other
provisions of this Lease, the Landlord shall forthwith upon any such termination
be entitled to recover the rent reserved in this Lease for the residue of the
term hereof less the fair rental value of the Premises for the residue of said
term.

         19: LITIGATION
         --------------

         19.1 In the event the Landlord or its Agents, without fault on
its/their part, or default under

                                       20

<PAGE>

the terms of this Lease, become involved, through or on account of the occupancy
of the Premises by the Tenant, or the conduct of Tenant's business upon the
Premises, in any controversy or litigation, with any Third Party, the Tenant
shall upon notice from Landlord or its Agent, immediately take all necessary
steps, and do whatever may be necessary to remove said Landlord's connection
with, or liability under such controversy or litigation, and particularly if
such controversy or litigation throws any cloud or encumbrance upon the title of
said Landlord to its real estate; provided, that if the Tenant believes it has a
good and valid defense, or claim, in such controversy or litigation which Tenant
desires to set up and maintain by and throughout court procedure and litigation,
the Tenant shall have the right to do so, provided it first executes and
delivers to the Landlord an indemnifying bond with surety, and discharges any
and all final judgments, liens, costs, damages, expenses and obligations of
Landlord whatsoever, in or arising out of the controversy or litigation
involving the Landlord or its Agents, including all costs, expenses and
reasonable attorney's fees incurred by Landlord or its agents in protecting
their interest or defending themselves in such controversy or litigation.

         20:  ATTORNEY'S FEES
         --------------------

         20.1 If the Landlord or Tenant shall at any time be at default
hereunder, and if the Landlord or Tenant shall institute an action, summary
proceeding or arbitration against the other party based upon any such default,
or if the Landlord or Tenant shall cure such default or defaults for the act of
the other party, then the Landlord or Tenant will reimburse the other party for
the expense of attorney's fees and disbursements thereby incurred by the other
party, so far as the same are reasonable in amount. Also so long as the Tenant
shall be a Tenant hereunder the amount of such expenses shall be deemed to be
"Additional Rent" hereunder and shall be due from the Tenant to the Landlord on
the first day of the month following the incurring of such respective expenses.
Similarly, if Landlord is required to reimburse Tenant under this Paragraph,
Landlord shall pay said reimbursement on the first day of the month following
the incurring of such respective expenses.

         21:  HAZARDOUS SUBSTANCES
         -------------------------

         21.1 The term "Hazardous Substance" shall mean any substance, chemical
or waste that is or shall be listed or defined as hazardous, toxic or dangerous
under Applicable Environmental Law, including, but not limited to PCB's and any
petroleum products, except commonly used cleaning products and products used in
common office machinery, i.e photocopiers, in amounts customary and reasonable
for normal office use.

         21.2 The term "Applicable Environmental Law" shall include, but shall
not be limited to, CERCLA, RCRA, the Federal Water Pollution Control Act, 33
U.S.C.(S)(S)1251, et. seq., the Clean Air Act, 42 U.S.C.(S)7401, et. seq., and
the regulations thereunder, and any other local, state and/or federal laws or
regulations, whether currently in existence or hereinafter enacted, that govern:

                                       21

<PAGE>

       (i)    the existence, cleanup and/or remedy of contamination on property;
       (ii)   the protection of the environment from spilled, deposited or
              otherwise emplaced contamination;
       (iii)  the control of hazardous wastes; or
       (iv)   the use, generation, transport, treatment, removal or recovery
              of hazardous substances, including building materials.

       21.3 On or before the Commencement Date Landlord shall, at Landlord's
sole cost and expense, provide to Tenant a Phase I Environmental Assessment of
the Building of which the Premises are a part from an environmental consultant
selected by Landlord (the "Initial Environmental Audit").

       21.4 Tenant shall not use, store, generate, treat, transport or dispose
of any hazardous waste or Hazardous Substances on the Premises or the Park
without first obtaining Landlord's written approval. Tenant shall notify
Landlord and seek such approval in writing at least thirty (30) days prior to
bringing any Hazardous Substances, as defined by any Federal, State or local law
or regulation, onto the Premises. Landlord may withdraw approval of any such
Hazardous Substances at any time, for reasonable causes related to the threat of
contamination, or damage or injury to persons, property or resources on the
Premises, the Building of which the Premises are a part or the Park. Upon
receipt of such disapproval, Tenant shall remove the Hazardous Substances from
the Premises or the Park. Landlord's failure to approve the use of a Hazardous
Substance under this paragraph shall not limit or affect Tenant's obligations
under this Lease, including Tenant's duty to remedy or remove releases or
threatened releases; and to comply with all applicable laws, federal, state and
local relating to the use, storage, generation, treatment, transportation and/or
disposal of such hazardous waste and/or Hazardous Substances.

       21.5 For any years in which Tenant has used, generated, treated, stored
or transported Hazardous Substances on or in the Premises or the Park, Tenant
shall provide Landlord with a written report (i) listing the substances which
were present on or in the Premises or the Park as a result of Tenant's use of
same (and provide copies of Material Safety Data Sheets [MSDS] with respect to
same and copies of all manifests required by State or Federal laws with regard
to disposal of any Federally-regulated hazardous waste or Connecticut-regulated
waste); (ii) all releases of Hazardous Substances that occurred or were
discovered on the Premises or the Park by Tenant, its agents, servants,
employees, invitees or contractors; (iii) all Hazardous Substance-related
compliance activities, including all contacts with administrative agencies in
any way concerning Hazardous Substances and all requests from third parties for
cleanup or compliance occurring or received by Tenant, its agents, servants,
employees, invitees or contractors; and (iv) all plans relating to the use of
the Premises or the Park, consent agreements or other contracts relating to
Hazardous Substances executed or requested during that time period by Tenant,
its agents, servants, employees, invitees or contractors. The report shall
include copies of all documents and correspondence related to such activities
and written reports of verbal contacts by Tenant, its agents, servants,
employees, invitees or

                                       22

<PAGE>

contractors. Tenant shall designate one individual or position to be responsible
to provide information to Landlord with respect to Hazardous Substances and/or
environmental matters.

         21.6  In the event Tenant applies for any permits or approvals with
respect to storage, generation, treatment, transportation and/or disposal of
hazardous waste or Hazardous Substances, Tenant shall notify Landlord and
provide copies of said applications prior to submission of same to governmental
authorities for approval.

         21.7  Tenant further agrees to promptly contain, remove and mitigate
the effect of any such pollution or contamination or hazardous waste or
Hazardous Substances on the Premises or the Park resulting from the act,
omission or negligence of Tenant, its agents, servants, employees, invitees or
contractors, in compliance with all applicable laws and regulations; and take
all such steps which may be required to satisfy and/or remove any lien placed
upon said Premises or the Park by the Commissioner of the Connecticut Department
of Environmental Protection pursuant to Connecticut statutes or regulations, the
United States Environmental Protection Agency pursuant to Federal statutes or
regulations, the local government or any legal authority, or any agents of any
of said entities, or any other entity or person, be it a public agency or
private, pursuant to any federal, state or local law, ordinance or regulation
resulting from any such act, omission or negligence of Tenant, its agents,
servants, employees, invitees or contractors.

         21.8  Tenant shall permit Landlord and its agents to enter into and
upon the Premises at all reasonable times for the purpose of inspecting the
Premises and all activities thereon, including activities involving
environmental matters and/or Hazardous Substances, or for the purposes of
maintaining the Building. As to inspection or maintenance of the Premises in the
normal course of Landlord's business, Landlord will provided Tenant forty eight
(48) hours notice of such inspection or maintenance, and Tenant shall have the
right to have a representative of Tenant present at all such times. As to
inspection or maintenance which Landlord reasonably considers to be an emergency
or require immediate attention, Landlord shall not be required to give any prior
notice to Tenant, nor to wait for any Tenant representative, but will give
Tenant notice of said inspection or maintenance within a reasonable time
thereafter.

         21.9  No spill, deposit, emission, leakage or other release of
hazardous waste or Hazardous Substances in or on the Premises or the Park, soil,
groundwater and/or water by Tenant, its agents, servants, employees, invitees or
contractors shall be deemed to result in wear and tear that would be normal for
the period of Tenant's occupancy.

         21.10 After Tenant has vacated the Premises in accordance with the
terms and conditions of this Lease, but no later than 10 days after the
expiration or sooner termination of this Lease, Tenant shall, at its sole cost
and expense, provide Landlord with a phase I environmental assessment of the
Premises, together with such additional reports and testing (including a phase
II environmental assessment) if necessary in Landlord's sole discretion using a
consultant selected by and acceptable

                                       23

<PAGE>

to Landlord, to determine the environmental status of the Premises as of the
date of that Environmental Update ("Environmental Update").

         21.11 Tenant shall surrender the Premises free of any contamination or
other damage caused by such occurrences during the term of this Lease by Tenant,
its agents, servants, employees, contractors or invitees.

         21.12 The Tenant hereby  irrevocably  and  unconditionally  agrees to
indemnify and hold the Landlord and Owner harmless, at all times, from and
against all liabilities, claims, liens, losses, costs, damages and expenses,
including, but not limited to reasonable attorney's fees and costs of defense
and experts incurred by the Landlord or Owner, claims paid whether as a result
of final judgment or in the settlement of contested claims, which the Landlord
or Owner may incur, sustain or be liable for, directly or indirectly, as the
result of any acts, omissions or negligence by the Tenant, its agents, servants,
employees, invitees or contractors which results in the exercise by the United
States Environmental Protection Agency, the Connecticut Department of
Environmental Protection, the local government or any legal authority, or any
agents of any of said entities, or any other entity or person, be it a public
agency or private, of any legal rights it may now or hereafter be entitled to
exercise with respect to Chapter 445 or 446K of the Connecticut General Statutes
(C. G. S.(S)22a-114, et. seq. and C.G.S.(S)22a-416 et. seq. respectively and
C.G.S. (S)22a-451 et. seq.), the Resource Conservation and Recovery Act of 1976
(42 U.S.C.(S)6901 et. seq.), the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (42 U.S.C.(S)9601 et. seq.), the
Hazardous Materials Transportation Act (49 U.S.C.(S)1801 et. seq.), the Federal
Water Pollution Control Act (33 U.S.C. (S)1251 et. seq.), the Clean Air Act (42
U.S.C.(S)7401 et. seq.), the Toxic Substances Control Act (15 U.S.C.(S)2601 et.
seq.), the Clean Water Act (33 U.S.C.(S)1251 et. seq.), the Safe Drinking Water
Act (42 U.S.C.(S)(S)300f through 300j), the Oil Pollution Control Act of 1990
(33 U.S.C.(S)2701 et. seq.), the Rivers and Harbors Act of 1899 (33 U.S.C.(S)401
et. seq.) and the Occupational Safety and Health Act (29 U.S.C.(S)651 et. seq.)
or any amendment, supplement or modification thereof or regulations or other
authority promulgated thereunder, or any other similar Federal, State or local
law, ordinance or regulation and for any other matter arising directly or
indirectly as a result of said laws or regulations including, but not limited
to, the removal of any "Hazardous Waste" as defined in the Federal laws or
regulations or the Connecticut General Statutes or regulations, or Hazardous
Substance as defined above, whether or not ordered by the respective Government
agencies referred to above or any Federal, State or local law or regulation or
any other claim at law or in equity. In the event the Landlord or Owner incurs
any of such expenses, or any of the above mentioned authorities exercises any of
the powers or rights set forth above as a result of the activities of Tenant as
set forth above, then the Landlord or Owner may require the Tenant to post a
bond in favor of the Landlord or Owner in an amount sufficient to indemnify
Landlord or Owner under this paragraph, the amount of said bond to be determined
by the Landlord or Owner. Failure of the Tenant to post said bond when required
by Landlord or Owner shall be a default under this lease. The provisions of this
paragraph shall be binding on the Tenant, its successors and assigns, and inure
to the benefit of the Landlord and Owner, their successors and assigns.

                                       24

<PAGE>

         21.13 Tenant's obligations under this Paragraph, including, but not
limited to its reporting, remediation and indemnification obligations, shall be
limited to any Hazardous Substances generated, stored, transported or disposed
of by Tenant, its successors and assigns, and inure to the benefit of the
Landlord and Owner, their successors and assigns.

         21.14 This Paragraph 21 shall survive the termination or expiration of
this Lease.

         22: ASSIGNMENT, MORTGAGING AND SUBLEASE
         ---------------------------------------

         22.1  Tenant covenants and agrees, for Tenant and its successors,
assigns and legal representatives, that neither this Lease nor the term and
estate hereby granted, nor any part hereof or thereof will be assigned,
mortgaged, pledged, encumbered or otherwise transferred (whether voluntarily,
involuntarily, by operation of law, or otherwise), and that neither the
Premises, nor any part thereof, will be encumbered in any manner by reason of
any act or omission on the part of Tenant, or will be used or occupied, or
permitted to be used or occupied, or utilized for desk space or for mailing
privileges or as a concession, by anyone other than Tenant, or for any purpose
other than as hereinbefore set forth, or will be sublet, or offered or
advertised for subletting, without the prior written consent of Landlord in
every case; provided, however, that if Tenant is a corporation, limited
liability company, partnership, association or other legal entity the assignment
or transfer of this Lease and the term and estate hereby granted, to any
corporation, limited liability company, partnership, association or other legal
entity into which the Tenant is merged or with which the Tenant is consolidated
or which corporation, limited liability company, partnership, association or
other legal entity controls, is controlled by or is commonly controlled with
Tenant, or which corporation, limited liability company, partnership,
association or other legal entity is purchasing substantially all of Tenant's
business as conducted at the Premises (such corporation, limited liability
company, partnership, association or other legal entity being hereinafter, in
this Paragraph 22, called "Assignee") without the prior written consent of
Landlord shall not be deemed to be prohibited hereby if, and upon the express
condition that, Assignee shall have executed, acknowledged and delivered to
Landlord an agreement, in form and substance satisfactory to Landlord, whereby
Assignee shall assume and agree to perform, and to be personally bound by and
upon, all the covenants, agreements, terms, provisions and conditions set forth
in this Lease on the part of the Tenant to be performed, and whereby Assignee
shall expressly agree that the Provisions of this Paragraph 22 shall,
notwithstanding such assignment or transfer, continue to be binding upon it with
respect to all future assignments and transfers, and further conditioned that
Tenant shall execute and deliver to Landlord a Guaranty of payment and
performance of Assignee in form and substance satisfactory to Landlord.

         22.2  Notwithstanding anything hereinbefore contained in this Paragraph
22, in the event Tenant desires Landlord's consent to an assignment or
subletting of all or any part of the Premises, Tenant, by notice in writing,
shall notify Landlord of the name of the proposed assignee or subtenant,

                                       25

<PAGE>

such information as to proposed assignee's or subtenant's financial
responsibility and standing as Landlord may reasonably require, and of the
covenants, agreements, terms, provisions and conditions contained in the
proposed assignment or sublease.

         22.3 Landlord covenants not to unreasonably withhold or delay its
consent to such proposed assignment or subletting by Tenant of such space to the
proposed assignee or subtenant on said covenants, agreements, terms, provisions
and conditions set forth in the notice to Landlord referred to above, provided,
however, that Landlord shall not in any event be obligated to consent to any
such proposed assignment or subletting unless:

         (a)      in the reasonable judgment of Landlord, the proposed assignee
                  or subtenant is of a character and engaged in a business such
                  as are in keeping with the standards of Landlord in those
                  respects for the MDA, building and occupancy;

         (b)      in the reasonable judgment of Landlord, the purposes for which
                  the proposed assignee or subtenant intends to use the portion
                  of the Premises sublet to it are such as are in keeping with
                  the standards of Landlord in those respects for the MDA,
                  Building and its occupancy;

         (c)      such subletting will result in there being no more than three
                  occupants of the Premises, including Tenant and all
                  subtenants;

         (d)      the space so to be sublet shall be regular in shape with
                  appropriate means of ingress and egress and suitable for
                  normal renting purposes;

         (e)      the proposed assignee or subtenant under such proposed
                  subletting shall not be a government or any subdivision or
                  agency thereof nor then be a tenant or subtenant of Landlord
                  or an occupant of any part of the Building in excess of ten
                  thousand (10,000) square feet outside the Premises;

         (f)      Tenant shall reimburse Landlord for any reasonable expenses
                  that may be incurred by Landlord in connection with the said
                  assignment or sublease, including, without limitation, the
                  costs of making investigations as to the acceptability of a
                  proposed assignee or subtenant and reasonable legal expenses
                  incurred in connection with the granting of any requested
                  consent to an assignment or subletting;

         (g)      the proposed subletting shall be at a rate not less than the
                  rental rates at which Landlord is offering comparable space
                  in the Building for a comparable term; and

         (h)      Tenant shall pay to Landlord, as and for Additional Rental
                  with each monthly installment of Basic Rental and Additional
                  Rental due and payable by Tenant to

                                       26

<PAGE>

          Landlord, in case of a subletting, during the term of the sublease
          between Tenant and the subtenant, an amount equal to fifty (50%)
          percent of the excess of the rent received by Tenant from the
          subtenant with respect to the space covered by the sublease over the
          rent payable by Tenant to Landlord for said space for the same period,
          and in the case of an assignment, during the remainder of the term of
          this Lease, an amount equal to fifty (50%) percent of the excess of
          the total rent payable by the assignee under the terms of this Lease
          over the total amounts payable by Tenant to Landlord (specifically
          excluded from the requirements of this Paragraph 22.3(h) are Business
          Assignments).

    22.4 Each subletting to this Paragraph 22 shall be subject to all the
covenants, agreements, terms, provisions and conditions contained in this Lease
and the MDA. Tenant covenants and agrees that, notwithstanding such assignment
or any such subletting to any tenant and/or acceptance of Basic Rental and
Additional Rental by Landlord from any subtenant, Tenant shall and will remain
fully liable for the payment of the Basic Rental and Additional Rental due and
to become due hereunder and for the performance of all the covenants,
agreements, terms, provisions and conditions contained in this Lease on the part
of the Tenant to be performed. Tenant further covenants and agrees that,
notwithstanding any such assignment or subletting, no other and further
assignment, underletting or subletting of the Premises or any portion thereof
shall or will be made except upon compliance with and subject to the provisions
of this Paragraph 22. Tenant shall promptly furnish to Landlord a copy of such
sublease.

    22.5 If this Lease be assigned or if the Premises or any part thereof be
subject or occupied by any entity other than Tenant, Landlord may, after default
by Tenant, collect rent from the assignee, subtenant or occupant, and apply the
net amount collected to the rent herein reserved, but no such assignment,
subletting, occupancy or collection shall be deemed a waiver of any of Tenant's
covenants contained in this Paragraph 22, or the acceptance of the assignee,
subtenant or occupant as tenant, or a release of Tenant from the further
performance by Tenant of covenants on the part of Tenant herein contained.

    23:  SUBORDINATION; TENANT'S NOTICE OF INTENT TO CANCEL
    -------------------------------------------------------

    23.1 This Lease shall be subject and subordinate at all times, to the lien
of the mortgages now on the Premises, and to all advances made or hereafter to
be made upon the Premises, and subject and subordinate to any Lease or other
arrangement or right to possession under which Landlord is in control of the
Premises and to the rights of the owner or owners of the Premises and of the
land or buildings of which the Premises are a part, provided, however, that in
the absence of any failure by the Tenant to perform the terms of this Lease
beyond any applicable notice and cure periods, the Tenant's possession of the
Premises on the terms and conditions set forth in this Lease shall not be
disturbed during the term of this Lease. If the mortgagee or proposed mortgagee
requests Tenant to execute an estoppel certificate or other similar document,
Tenant shall execute said

                                       27

<PAGE>

estoppel certificate and return same to Landlord within ten (10) days of
Tenant's receipt of same. Failure of Tenant to execute and return said estoppel
certificate or similar document within said ten (10) day period shall be a
default under this Lease. Landlord shall use commercially reasonable efforts to
obtain for Tenant a non-disturbance agreement from any current mortgagee.

         23.2 Tenant shall, upon the request of Landlord in writing and at no
charge or expense to Landlord, subordinate this lease and the lien hereof to the
lien of any present or future mortgage or mortgages upon the Premises or any
property of which the Premises are a part irrespective of the time of execution
or the time of recording of any such mortgage or mortgages, provided that the
holder of any such mortgage shall enter into a written agreement with Tenant to
the effect that in the event of foreclosure or other action taken under the
mortgage by the holder thereof this Lease and the rights of the Tenant hereunder
shall not be disturbed but shall continue in full force and effect so long as
Tenant shall not be in default hereunder beyond any applicable cure period. The
word "mortgage" as used herein includes mortgages, deeds of trust or other
similar instruments, and modifications, extensions, renewals and replacements
thereof, and any and all advances thereunder.

         23.3 Anything to the contrary notwithstanding, the Tenant shall not
elect to exercise any right or option to cancel and terminate this Lease for any
default by the Landlord without having first given any assignee of the rents
hereunder or mortgagee of the Premises or Park prior written notice of its
election to so cancel and terminate, and the assignee and/or mortgagee, their
successors and assigns, shall have thirty (30) days after the receipt of such
notice in which to remedy or have remedied any default of the Landlord and
thereby void Tenant's election to cancel and terminate this Lease. Landlord
hereby notifies Tenant that at the time of the execution of this Lease the
assignee/mortgagee is the Travelers Insurance Company.

         24:  SALE BY LANDLORD
         ---------------------

         24.1  If Landlord, or any subsequent owner of the Park, Premises or
Building sells the same and its successor owner assumes all liability of
Landlord hereunder, Landlord's liability for the performance of its agreements
in this Lease will end on the date of the sale of the Park, Premises or Building
and Tenant will look solely to the purchaser for the performance of those
agreements. For the purposes of this Paragraph, any holder of a mortgage or deed
of trust that affects the Park, Premises or Building at any time, and any
landlord in any lease to which this Lease is subordinate, at any time, will be a
subsequent owner of the Park, Premises or Building when it succeeds to the
interest of the Landlord or any subsequent owner of the Park, Premises or
Building. Tenant will attorn to any subsequent owners of the Park, Premises or
Building. Any and all security deposits paid by Tenant hereunder shall be held
by such subsequent owner and Tenant shall look only to such subsequent owner for
a return thereof upon the expiration of this Lease.

         25:  FIRE INSURANCE
         -------------------

                                       28

<PAGE>

         25.1 Landlord shall, from and after the date of the execution of this
Lease, keep the Premises, the building of which the Premises are a part, the
Park and the parking facilities and other common areas and facilities, as the
case may be, insured against "all risk" loss or damage by fire and any
casualties included in the extended coverage or supplementary contract
endorsements, exclusive of foundation, all concrete improvements and utilities.
Landlord will not, and shall not have any obligation to, provide coverage for
the personal property, trade fixtures, Tenant's improvements or equipment of
Tenant, as Tenant is required to provide its own insurance coverage for same as
set forth in Paragraph 25.3 below.

         25.2 Each of Landlord and Tenant hereby releases the other from any and
all liability or responsibility (to the other or anyone claiming through or
under them by way of subrogation or otherwise) for loss or damage to property
caused by fire or any of the extended coverage or supplementary contract
casualties, even if such fire or other casualty shall have been caused by the
fault or negligence of the other party, or anyone from whom such party may be
responsible, provided, however, that this release shall be applicable and in
force and effect only with respect to loss or damages occurring during such time
as the releasor's policies shall contain a clause or endorsement to the effect
that any such release shall not adversely affect or impair said policies or
prejudice the right of the releasor to recover thereunder. Each of the Landlord
and Tenant agrees that its policies will include such a clause or endorsement so
long as the same shall be obtainable without extra cost, or if extra cost shall
be chargeable therefor, each party shall advise the other thereof and of the
amount of the extra cost, and the other party, at its election, may pay the
same, but shall not be obligated to do so.

         25.3 The Tenant shall, at its own cost and expense carry fire and
casualty insurance covering all property of the Tenant and all interior
installations, partitions, equipment, systems and improvements installed or made
by it in the Premises, any loss payable under such insurance being payable
directly to the Tenant. Tenant shall provide Landlord with a copy of the
certificate for said insurance, which policy shall provide that it will not be
canceled without a Ten (10) day written notice to Landlord by the insurer.

         26:  DAMAGE
         -----------

         26.1 In case of partial or total destruction of the Premises, the
Landlord and Tenant will each give immediate notice thereof to the other. If the
Premises shall have been damaged or destroyed to an extent less than 25% of the
insurable value thereof, the Landlord will restore the Premises to their former
condition within a reasonable time, not to exceed six (6) months after the
receipt of any available insurance proceeds, at its expense. If the Premises
shall have been damaged or destroyed to an extent of 25% or more of the
insurable value thereof, the Landlord may elect to (a) restore the Premises to
their former condition with a reasonable time, not to exceed nine (9) months
after the receipt of any available insurance proceeds, at its expense, or (b)
terminate this Lease by giving notice of termination to the Tenant. If Landlord
elects to restore the Premises as set forth above and

                                       29

<PAGE>

the Premises is not restored during the applicable time period, subject to the
provisions of Paragraph 33.1 below, then Tenant shall have the right to
terminate this Lease upon written notice to Landlord. A just proportion of the
Basic Rent, according to the nature and extent of the damage or destruction,
will be abated from the time of the same until the Premises shall have been
restored (as hereinabove provided) or this Lease terminated, excepting, however,
that if the nature of the damages is such as to render the Premises wholly
unsuitable for Tenant's use, then unless this Lease is terminated by Landlord,
as hereinbefore provided, all rent shall abate and Tenant's obligations under
this Lease shall be suspended until such time as the Premises shall have been
fully restored by the Landlord, including Landlord Work and Tenant Work set
forth in Exhibit W-1 hereof. There shall be no obligation upon the part of the
Landlord to repair or rebuild during the last year of the term of this Lease
provided that, if Landlord elects not to repair or rebuild, then Tenant shall
have the right to terminate this Lease immediately. Landlord's obligation to
repair or rebuild pursuant to this paragraph shall be limited to the basic
building, systems and equipment and replacement of any interior work which may
have been installed at Landlord's cost or by Landlord's contractor. Landlord's
obligation to repair or rebuild shall also be limited to the extent of insurance

         proceeds made available by any mortgagee having control over
disposition of such proceeds and shall be further limited to not include the
restoration, repair or rebuilding of any portion of the Premises for which
Tenant is required to maintain insurance under Paragraph 25.3 of this Lease.
Tenant shall be responsible to promptly restore, repair or replace any portion
of the Premises for which Tenant is required to maintain insurance under
Paragraph 25.3 of this Lease provided Landlord has first repaired or restored
the Premises as herein provided.

         27:  EMINENT DOMAIN
         -------------------

         27.1 If any person, authority or corporation, public, private or
otherwise, shall at any time during the term of this Lease or any renewal
thereof lawfully condemn or take under power of eminent domain or condemnation
the whole or any part of the Premises, then at the option of the Landlord this
Lease shall immediately cease and terminate upon possession being taken
thereunder of the Premises or any part thereof, and the Basic Rental and
Additional Rental provided for hereunder shall be apportioned and adjusted as of
the time of such termination. The Landlord shall notify the Tenant of any such
proceedings pertaining to or in any way involving the Premises, and the Tenant
shall have the right, at Tenant's sole cost and expense, to interpose and
prosecute in any such proceeding a claim for the value of its leasehold
interests in the Premises or any part thereof and for the value of any fixtures
or improvements installed in or made to the Premises by the Tenant and for its
moving expenses, and all sums recovered or awarded on the basis of such claims
by the Tenant shall belong to and be payable to the Tenant. If, in the event of
a partial taking, the portion taken leaves the remaining portion of the Premises
wholly unsuitable for Tenant's use, then Tenant, at its election, may terminate
this Lease by giving notice to Landlord of its election and in such event the
Basic Rental and Additional Rental shall be apportioned and adjusted as of the
date of termination. If the term of this Lease shall not be terminated as
aforesaid, then the term of this Lease shall

                                       30

<PAGE>

continue in full force and effect, and Landlord shall within a reasonable time
after possession is physically taken (subject to delays due to shortage of
labor, materials or equipment, labor difficulties, breakdown of equipment,
government restrictions, fires, other casualties or other causes beyond the
reasonable control of Landlord) repair or rebuild what may remain of the
Premises for the occupancy of Tenant; and a just proportion of the Basic Rental
and Additional Rental shall be abated, according to the nature and extent of the
part of the Premises acquired or condemned, in proportion to the area of the
Premises rendered unusable for Tenant to conduct its ordinary business as
previously conducted at the Premises for the balance of the term of the Lease.

         27.2 Landlord reserves to itself, and Tenant assigns to Landlord, all
rights to damages accruing on account of any such taking or condemnation except
as hereinafter stated or by reason of any act of any public or quasi public
authority for which damages are payable. Tenant agrees to execute such
instruments of assignment as may be required by Landlord, to join with Landlord
in any petition for the recovery of damages, if requested by Landlord, and to
turn over to Landlord any such damages as may recovered in any such proceeding.
If Tenant shall fail to execute such instruments as may be required by Landlord,
or to undertake such other steps as may be as may requested as herein stated,
Tenant shall be in default under this Lease. It is agreed and understood,
however, that Landlord does not reserve to itself, and Tenant does not assign to
Landlord, any damages payable for trade fixtures installed by Tenant at its own
cost and expense and which are not a part of the realty, and any damages payable
to Tenant for moving expenses.

         28: QUIET ENJOYMENT
         -------------------

         28.1 Landlord covenants and agrees with Tenant that upon Tenant paying
all Basic Rental, Additional Rental and all other charges which may become due
under this Lease and observing and performing all of the terms, covenants and
conditions on Tenant's part to be observed and performed subject to any
applicable notice and cure periods, Tenant may peaceably and quietly have, hold,
occupy and enjoy the Premises and all rights under this Lease and all said
common facilities of the Park without hindrance or disturbance by Landlord.

         29: DEFAULT BY TENANT
         ---------------------

         29.1 Upon Tenant's failure to pay any installment of Basic Rental,
Additional Rental or any other payment under this Lease within ten (10) days of
said installment being due, or if Tenant shall fail to observe and perform any
of the other conditions, agreements or provisions of this Lease, it shall be
lawful thereupon, without notice as to monetary default and after ten (10) days
written notice as to any other default (except where said other default cannot
be cured within said ten (10) day period, if Tenant commences to cure said
default within ten (10) days and diligently pursues said cure then said ten (10)
day period shall be extended to thirty (30) days) for Landlord to: (1) re-enter
and repossess the Premises, to remove all persons therefrom and to take
exclusive possession of and remove all property therefrom; and/or (2) perform on
behalf of and at the expense of Tenant, any

                                       31

<PAGE>

obligation of Tenant under this Lease which Tenant has failed to perform,
provided, however, that Landlord may exercise the remedy described in this
clause without a default by, or notice to Tenant if Landlord, in its good faith
judgment, believes it would suffer material or substantial damage by failure to
take rapid action or if the unperformed obligation of Tenant constituted an
emergency. Upon any occurrence of default by Tenant hereunder after applicable
notice and cure periods, any and all rights of Tenant as a tenant shall, at the
option of Landlord, immediately cease and terminate. Nothing provided herein
shall be deemed to obligate or require Landlord to take any action or do any
thing for or on behalf of Tenant, or otherwise. The failure on the part of the
Landlord to re-enter or repossess the Premises, or to exercise any of its rights
hereunder upon any default shall not be deemed a waiver of any of the terms and
conditions of this Lease, and shall not preclude said Landlord from the exercise
of any of such rights upon any subsequent occurring default or defaults.
Notwithstanding any other provisions of this Lease, the Landlord shall forthwith
upon any such termination be entitled to recover the total amount of rent
reserved in this Lease for the residue of the term hereof at the time of the
termination.

         29.2 Any reasonable costs or expenses incurred by Landlord (including,
but not limited to, attorney's fees) in enforcing any of its rights or remedies
under this Lease shall be deemed to be Additional Rental and shall be paid to
Landlord by Tenant upon demand.

         30: WAIVERS
         -----------

         30.1 The failure of either party to insist, in any one or more
instances, upon a strict performance of any of the covenants of this Lease, or
to exercise any option herein contained, shall not be construed as a waiver or a
relinquishment for the future of such covenant or option, but the same shall
continue and remain in full force and effect. The receipt by Landlord of Basic
Rent and/or Additional Rent with knowledge of the breach of any covenant hereof
shall not be deemed a waiver of such breach and no waiver by the Landlord of any
provision hereof shall be deemed to have been made unless expressed in writing
and signed by the Landlord. Even though the Landlord shall have consented to an
assignment of this Lease, no further assignment shall be made without the
express consent in writing by the Landlord.

         31: ABANDONMENT
         ---------------

         31.1 If Tenant shall abandon or vacate said Premises before the end of
the term or otherwise default under any other provision of this Lease agreement
beyond any applicable notice and cure periods, Landlord may take possession of
said Premises and relet the same, without such action being deemed an acceptance
of a surrender of this Lease, or in any way terminating the Tenant's liability
hereunder, and the Tenant shall remain liable for payment of the Basic Rent and
Additional Rent herein reserved, less the net amount realized by the Landlord
from reletting, after deduction of any expenses incident to such repossession
and reletting.

                                       32

<PAGE>

         32: HOLDOVER
         ------------

         32.1 If the Tenant shall occupy the Premises with the consent of the
Landlord, after the expiration of this Lease, and/or Landlord and Tenant are
negotiating in good faith for the extension or renewal of this Lease, and rent
is accepted from said Tenant, such occupancy and payment shall be construed as
an extension of this Lease for the term of one month only from the date of such
expiration, and occupation thereafter shall operate to extend the term of this
Lease for but one month at a time unless other terms of such extension are
endorsed hereon in writing and signed by the parties hereto. In such event if
either Landlord or Tenant desires to terminate said occupancy at the end of any
month after the termination of this Lease, the party so desiring to terminate
the same shall give the other party at least thirty (30) days written notice to
that effect. Failure on the part of the Tenant to give such notice shall
obligate it to pay rent for an additional calendar month, following the month in
which the Tenant has vacated the demised premises. If such occupancy continues
without the consent of the Landlord, Tenant shall pay to Landlord, as liquidated
damages, one and one-half times the amount of Basic Rent and Additional Rent at
the highest rate specified in this Lease for the time Tenant retains possession
of the Premises or any part thereof after termination of the term by lapse of
time or otherwise.

         33: GRACE PERIOD
         ----------------

         33.1 In any case where either party hereto is required to do any act,
the time for performance thereof shall be extended by a period equal to any
delay caused by or resulting from Act of God, war, civil commotion, fire or
other casualty, labor difficulties, shortages of labor, materials or equipment,
government regulations or any other causes beyond such party's reasonable
control, whether such time be designated by a fixed date, a fixed time or a
"reasonable time".

         34: NOTICES
         -----------

         34.1 Any notice required to be given hereunder shall be deemed duly
given if mailed in any Post Office by registered or certified mail with return
receipt requested, or sent by commercial overnight delivery, with signatures,
addressed to the Landlord at 2 Parklawn Drive, Bethel, Connecticut 06801 and
addressed to the Tenant at 57 Commerce Drive, Brookfield, CT 06804, Attention:
President, prior to occupancy or at the Premises subsequent to occupancy, or at
such other address as either party may give to the other in writing.

         35: REAL ESTATE BROKERS
         -----------------------

         35.1 Landlord and Tenant acknowledge that Vidal/Wettenstein, L.L.C.
(Bruce Wettenstein), acting as a licensed real estate broker, was instrumental
in the consummation of this Lease. Landlord agrees to pay any commission that
may be due said real estate broker. Landlord and Tenant each represents and
warrants to the other that it has not had any dealing with any other real estate
broker

                                       33

<PAGE>

or finder with respect to the subject matter of this Lease, and agrees to hold
the other harmless from and against any and all damages, costs and expenses,
including, but not limited to, court costs, costs of defense, costs of
settlement and reasonable attorneys fees, resulting from any claim(s) for a
brokerage commission or finder's fee that may be asserted against Landlord or
Tenant by any other broker or finder with whom Landlord or Tenant has dealt.

         36: OPTION TO RENEW
         -------------------

         36.1 Provided Tenant is not in default under this Lease beyond any
applicable notice and cure period, Landlord hereby grants Tenant an option to
renew this Lease under such terms and conditions as Landlord is offering at that
time and at the then current rental rates Landlord is offering for comparable
space in the Park for an additional period of Five (5) years (hereinafter
referred to as the "Option Term"), commencing on the Termination Date of the
Initial Term as set forth above. Said Option shall only be exercisable during
the Initial Term of this Lease, must be exercised as set forth below and shall
expire upon the termination of the Initial Term of this Lease, whether by lapse
of time or otherwise. Said option may only be exercised by a notice in writing
addressed to the Landlord stating that Tenant may wish to exercise this option,
which notice must be actually received by Landlord at or prior to the date which
is Three (3) months prior to the Termination Date of the Initial Term. At least
Six (6) months prior to the Termination Date of the Initial Term of this Lease,
                                                            -
Landlord shall forward to Tenant a copy of the then current lease form being
used by Landlord for the Park containing the terms and conditions Landlord is
        -
offering for space in the Park and shall at the same time notify Tenant of the
current rental rates Landlord is offering for comparable space in the Park so
that Tenant may be informed of said terms and conditions and rental rates prior
                                                         ----------------
to deciding whether to exercise this Option to Renew.

         37: EFFECT
         ----------

         37.1 Except as otherwise provided herein, terms and provisions of this
Lease shall be binding on and inure to the benefit of the parties hereto and
their respective heirs, representatives, executors, administrators, successors
and permitted assigns. This Lease constitutes the entire agreement between the
parties and may not be changed except by a writing signed by the party or
parties against whom enforcement of any waiver, change, modification, extension,
estoppel or discharge is sought. Whenever used, the singular number shall
include the plural, the plural the singular, and the use of any gender shall be
applicable to all genders as the circumstances require. This Lease shall be
construed under the laws of the State of Connecticut. The Landlord and Tenant
hereby agree that any claims, disputes or litigation arising out of the terms,
conditions and covenants of this Lease shall be adjudicated in the State of
Connecticut, and the parties further hereby consent to the jurisdiction of the
State of Connecticut over any such claims, disputes or litigation. It is agreed
that if any provision of this Lease shall be determined to be void by any Court
of competent

                                       34

<PAGE>

jurisdiction, then such determination shall not affect any other provision
of this Lease, all of which other provisions of this Lease shall remain in full
force and effect; and it is the intention of the parties hereto that if any
provision of this Lease is capable of two constructions, one of which would
render the provision valid, then the provision shall have the meaning which
renders it valid. At the request of either party, Landlord and Tenant shall
execute, acknowledge and deliver to each other a recordable Notice of Lease
pursuant to Connecticut statutes too give notice of Tenant's lease. At the
termination of this Lease, whether by lapse of time or otherwise, Tenant shall
execute, acknowledge and deliver to Landlord a quitclaim or other appropriate
document in recordable form to evidence that Tenant's Lease has ended.

         IN WITNESS WHEREOF, the parties hereto have executed this lease under
seal this 8 day of February, 2001.

     /s/ Rose Dowd                         BERKSHIRE INDUSTRIAL CORPORATION
--------------------------------------
Witness   Rose Dowd

                                           By     /s/ Richard E. Steiner
                                             ------------------------------
     /s/ Kathleen S. Braden                     V. Pres
--------------------------------------
Witness  (Kathleen S. Braden)

     /s/ George Walker                     MEMRY CORPORATION
--------------------------------------
Witness   George Walker

                                           By     /s/ Joseph Pasqualucci
                                             ------------------------------
     /s/ Rose Dowd                              VP & GM, Eastern Operations
--------------------------------------
Witness   Rose Dowd

State of Connecticut      :
                          : ss. Bethel                         February 8, 2001
County of Fairfield       :

Personally appeared Joseph Pasqualucci, V.P. & G.M. of Memry Corporation, duly
                    ------------------  -----------
authorized, Signer and Sealer of the foregoing instrument, who acknowledges
the foregoing to be his free act and deed and the free act and deed of said
corporation, before me.

                                                      /s/ Martin W. Ryan
                                                 -----------------------

                                       35

<PAGE>

                                        Commissioner of the Superior Court
                                        Notary Public
                                        My Commission expires June 30, 2004
                                                              -------------

State of Connecticut    :
                        : ss.  Bethel                           February 8, 2001
County of Fairfield     :

Personally appeared Richard E. Steiner, Vice President of Berkshire Industrial,
                    ------------------  --------------
duly authorized, Signer and Sealer of the foregoing instrument, who acknowledges
the foregoing to be his free act and deed and the free act and deed of said
corporation, before me.

                                              /s/ Martin W. Ryan
                                        ------------------------

                                        Commissioner of the Superior Court
                                        Notary Public
                                        My Commission expires June 30, 2004
                                                              -------------

                                       36

<PAGE>

                                    EXHIBIT A

                               [legal description]<PAGE>

                                                                EXHIBIT 10.40

                            Tenant: MEMRY CORPORATION
                                     LEASE
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
Article                              Title                             Page
-------                              -----                             ----
<S>                                                                    <C>
1  - Premises and Term..................................................    1
2  - Rent ..............................................................    1
3  - Landlord's Work - Tenant's Work ...................................    2
4  - Streets ...........................................................    2
5  - Utility Services ..................................................    3
6  - Assignment - Change of Ownership ..................................    3
7  - Tenant's Additional Agreements ....................................    5
8  - Use of Premises ...................................................    7
9  - Indemnity and Public Liability Insurance ..........................    7
10 - Fire Insurance and Casualty .......................................    8
11 - Repair ............................................................   11
12 - Fixtures & Alterations ............................................   12
13 - Remedies ..........................................................   12
14 - Bankruptcy ........................................................   14
15 - Surrender of Premises .............................................   15
16 - Eminent Domain ....................................................   15
17 - Real Property Taxes ...............................................   16
18 - Common Area, Parking Facilities ...................................   17
19 - Miscellaneous .....................................................   19
</TABLE>

<PAGE>

                               BUSINESS PARK LEASE

         THIS LEASE is made this 27th day of August, 2001, between 4065
ASSOCIATES, L.P., a California limited partnership, herein referred to as
"Landlord," and MEMRY CORPORATION, a Delaware corporation, herein referred to as
"Tenant".

                          ARTICLE 1 - Premises and Term

         Section 1.1. Landlord hereby leases to Tenant and Tenant hereby leases
         -----------
from Landlord the demised premises, including the building and other
improvements thereon (as described in Exhibit "A" and located substantially as
                                      ----------
shown on Exhibit "B" attached hereto) upon and subject to the terms and
         ----------
provisions of this Lease for the demised term of approximately eighteen (18)
months, commencing on October 1, 2001, and ending on March 31, 2003.

                                ARTICLE 2 - Rent

         Section 2.1. Tenant covenants and agrees to pay to Landlord without
         -----------
set-off, recoupment, deduction or demand of any nature whatsoever, base rent for
each year during the demised term in the amount of Five Hundred Eighty Eight
Thousand Six Hundred Seventy Two Dollars ($588,672.00) per annum, payable in
twelve (12) equal monthly installments of Forty Nine Thousand Fifty Six Dollars
($49,056.00). Base rent shall be paid monthly in advance on the first (1st) day
of each calendar month.

         Section 2.2. For the purpose of this Lease, a year shall be twelve (12)
         -----------
calendar months, commencing with the first day of the first full calendar month
of the demised term and the succeeding anniversaries thereof. For any period
prior to the commencement of the first year or subsequent to the end of the last
year of the demised term, rent shall be prorated on the basis of the rental rate
then payable.

         Section 2.3. All sums payable and all statements deliverable to
         -----------
Landlord by Tenant under this Lease shall be paid and delivered at 60 Hillsdale
Mall, San Mateo, California 94403-3497, or at such other place as Landlord may
from time to time direct by notice to Tenant and all such sums shall be paid in
lawful money of the United States.

         Section 2.4. Tenant shall pay to the Landlord the following:
         -----------

         (A) Upon commencement of the demised term, Forty Nine Thousand Fifty
Six Dollars ($49,056.00) which shall be applied by Landlord to the first base
rent to become due and payable under this Lease, and

         (B) Upon execution of this Lease, Forty Nine Thousand Fifty Six Dollars
($49,056.00) which shall be held as a Security Deposit pursuant to the terms of
Section 19.9.
------------

         Section 2.5. In addition to base rent under Section 2.1., all other
         -----------                                 -----------
payments to be made under this Lease by Tenant to Landlord shall be deemed to be
and shall become additional rent hereunder, whether or not the same to be
designated as such, and shall be included in the term "rent" wherever used in
this Lease; and, unless another time shall be expressly provided for the payment
thereof, all rent and additional rent shall be due and payable together with the
next succeeding installment of base rent; and Landlord shall have the same
remedies for failure to pay the same as for a nonpayment of base rent.

         Section 2.6. Any amount due from Tenant to Landlord that is not paid
         -----------
when due shall bear interest at the highest rate then permitted to be charged on
late payments under leases under California law; provided, however, the payment
of any such interest shall not

                                       -1-

<PAGE>

excuse or cure the default upon which such interest accrued. Tenant acknowledges
and agrees that payment of such interest on late payments is reasonable
compensation to Landlord for the additional costs incurred by Landlord caused by
such late payment, including, but not limited to, collection and administration
expenses and the loss of the use of the money that was late in payment.

                   ARTICLE 3 - Landlord's Work - Tenant's Work

         Section 3.1. Except as provided in Section 3.2. below, in connection
         -----------
with the commencement of this Lease, Landlord shall not be required to perform
any work in the demised premises; and Tenant accepts the demised premises in an
"as is" condition.

         Section 3.2. Landlord agrees to provide and install new HVAC units and
         -----------
the necessary duct distribution system ("HVAC work") in the manufacturing
portion of the building on the demised premises. Except as provided herein, such
HVAC work shall be completed before the commencement date of the demised term.
In the event the City of Menlo Park or other governmental agency requires
Landlord to apply for a conditional use permit in order to obtain building
permit(s) for such HVAC work, then Landlord may, at Landlord's sole and
unfettered discretion, choose not to perform such HVAC work in the building on
the demised premises, and such failure to so provide the HVAC work shall not be
deemed a default by Landlord of any terms of this Lease. Landlord agrees to use
reasonable business efforts to not interfere with Tenant's manufacturing
operations during the performance of any HVAC work, and such work may be
performed during business hours so long as such work otherwise complies with
this sentence and this Lease.

         Any work or improvements which Tenant elects to make in the demised
premises shall be performed by Tenant pursuant to the provisions of Article 12
below.

                               ARTICLE 4 - Streets

         Section 4.1. Tenant agrees to encourage employees, and to direct
         -----------
customers and other persons visiting Tenant, to park in the parking area
provided in the Parking and Accommodation Areas.

                          ARTICLE 5 - Utility Services

         Section 5.1. Landlord has at its own cost and expense secured the
         -----------
installation of water, gas, sanitary sewers and electrical services to the
demised premises and made all necessary connections thereof to the building.
Tenant shall pay all meter or service charges made by public utilities companies
and shall pay for the water, gas and/or electricity used on the demised premises
and sewer use fees and charges whether ad valorum or not and any so called
"sewer connection charges" based on increased wastewater discharge from the
demised premises exclusively. Tenant shall maintain such connections of
utilities to the building to the extent they serve the demised premises
exclusively.

         Section 5.2. Landlord shall not be liable to Tenant for the failure of
         -----------
any utility services except to the extent such failure is due to Landlord's
gross negligence or willful misconduct.

                                       -2-

<PAGE>

                  ARTICLE 6 - Assignment - Change of Ownership

         Section 6.1.
         -----------

         A. Except as otherwise provided herein, Tenant shall not, by operation
of law or otherwise, transfer, assign, sublet, enter into license or concession
agreements, enter into a change of ownership, mortgage or hypothecate this Lease
or the Tenant's interest in and to the demised premises without first procuring
the written consent of Landlord. Any attempted transfer, assignment, subletting,
license or concession agreement, change of ownership, mortgage or hypothecation
without Landlord's written consent shall be void and confer no rights upon any
third person. Landlord's consent to a proposed assignment, sublease or change of
ownership shall not be unreasonably withheld provided that the proposed assignee
or sublessee or post-change-of-ownership Tenant shall have: (i) a net worth, at
the time of the assignment, sublease or change ownership, determined in
accordance with good accounting principles, equal to or in excess of the net
worth of Tenant at the date of this Lease; (ii) been active in its current
business for a minimum of three (3) years immediately prior to the assignment,
sublease or change of ownership; or be assuming substantially all of the
business of Tenant; and (iii) a good reputation in the business community. In
addition, Tenant shall give Landlord not less than thirty (30) days notice prior
to the effective date of any such assignment or sublease, and, so long as same
is not to an affiliate of Tenant or to a purchaser of substantially all of the
business of Tenant, Landlord shall have the option to terminate this Lease with
respect to the space to be assigned or subleased by notice to Tenant given
within twenty (20) days of Landlord's receipt of Tenant's notice. Nothing herein
contained shall relieve Tenant from its covenants and obligations for the
demised term. Tenant agrees to reimburse Landlord for up to Five Hundred Dollars
($500.00) of Landlord's reasonable outside attorneys' fees incurred in
conjunction with the processing and documentation of any such requested
transfer, assignment, subletting, licensing or concession agreement, change of
ownership, mortgage or hypothecation of this Lease or Tenant's interest in and
to the demised premises. If Landlord consents to any assignment or sublease
pursuant to this Article, Tenant shall pay Landlord, as additional rent:

            (a) in the case of each and every assignment, an amount equal to ALL
         monies, property, and other consideration of every kind whatsoever paid
         or payable to Tenant by the assignee for such assignment and for all
         property of Tenant transferred to the assignee as part of the
         assignment (including, but not limited to, any fixtures, other
         leasehold improvements, furniture, equipment, and furnishings so
         included as consideration); and

            (b) in the case of each and every sublease, ALL rent, and/or other
         monies, property, and consideration of every kind whatsoever paid or
         payable to Tenant by the subtenant under the sublease, LESS all base
         rent and additional rent under this Lease accruing during the term of
         the sublease in respect of the subleased space (as reasonably
         determined by Landlord, taking into account the useable area of the
         premises demised under the sublease).

         B. Each transfer, assignment, subletting, license, concession
agreement, change of ownership, mortgage and hypothecation to which there has
been consent shall be by an instrument in writing in form reasonably
satisfactory to Landlord, and shall be executed by the transferor, assignor,
sublessor, licensor, concessionaire, hypothecator or mortgagor and the
transferee, assignee, sublessee, licensee, concessionaire or mortgagee in each
instance, as the case may be; and each transferee, assignee, sublessee,
licensee, concessionaire or mortgagee shall agree in writing for the benefit of
Landlord herein to

                                       -3-

<PAGE>

assume, to be bound by, and to perform the terms, covenants and conditions of
this Lease to be done, kept and performed by Tenant, relating to the portion of
the demised premises affected, including the payment of all amounts due or to
become due under this Lease directly to Landlord. One (1) executed copy of such
written instrument shall be delivered to Landlord. Failure to first obtain in
writing Landlord's consent or failure to comply with the provisions of this
Article shall operate to prevent any such transfer, assignment, subletting,
license, concession agreement, mortgage, or hypothecation from becoming
effective.

         C. If Tenant hereunder is a corporation which, under the then current
laws of the State of California, is not deemed a public corporation, or is an
unincorporated association or partnership, the transfer, assignment or
hypothecation of any stock or interest in such corporation, association or
partnership in the aggregate in excess of fifty percent (50%) shall be deemed a
change of ownership within the meaning and provisions of this Section 6.1.
                                                              -----------

         D. Landlord's rights to assign this Lease are and shall remain
unqualified. Upon any sale of the demised premises and provided the purchaser
assumes all obligations under this Lease, Landlord shall thereupon be entirely
released of all obligations of Landlord hereunder and shall not be subject to
any liability resulting from any act or omission or event occurring after such
sale.

         E. The consent of Landlord to any transfer, assignment, sublease,
license or concession agreement, change of ownership, mortgage or hypothecation
of this Lease is not and shall not operate as a consent to any future or further
transfer, assignment, sublease, license or concession agreement, change of
ownership, mortgage or hypothecation, and Landlord specifically reserves the
right to refuse to grant any such consents except as otherwise provided in this
Section 6.1.
-----------

                   ARTICLE 7 - Tenant's Additional Agreements

         Section 7.1. Tenant agrees at all times during the demised term to: (A)
         -----------
Keep the demised premises in a neat and clean condition. (B) Promptly remove all
waste, garbage or refuse from the demised premises. (C) Promptly comply with all
laws and ordinances and all rules and regulations of duly constituted
governmental authorities affecting the demised premises, and the cleanliness,
safety, use and occupation thereof, but this clause (C) shall not be construed
to require Tenant to comply with any such laws, ordinances, rules or regulations
which require structural changes in or capital improvements to the demised
premises unless the same are made necessary by act or work performed by or for
Tenant or the nature of Tenant's business. (D) Prevent the escape from the
demised premises of all fumes, odors and other substances which are offensive or
may constitute a nuisance or interfere with other tenants.

         Section 7.2. Tenant agrees that it will not at any time during the
         -----------
demised term without first obtaining the Landlord's written consent: (A) Conduct
or permit any fire, bankruptcy or auction sale in the demised premises. (B)
Place on the exterior walls (including both interior and exterior surfaces of
windows and doors), the roof of any buildings or any other part of the demised
premises, any sign, symbol, advertisement, neon light, other light or other
object or thing visible to public view outside of the demised premises. (C)
Change the exterior color of the building on the demised premises, or any part
thereof, or the color, size, location or composition of any sign, symbol or
advertisement that may have been approved by Landlord. (D) Park, operate, load
or unload, any truck or other delivery vehicle on any place other than the
loading area designated for Tenant's use. (E) Use the plumbing facilities for
any purpose other than that for which they were constructed or dispose of any
foreign substance therein. (F) Install any exterior lighting or

                                       -4-

<PAGE>

plumbing facilities, shades or awnings, amplifiers or similar devices, or use
any advertising medium which may be heard or experienced outside the demised
premises, such as loudspeakers, phonographs, or radio broadcasts. (G) Deface any
portion of the building or improvements on the demised premises, normal usage
excepted. In the event any portion of the building is defaced or damaged by
Tenant, its agents, servants, invitees or employees, Tenant agrees to repair
such damage. (H) Permit any rubbish or garbage to accumulate on the demised
premises, or any part thereof, unless confined in metal containers so located as
not to be visible to members of the public. (I) Install, maintain or operate any
sign except as approved in writing by Landlord. (J) Store materials, supplies,
equipment, finished products, raw materials or articles of any nature outside of
the demised premises. (K) Use the demised premises for retail, commercial or
residential purposes.

         Section 7.3. Tenant agrees that it will not at any time during the
         -----------
demised term: (A) Perform any act or carry on any practice which may injure the
demised premises. (B) Burn anything in or about the demised premises. (C) Keep
or display any merchandise or other object on or otherwise obstruct any
sidewalks, walkways or areaways. (D) Use or permit the use of any portion of the
demised premises as living quarters, sleeping apartments, lodging rooms, or for
any unlawful purpose. (E) Use or permit the demised premises to be used for any
purpose which is or shall not then be allowed under the Zoning Ordinance of the
City of Menlo Park, California, in that area.

         Section 7.4. Tenant shall, at its expense, comply with all applicable
         -----------
laws, regulations, rules and orders, regardless of when they become or became
effective, including, without limitation, those relating to health, safety,
noise, environmental protection, waste disposal, and water and air quality (but
this Section 7.4 shall not be construed to require Tenant to make structural
     -----------
changes in or capital improvements to the demised premises unless the same are
made necessary by act or work performed by or for Tenant or the nature of
Tenant's business or otherwise is Tenant's responsibility hereunder), and
furnish satisfactory evidence of such compliance upon request of Landlord.

         Should any discharge, leakage, spillage, emission or pollution of any
type occur upon or from the demised premises due to Tenant's use and occupancy
thereof, Tenant, at its expense, shall be obligated to remedy the same to the
satisfaction of Landlord and any governmental body having jurisdiction
thereover. Tenant agrees to indemnify, hold harmless, and defend Landlord
against all liability, cost, and expense (including without limitation any
fines, penalties, judgments, litigation costs, and reasonable attorneys' fees)
incurred by Landlord as a result of Tenant's breach of this section, or as a
result of any such discharge, leakage, spillage, emission, or pollution,
regardless of whether such liability, cost, or expense arises during or after
the demised term, unless such liability, cost or expense is proximately caused
solely by the gross negligence or willful misconduct of Landlord or its
contractors, licensees, agents, servants or employees.

         Tenant shall pay all amounts due Landlord under this section, as
additional rent, within ten (10) days after any such amounts become due.

         Tenant shall, at least thirty (30) days prior to the termination of the
demised term, or any earlier termination of this Lease, submit a plan to the San
Mateo County Environmental Health Services Division or other appropriate
governmental agency and to the Menlo Park Fire Protection District in accordance
with, and to the extent required under, applicable provisions of the Uniform
Fire Code and any other appropriate governmental rules and regulations, with a
copy to Landlord, demonstrating, if and to the extent so required, how any
hazardous materials which were stored, dispensed, handled or used in, at or upon
the demised premises by Tenant, its agents, servants, contractors, invitees or
employees during the demised term will be transported, disposed of or reused

                                       -5-

<PAGE>

at the expiration or sooner termination of the demised; and Tenant shall, at the
expiration or sooner termination of the demised term, comply with all applicable
laws, regulations, rules and orders of any governmental body having jurisdiction
thereover (including without limitation, if applicable, the Menlo Park Fire
Protection District) regarding the disposal of any such hazardous materials.

         Tenant's obligations under this Section 7.4. shall survive the
                                         -----------
expiration or earlier termination of this Lease, including without limitation
any termination resulting from any default by Tenant under this Lease.

                           ARTICLE 8 - Use of Premises

         Section 8.1. Tenant shall use the demised premises solely for office,
         -------------------
warehouse , laboratory, manufacturing, and distribution and related uses, and
for no other purposes without Landlord's written consent.

              ARTICLE 9 - Indemnity and Public Liability Insurance

         Section 9.1. Except for claims, costs, fees, expenses or liability
         -----------
arising from the gross negligence or willful misconduct of Landlord or its
contractors, licensees, agents, servants or employees, Tenant agrees to
indemnify and save harmless Landlord from and against all claims arising from
any act, omission or negligence of Tenant, or its contractors, licensees,
agents, servants, invitees or employees, or arising from any accident, injury or
damage whatsoever caused to any person, or to the property of any person
occurring during the demised term in or about the demised premises, the
sidewalks (if any) adjoining the same and from and against all costs, expenses
and liabilities incurred in or in connection with any such claim or proceeding
brought thereon, including, but not limited to, reasonable attorneys' fees and
court costs.

         Landlord agrees to indemnify and save harmless Tenant from and against
all claims, costs, fees, expenses and liability, including, but not limited to,
reasonable attorneys' fees and court costs, arising from the gross negligence or
willful misconduct of Landlord or its contractors, licensees, agents, servants
or employees.

         Section 9.2. Tenant agrees to maintain in full force during the demised
         -----------
term a policy of public liability and property damage insurance under which
Landlord (and such other persons, firms or corporations as are designated by
Landlord and are properly includible as additional insureds under the terms of
any such policies of insurance) and Tenant are named as insureds, and the
insurer agrees to indemnify and hold Landlord and Landlord's said designees
harmless from and against all cost, expense and/or liability arising out of or
based upon any and all claims, accidents, injuries and damage mentioned in
Section 9.1., except for claims, costs, fees, expenses or liability arising from
-----------
the gross negligence or willful misconduct of Landlord or its contractors,
licensees, agents, servants or employees. All public liability and property
damage policies shall contain a provision that Landlord, although named as an
insured, shall nevertheless be entitled to recovery under said policies for any
loss occasioned to it, its servants, agents and employees, by reason of the
negligence of Tenant. Each such policy shall be approved as to form and
insurance company by Landlord, such approval not to be unreasonably withheld, be
noncancellable with respect to the Landlord and Landlord's said designees
without twenty (20) (or, in the case of non-payment of premiums, ten (10)) days'
written notice to the Landlord and Landlord's said designees, and a duplicate
original or certificate thereof shall be delivered to Landlord prior to
commencement of the demised term and thereafter thirty (30) days

                                       -6-

<PAGE>

prior to expiration of the term of each policy. The limits of liability of such
comprehensive general liability insurance shall be Two Million Dollars
($2,000,000.00) for injury or death to one or more persons and damage to
property, combined single limit. All public liability, property damage and other
casualty policies shall be written as primary policies, not contributing with
and not in excess of coverage which Landlord may carry.

         If Tenant shall not comply with its covenants to maintain insurance
made above, or if Tenant fails to provide duplicate originals or certificates
thereof to Landlord as is provided above within five (5) business days after
written notice of such failure, Landlord may, but shall not be required to,
obtain any such insurance; and if Landlord does obtain any such insurance,
Tenant shall, on demand, reimburse Landlord for the premium for any such
insurance.

         Section 9.3. Tenant agrees to use and occupy the demised premises, the
         -----------
Parking and Accommodation Areas and to use all other portions of the Business
Park (which it is herein given the right to use) at its own risk and, except for
claims arising from the gross negligence or willful misconduct of Landlord or
its contractors, licensees, agents, servants or employees, hereby releases to
the full extent permitted by law the Landlord, and its agents, servants, and
employees, from all claims and demands of every kind resulting from any
accident, damage or injury occurring therein. Landlord shall have no
responsibility or liability for any loss of or damage to fixtures or other
personal property of Tenant. The provisions of this Section shall apply during
the whole of the demised term.

                    ARTICLE 10 - Fire Insurance and Casualty

         Section 10.1. If the building on the demised premises should be damaged
         ------------
or destroyed during the demised term by any casualty insurable under Landlord's
standard fire and extended coverage insurance policies, Landlord shall (except
as hereinafter provided) repair and/or rebuild the same to substantially the
condition in which the same existed immediately prior to such damage or
destruction. Landlord's obligation under this Section shall in no event exceed
either (A) the scope of the work done by Landlord in the original construction
of such building, or (B) the proceeds of any such insurance policy if Landlord
keeps the building and the demised premises insured against loss or damage by
such fire and extended coverage insurance to the extent of at least eighty
percent (80%) of the insurable value of the building if reasonably obtainable
from responsible insurance companies licensed to do business in California,
unless Landlord nevertheless elects to repair and/or rebuild the building and
the demised premises. Tenant shall in the event of any such damage or
destruction, unless this Lease shall be terminated as hereinafter provided, be
responsible for the cost of replacing or repairing all exterior signs, trade
fixtures, equipment, display cases and other installations whether or not
originally installed by the Tenant. Landlord shall have no interest in the
proceeds of any insurance carried by Tenant on Tenant's interest in this Lease
and Tenant shall have no interest in the proceeds of any insurance carried by
Landlord.

         Section 10.2. Unless and until this Lease is terminated as provided
         ------------
herein, Tenant's base rent (and any other rent allocated based on Tenant's
square footage in the building) shall be abated proportionately during any
period in which, by reason of any such damage or destruction (including any
damage or destruction referred to in Section 10.3 and Section 10.7 hereinafter
                                     ------------     ------------
set forth), there is substantial interference with the operation of the business
of Tenant in the demised premises to the extent that Tenant is required to
discontinue all or a substantial portion of its business in the demised
premises. Such abatement shall continue for the period commencing with such
destruction or damage and ending with the substantial completion by the Landlord
of such work or repair and/or

                                       -7-

<PAGE>

reconstruction as Landlord is obligated to do.

         Section 10.3. If the building on the demised premises should be damaged
         ------------
or destroyed to the extent of thirty three percent (33%) or more of the then
monetary value thereof by an event described in Section 10.1., then Landlord may
                                                ------------
terminate this Lease by written notice to Tenant within ninety (90) days of such
damage or destruction.

         If the demised premises should be damaged or destroyed and the time
needed to repair and/or rebuild the same is reasonably estimated by Landlord to
exceed one hundred eighty (180) days, then Tenant may terminate this Lease by
written notice to Landlord as follows:

         Landlord shall notify Tenant within sixty (60) days following any
damage to or destruction of the demised premises of the length of time Landlord
reasonably estimates to be necessary for repair or restoration of the demised
premises. Tenant shall have the right to terminate this Lease within fifteen
(15) business days following receipt of such notice if restoration or repair of
the demised premises is so estimated by Landlord to take more than one hundred
eighty (180) days from the date of damage.

         If Landlord or Tenant does not elect to terminate this Lease then
Landlord shall repair and/or rebuild the same as provided in Section 10.1. If
                                                             ------------
such damage or destruction occurs and this Lease is not so terminated, this
Lease shall remain in full force and effect and the parties waive the provisions
of any law to the contrary. The Landlord's obligation under this Section shall
in no event exceed the scope of the work to be done by the Landlord in the
original construction of said building and the demised premises.

         Section 10.4. Tenant agrees to comply with all of the applicable
         ------------
regulations and rules of the Insurance Service Office or any similar body and
will not do, suffer, or permit an act to be done in or about the demised
premises which will increase any insurance rate with respect thereto.

         Section 10.5. Tenant agrees, in addition to any rent provided for
         ------------
herein, to pay to the Landlord the cost of the fire and extended coverage
insurance policy carried by Landlord on the demised premises during the entire
demised term or any renewal or extension thereof. This Section expressly permits
the Landlord to carry standard fire and extended coverage policies to the extent
of one hundred percent (100%) of the replacement value.

         Section 10.6. During the demised term, Tenant shall carry, at its
         ------------
expense, insurance against loss and damage by fire with an "All Risk"
endorsement for the full insurable value of Tenant's merchandise, trade
fixtures, furnishings, operating equipment and personal property, including wall
coverings, carpeting and drapes. Landlord and Landlord's mortgagee (to the
extent Tenant has been notified of such mortgagee by Landlord in writing) shall
be named as additional insureds under said policy, which shall be non-cancelable
with respect to Landlord and Landlord's mortgagee without twenty (20) (or, in
the case of non-payment of premiums, ten (10)) days' prior written notice. A
certificate evidencing such coverage shall be delivered to Landlord prior to
commencement of the demised term and thereafter thirty (30) days prior to the
expiration of the term of such policy. Such insurance shall be written as a
primary policy, not contributing with and not in excess of coverage Landlord may
carry. If Tenant shall not comply with its covenants to maintain said insurance,
or if Tenant fails to provide a certificate thereof to Landlord as provided
above within five (5) business days after written notice of such failure,
Landlord may, but shall not be required to, obtain any such insurance, and if
Landlord does obtain any such insurance, Tenant shall, on demand, reimburse
Landlord for the premium for any such insurance.

         Section 10.7. In the event the building on the demised premises shall
         ------------
be damaged as a result of any flood, earthquake, act of war, nuclear reaction,
nuclear radiation or radioactive contamination, or from any other casualty not
covered by Landlord's fire and

                                       -8-

<PAGE>

extended coverage insurance, to any extent whatsoever, Landlord may within
ninety (90) days following the date of such damage, commence repair,
reconstruction or restoration of the building and prosecute the same diligently
to completion, in which event this Lease shall continue in full force and
effect, or within said ninety (90) day period elect not to so repair,
reconstruct or restore the building, in which event this Lease shall cease and
terminate. In either such event Landlord shall give Tenant written notice of its
intention within said ninety (90) day period.

         If the demised premises should be damaged by an event described in
Section 10.7 and the time needed to repair and/or rebuild the same is reasonably
------------
estimated by Landlord to exceed one hundred eighty (180) days, then Tenant may
terminate this Lease by written notice to Landlord as follows:

         Landlord shall notify Tenant within sixty (60) days following any
damage to or destruction of the demised premises of the length of time Landlord
reasonably estimates to be necessary for repair or restoration of the demised
premises. Tenant shall have the right to terminate the Lease within fifteen (15)
business days following receipt of such notice if restoration or repair of the
demised premises is so estimated by Landlord to take more than one hundred
eighty (180) days from the date of damage.

         Section 10.8. Upon any termination of this Lease under the provisions
         ------------
of this Article 10, the rent shall be adjusted as of the date of such
        ----------
termination and the parties shall be released without further obligation to the
other party upon the surrender of possession of the demised premises to
Landlord, except for items that have been theretofore accrued and are then
unpaid, and except for obligations that are designated as surviving such
termination.

         Section 10.9. Notwithstanding anything in this Article 10 or elsewhere
         ------------                                   ----------
in this Lease to the contrary, Landlord may maintain any insurance on the
demised premises that Landlord deems necessary or advisable, including, but not
limited to, any rental insurance, owner's protective liability insurance or any
insurance required by any mortgagee of Landlord; and Landlord may include the
amount of the premiums for such insurance in the total of the insurance premiums
which Tenant is required to pay under the terms hereof.

                               ARTICLE 11 - Repair

         Section 11.1. Landlord agrees, at Landlord's sole expense, to repair
         ------------
structural defects of the building on the demised premises throughout the life
of this Lease and to perform any work described pursuant to Section 3.2.
                                                            -----------
Structural defects and maintenance shall not be deemed to include cracks or
fissures in walls or floors, nor the requirement of painting or caulking.

         Section 11.2. Tenant agrees during the demised term or any extension
         ------------
thereof to maintain the interior of the building on the demised premises, and
every part thereof, except as to work to be performed by Landlord under Sections
                                                                        --------
11.1. and 11.3. Tenant further agrees to clean, inside and out, all of the glass
--------------
on the exterior of the building. If Tenant should fail to faithfully perform its
maintenance obligations hereunder then Landlord shall, after giving Tenant at
least ten (10) days' written notice of such failure, have the right to perform,
or cause to be performed, said maintenance and Tenant shall on demand reimburse
Landlord for Landlord's reasonable costs of providing such maintenance.
Landlord's reservation of the right to enter upon the demised premises (during
reasonable business hours, after notice to Tenant and, at Tenant's option, with
a Tenant representative, and in emergencies at all times without the requirement
of notice to Tenant) to perform any repairs or maintenance or other work in, to,
or about the demised premises

                                       -9-

<PAGE>

under such circumstances shall not be deemed to impose any obligation on
Landlord to do so, nor shall Landlord be rendered liable to Tenant or any third
party for the failure to do so, and Tenant shall not be relieved from any
obligation to indemnify Landlord as otherwise provided elsewhere in this Lease.

         Section 11.3 Landlord shall provide the following services and Tenant
         ------------
shall, in addition to all other payments required to be made under other
provisions of this Lease, on demand reimburse Landlord for Landlord's
out-of-pocket costs of: (i) maintaining and repairing the roof; (ii) maintaining
and repairing the exterior of the building; (iii) maintenance and repair of the
trash enclosure utilized in connection with the building; (iv) maintenance and
repair of the glass on the exterior of the building and (v) any other
maintenance and repair other than that which Landlord is required to perform at
Landlord's expense per Section 11.1. Tenant shall also, on demand, reimburse
                       ------------
Landlord for Landlord's out of pocket costs of maintaining and repairing the
heating and air conditioning equipment serving the demised premises, whether
furnished by Landlord or Tenant (except any work that is described in Section
                                                                      -------
3.2). Landlord's said costs as used in this Section 11.3. shall include all
---                                         ------------
costs and expenses of every kind or nature incurred by Landlord in the
performance of such maintenance or repair and Landlord's determination of the
amount of said costs and expenses will be final absent manifest error. Upon
Tenant's written request, Landlord shall provide Tenant with reasonable evidence
of such costs and expenses.

         Notwithstanding anything to the contrary contained herein, repair
and/or maintenance costs included in this Section 11.3. are exclusive of
                                          ------------
replacement; provided, however, that any costs for repair, maintenance or
replacements which are occasioned by (x) Tenant's negligent acts or omissions or
those of its employees, contractors, agents, invitees or servants, or (y) the
particular nature of Tenant's business, then all of such costs shall be borne
solely by Tenant.

                       ARTICLE 12 - Fixtures & Alterations

         Section 12.1. All trade fixtures owned by Tenant and installed in the
         ------------
demised premises shall remain the property of Tenant and may be removed from
time to time and shall be removed at the expiration of the demised term. Tenant
shall repair any damage to the demised premises caused by the removal of said
fixtures. If Tenant fails to remove such fixtures on or before the last day of
the demised term, all such fixtures shall become the property of Landlord,
unless Landlord elects to require their removal, in which case Tenant shall
promptly remove them and restore the demised premises to its condition prior to
such removal. Landlord may also, at Landlord's sole discretion, store such
fixtures at Tenant's expense.

         Section 12.2. Tenant shall not make any alterations, additions or
         ------------
improvements in or to the demised premises or the building during the demised
term without submitting plans and specifications therefor for the prior written
consent of Landlord, which consent shall not be unreasonably withheld, and which
consent, if granted, may be subject to such conditions as Landlord may deem
appropriate. Any such alterations, additions or improvements consented to by
Landlord shall be made at Tenant's sole cost and expense in accordance with the
plans and specifications therefor and Tenant agrees to provide Landlord with an
"as built" set of plans and specifications in IBM-compatible AutoCAD format or
such other format which is compatible to Landlord's computer aided design
software after any such work is completed. Tenant shall secure any and all
governmental permits, approvals or authorizations required in connection with
any such work, and shall hold Landlord harmless from any and all liability,
costs, damages, expenses (including

                                       -10-

<PAGE>

reasonable attorneys' fees) and any and all liens resulting therefrom.

        Section 12.3. All alterations, decorations, additions and improvements
        ------------
(and expressly including all light fixtures and floor coverings) except
furniture, removable paneling, wall fixtures, trade fixtures, appliances and
equipment which do not become a part of the demised premises, shall be deemed to
belong to Tenant, but shall be deemed to have been attached to the demised
premises or the building and to have become the property of Landlord upon the
termination of the demised term. Upon the expiration or sooner termination of
the demised term hereof, Tenant shall, upon written demand by Landlord made on
or prior to the end of the demised term, at Tenant's sole cost and expense,
forthwith remove (A) all of the items listed on Exhibit "C" attached hereto
and/or (B) any alterations, decorations, additions or improvements made by
Tenant during the demised term, that are designated by Landlord to be removed,
and Tenant shall forthwith at its sole cost and expense repair any damage to the
demised premises or the building caused by such removal.

                              ARTICLE 13 - Remedies

        Section 13.1. Should Tenant default in the performance of any of its
        ------------
obligations under this Lease with reference to the payment of rent and such a
default in the payment of base rent continues for five (5) days after the date
payment is due, or such a default in the payment of other rent continues for
five (5) days after receipt of written notice from Landlord specifying such
default, or should Tenant default in the performance of any other obligations
under this Lease and such default continue for thirty (30) days after receipt of
written notice from Landlord specifying such default or beyond the time
reasonably necessary to cure if such default is of a nature to require more than
thirty (30) days to remedy, then, in addition to all other rights and remedies
Landlord may have under this Lease or under applicable law, Landlord shall have
the following rights and remedies:

        (1) The Landlord has the remedy described in California Civil Code
Section 1951.4 (Landlord may continue this Lease in effect after Tenant's breach
and abandonment and recover Rent as it becomes due, if Tenant has the right to
sublet or assign, subject only to reasonable limitations). If Tenant breaches
any covenants of this Lease or if any event of default occurs, whether or not
Tenant abandons the demised premises, this Lease shall continue in effect until
Landlord terminates Tenant's right to possession, and Tenant shall remain liable
to perform all of its obligations under this Lease and Landlord may enforce all
of Landlord's rights and remedies, including the right to recover rent as it
falls due. If Tenant abandons the demised premises or fails to maintain and
protect the same as herein provided, Landlord shall have the right to do all
things necessary or appropriate to maintain, preserve and protect the demised
premises, including the installation of guards, and may do all things
appropriate to a re-letting of the demised premises, and none of said acts shall
be deemed to terminate Tenant's right of possession, unless Landlord elects to
terminate the same by written notice to Tenant. Tenant agrees to reimburse
Landlord on demand for all amounts reasonably expended by Landlord in
maintaining, preserving and protecting the demised premises, together with
interest on the amounts expended from time to time at the rate provided in
Section 2.6. Landlord shall also have the right to repair, the demised premises
-----------
at the expense of Tenant to the condition in which Tenant was required to
deliver them at the end of the demised term.

        (2) Landlord shall have the right to terminate Tenant's possession of
the demised premises, and if Tenant's right to possession of the demised
premises is terminated by Landlord by reason of a breach of this Lease by
Tenant, or by reason of the happening of

                                      -11-

<PAGE>

an event of default, or by reason of abandonment of the demised premises by
Tenant, Tenant agrees to pay to Landlord on demand (i) all unpaid rent earned at
the time of termination, together with interest on all unpaid installments from
the times they were due to the date of termination at the rate provided in
Section 2.6; (ii) the amounts by which the unpaid rent which would have been due
-----------
and payable by Tenant since the date of termination exceeds the amount of any
rental loss that Tenant proves could have been avoided, together with interest
on said amounts from the dates they were due at the rate provided in Section
                                                                     -------
2.6; (iii) the worth at the time of demand of the amount by which the unpaid
---
rent for the balance of the demised term exceeds the amount of rental loss that
Tenant proves may reasonably be avoided, together with interest on such amount
at the rate provided in Section 2.6 from the date of demand until paid; (iv) all
                        -----------
other amounts due Landlord from Tenant under the terms of this Lease, or
necessary to compensate Landlord for all detriment caused by Tenant's failure to
perform its obligations under this Lease. The right to possession of the demised
premises by Tenant should not be deemed terminated until Landlord gives Tenant
written notice of such termination or until Landlord re-lets all or a portion of
the demised premises. In the event that Landlord seeks to recover the amount
due, Landlord shall be entitled to recover the amounts specified in paragraphs
(a) (1), (a) (2) and (a) (4) of Section 1951.2 of the Civil Code of California
as such section reads at the date of this Lease, together with interest on said
amounts at the rate provided in Section 2.6 from the dates they were due,
                                -----------
computed as of the date of the award, together with the worth at the time of the
award of the amount by which the unpaid rent for the balance of the term exceeds
the amount of such rental loss that Tenant proves could reasonably have been
avoided. Landlord shall be required to mitigate damages by making a good faith
effort to re-let the demised premises.

        (3) No right or remedy herein conferred upon or reserved to Landlord is
intended to be exclusive of any other right or remedy herein or by law, provided
that each shall be cumulative and in addition to every other right or remedy
given herein or now hereafter existing at law or in equity or by statute.

        Section 13.2. Landlord shall in no event be in default in the
        ------------
performance of any of its obligations hereunder unless and until Landlord shall
have failed to perform such obligations within thirty (30) days or such
additional times as is reasonably required to correct any such default after
notice by Tenant to the Landlord properly specifying wherein the Landlord has
failed to perform any such obligation.

                             ARTICLE 14 - Bankruptcy

        Section 14.1. Tenant shall use reasonable business efforts to give
        ------------
written notice to Landlord of its intention to commence proceedings under any
state or federal insolvency or bankruptcy law, or any comparable law that is now
or hereafter may be in effect, whereby Tenant seeks to be, or would be,
discharged of its debts or the payment of its debts is sought to be delayed, at
least thirty (30) days prior to the commencement of such proceedings.

        Section 14.2. If any of the following events occur:
        ------------

        (1) The entry of an order for relief under Title 11 of the United States
Code as to Tenant or its executors, administrators or assigns, if any, or the
adjudication of Tenant or its executors, administrators or assigns, if any, as
insolvent or bankrupt pursuant to the provisions of any state insolvency or
bankruptcy act;

        (2) The appointment of a receiver, trustee or other custodian of all or
a substantial portion of the property of Tenant by reason of the insolvency or
inability of Tenant to pay its debts;

                                      -12-

<PAGE>

        (3) The assignment of all or a substantial portion of the property of
Tenant for the benefit of creditors; or

        (4) The commencement by Tenant (or by another that has not been
dismissed or released within sixty (60) days) of any proceedings under any state
or federal insolvency or bankruptcy law, or any comparable law that is now or
hereafter may be in effect, whereby Tenant seeks to be, or would be, discharged
of its debts or the payment of its debts is sought to be delayed; then Landlord
may, at any time thereafter, to the full extent permitted under applicable law,
in addition to any and all other rights or remedies of Landlord under this Lease
or under applicable law, upon written notice to Tenant, terminate this Lease,
and upon such notice this Lease shall cease and terminate with the same force
and effect as though the date set forth in said notice were the date originally
set forth herein and fixed for the expiration of the demised term. Tenant shall
thereupon vacate and surrender the demised premises, but shall remain liable as
herein provided.

                       ARTICLE 15 - Surrender of Premises

        Section 15.1. Tenant shall, upon termination of the demised term, or any
        ------------
earlier termination of this Lease, surrender to Landlord the demised premises,
including, without limitation, all building equipment and apparatus, and
fixtures (except as provided in Sections 12.1. and 12.2.) then upon the demised
                                -----------------------
premises without any damage, injury, or disturbance thereto, or payment
therefor, except damages due to ordinary wear and tear, acts of God, fire and
other perils to the extent the demised premises are not required to be repaired
or restored as hereinbefore provided, and Tenant shall dispose of any hazardous
materials stored, dispensed, handled or used in, at or upon the demised premises
by Tenant, its agents, servants, contractors or employees in accordance with the
provisions of Section 7.4.
              -----------

                           ARTICLE 16 - Eminent Domain

        Section 16.1. If more than thirty-three percent (33%) of the floor area
        ------------
of the building on the demised premises or if more than thirty-three percent
(33%) of the area of the Parking and Accommodation Areas shall be taken under
the power of eminent domain and the portion not so taken will not be reasonably
adequate for the operation of Tenant's business after the Landlord completes
such repairs or alterations as the Landlord is obligated or elects to make,
Tenant shall have the right to elect either to terminate this Lease, or, subject
to Landlord's right to terminate this Lease pursuant to Section 16.4., to
                                                        ------------
continue in possession of the remainder of the demised premises and shall notify
Landlord in writing within ten (10) days after such taking of Tenant's election.
In the event less than thirty-three percent (33%) of the floor area of the
building on the demised premises or less than thirty three percent (33%) of the
area of the Parking and Accommodation Areas shall be taken, all of the terms
herein provided shall continue in effect, except that the base rent (and any
other rent allocated based on Tenant's square footage in the building) shall be
reduced in the same proportion that the floor area of the building on the
demised premises taken bears to the original floor area of the building on the
demised premises, and Landlord shall at its own cost and expense make all
necessary repairs or alterations to the building so as to constitute the portion
of the building not taken a complete architectural unit and the demised premises
a complete unit for the purposes allowed by this Lease, but such work shall not
exceed the scope of the work to be done by Landlord in originally constructing
said building.

                                      -13-

<PAGE>

        Section 16.2. Each party waives the provisions of Code of Civil
        ------------
Procedure Section 1265.130 allowing either party to petition the Superior Court
to terminate this Lease in the event of a partial taking.

        Section 16.3. All damages or awards for any taking under the power of
        ------------
eminent domain whether for the whole or a part of the demised premises shall
belong to and be the property of Landlord whether such damages or awards shall
be awarded as compensation for diminution in value to the leasehold or to the
fee of the demised premises; provided however, that Landlord shall not be
entitled to the award made to Tenant or Landlord for loss of business,
depreciation to, and cost or removal of stock and fixtures and for leasehold
improvements which have been installed by Tenant at its sole cost and expense
less depreciation which is to be computed on the basis of completely
depreciating such leasehold improvements during the initial demised term of this
Lease, and any award made to Tenant in excess of the then depreciated value of
leasehold improvements shall be payable to the Landlord.

        Section 16.4. If more than thirty-three percent (33%) of the floor areas
        ------------
of the building on the demised premises shall be taken under power of eminent
domain, or if more than thirty-three percent (33%) of the area of the Parking
and Accommodation Areas shall be so taken, Landlord may, by written notice to
Tenant delivered on or before the date of surrendering possession to the public
authority pursuant to such taking, terminate this Lease as of such date.

        Section 16.5. If this Lease is terminated as provided in this Article,
        ------------
the rent shall be paid up to the day that possession is so taken by public
authority and Landlord shall make a prorata refund of any rent and all deposits
paid by Tenant in advance and not yet earned.

                        ARTICLE 17 - Real Property Taxes

        Section 17.1. Tenant shall reimburse Landlord for all real property
        ------------
taxes, assessments and ongoing sewer fees applicable to the demised premises
during the demised term. Such taxes, assessments and fees shall be prorated to
lease years for purpose of making this computation. Such payment shall be made
by Tenant the later of: (i) within thirty (30) days after receipt of Landlord's
written statement setting forth the amount of such computation thereof, or (ii)
by the thirtieth (30th) day prior to the delinquency date for such tax,
assessment or fee. If the demised term shall not expire concurrently with the
expiration date of the fiscal tax year, Tenant's liability for taxes for the
last partial lease year shall be prorated on an annual basis.

        Section 17.2. If the demised premises are not separately assessed,
        ------------
Tenant's liability shall be an equitable proportion of the real property taxes
for all of the land and improvements included within the tax parcel assessed,
such proportion to be determined by Landlord from the respective valuations
assigned in the assessor's work sheets or such other information as may be
reasonably available. Landlord's reasonable determination thereof, in good
faith, shall be conclusive.

        Section 17.3. Tenant shall pay prior to delinquency all taxes assessed
        ------------
against and levied upon trade fixtures, furnishings, equipment and all other
personal property of Tenant contained in the demised premises or elsewhere.
Tenant shall, if possible, cause said trade fixtures, furnishings, equipment and
all other personal property to be assessed and billed separately from the real
property of Landlord.

        If any of Tenant's said personal property shall be assessed with
Landlord's real property, Tenant shall pay Landlord the taxes attributable to
Tenant the later of: (i) within ten (10) days after receipt of a written
statement setting forth the taxes applicable to Tenant's property, or (ii) by
the thirtieth (30/th/) day prior to the delinquency date for such

                                      -14-

<PAGE>

taxes.

        Section 17.4. In addition to all other payments provided for herein, the
        ------------
Tenant shall on demand reimburse Landlord for any surcharges, fees, and any
similar charges required to be paid by any instrumentality of local, state or
federal government in connection with parking in the parking area, including
policing; supervising with attendants; other costs in connection with providing
charged parking; repairs and maintenance not properly chargeable to capital
account under good accounting principles; interest and depreciation of the
actual cost of modification or improvements to the areas, facilities and
improvements maintained in this Article either (i) required by any
instrumentality of local, state or federal government, or (ii) installed by
Landlord to facilitate payment of a parking charge by the general public for
parking in the parking area, or both, and other similar costs; and there shall
be excluded from all of Article 17 (a) cost of construction of such improvements
                        ----------
which is properly chargeable to capital account and (b) depreciation of the
original cost of construction of all items not previously mentioned in this
sentence. If Landlord shall require the payment of a parking charge by the
general public for parking in the parking area, then during any period in which
such a charge is made the total revenue (after deducting excise and similar
taxes thereon and taxes, fees or surcharges imposed by any agency or
instrumentality of local, state or federal government) actually received in cash
or its equivalent by Landlord for such parking charge shall be credited against
said costs.

        Section 17.5. Notwithstanding the provisions of Article 17 hereinabove,
        ------------                                    ----------
Tenant shall pay any increase in "real property taxes" resulting from any and
all improvements of any kind whatsoever placed on or in the demised premises for
the benefit of or at the request of Tenant regardless of whether said
improvements were installed or constructed either by Landlord or Tenant.

        Section 17.6. In addition to all other payments provided for herein, the
        ------------
Tenant shall on demand reimburse Landlord for any tax (excluding income or
similar income-based tax) and/or business license fee or other levy that may be
levied, assessed or imposed upon the rent or other payments provided for herein
or on the square footage of the demised premises, on the act of entering into
this Lease, or on the occupancy of the Tenant however described, as a direct
substitution in whole or in part for, or in addition to, any real property
taxes, whether pursuant to laws presently existing or enacted in the future.

                  ARTICLE 18 - Parking and Accommodation Areas

        Section 18.1. Landlord grants to Tenant during the demised term the
        ------------
non-exclusive right to use the parking facilities and other areas provided and
designated as "Parking and Accommodation Areas" on Exhibit "B" hereto for the
                                                   -----------
accommodation and parking of such automobiles of the Tenant, its officers,
agents, employees and its customers while working or visiting Tenant. Tenant
agrees that it will encourage its officers, agents and employees park their
automobiles only in the parking areas provided in the Parking and Accommodation
Areas. Except as provided in Sections 17.4. and 18.3., Landlord shall not charge
                             -----------------------
parking fees for such right to use parking facilities.

        Section 18.2. All parking areas and facilities furnished by Landlord
        ------------
including, but not limited to, pedestrian sidewalks, landscaped areas and
parking areas shall at all times be subject to the control and management of
Landlord so that Landlord will be in a position to make available efficient and
convenient use thereof, and Landlord shall have the right from time to time to
establish, modify and enforce reasonable rules and regulations with respect to
all facilities and areas mentioned in this Article, and Tenant agrees to abide
by and conform therewith. Landlord shall have the right to construct, maintain
and operate lighting facilities on all of said areas and improvements, to police
the same, from time to time to

                                      -15-

<PAGE>

change the area, location and arrangement of parking areas and facilities, to
restrict employee parking to employee parking areas, to construct surface,
subterranean and/or elevated parking areas and facilities, to establish and from
time to time change the level of parking surfaces, to close (if necessary) all
or any portion of said areas or facilities to such extent as may in the opinion
of Landlord's counsel be legally sufficient to prevent a dedication thereof or
the accrual of any rights of any person or of the public therein, and to do and
perform such other acts in and to said areas and improvements respectively as in
the use of good business judgment the Landlord shall determine to be advisable
with a view to the improvement of the convenience and use thereof by Tenant,
other lessees, and their respective employees and visitors.

        Section 18.3. Tenant agrees during the demised term to pay to Landlord
        ------------
an annual charge which shall be Landlord's actual out-of-pocket costs of
operating, maintaining and/or repairing all of the areas and facilities
mentioned in this Article. The annual charge shall be an estimate computed on
the basis of periods of twelve (12) consecutive calendar months, commencing and
ending on such dates as may be designated by Landlord, and shall be paid in
monthly installments on the first day of each calendar month in the amount
estimated by Landlord. Within ninety (90) days after the end of each such annual
period, Landlord will determine (and furnish to Tenant a statement showing in
reasonable detail) the actual annual charge for such period and the amounts so
estimated and paid during such period shall be adjusted within such ninety (90)
days (including adjustments on a prorata basis of any partial such period at
either end of the demised term) and one party shall pay to the other on demand
whatever amount is necessary to effectuate such adjustment.

        Landlord's said costs shall consist of and include all costs and
expenses of every kind or nature incurred by Landlord in the operation,
maintenance and repair of all of the areas, facilities and improvements
mentioned in this Article determined in accordance with good accounting practice
by an accountant employed by Landlord. The determination of such accountant
shall be conclusive. Without otherwise limiting the generality of the foregoing,
there shall be included in such costs public liability and property damage
insurance, landscape maintenance, maintenance of utilities, water, cleaning of
areas, facilities and improvements, operation of lighting, common area taxes and
assessments determined in the same manner as taxes and assessments on the
demised premises, policing and sweeping of parking areas, supervising with
attendants, repairs and maintenance, and an amount equal to ten percent (10%) of
the total of all of the above for administration of the Parking and
Accommodation Areas.

        Notwithstanding anything to the contrary contained herein, repair and/or
maintenance costs included in this Section 18.3. are exclusive of replacement;
                                   ------------
provided, however, that any costs for repair, maintenance or replacements which
are occasioned by (x) Tenant's negligent acts or omissions or those of its
employees, contractors, agents, invitees or servants, or (y) the particular
nature of Tenant's business, then all of such costs shall be borne solely by
Tenant.

        Section 18.4. The Parking and Accommodation Areas included for the
        ------------
purpose of this Article are those shown on Exhibit "B" outside of the building
                                           -----------
area.

                                      -16-

<PAGE>

                           ARTICLE 19 - Miscellaneous

        Section 19.1. Landlord and its designee shall have the right during
        ------------
reasonable business hours, after notice to Tenant and, at Tenant's option, with
a Tenant representative, to enter the demised premises except restricted areas
as established by or on behalf of the Federal Government for security purposes
(and in emergencies at all times without the requirement of notice to Tenant),
(i) to inspect the same, (ii) for any purpose connected with Landlord's rights
or obligations under this Lease and, (iii) for all other lawful purposes.

        Section 19.2. Tenant shall not be entitled to make repairs at Landlord's
        ------------
expense, and Tenant waives the provisions of Civil Code Sections 1941 and 1942
with respect to Landlord's obligations for tenantability of the demised premises
and Tenant's right to make repairs and deduct the expenses of such repairs from
rent.

        Section 19.3. This Lease shall be governed exclusively by the provisions
        ------------
hereof and by the laws of the State of California as the same from time to time
exist. This Lease expresses the entire understanding and all agreements of the
parties hereto with each other and neither party hereto has made or shall be
bound by any agreement or any representation to the other party which is not
expressly set forth in this Lease.

        Section 19.4. If Tenant should hold over after the demised term and any
        ------------
extension thereof as herein provided for, then such holding over shall be
construed as a tenancy from month to month at a rent equal to 150% of that
provided for under the monthly rental of the principal demised term.

        Section 19.5. Tenant agrees to maintain all toilet and washroom
        ------------
facilities within the demised premises in a neat, clean and sanitary condition.

        Section 19.6. Landlord covenants and agrees that Tenant, subject to the
        ------------
terms and provisions of this Lease, on paying the rent and observing, keeping
and performing all of the terms and provisions of this Lease on its part to be
observed, kept and performed, shall lawfully, peaceably and quietly have, hold,
occupy and enjoy the demised premises during the demised term without hindrance
or ejection by any person lawfully claiming under or against the Landlord.

        Section 19.7. Subject to Article 6, the terms and provisions hereof
        ------------             ---------
shall be construed as running with the land and shall be binding upon and inure
to the benefit of heirs, executors, administrators, successors and assigns of
Landlord and Tenant.

        Section 19.8.
        ------------

        A. Tenant shall promptly pay all sums of money with respect to any
labor, services, materials, supplies or equipment furnished or alleged to have
been furnished to Tenant in, at or about the demised premises, or furnished to
Tenant's agents, employees, contractors or subcontractors, that may be secured
by any mechanic's, materialmen's, supplier's or other liens against the demised
premises or Landlord's interest therein. In the event any such or similar liens
shall be filed, Tenant shall, within five (5) business days of receipt thereof,
give notice to Landlord of such lien, and Tenant shall discharge such lien by
payment of the amount due to the lien claimant within ten (10) business days
after receiving notice of the filing of the lien, or by the date the lien
claimant claims payment is due (if the lien claimant filed such lien before
payment was due). However, Tenant may in good faith contest such lien provided
that within such ten (10) day period Tenant provides Landlord with a surety bond
from a company acceptable to Landlord, protecting against said lien in an amount
at least one and one-half (1-1/2) times the amount claimed or secured as a lien
or such greater amount as may be required by applicable law; and provided
further that Tenant, if it should decide to contest such lien, shall agree to
indemnify, defend and save harmless Landlord from and against all costs arising
from or in connection with any proceeding with respect to such lien. Failure of
Tenant to discharge

                                      -17-

<PAGE>

the lien, or, if contested, to provide such bond and indemnification, shall
constitute a default under this Lease and in, addition to any other right or
remedy of Landlord, Landlord may, but shall not be obligated, to discharge or
secure the release of any lien by paying the amount claimed to be due, and the
amount so paid by Landlord, and all costs and expenses incurred by Landlord
therewith, including, but not limited to, court costs and reasonable attorneys'
fees, shall be due and payable by Tenant to Landlord forthwith on demand.

        B. At least fifteen (15) days before the commencement by Tenant of any
material construction or remodeling work on the demised premises, Tenant shall
give written notice thereof to Landlord. Landlord shall have the right to post
and maintain on the demised premises such Notices of Non-Responsibility, or
similar notices, provided for under applicable laws.

        Section 19.9.
        ------------

        A. Tenant shall deposit with Landlord the sum specified in Section
                                                                   -------
2.4.(B) hereof as a "Security Deposit". The Security Deposit shall be held by
-------
Landlord as security for the faithful performance of all the terms of this Lease
to be observed and performed by Tenant. The Security Deposit shall not be
mortgaged, assigned, transferred or encumbered by Tenant without the written
consent of Landlord and any such act on the part of Tenant shall be without
force and effect and shall not be binding upon Landlord.

        B. If any of the rents herein reserved or any other sum payable by
Tenant to Landlord shall be overdue and unpaid, or should Landlord make payments
on behalf of Tenant as permitted hereunder, or should Tenant fail to perform any
of the terms of this Lease, then Landlord may, at its option and without
prejudice to any other remedy which Landlord may have on account thereof, apply
the entire Security Deposit, or so much thereof as may be necessary, to
compensate Landlord toward the payment of rent or additional rent, loss, or
damage sustained by Landlord due to such breach on the part of Tenant, and
Tenant shall forthwith upon demand restore said Security Deposit to the original
sum deposited. The remainder of said Security Deposit shall be returned in full
to Tenant at the end of the demised term.

        C. In the event of bankruptcy or other similar proceedings listed in
Article 14 hereof, the Security Deposit shall be deemed to be applied first to
----------
the payment of rent and other charges due Landlord for all periods prior to the
filing of such proceedings.

        D. In the event Landlord delivers the Security Deposit to the purchaser
of Landlord's interest in the demised premises, Landlord, after written notice
to Tenant of said delivery, shall be discharged from any further liability with
respect to the Security Deposit. This provision shall also apply to any
subsequent transferees.

        Section 19.10. All notices, statements, demands, requests, consents,
        -------------
approvals, authorizations, offers, agreements, appointments or designations
hereunder by either party to the other shall be in writing and shall be
sufficiently given and served upon the other party if sent by United States
certified mail, return receipt requested, postage prepaid, or overnight courier
(provided a receipt is given), and addressed as follows:

        If sent by mail to Tenant, the same shall be addressed to the Tenant at
Memry Corporation, 4065 Campbell Avenue, Menlo Park, CA 94025, with a copy
(until 7/1/00) to Memry Corporation, 57 Commerce Drive, Brookfield, CT 06804 and
(after 7/1/00) to Memry Corporation, 3 Berkshire Boulevard, Bethel, CT 06801, or
at such other place as Tenant may from time to time designate by notice to
Landlord.

        If sent by mail to Landlord, the same shall be addressed to Landlord at
Sixty 31/st/ Avenue, San Mateo, California 94403-3497, or at such other place as
Landlord may from time to time designate by notice to Tenant.

        Any such notice when sent by certified mail as above provided shall be
deemed duly served on the third business day following the date of such mailing.
Any such notice when

                                      -18-

<PAGE>

sent by overnight courier as above provided shall be deemed duly served on the
first business day following the date on which it is delivered to such courier.

        Section 19.11. As used in this Lease and when required by the context,
        -------------
each number (singular or plural) shall include all numbers, and each gender
shall include all genders; and unless the context otherwise requires, the word
"person" shall include corporation, firm or association.

        Section 19.12. In case of litigation with respect to the mutual rights,
        -------------
obligations, or duties of the parties hereunder, the prevailing party shall be
entitled to reimbursement from the other party of all costs and reasonable
attorneys' fees actually incurred.

        Section 19.13. Each term and each provision of this instrument
        -------------
performable by Tenant shall be construed to be both a covenant and a condition.

        Section 19.14. Except as otherwise expressly stated, each payment
        -------------
provided herein to be made by Tenant to Landlord shall be in addition to and not
in substitution for the other payments to be made by Tenant to Landlord.

        Section 19.15. Time is and shall be of the essence of this Lease and all
        -------------
of the terms, provisions, covenants and conditions hereof.

        Section 19.16. The Tenant warrants that it has not had any dealings with
        -------------
any realtor, broker, or agent in connection with the negotiation of this Lease
excepting only ResourceOne (Joseph Carroll), whom Tenant agrees to pay whatever
commission may be due. The Landlord warrants that it has not had any dealings
with any realtor, broker, or agent in connection with the negotiation of this
Lease. Each party agrees to hold the other harmless from any cost, expense or
liability for any compensation, commissions or charges claimed by any realtor,
broker, or agent with respect to this Lease and/or the negotiation thereof with
whom such party has or purportedly has dealt.

        Section 19.17. Tenant agrees that its interest in this Lease shall be
        -------------
subordinate to any mortgage, deed of trust and/or other security indenture
hereafter placed upon the demised premises and to any and all advances made or
to be made thereunder and to the interest thereon made and all renewals,
replacements, and extensions thereof, but nothing herein contained shall be
deemed to alter or limit Tenant's rights as set forth in Section 19.6. Tenant
                                                         ------------
shall, at the request of Landlord or any mortgagee, trustee or holder of any
such security instrument, execute in writing an agreement subordinating its
rights under this Lease to the lien of such mortgage, deed of trust and/or other
security indenture. If any mortgagee, trustee or holder of such security
instrument elects to have the Tenant's interest in this Lease superior to any
such instrument by notice to Tenant, then this Lease should be deemed superior
to the lien of any such mortgage, deed of trust or security indenture whether
this Lease was executed before or after said mortgage, deed of trust and/or
security indenture.

        Section 19.18. Landlord reserves the right during the last six months of
        -------------
the demised term or the last six months of any extension hereof to enter the
property during reasonable business hours (after notice to Tenant and, at
Tenant's option, with a Tenant representative) for the purpose of showing the
demised premises (except restricted areas established by, or on behalf of, the
Federal Government for security purposes) to prospective tenants or purchasers
and to place signs (for the last year) on the demised premises advertising the
property for lease or sale. Notwithstanding the above, Landlord acknowledges
that Tenant has sensitive and confidential trade secrets (including its plant
layout and processes), and Landlord agrees not to show, or allow brokers or
other agents to show, the demised premises to any competitors of Tenant
identified by Tenant. In order to do so, Landlord agrees to give Tenant
reasonable advance notice of the name and affiliation of each visitor and the
prospective tenant or purchaser that they represent, and to provide Tenant with
reasonable evidence of such affiliations, so as to allow Tenant a reasonable
amount of time to verify this information and to object and refuse entry to any

                                      -19-

<PAGE>

competitor, its affiliates or representatives.

        Section 19.19. The following terms as used in this Lease shall have the
        -------------
following meaning:

        (a) "Unavoidable Delay" means any prevention, delay or stoppage due to
strike(s), lockout(s), labor dispute(s), act(s) of God, inability to obtain
labor or materials or reasonable substitutes therefor, governmental
restrictions, governmental regulations, governmental controls, enemy or hostile
governmental action, civil commotion, fire or other casualty, and other
conditions or causes beyond the reasonable control of the party obligated to
perform.

        Section 19.20. Tenant shall at any time during the demised term, within
        -------------
ten (10) business days after written notice from Landlord, execute, acknowledge
and deliver to Landlord's prospective mortgagee or prospective purchaser, an
estoppel certificate in writing (i) certifying that this Lease is unmodified and
in full force and effect (or, if modified, stating the nature of such
modification and certifying that this Lease, as so modified, is in full force
and effect) and the date to which the rent and other charges are paid in
advance, if any, (ii) acknowledging that here are not, to Tenant's knowledge,
any uncured defaults on the part of Landlord hereunder, or specifying such
defaults, if any, as are claimed, and (iii) ratifying and certifying any such
other matters as may reasonably be requested. Any such certificate may be
conclusively relied upon by such prospective mortgagee or prospective purchaser.
Tenant's failure to deliver such certificate within such time shall be
conclusive upon Tenant that this Lease is in full force and effect, without
modification except as may be represented by Landlord; that, to Tenant's
knowledge, there are no uncured defaults in Landlord's performance, and that not
more than one month's rent has been paid in advance.

                                      -20-

<PAGE>

     IN WITNESS WHEREOF, the parties have executed this instrument.
TENANT:                               LANDLORD:
MEMRY CORPORATION,                    4065 ASSOCIATES, L.P.,
a Delaware corporation                a California limited partnership

By:    /s/ Robert P. Belcher          By:  /s/ Frances B. Nelson
   --------------------------------      -------------------------
Title: SVP Finance & Administration        Frances B. Nelson, Trustee
                                           General Partner

By:    /s/ Joseph Pasqualucci         By:  /s/ Robert L. Webster
   --------------------------------      -------------------------
Title: VP & GM, Eastern Operations         Robert L. Webster, Trustee
                                           General Partner

                                      -21-

<PAGE>

                                    EXHIBIT A

                               [legal description]

<PAGE>

                                    EXHIBIT B

                                    [survey]

<PAGE>

                                    EXHIBIT C

                       [items to be removed from premises]

<PAGE>

                                    AGREEMENT

         This AGREEMENT TO DEFER CERTAIN WORK ("Agreement") is entered into as
of August 27, 2001 by and between 4065 Associates L.P., a California limited
partnership ("Landlord") and Memry Corporation, a Delaware corporation ("Memry")
(Landlord and Memry, each a "Party", and together, the "Parties").

         WHEREAS, Frances E. Nelson, ("Nelson") as landlord, and Raychem
Corporation, a Delaware corporation ("Raychem") as tenant, entered into a lease
dated as of April 25, 1983, for the property located at 4065 Campbell Avenue in
Menlo Park, California ("Property"), which lease was amended by the First,
Second, Third and Fourth Amendments to Lease, dated as of May 8, 1989, June 10,
1992, June 7, 1995, and September 21, 1998, respectively (as so amended, the
"Old Lease"); Landlord is the successor-in-interest to Nelson under the Old
Lease;

         WHEREAS, the Old Lease will expire on September 30, 2001;

         WHEREAS, subsequent to entering into the Old Lease, and in connection
with entering into that certain Asset Purchase Agreement by and between Raychem
and Memry, dated as of May 10, 1996 ("Purchase Agreement"), Raychem, as
sublessor, subleased the entire premises demised under the Old Lease to Memry,
as sublessee, pursuant to that certain sublease dated as of June 28, 1996, as
amended by the Amendment to Sublease dated as of March 26, 1998 (as amended, the
"Sublease");

         WHEREAS, in connection with the expiration of the Old Lease, the
Landlord engaged Green Environment Inc. ("GEI") to perform an environmental site
assessment of the Property; GEI recommended that the conditioned air supply
heating, ventilating and air conditioning units and vents be cleaned to remove
particulates containing nickel and titanium as documented in Exhibit A to this
Agreement ("HVAC Cleaning") (the Parties hereto acknowledge and agree that the
HVAC Cleaning does not include cleaning of the HVAC work to be installed by
Landlord pursuant to Section 3.2. of the New Lease and which HVAC work Memry
does not plan to use during the term of the New Lease; Landlord agrees that so
long as Memry does not use the HVAC work described in Section 3.2. of the New
Lease, Landlord shall be solely responsible for any maintenance, cleaning and
repair of such HVAC work); and but for this Agreement, Landlord would require
that Raychem perform the HVAC Cleaning or cause the HVAC Cleaning to be
performed at the time of the termination of the Old Lease;

         WHEREAS, further, in connection with the expiration of the Old Lease,
the

                                       -1-

<PAGE>

Landlord has requested that Raychem perform, or reimburse to Landlord the cost
to perform, certain repairs to the parking lot and paint the exterior of the
building located on the Property the current estimates of which are documented
in Exhibit B to this Agreement ("Repairs");

         WHEREAS, pursuant to the Sublease, Raychem has requested that Memry
perform or cause to be performed the HVAC Cleaning and make the Repairs or cause
the Repairs to be made;

         WHEREAS, simultaneous herewith the Parties are entering into a lease
for the Property as of the date hereof ("New Lease");

         WHEREAS, Memry prefers that the HVAC Cleaning and the Repairs be
deferred until the termination of the New Lease to minimize disruption to its
business operations and to avoid possible duplication of costs that might be
incurred were it necessary to perform certain tasks more than once during the
combined terms of the Old Lease and the New Lease (including any extension
thereof); and

         WHEREAS, Landlord is amenable to the deferral of the HVAC Cleaning and
the Repairs pursuant to the terms and conditions of this Agreement.

         NOW, THEREFORE, incorporating the foregoing recitals and in
consideration of the promises and covenants herein made, the sufficiency of
which consideration is hereby acknowledged by the Parties, the Parties agree as
follows.

1.       HVAC Cleaning. Memry agrees to perform or cause to be performed the
         HVAC Cleaning at no cost to Landlord. Memry may, at its option, absorb
         the costs associated with the HVAC Cleaning or seek to recover all or a
         portion of such costs from Raychem.

2.       Repairs. Memry agrees to reimburse Landlord for (a) its costs of
         completing the painting-related Repairs, and (b) its costs of
         completing the parking-lot related Repairs, provided, in each case,
         that such Repairs are completed within sixty (60) days of the
         termination of the New Lease, subject to force majeure. For reference
         purposes only, and not to serve as a cap or limit on the amount that
         Memry shall reimburse Landlord for such Repairs, the Parties
         acknowledge that as of the date of this Agreement the estimated cost of
         the painting-related Repairs is $5,450.00 and the estimated cost of the
         parking-lot-related Repairs is $49,850.00. Memry may, at its option,
         absorb the costs associated with the

                                       -2-

<PAGE>

         Repairs or seek to recover all or a portion of such costs from Raychem.

3.       Fulfillment of Obligations Pursuant to the Old Lease. Landlord
         acknowledges and agrees that, to the best of Landlord's knowledge, as
         of the date of this Agreement the only outstanding obligations of
         Raychem pursuant to the terms of the Old Lease are the HVAC Cleaning
         and the Repairs. Upon the completion of the HVAC Cleaning and the
         Repairs, and the Exhibit C Work described below, Landlord waives any
         direct or indirect claim it might have against Memry arising out of or
         related to the Old Lease and/or the Sublease as of the date of this
         Agreement and releases Memry from any and all liability related in any
         way to the Old Lease and/or the Sublease and arising on or before the
         date of this Agreement, except nothing contained herein shall release
         Raychem or Memry from any indemnity obligations contained in the Old
         Lease or the Sublease.

4.       Completion of HVAC Cleaning, Repairs and Exhibit C Work. Memry agrees
         to perform or cause to be performed the HVAC Cleaning, the Repairs and
         the tasks enumerated on Exhibit C to the New Lease ("Exhibit C Work")
         and to have the HVAC Cleaning, the Repairs and the Exhibit C Work
         completed on or before the last day of the term of the New Lease.

5.       No Release of Raychem. Nothing in this Agreement is intended by the
         Parties to represent a waiver or release of Raychem by Memry and/or
         Landlord of any of Raychem's obligations under the Old Lease, the
         Sublease and the Purchase Agreement, including without limitation,
         Raychem's obligations with respect to the HVAC Cleaning or the Repairs.

                                       -3-

<PAGE>

6.       Cooperation. Upon Memry's request, Landlord covenants to provide full
         cooperation to Memry if, as, and when Memry seeks to obtain any
         contribution from Raychem toward the costs of the HVAC Cleaning and/or
         the Repairs, pursuant to the Old Lease, the Sublease or the Purchase
         Agreement, at no cost to Landlord. In the event that Memry requests
         that Landlord participate in litigation against Raychem in any way
         related to the HVAC Cleaning or the Repairs, Memry will reimburse
         Landlord for its out-of-pocket costs related to such litigation.

7.       Counterparts. This Agreement may be executed in counterparts, each
         counterpart will be deemed an original and all counterparts together
         will constitute a single agreement.

8.       Governing Law. This Agreement will be governed by the laws of the State
         of California without regard to its conflict of laws provisions.

9.       Exhibits. Exhibits A and B are by this reference incorporated into this
         Agreement.

IN WITNESS WHEREOF, the Parties have executed this Agreement.

                                          4065 CAMPBELL ASSOCIATES L.P.

                                          By:  /s/ Frances B. Nelson
                                             ------------------------
                                             Frances B. Nelson, Trustee
                                             General Partner

                                          By:  /s/ Robert L. Webster
                                             -----------------------
                                             Robert L. Webster, Trustee
                                             General Partner

                                          MEMRY CORPORATION

                                          By:  /s/ Robert P. Belcher
                                             -----------------------
                                          Name:    Robert P. Belcher
                                               ---------------------
                                          Title:  SVP Finance & Administration
                                                ------------------------------

                                          By:  /s/ Joseph Pasqualucci
                                             ------------------------
                                          Name:   Joseph Pasqualucci
                                               ---------------------
                                          Title: VP & GM, Eastern Operations
                                                ----------------------------

                                       -4-

<PAGE>

                                                                       EXHIBIT A

                         [Environmental Site Assessment]

<PAGE>

                                                                       EXHIBIT B

                             [Proposals & Contracts]

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00030-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00030-of-00352.parquet"}]]