Document:

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                                                                   Exhibit 10.10

                           BORELLI INVESTMENT COMPANY
       1798 Technology Drive, #200, San Jose, CA 95110-1308 (408) 453-4700
                               Fax (408) 453-5636

                                 [COMPANY LOGO]

                            FULL SERVICE LEASE-GROSS

1.    BASIC LEASE PROVISIONS.  ("Basic Lease Provisions")

      1.1   PARTIES. This Lease, dated for reference purposes only, August 17,
      2000, is made by and between, Clay Street Capital, Inc., a California
      Corporation (herein called "Lessor") and National Scientific Corporation,
      a Texas Corporation doing business under the same name (herein called
      "Lessee").

      1.2   PREMISES. Suite Number(s) 214, consisting of approximately 1,551
      rentable square feet, more or less, as defined in paragraph 2 and as shown
      as Exhibit "A" hereto (the "premises").

      1.3   BUILDING. Commonly described as being located at 3150 Almandes
      Expressway in the city of San Jose, County of Santa Clara, State of
      California, as more particularly described in Exhibit "A" hereto, and as
      defined paragraph 2.

      1.4   USE. General office use and related legal uses, subject to paragraph
      6.

      1.5   TERM. Three (3) years commencing on September 1, 2000 ("Commencement
      Date") and ending August 31, 2003 as defined in paragraph 3.

      1.6   BASE RENT. Payable on the first day of each month in accordance with
      paragraph 4.1 herein shall be as follows:

<TABLE>
<S>                                   <C>
            09-01-00 to 08-31-2001    $3,878.00 per month
            09-01-01 to 08-31-2002    $4,071.00 per month
            09-01-02 to 08-31-2003    $4,275.00 per month
</TABLE>

      1.7   BASE RENT INCREASE. N/A

      1.8   RENT PAID UPON EXECUTION. $3,878.00 for first month's rent.

      1.9   SECURITY DEPOSIT. $10,000.00 pursuant to the terms and conditions of
      paragraph 5 herein.

      1.10  LESSEE'S SHARE OF OPERATING EXPENSES INCREASE. 2.43% as defined in
      paragraph 4.2

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2.    PREMISES, PARKING AND COMMON AREAS.

      2.1   PREMISES. The Premises are a portion of a building herein sometimes
      referred to as the "Building" identified in paragraph 1.3 of the Basic
      Lease Provisions. "Building" shall include adjacent parking structures
      used in connection therewith. The Premises, the Building, the Common
      Areas, the land upon which the same are located, along with all other
      buildings and improvements thereon or thereunder, are herein collectively
      referred to as the "Office Building Project". Lessor hereby leases to
      Lessee and Lessee leases from Lessor the term, at the rental, and upon all
      of the conditions set forth herein, the real property referred to in the
      Basic Lease Provisions, paragraph 1.2, as the "Premises", including rights
      to the Common Areas as hereinafter specified.

      2.2   VEHICLE PARKING. So long as Lessee is not in default, and subject to
      the rules and regulations attached hereto, and as established by Lessor
      from time to time, Lessee shall be entitled to rent and use six (6)
      parking spaces in the Office Building Project.

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

      2.3   COMMON AREAS - DEFINITION. The term "Common Areas" is defined as all
      areas and facilities outside the Premises and within the exterior boundary
      line of the Office Building Project" that are provided and designated by
      Lessor from time to time for the general non-exclusive use of Lessor,
      Lessee and of other lessors of the Office Building Project and their
      respective employees, suppliers, shippers, customers and invitees,
      including, but not limited to common entrances, lobbies, corridors,
      stairways and stairwells, public restrooms, elevators, escalators, parking
      areas to the extent not otherwise prohibited by this Lease, loading and
      unloading areas, roadways, sidewalks, walkways, parkways, ramps,
      driveways, landscaped areas and decorative walls.

      2.4   COMMON AREAS - RULES AND REGULATIONS. Lessee agrees to abide by and
      conform to the rules and regulations attached hereto as Exhibit "B" with
      respect to the Office Building Project and Common Areas, and to cause its
      employees, suppliers, shippers, customers and invitees to so abide and
      conform. Lessor or such other person(s) as Lessor may appoint shall have
      the exclusive control and management of the Common Areas and shall have
      the right from time to time, to modify, amend and enforce said rules and
      regulations. Lessor shall not be responsible to Lessee for the
      non-compliance with said rules and regulations by other lessee's their
      agents, employees and invitees of the Office Building Project.

      2.5   COMMON AREAS CHANGES. Lessor shall have the right, in Lessor's sole
      discretion, from time to time:

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            (a)   To make changes to the Building interior and exterior and
                  Common Areas, including, without limitation, changes in the
                  location, size, shape, number, and appearance thereof,
                  including but not limited to the lobbies, windows, stairways,
                  air shafts, elevators, escalators, restrooms, driveways,
                  entrances, parking spaces, parking areas, loading and
                  unloading areas, ingress, egress, direction of traffic,
                  decorative walls, landscaped areas and walkways; provided,
                  however, Lessor shall at all time provide the parking
                  facilities required by applicable law;

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

            (c)   To designate other land and improvements outside the
                  boundaries of the Office Building Project to be a part of the
                  Common Areas, provided that such other land and improvements
                  have a reasonable and functional relationship to the Office
                  Building Project;

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

            (e)   To use the Common Areas while engaged in making additional
                  improvements, repairs or alterations to the Office Building
                  Project, or any portion thereof;

            (f)   To do and perform such other act and make such other changes
                  in, to or with respect to the Common Areas and Office Building
                  Project as Lessor may, in the exercise of sound business
                  judgment deem to be appropriate.

3.    TERM.

      3.1   TERM. The term and Commencement Date of this Lease shall be as
      specified in paragraph 1.5 of the Basic lease Provisions.

      3.2   DELAY IN POSSESSION. Notwithstanding said Commencement Date, if for
      any reason Lessor cannot deliver possession of the Premises to Lessee on
      said date and subject to paragraph 3.2(b), Lessor shall not be subject to
      any liability therefor, nor shall such failure affect the validity of this
      Lease or the obligations of Lessee hereunder or extend the term hereof,
      but, in such case, Lessee shall not be obligated to pay rent or perform
      any other obligation of Lessee under the terms of this Lease, except as
      may be otherwise provided in this Lease, until possession of the Premises
      is tendered to Lessee, as hereinafter defined; provided, however, that if
      Lessor shall not have delivered possession of the Premises within sixty
      (60) days following said Commencement Date, as the same may be extended
      under the terms of a Work Letter executed by Lessor and Lessee, Lessee
      may, at Lessee's option by notice in writing to Lessor, within ten (10)
      days thereafter, cancel this lease, in which event the parties shall be
      discharged from all obligations hereunder, provided however that as to
      Lessee's obligations, Lessee first reimburses Lessor for all costs
      incurred for Non-Standard improvements and as to Lessor's obligations,
      Lessor shall return any money previously deposited by Lessee (less any
      offsets due Lessor for Non-Standard Improvements); and provided further
      that if

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      such written notice by Lessee is not received by Lessor within said ten
      (10) day period, Lessee's right to cancel this Lease hereunder shall
      terminate and be of no further force and effect.

            (a)   Possession Tendered - Defined. Possession of the Premises
                  shall be deemed tendered to Lessee ("Tender of Possession")
                  when (1) the improvements to be provided by lessor under this
                  Lease are substantially completed, (2) the Building utilities
                  are ready for use in the Premises, and (3) Lessee has
                  reasonable access to the Premises.

            (b)   Delays Caused by Lessee. There shall be no abatement of rent
                  and the sixty (60) day period following the Commencement Date
                  before which Lessee's right to cancel this lease accrues under
                  paragraph 32.2, shall be deemed extended to the extent of any
                  delays caused by acts or omissions of Lessee, Lessee's agents,
                  employees and contractors.

      3.3   EARLY POSSESSION. If Lessee occupies the Premises prior to said
      Commencement Date, such occupancy shall be subject to all provisions of
      this Lease, such occupancy shall not change the termination date, and
      Lessee shall pay rent for such occupancy.

      3.4   UNCERTAIN COMMENCEMENT. In the event commencement of the Lease term
      is defined as the completion of the improvements, Lessee and Lessor shall
      execute an amendment to this Lease establishing the date of Tender of
      Possession (as defined in paragraph 3.2(a)) or the actual taking of
      possession by Lessee, whichever first occurs, as the Commencement Date.

      3.5   LESSEE COMPLIANCE. Lessor shall not be required to tender possession
      of the Premises to Lessee until Lessee complies with its obligation to
      provide evidence of Insurance (Paragraph 8.3). Pending delivery of such
      evidence, Lessee shall be required to perform all of its obligations under
      this Lease from and after the Commencement Date, including the payment of
      Rent, notwithstanding Lessor's election to withhold possession pending
      receipt of such evidence of insurance. Further, if Lessee is required to
      perform any other conditions prior to or concurrent with the Commencement
      Date, the Commencement Date shall occur but Lessor may elect to withhold
      possession until such conditions are satisfied.

4.    RENT.

      4.1   BASE RENT. Subject to adjustment as provided in paragraph 1.7, and
      except as may be otherwise expressly provided in this Lease, Lessee shall
      pay to Lessor the Base Rent for the Premises set forth in paragraph 1.6 of
      the Basic lease Provisions, without offset or deduction. Lessee shall pay
      Lessor upon execution hereof the advance Base Rent described in paragraph
      1.6 of the Basic lease provisions. Rent for any period during the term
      hereof which is for less than one month shall be prorated based upon the
      actual number of days of the calendar month involved. Rent shall be
      payable in lawful money of the United States to Lessor at the address
      stated herein or to such other persons or at such other places as Lessor
      may designate in writing.

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      4.2   OPERATING EXPENSE INCREASE. Lessee shall pay to Lessor during the
      term hereof, in addition to Base Rent, Lessee's Share, as hereinafter
      defined, of the amount by which individual operating expense categories,
      as hereinafter defined, for each Comparison Year exceeds the amount of
      individual operating expense categories for the Base Year, such excess
      being hereinafter referred to as the "Operating Expense Increase". In
      accordance with the following provisions:

            (a)   "Lessee's Share" is defined for purposes of this Lease, as set
                  forth in paragraph 1.10, which percentage has been determined
                  by dividing the approximate square footage of the Premises by
                  the total approximate square footage of the rentable space
                  contained in the Office Building Project. It is understood and
                  agreed that the square footage figures set forth in the Basic
                  lease Provisions are approximations, which Lessor and Lessee
                  agree are reasonable and shall not be subject to revision
                  except in connection with an actual changes in the size of the
                  Premises or a change in the space available for lease in the
                  Office Building Project.

            (b)   "Base Year" is defined as the calendar year in which the Lease
                  Term commences.

            (c)   "Comparison Year" is defined as each calendar year during the
                  term of this Lease subsequent to the Base Year; provided,
                  however, Lessee shall have no obligation to pay a share of the
                  Operating Expense Increase applicable to the first twelve (12)
                  months of the Lease Term (other than such as are mandated by a
                  governmental authority, as to which government mandated
                  expenses Lessee shall pay lessee's Share, notwithstanding they
                  occur during the first twelve (12) months). Lessee's Share of
                  the Operating Expense increase for the first and last
                  Comparison Years of the Lease Term shall be prorated according
                  to that portion of such Comparison Year as to which Lessee is
                  responsible for a share of such increase.

            (d)   "Operating Expenses" is defined, for purposes of this lease,
                  to include all costs, if any, incurred by Lessor in the
                  exercise of its reasonable discretion, for:

                  (i)   The operation, repair, maintenance, and replacement, in
                        neat, clean, safe, good order and condition, of the
                        Office Building Project, including but not limited to,
                        the following:

                        (aa)  The Common Areas, including their surfaces,
                              covering, decorative items, carpets, drapes and
                              window coverings, and including parking areas,
                              loading and unloading areas, trash areas,
                              roadways, sidewalks, walkways, stairways,
                              parkways, driveways, landscaped areas, striping,
                              bumpers, irrigation systems, Common Area lighting
                              facilities, building exteriors and roofs, fences
                              and dates;

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                        (bb)  All heating, air conditioning, plumbing,
                              electrical systems, life safety equipment,
                              telecommunication and other equipment used in
                              common by, or for the benefit of Lessee's or
                              occupants of the Office Building Project,
                              including elevators and escalators, tenant
                              directories, fire detection systems including
                              sprinkler system maintenance and repair.

                  (ii)  Trash disposal, janitorial and security services;

                  (iii) Any other service to be provided by Lessor that is
                        elsewhere in this Lease stated to be an "Operating
                        Expense";

                  (iv)  The cost of water, sewer, gas, electricity, and other
                        publicly mandated services to the Office Building
                        Project;

                  (v)   Labor, salaries and applicable fringe benefits and
                        costs, materials, supplies and tools, used in
                        maintaining and/or cleaning the Office Building Project
                        and accounting and a management fee attributable to the
                        operation of the Office Building Project.

            (e)   Operating Expenses shall not include any expenses paid by any
                  lessee directly to their parties, or as to which Lessor is
                  otherwise reimbursed by any third party, other tenant, or by
                  insurance proceeds.

            (f)   Lessee's Share of Operating Expense Increase shall be payable
                  by Lessee within ten (10) days after a reasonable detailed
                  statement of actual expenses is presented to Lessee by Lessor.
                  At Lessor's option, however, an amount may be estimated by
                  Lessor from time to time in advance of Lessee's Share of the
                  Operating Expense Increase for any Comparison Year, and the
                  same shall be payable monthly or quarterly, as Lessor shall
                  designate during each Comparison Year of the Lease term, on
                  the same day as the Base Rent is due hereunder. In the event
                  that Lessee pays Lessor's estimate of Lessee's Share of
                  Operating Expense Increase as aforesaid, Lessor shall deliver
                  to Lessee within ninety (90) days after the expiration of each
                  Comparison Year a reasonably detailed statement showing
                  Lessee's Share of the actual Operating Expense increase
                  incurred during such year. If Lessee's payments under this
                  paragraph (g) during said Comparison Year exceed Lessee's
                  Share as indicated on said statement, Lessee shall be entitled
                  to credit the amount of such overpayment against Lessee's
                  Share of Operating Expense Increase next falling due. If
                  Lessee's payments under this paragraph during said Comparison
                  Year were less than Lessee's Share as indicated on said
                  statement, Lessee shall pay to Lessor the amount of the
                  deficiency within ten (10) days after delivery by Lessor to
                  Lessee of said statement. Lessor and Lessee shall forthwith
                  adjust between them by cash payment any balance determined to
                  exist with respect to that portion of the last

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                  Comparison Year for which Lessee is responsible as to
                  Operating Expense Increases, notwithstanding that the Lease
                  term may have terminated before the end of such Comparison
                  Year.

      4.3   CAPITAL EXPENSE INCREASE. Lessee shall pay to Lessor during the term
      hereof in addition to base rent, Lessee's share, as defined in paragraph
      4.2(a), of the amount by which the cost of any capital improvement (such
      cost or allocable portion thereof to be amortized over such reasonable
      period as Lessor shall determine in accordance with generally accepted
      accounting principles), for each comparison year that exceeds the amount
      of capital expenses for the base year, such excess being hereafter
      referred to as "Capital Expense Increase". Sums representing Capital
      Expense INCREASE SHALL BE PAID IN THE SAME MANNER AND IN CONJUNCTION WITH
      Operating Expense Increase as set forth in paragraph 4.2(g). Capital
      Expense Increase shall constitute a separate expense category from
      Operating Expense Increase. Capital Improvements shall not include the
      cost of any Capital Improvements relating only to a single tenant in the
      Office Building Project.

      4.4   INSURANCE PREMIUM INCREASE. Lessee shall pay to lessor during the
      term hereof, in addition to base rent, Lessee's share, as defined in
      paragraph 4.2(a) of the amount by which the cost of any premium for
      insurance carried by lessor pursuant to paragraph 8.1(b), for each
      comparison year that exceeds the amount of insurance premium for the base
      year, such excess being hereafter referred to as "Insurance Premium
      Increase". Sums representing Insurance Premium Increase shall be paid in
      the same manner and in conjunction with Operating Expense Increase as set
      forth in paragraph 4.2(g). Insurance Premium Increase shall constitute a
      separate expense category from Operating Expense Increase.

      4.5   REAL PROPERTY TAX INCREASE. Lessee shall pay to Lessor during the
      term hereof, in addition to base rent, Lessee's share, as defined in
      paragraph 4.2(a), of the amount by which the cost of any real property tax
      as defined in paragraph 10 for each comparison year that exceeds the
      amount of real property tax for the base year, such excess being hereafter
      referred to as "Real Property Tax Increase". Sums representing Real
      Property Tax Increase shall be paid in the same manner and in conjunction
      with Operating Expense Increase as set forth in paragraph 4.2(g). Real
      Property Tax Increase shall constitute a separate expense category from
      Operating Expense Increase.

5.    SECURITY DEPOSIT. Lessee shall deposit with Lessor upon execution hereof
      the Security Deposit as security for Lessee's faithful performance of its
      obligations under this Lease. If Lessee fails to pay Rent, or otherwise
      Defaults under this Lease, Lessor may use, apply or retain all or any
      portion of said Security Deposit for the payment of any amount due Lessor,
      including alter charges, or to reimburse or compensate Lessor for any
      liability, expense, loss or damage which Lessor may suffer or incur by
      reason thereof. If Lessor uses or applies all or any portion of said
      Security Deposit, Lessee shall within ten (10) days after written request
      therefor deposit monies with lessor sufficient to restore said Security
      Deposit to the full amount required by this Lease. If the Base Rent
      increases during the term of this Lease, Lessee shall upon written request
      from Lessor, deposit additional moneys with Lessor so that the total
      amount of the Security Deposit

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      shall at all times bear the same proportion to the increased Base Rent as
      the initial Security Deposit bore to the initial Base Rent. Should the Use
      (Paragraph 1.4) be amended to accommodate a material change in the
      business of Lessee or to accommodate a sublessee or assignee, Lessor shall
      have the right to increase the Security Deposit to the extent necessary,
      in Lessor's reasonable judgment to account for any increased wear and tear
      that the Premises may suffer as a result thereof. If a change in control
      of Lessee occurs during this Lease and following such change the financial
      condition of Lessee is, in Lessor's reasonable judgment significantly
      reduced, Lessee shall deposit such additional monies with Lessor as shall
      be sufficient to cause the Security Deposit to be at a commercially
      reasonable level based on said change in financial condition. Lessor shall
      not be required to keep the Security Deposit separate from its general
      accounts. Within fourteen (14) days after the expiration or termination of
      this Lease, if Lessor elects to apply the Security Deposit only to unpaid
      Rent, and otherwise within thirty (30) days after the Premises have been
      vacated pursuant to Paragraph 7.2(b) below, Lessor shall return that
      portion of the Security Deposit not used or applied by Lessor. No part of
      the Security Deposit shall be considered to be held in trust to bear
      interest or to be prepayment for any monies to be paid by Lessee under
      this Lease. Lessee understands and agrees that the Security Deposit is not
      prepaid rent and, specifically, that such Security Deposit may not be
      applied by Lessee as rent for the last month of the term of this lease.

6.    USE.

      6.1   USE. The Premises shall be used and occupied only for the Use
      specified in Paragraph 1.4, or any other legal use, which is reasonably
      comparable thereto, and for no other purpose. Lessee shall not sue or
      permit the use of the Premises in a manner that is unlawful, creates
      damage, waste or a nuisance, or that disturbs owners and/or occupants of
      or causes damage to neighboring properties. Lessor shall not unreasonably
      withhold or delay its consent to any written request for a modification of
      the Use, so long as the same will not impair the structural integrity of
      the improvements on the Premises or the mechanical or electrical systems
      therein, or is not significantly more burdensome to the Premises. If
      Lessor elects to withhold consent, Lessor shall within five (5) business
      days after such request give written notification of same, which notice
      shall include an explanation of Lessor's objections to the change in use.

      6.2   COMPLIANCE.

            (a)   Lessor warrants to lessee that the Premises in the state
                  existing on the date that the lease term commences, but
                  without regard to alterations or improvements made by Lessee
                  or the use for which Lessee will occupy the Premises, does not
                  violate any covenants or restrictions of record in effect on
                  such Lease term Commencement Date. In the event it is
                  determined that this warranty has been violated, then it shall
                  be the obligation of the Lessor, after written notice from
                  Lessee, to promptly, at Lessor's sole cost and expense,
                  rectify any such violation. In the event Lessee does not give
                  to Lessor written notice of the violation of this warranty
                  within six (6) months from the date that the Lease term
                  commences, the correction of

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                  same shall be the obligation of the Lessee at Lessee's sole
                  cost. The warranty contained din this paragraph 6.2(a) shall
                  be of no force or effect if, prior to the date of this Lease,
                  Lessee was an owner or occupant of the Premises and, in such
                  event, Lessee shall correct any such violation at Lessee's
                  sole cost.

            (b)   Except as provided in paragraph 6.2(a) Lessee shall, at
                  Lessee's expense, promptly comply with all applicable statutes
                  (including Americans with Disabilities Act and O.S.H.A.),
                  ordinances, rules, regulations, orders, covenants and
                  restrictions of record, and requirements of any fire insurance
                  underwriters or rating bureaus, not in effect or which may
                  hereafter come into effect, whether or not they reflect a
                  change in policy from that now existing during the term or any
                  part of the term hereof, relating in any manner to the
                  Premises and the occupation and use by lessee of the Premises.
                  Lessee shall conduct its business in a lawful manner and shall
                  not use or permit the use of the Premises or the Common Area
                  in any manner that will tend to create waster or a nuisance or
                  shall tend to disturb other occupants of the Office Building
                  Project.

      6.3   CONDITION OF PREMISES.

            (a)   Lessor shall deliver the Premises to Lessee in a clean
                  condition on the Lease Commencement Date (unless Lessee is
                  already in possession) and Lessor warrants to Lessee that the
                  plumbing, lighting, air conditioning, and heating system in
                  the Premises shall be in good operating condition. In the
                  event that it is determined that this warranty has been
                  violated, then it shall be the obligation of Lessor, after
                  receipt of written notice from Lessee setting forth with
                  specificity the nature of the violation to promptly, at
                  Lessor's sole cost, rectify such violation.

            (b)   Except as other provided in this Lease, Lessee hereby accepts
                  the Premises and the Office Building Project in their
                  condition existing as of the lease commencement Date or the
                  date that Lessee takes possession of the Premises, whichever
                  is earlier, subject to all applicable zoning, municipal,
                  country and state laws, ordinances and regulations governing
                  and regulating the use of he Premises, and any easements,
                  covenants or restrictions of record, and accepts this Lease
                  subject thereto and to all matters disclosed thereby and by
                  any exhibits attached hereto. Lessee acknowledges that it has
                  satisfied (itself by its own independent investigation that
                  the Premises are suitable for its intended use and that
                  neither Lessor nor Lessor's agent or agents has made any
                  representation or warranty as to the present or future
                  suitability of the Premises, Common Areas or Office Building
                  Project for the conduct of Lessee's business.

      6.4   WASTE; NUISANCE. Lessee shall not use the premises in any manner
      that will constitute waste, nuisance, or unreasonable annoyance
      (including, without limitation, unreasonable noise, the use of
      loudspeakers or sound or light apparatus that can be heard

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      or seem outside the Premises) to other tenants in the Building or
      occupants of neighboring properties. Lessee shall not use the Premises for
      vehicle repair, sleeping, washing clothes, cooking, or the preparation,
      manufacturing or mixing of anything that might emit any odor or
      objectionable noises or lights into the Building or into neighboring
      properties.

7.    MAINTENANCE, REPAIRS, ALTERATIONS AND COMMON AREA SERVICES.

      7.1   LESSOR'S OBLIGATIONS. Lessor shall keep the Office Building Project,
      including the Premises, interior and exterior walls, roof and Common
      Areas, whether used exclusively for the premises or in common with other
      Premises, in good condition and repair, provided, however, Lessor shall
      not be obligated to paint, repair or replace wall coverings, or to repair
      or replace any improvements that are not ordinarily a part of the
      Building. Except as provided in paragraph 9.5, there shall be no abatement
      of rent or liability of Lessee on account of any injury or interference
      with lessee's business with respect to any improvements, alterations or
      repairs made by Lessor to the Office Building Project of any part thereof.
      Lessee expressly waives the benefits of any statute now or hereafter in
      effect which would otherwise afford Lessee the right to make repairs at
      Lessor's expense or to terminate this lease because of Lessor's failure to
      keep the Premises in good order, condition and repair.

      7.2   LESSEE'S OBLIGATIONS.

            (a)   Notwithstanding Lessor's obligations to keep the Premises in
                  good condition and repair, Lessee shall be responsible for
                  payment of the cost thereof to Lessor as additional rent for
                  that portion of the cost of nay maintenance and repair of the
                  Premises, or any equipment (wherever located) that serves only
                  Lessee or the Premises, to the extent such cost is
                  attributable to cases beyond normal wear and tear. Lessee
                  shall be responsible for the cost of painting, repairing or
                  replacing wall coverings and to repair or replace any Premises
                  improvements that are not ordinarily a part of the Building.
                  Lessor may, at its option, upon reasonable notice, elect to
                  have Lessee perform any particular such maintenance or repair
                  costs of which are otherwise Lessee's responsibility
                  hereunder.

            (b)   On the last of the term hereof, or on any sooner termination,
                  Lessee shall surrender the Premises in same condition as
                  received, ordinary wear and tear excepted, clean and free of
                  debris. Any damage or deterioration of the Premises shall not
                  be deemed ordinary wear and tear if the same could have been
                  prevented by good maintenance practices by Lessee. Lessee
                  shall repair all penetrations and damage (including markings)
                  to walls and stains in carpet. Lessee shall repair any damage
                  to the Premises occasioned by the installation or removal of
                  Lessee's trade fixtures, alterations, furnishings and
                  equipment. Except as otherwise stated in this Lease, Lessee
                  shall leave the air lines, power panels, electrical
                  distribution systems, lighting fixtures, air conditioning,
                  window coverings, wall

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                  covering, carpets, wall paneling, ceilings and plumbing on the
                  Premises in good operating condition.

      7.3   ALTERATIONS AND ADDITIONS.

            (a)   Lessee shall not, without Lessor's prior written consent make
                  any alterations, improvements, additions, Utility
                  Installations or repairs in, on or about the Premises, or the
                  Office Building Project. As used in this paragraph 7.3 the
                  term "Utility Installation" shall mean carpeting, window and
                  wall coverings, power panels, electrical distribution systems,
                  lighting fixtures, air conditioning, plumbing, and telephone
                  and telecommunication wiring and equipment. At the expiration
                  of the term, Lessor may elect ownership or require the removal
                  of any or all of said alterations, improvements, additions or
                  Utility Installations, and the restoration of the Premises and
                  the Office Building Project to their prior condition, at
                  Lessee's expense. Should Lessor permit Lessee to make its own
                  alterations, improvement, additions or Utility Installations
                  Lessee shall use only such contractor as has been expressly
                  approved by lessor, and Lessor may require Lessee to provide
                  Lessor, at Lessee's sole cost and expense, a lien and
                  completion bond in an amount equal to one and one-half times
                  the estimated cost of such improvements to insure Lessor
                  against any liability for mechanic's and materialmen's liens
                  and to insure completion of the work. Should Lessee make any
                  alterations, improvements, additions or Utility Installations
                  without the prior approval of Lessor, or use a contractor not
                  expressly approved by Lessor, Lessor may, at any time during
                  the term of this lease, require that Lessee remove any part or
                  all of the same.

            (b)   Any alterations, improvements, additions or Utility
                  Installations in or about the Premises or the Office Building
                  Project that lessee shall desire to make shall be presented to
                  Lessor written form, with proposed detailed plans. If Lessor
                  shall give its consent to Lessee's making such alteration,
                  improvements, addition to Utility Installation, the consent
                  shall be deemed conditioned upon Lessee acquiring a permit to
                  do so from the applicable governmental agencies, furnishing a
                  copy thereof to Lessor prior to the commencement of the work,
                  and compliance by Lessee with all conditions of said permit in
                  a prompt and expeditious manner.

            (c)   Lessee shall pay, when due, all claims for labor or materials
                  furnished or alleged to have been furnished to or for Lessee
                  or for use in the Premises, which claims are or may be secured
                  by any mechanic's or materialmen's lien against the Premises,
                  the Building or the Office Building Project, or any interest
                  therein.

                                    Page 11
<PAGE>   12
            (d)   Lessee shall give Lessor not less than ten (10) days' notice
                  prior to the commencement of any work in the Premises by
                  Lessee, and Lessor shall have the right to post notices of
                  non-responsibility in or on the Premises or the Building as
                  provided by law. If Lessee shall, in good faith, contest the
                  validity of any such lien, claim or demand, then Lessee shall
                  at its sole expense defend itself and Lessor against the same
                  and shall pay and satisfy any such adverse judgment that may
                  be rendered thereon before the enforcement thereof against the
                  Lessor or the Premises, the Building or the Office Building
                  Project, upon the condition that if Lessor shall require,
                  Lessee shall furnish to Lessor a surety bond satisfactory to
                  Lessor in an amount equal to such contested lien claim or
                  demand indemnifying Lessor against liability for the same and
                  holding the Premises, the Building and the Office Building
                  Project free from the effect of such lien or claim. In
                  addition, Lessor may require Lessee to pay Lessor's reasonable
                  attorneys' fees and costs in participating in such action if
                  Lessor shall decide it is to Lessor's best interest so to do.

            (e)   All alterations, improvements, additions and Utility
                  Installations (whether or not such Utility Installations
                  constitute trade fixtures of Lessee), which may be made to the
                  Premises by Lessee, including but no limited to, floor
                  covering, panelings, doors, drapes, built-ins, moldings, sound
                  attenuation, and lighting and telephone or communication
                  systems, conduit, wiring and outlets, shall be made and done
                  in a good and workmanlike manner and of good and sufficient
                  quality and materials and shall be the property of Lessor and
                  remain upon and be surrendered with the Premises at the
                  expiration of the Lease term, unless Lessor requires their
                  removal pursuant to paragraph 7.3(a). Provided Lessee is not
                  in default, notwithstanding the provisions of this paragraph
                  7.3(c), Lessee's personal property and equipment other than
                  utility installations, shall remain the property of Lessee and
                  may be removed by Lessee subject to the provisions of
                  paragraph 7.2.

            (f)   Lessee shall provide Lessor with as-built plans and
                  specifications for any alterations, improvements, additions or
                  Utility Installations.

      7.4   UTILITY ADDITIONS. Lessor reserves the right to install new or
      additional utility facilities throughout the Office Building Project for
      the benefit of Lessor or Lessee, or any other lessee of the Office
      Building Project, including, but not by way of limitation, such utilities
      as plumbing, electrical systems, communication systems, and fire
      protection and detection systems, so long as such installations do not
      unreasonably interfere with Lessee's use of the Premises.

8.    INSURANCE; INDEMNITY.

      8.1   LIABILITY INSURANCE.

                                    Page 12
<PAGE>   13
            (a)   Carried by Lessee. Lessee shall obtain and keep in force a
                  Commercial General Liability Policy of Insurance protecting
                  Lessee, Lessor and Borelli Investment Company against claims
                  for bodily injury, personal injury and property damage based
                  upon or arising out of the ownership, use, occupancy or
                  maintenance of the Premises and all areas appurtenant thereto.
                  Such insurance shall be on an occurrence basis providing
                  single limit coverage in an amount not less than $2,000,000
                  per occurrence with an "Additional Insured-Managers or Lessors
                  of Premises Endorsement" and contain the "Amendment of the
                  Pollution Exclusion Endorsement" for damage caused by the,
                  smoke or fumes from a hostile fire. The Policy shall not
                  contain any insured exclusions as between injured persons or
                  organizations, but shall include coverage for liability
                  assumed under this lease as an "insured contract" for the
                  performance of Lessee's indemnity obligations under this
                  Lease. The limits of said insurance shall not, however, limit
                  the liability of Lessee nor relieve Lessee of any obligation
                  hereunder. All insurance carried by Lessee shall be primary to
                  and not contributory with any similar insurance carried by
                  Lessor, whose insurance shall be considered excess insurance
                  only. Lessor and Borelli Investment Company shall be named as
                  additional insureds on such insurance contracts.

            (b)   Carried by Lessor. All insurance maintained by Lessor shall be
                  for the sole benefit of Lessor and under Lessor's sole
                  control.

                  (i)   Property Insurance. Lessor agrees to maintain property
                        insurance insuring the Building against damage or
                        destruction due to risks including fire, vandalism and
                        malicious mischief in an amount not less than the
                        replacement cost thereof in the form and with
                        deductibles and endorsements as selected by Lessor. At
                        its election, Lessor may instead obtain "All Risk"
                        coverage, and may also obtain earthquake, pollution,
                        and/or flood insurance in amounts selected by Lessor.

                  (ii)  Optional Insurance. Lessor, at Lessor's option, may also
                        carry insurance against loss of rent, in an amount equal
                        to the amount of Base Rent and Additional Rent that
                        Lessor could be required to abate to all Building
                        tenants in the event of condemnation, damage or
                        destruction for a period of twelve (12) months. Lessor
                        may also carry such other insurance as Landlord may deem
                        prudent or advisable, including, without limitation,
                        liability insurance in such amounts an on such terms as
                        Lessor shall determine. Lessor shall not be obligated to
                        insure any furniture, machinery, goods, inventory or
                        supplies which Tenant may keep or maintain in the
                        Premises, or any leasehold improvements, additions or
                        alterations within the Premises.

                                    Page 13
<PAGE>   14
            (c)   Adjacent Premises. If the Premises are part of a larger
                  building or of a group of buildings owned by Lessor which are
                  adjacent to the Premises, the Lessee shall pay for any
                  increase in the premiums for the property insurance of such
                  building or building if said increase is caused by Lessee's
                  acts, omissions, use or occupancy of the Premises.

      8.2   LESSEE'S PROPERTY/BUSINESS INTERRUPTION INSURANCE.

            (a)   Property Damage. Lessee shall obtain and maintain insurance
                  coverage on all of Lessee's personal property, Trade Fixtures,
                  and Lessee Owned Alterations and Utility Installations. Such
                  insurance shall be full replacement cost coverage with a
                  deductible of not to exceed $1,000 per occurrence. The
                  proceeds from any such insurance shall be used by Lessee for
                  the replacement of personal property, Trade Fixtures and
                  Lessee Owned Alterations and Utility Installations. Lessee
                  shall provide Lessor with written evidence that such insurance
                  is in force.

            (b)   Business Interruption. Lessee shall obtain and maintain loss
                  of income and extra expense insurance in amounts as will
                  reimburse Lessee for direct or indirect loss of earnings
                  attributable to all perils commonly insured against by prudent
                  lessees in the business of Lessee or attributable to
                  prevention of access to the Premises as a result of such
                  perils.

            (c)   No Representation of Adequate Coverage. Lessor makes no
                  representation that the limits or forms of coverage of
                  insurance specified herein are adequate to cover Lessee's
                  property, business operations or obligations under this Lease.

      8.3   INSURANCE POLICIES. Insurance required herein shall be by companies
      duly licensed or admitted to transact business in the state where the
      Premises are located and maintaining during the policy term a "General
      Policy Holders Rating" of at least B+, V, as set fort in the most current
      issue of "Best's Insurance Guide", or such other rating as may be required
      by a Lender. Lessee shall not do or permit to be done anything which
      invalidates the required insurance policies. Lessee shall, prior to the
      Start Date deliver, to Lessor certified copies of policies of such
      insurance or certificates evidencing the existence and amounts of the
      required insurance. No such policy shall be cancelable or subject to
      modification except after thirty (30) days prior written notice to lessor.
      Lessee shall, at least thirty (30) days prior to the expiration of such
      policies, furnish, Lessor with evidence of renewals or "insurance binders"
      evidencing renewal thereof, or Lessor may order such insurance and charge
      the cost thereof to Lessee, which amount shall be payable by Lessee to
      Lessor upon demand. Such policies shall be for a term of at least one
      year, or the length of the remaining term of this Lease, whichever is
      less. If either Party shall fail to procure and maintain the insurance
      required to be carried by it, the other Party may, but shall not be
      required to, procure and maintain the same.

      8.4   WAIVER OF SUBROGATION. Without affecting any other rights or
      remedies, Lessee and Lessor each hereby release and relieve the other, and
      waive their entire right to

                                    Page 14
<PAGE>   15
      recover damages against the other, for loss of or damage to its property
      arising out of or incident to the perils required to be insured against
      herein. The effect of such releases and waivers is not limited by the
      amount of insurance carried or required, or by any deductibles applicable
      hereto. The Parties agree to have their respective property damage
      insurance carriers waive any right to subrogation that such companies may
      have against Lessor or Lessee, as the case may be, so long as the
      insurance is not invalidated thereby.

      8.5   INDEMNITY. Except for Lessor's gross negligence or willful
      misconduct, Lessee shall indemnify, protect, defend and hold harmless the
      Premises, Lessor and its agents, Lessor's master or ground lessor,
      partners and Lenders from and against any and all claims, loss of rents
      and/or damages, liens, judgments, penalties, attorneys' and consultants'
      fees, expenses and/or liabilities arising out of, involving, or in
      connection with the use and/or occupancy of the Premises by Lessee. If any
      action or proceeding is brought against Lessor by reason of any of the
      foregoing matters, Lessee shall upon notice defend the same at Lessee's
      expense by counsel reasonably satisfaction to Lessor and Lessor shall
      cooperate with Lessee in such defense. Lessor need not have first paid any
      such claim in order to be defended or indemnified.

      8.6   EXEMPTION OF LESSOR FROM LIABILITY. Lessor shall not be liable for
      injury or damage to the person or goods, wares, merchandise or other
      property of Lessee, Lessee's employees, contractors, invitees, customers,
      or any other person in or about the Premises, whether such damage or
      injury is caused by or results from fire, steam, electricity, gas, water
      or rain, or from the breakage, leakage, obstruction or other defects of
      pipes, fire sprinklers, wires, appliances, plumbing, HVAC or lighting
      fixtures, or from any other cause, whether the said injury or damage
      results from conditions arising upon the Premises or upon other portions
      of the Building of which the Premises are a part, or from other sources or
      places. Lessor shall not be liable for any damages arising from any act or
      neglect of any other tenant of Lessor. Notwithstanding lessor's negligence
      or breach of this Lease, Lessor shall under no circumstances be liable for
      injury to Lessee's business or for any loss of income or profit therefrom.

9.    DAMAGE OR DESTRUCTION.

      9.1   DEFINITIONS.

            (a)   "Premises Damage" shall mean if the Premises are damaged or
                  destroyed to any extent.

            (b)   "Premises Building Partial Damage" shall mean if the Building
                  of which the Premises are a part is damaged or destroyed to
                  the extent that the cost to repair is less than fifty percent
                  (50%) of the then Replacement Cost of the building.

            (c)   "Premises Building Total Destruction: shall mean if the
                  Building of which the premises are a part is damaged or
                  destroyed to the extent that the cost to repair is fifty
                  percent (50%) or more of the then Replacement Cost of the
                  Building.

                                    Page 15
<PAGE>   16
            (d)   "Office Building Project Buildings" shall mean all of the
                  buildings on the Office Building Project site.

            (e)   "Office Building Project Buildings Total Destruction" shall
                  mean if the Office Building Project Buildings are damaged or
                  destroyed to the extent that the cost of repair is fifty
                  percent (50%) or more of the then Replacement Costs of the
                  Office Building Project Buildings.

            (f)   "Insured Loss" shall mean damage or destruction, which was
                  caused by an event required to be covered by the insurance
                  described in paragraph 8. The fact than an Insured Loss has
                  deductible amount shall not make the loss an uninsured loss.

            (g)   "Replacement Cost" shall mean the amount of money necessary to
                  be spent in order to repair or rebuild the damaged area to the
                  condition that existed immediately prior to the damage
                  occurring, excluding all improvements made by lessee's, other
                  than those installed by Lessor at Lessee's expense.

      9.2   PREMISES DAMAGE; PREMISES BUILDING PARTIAL DAMAGE.

            (a)   Insured Loss. Subject to the provisions of paragraph 9.4 and
                  9.5, if as any time during the term of this Lease there is
                  damage which is an Insured Loss and which falls into the
                  classification of either Premises Damage or Premises Building
                  Partial Damage, then Lessor shall, as soon as reasonably
                  possible and to the extent the required materials and labor
                  are readily available through usual commercial the Premises,
                  Lessor may at Lessor's option cancel and terminate this Lease
                  as of the date of occurrence of such damage by giving written
                  notice to lessee of Lessor's election to do so within 30 days
                  after the date of occurrence of such damage.

            (b)   Notwithstanding paragraph 9.4(a) in the event that Lessee has
                  an option to extend or renew this Lease, and the time within
                  which said option may be exercised has not yet expired, Lessee
                  shall exercise such option, if it is to be exercised at all,
                  no later than twenty (30) days after the occurrence of an
                  Insured Loss falling within the classification of Premises
                  Damage during the last twelve (12) months of the term of this
                  Lease. If Lessee duly exercises such option during said twenty
                  (20) day period, Lessor shall, at Lessor's expense, repair
                  such damage, but not Lessee's fixtures, equipment or tenant
                  improvements, as soon as reasonably possible and this lease
                  shall continue in full force and effect. If lessee fails to
                  exercise such option during said twenty (20) day period, then
                  Lessor may at Lessor's option terminate and cancel this Lease
                  as of the expiration of said twenty 920) day period
                  notwithstanding any term or provision in the grant of option
                  to the contrary.

                                    Page 16
<PAGE>   17
      9.3   ABATEMENT OF RENT; LESSEE'S REMEDIES.

            (a)   In the event Lessor repairs or restores the Building or
                  Premises pursuant to the provisions of this paragraph 9, and
                  any part of the Premises are not usable (including loss of use
                  due to loss of access or essential services), the rent payable
                  hereunder (including Lessee's Share of Operating Expense
                  Increase) for the period during which such damage, repair or
                  restoration continues shall be abated, provided (i) the damage
                  was not the result of the negligence of Lessee, and (ii) such
                  abatement shall only be to the extent the operation and
                  profitability of Lessee's business as operated from the
                  Premises is adversely affected. Except for said abatement of
                  rent, if any, Lessee shall have no claim against Lessor for
                  any damage suffered by reason of any such damage, destruction,
                  repair or restoration.

            (b)   If Lessor shall be obligated to repair or restore the Premises
                  or the Building under the provisions of this Paragraph 9 and
                  shall not commence such repair or restoration within ninety
                  (90) days after such occurrence, or if Lessor shall not
                  complete the restoration and repair within six (6) months
                  after such occurrence, Lessee may at Lessee's option cancel
                  and terminate this Lease by giving Lessor written notice of
                  Lessee's election to do so at any time prior to the
                  commencement or completion, respectively, of such repair or
                  restoration. In such event his Lease shall terminate as of the
                  date of such notice.

            (c)   Lessee agrees to cooperate with Lessor in connection with any
                  such restoration and repair, including but not limited to the
                  approval and/or execution of plans and specifications
                  required.

      9.4   TERMINATION-ADVANCE PAYMENTS. Upon termination of this lease
      pursuant to this paragraph 9, an equitable adjustment shall be made
      concerning advance rent and any advance payments made by Lessee to Lessor.
      Lessor shall, in addition, return to Lessee so much of Lessee's security
      deposit as has not theretofore been applied by Lessor.

      9.5   WAIVER. Lessor and Lessee waive the provisions of any statute, which
      relates to termination of leases when leased property is destroyed and
      agree that such event shall be governed by the terms of this Lease.

10.   REAL PROPERTY TAXES.

      10.1  PAYMENT OF TAXES. Lessor shall pay the real property tax, as defined
      in paragraph 10.3, applicable to the Office Building Project subject to
      reimbursement by Lessee of Lessee's Share of such taxes in accordance with
      the provisions of paragraph 4.5, except as otherwise provided in paragraph
      10.2

      10.2  ADDITIONAL IMPROVEMENTS. Lessee shall not be responsible for paying
      any increase in real property tax specified in the tax assessor's records
      and work sheets as being caused by additional improvements placed upon the
      Office Building Project by other lessee's or by Lessor for the exclusive
      enjoyment of any other lessee. Lessee shall,

                                    Page 17
<PAGE>   18
      however, pay to Lessor at the time that Operating Expenses are payable
      under paragraph 4.2 the entirety of any increase in real property tax if
      assessed solely by reason of additional improvements placed upon the
      Premises by Lessee or at Lessee's request.

      10.3  DEFINITION OF "REAL PROPERTY TAX". As used herein, the term "real
      property tax" shall include any form of real estate tax or assessment,
      general, special, ordinary or extraordinary, and any license fee,
      commercial rental tax, improvement bond or bonds, levy or tax (other than
      inheritance, personal income or estate taxes) imposed on the Office
      Building Project or any portion thereof by any authority having the direct
      or indirect power to tax, including any city, county, regional, state or
      equitable interest of Lessor in the Office Building Project or in any
      portion thereof, as against Lessor's right to rent or other income
      therefrom, and as against Lessor's business of leasing the Office Building
      Project. The term "real property tax" shall also include any tax, fee,
      levy, assessment or charge (i) in substitution of, partially or totally,
      any tax, fee, levy, assessment or charge hereinabove included within the
      definition of "real property tax", or (ii) the nature of which was
      hereinbefore included within the definition of "real property tax", or
      (iii) which is imposed as a result of a change in ownership, as defined by
      applicable local statues for property tax purposes, of the Office Building
      Project or which is added to a tax or charge hereinbefore included within
      the definition of real property tax by reason of such changes of
      ownership, or (v) which is imposed by reason of this transaction, any
      modifications or changes hereto, or any transfers hereof.

      10.4  ASSESSMENT. If the improvements or property, the taxes for which are
      to be paid separately by Lessee under paragraph 10.2 or 10.5 are not
      separately assessed. Lessee's portion of that tax shall be equitably
      determined by Lessor from the respective valuations assigned in the
      assessor's work sheets or such other information (which may include the
      cost of construction) as may be reasonably available. Lessor's reasonable
      determination thereof, in good faith, shall be conclusive.

      10.5  PERSONAL PROPERTY TAXES.

            (a)   Lessee shall pay prior to delinquency all taxes assessed
                  against and levied upon trade fixtures, furnishings, equipment
                  and all other personal property of Lessee contained in the
                  Premises or elsewhere.

            (b)   If any of Lessee's said personal property shall be assessed
                  with Lessor's real property, Lessee shall pay to Lessor the
                  taxes attributable to Lessee within ten (10) days after
                  receipt of a written statement setting forth the taxes
                  applicable to Lessee's property.

11.   UTILITIES.

      11.1  SERVICES PROVIDED BY LESSOR. Lessor shall provide heating,
      ventilation, air conditioning, and janitorial service as reasonably
      required, reasonable amounts of electricity for normal lighting and office
      machines during the days/hours set forth in subparagraph 11.3, water for
      reasonable and normal drinking and lavatory use, and

                                    Page 18
<PAGE>   19
      replacement light bulbs and/or fluorescent tubes and ballasts for standard
      overhead fixtures.

      11.2  SERVICES EXCLUSIVE TO LESSEE. Lessee shall pay for all water, gas,
      heat, light, power, telephone and other utilities and services specially
      or exclusively supplied and/or metered exclusively to the Premises or to
      Lessee, together with any taxes thereon. If any such services are not
      separately metered to the Premises, Lessee shall pay at Lessor's option,
      either Lessee's Share or a reasonable proportion to be determined by
      Lessor of all charges jointly metered with other premises in the Building.

      11.3  HOURS OF SERVICE. Said services and utilities shall be provided
      Monday through Friday, 7:00 a.m. to 7:00 p.m. "Standard Usage" is four (4)
      watts per square foot (based on "rentable" square footage) per hour
      excluding general building H.V.A.C. during hours of service. All usage of
      services and utilities on days or hours other than Monday through Friday,
      7:00 a.m. to 7:00 p.m. shall be defined as "After Hours Usage". Lessee
      agrees to pay Lessor, as additional rent, the sum of $15.00 per hour
      billed in increments of one (1) hour for all after hour standard usage of
      services and utilities. Charges for such after hour usages shall be
      reflected in the monthly statement to Lessee and shall be paid each month
      in conjunction with base rent pursuant to paragraph 4.1.

      11.4  EXCESS USAGE BY LESSEE. Lessee shall not make connection to the
      utilities except by or through existing outlets and shall not install or
      use machinery or equipment in or about the Premises that uses excess
      water, lighting or power, or suffer or permit any act that causes extra
      burden upon the utilities or services, including but not limited to
      security services over Standard Usage for the Office Building Project.
      Lessor shall require Lessee to reimburse Lessor for any excess expenses or
      costs that may arise out of a breach of this subparagraph by Lessee.
      Lessor may, in is sole discretion, install at Lessee's expense
      supplemental equipment and/or separate metering applicable to Lessee's
      excess usage or loading. It is agreed and understood that all costs
      (including, without limitation, costs incurred in determining excess
      usage) incident to excess usage shall be paid by Lessee.

      11.5  INTERRUPTIONS. There shall be no abatement of rent and Lessor shall
      not be liable in any respect whatsoever for the inadequacy, stoppage,
      interruption or discontinuance of any utility or servitude to riot,
      strike, labor dispute, breakdown, accident, repair or other cause beyond
      Lessor's reasonable control or in cooperation with governmental request or
      directions.

12.   ASSIGNMENT AND SUBLETTING.

      12.1  LESSOR'S CONSENT REQUIRED.

            (a)   Lessee shall not voluntarily or by operation of law assign,
                  sublet, transfer, mortgage or encumber all or any part of
                  Lessee's interest in this Lease or in the Premises without
                  Lessor's prior written consent. A change in the control of
                  Lessee whether by way of merger, sale, acquisition, financing,
                  transfer, leveraged buy-out or otherwise, shall require
                  Lessor's prior

                                    Page 19
<PAGE>   20
                  written consent. Any such assignment, sublet, transfer,
                  mortgage, encumbrance or change in control of Lessee is
                  hereafter collectively referred to as "Assignment or
                  Subletting";

            (b)   An Assignment or Subletting without written consent shall, at
                  Lessor's option, be a Default curable after notice per
                  Paragraph 13.1;

            (c)   Or a noncurable Breach without the necessity of any notice and
                  grace period. If Lessor elects to treat such unapproved
                  Assignment or Subletting as a noncurable Breach, Lessor may
                  either (i) terminate this Lease, or (ii) upon thirty (30) days
                  written notice increase the monthly Base Rent to one hundred
                  ten percent (110%) of the current market rent for new leases.
                  Further, in the event of such Breach and rental adjustment,
                  all fixed and non-fixed rental adjustments scheduled during
                  the remainder of the Lease term shall be increased to One
                  Hundred Ten percent (110%) of the estimated future market
                  rent(s).

            (d)   Lessor and Lessee hereby acknowledge that Lessor's disapproval
                  of any proposed Assignment or Subletting pursuant to Paragraph
                  12 shall be deemed reasonably withheld if based upon any
                  reasonable factor, specifically, without limitation, any or
                  all of the following factors:

                  (i)   The proposed Assignment or Subletting would result in
                        more than two subleases of portions of the premises
                        being in effect at any one time during the Term;

                  (ii)  The net effective rent payable by the Assignee or
                        Sublessee (adjusted on a rentable square foot basis) is
                        less than the net effective rent theft being quoted by
                        Lessor for new leases in the Building for comparable
                        size space for a comparable period of time;

                  (iii) The proposed Assignee or Sublessee is an existing tenant
                        of the Project (or has negotiated with Lessor in the
                        last six (6) months) for space in the Project;

                  (iv)  The proposed Assignee or Sublessee is a governmental
                        entity,

                  (v)   The portion of the premises to be assigned or sublet is
                        irregular in shape with inadequate means of ingress and
                        egress:

                  (vi)  The use of the Premises by the Assignee or Sublessee;

                        (aa)  Is not permitted by the use provisions hereof or

                        (bb)  Violates any exclusive use granted by Lessee to
                              another tenant in the Building;

                                    Page 20
<PAGE>   21
                  (vii) The Assignment or Subletting would likely result in a
                        significant increase in the use of parking areas or
                        Common Areas by the Assignee's or Sublessee's employees
                        or visitors and/or significantly increase the demand
                        upon utilities and services to be provided by Lessor to
                        the Premises,

                 (viii) The Assignee or Sublessee does not have the financial
                        capacity to fulfill the obligations imposed by the
                        Assignment or Subletting; or

                  (ix)  The Assignee or Sublessee is not in Lessee's reasonable
                        opinion of reputable or good character or consistent
                        with Lessor's desired tenant mix.

      12.2  TERMS AND CONDITIONS APPLICABLE TO ASSIGNMENT AND SUBLETTING.

            (a)   Regardless of Lessor's consent, any assignment or subletting
                  shall not: (i) be effective without the express written
                  assumption by such Assignee at Sublessee of the obligations of
                  Lessee under this lease; (ii) release Lessee of any
                  obligations hereunder; or (iii) alter the primary liability of
                  Lessee for the payment of Rent or for the performance of any
                  other obligations to be performed by Lessee.

            (b)   Lessor may accept Rent at performance at Lessee's obligations
                  from any person other than Lessee pending approval or
                  disapproval of an Assignment. Neither a delay in the approval
                  or disapproval of such Assignment nor the acceptance of Rent
                  or performance shall constitute a waiver or estoppel of
                  Lessors right to exercise its remedies for Lessees Default or
                  Breach.

            (c)   Lessors consent to any assignment or subletting shall not
                  constitute a consent to any subsequent assignment or
                  subletting.

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

            (e)   Each request for consent to an Assignment or Subletting shall
                  be in writing, accompanied by information relevant to Lessor's
                  determination as to the financial and operational
                  responsibility and appropriateness of the proposed Assignee or
                  Sublessee, including but not limited to the intended use
                  and/or required modification at the Premises, if any, together
                  with a fee of $1,000 or ten percent (10%) of the current
                  monthly Base Rent applicable to the portion of the Premises
                  which is the subject of the proposed Assignment or Sublease,
                  whichever it greater, as consideration for Lessor's
                  considering and processing said request. Lessee agrees to

                                    Page 21
<PAGE>   22
                  provide Lessor with such other or additional information
                  and/or documentation as may be reasonably requested.

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

      12.3  ADDITIONAL TERMS AND CONDITIONS APPLICABLE TO SUBLETTING. The
      following terms and conditions shall apply to any subletting by Lessee of
      all or any part of the Premises and shall be deemed included in all
      subleases under this Lease whether or not expressly incorporated therein:

            (a)   Subject to paragraph 12.4, Lessee hereby assigns and transfers
                  to Lessor all of Lessee's interest in all Rent payable on any
                  Sublease and Lessor may collect such Rent and apply same
                  toward Lessor's obligations under this Lease; provided,
                  however, that until a Breach shall occur in the performance of
                  Lessee's obligations, Lessee may collect said Rent. Lessor
                  shall not, by reason of the foregoing or any assignment of
                  such sublease, nor by reason of the collection of Rent, be
                  deemed liable to the Sublessee for any failure to Lessee to
                  perform and comply with any of Lessee's obligations to such
                  Sublessee. Lessee hereby irrevocably authorizes and directs
                  any such Sublessee, upon receipt of a written notice from
                  Lessor stating that a Breach exists in the performance of
                  Lessee's obligations under this Lease, to pay to Lessor all
                  Rent due and to become due under the Sublease. Sublessee shall
                  rely upon any such notice from Lessor and shall pay all Rents
                  to Lessor without any obligation or right to inquire as to
                  whether such Breach exists, notwithstanding any claim from
                  Lessee to the contrary.

            (b)   In the event of a Breach by Lessee, Lessor may, at its option,
                  require Sublessee to attorn to Lessor, in which event Lessor
                  shall undertake the obligations of the Sublessor under such
                  Sublease from the time of the exercise of said option to the
                  expiration of such Sublease; provided, however, Lessor shall
                  not be liable for any prepaid rents or security deposit paid
                  by such Sublessee to such Sublessor or for any prior Defaults
                  or Breaches by such Sublessor.

            (c)   Any matter requiring the consent of the Sublessor under a
                  Sublease shall also require the consent of Lessor.

            (d)   No Sublessee shall further assign or sublet all or any part of
                  the Premises without Lessor's prior written consent.

                                    Page 22
<PAGE>   23
            (e)   Lessee and/or Sublessee shall be responsible for paying all
                  costs associated with Subletting and not be entitled to credit
                  such associated costs against rent (or other consideration)
                  payable on any Sublease. It is expressly understood and agreed
                  that all rent (or other consideration) payable on any Sublease
                  shall be paid to Lessor without offset or credit.

      12.4  ADDITIONAL TERMS AND CONDITIONS APPLICABLE TO ASSIGNMENT AND
      SUBLETTING. It is the intent of the parties hereto that the Lease shall
      confer upon Lessee only the right to use and occupy the premises and to
      exercise such other rights as are conferred upon Lessee by this Lease. The
      parties agree that this Lease is not intended to have a bonus or enhanced
      value to Lessee, nor to serve as a vehicle whereby Lessee may profit by a
      future assignment or sublet of this Lease of a right to use or occupy the
      Premises as a result of any favorable terms contained herein or any
      favorable changes in the market for commercial lease space. It is the
      intent of the parties that any such bonus or enhanced value that may
      attach to this Lease shall be and remain the exclusive property of the
      Lessor. In order to carry out this intent, in the event Lessee seeks to
      assign or transfer its interest in this Lease of Premises. Lessor shall
      have the following options, which may be exercised at its sole election,
      without limiting Lessor in the exercise of any other right or remedy at
      law or equity or under this Lease, which Lessor may have by reason of such
      proposed assignment or sublet.

            (a)   Lessor may terminate this lease and release Lessee from any
                  further rental obligations thereunder by sending Lessee
                  written notice of such termination within forty-five (45) days
                  after notice of intent to assign or sublet is deemed given by
                  Lessee, provided, however, that Lessee may withdraw its notice
                  of intent by written notice to Lessor at any time within ten
                  (10) days after receipt by Lessee of Lessor's notice of
                  termination, in which event this Lease shall continue in full
                  force and effect. If Lessor elects to terminate this Lease and
                  if lessee does not withdraw its notice of intent, Lessee shall
                  surrender the Premises pursuant to the terms of this Lease
                  within sixty (60) days after notice of intent to transfer is
                  deemed given by Lessee and on such date as designed by Lessor.

            (b)   Lessor may within forty-five (45) days after notice of intent
                  to assign or sublet is deemed given by lessee, acquire the
                  interest in this Lease and the Premises that Lessee proposed
                  to assign or sublet on the same terms and conditions as the
                  proposed assignment or sublet.

            (c)   Lessor may consent to proposed assignment or sublet, provided
                  that as a condition to such consent, Lessor shall have the
                  right to require that any and all rent paid by the assignee,
                  tenant or subtenant, including, without limitation, any rent
                  in excess of the rentals to be paid under this Lease shall be
                  paid directly to Lessor at the time and place specified in
                  this Lease. For the purpose of this paragraph, the term "rent"
                  shall include any consideration of any kind received, or to be
                  received from the assignee tenant subtenant. If such sums are
                  related to Lessee's interest in the Lease or in the Premises,
                  including, without limitation, expense reimbursements

                                    Page 23
<PAGE>   24
                  or advances, the value of services performed, key money, bonus
                  money and/or payments for Lessee's personal property in excess
                  of the book value of such property. The term "personal
                  property" as used in this paragraph shall include, without
                  limitation, assets, fixtures, inventories, accounts, good
                  will, equipment, furniture, general intangibles, and any
                  capital stock or other equity ownership interest of Lessee.

13.   DEFAULTS; BREACH; REMEDIES.

      13.1  DEFAULT; BREACH. A "Default" is defined as a failure by the Lessee
      to comply with or perform any of the terms, covenants, conditions or rules
      under this Lease. A "Breach" a defined as the occurrence of one or more of
      the following Defaults, and the failure of Lessee to cure such Default
      within any applicable grace period:

            (a)   The abandonment of the Premises; or the vacating of the
                  Premises without providing a commercially reasonable level of
                  security and/or Security Deposit or where the coverage of the
                  property insurance described in Paragraph 8.1 is jeopardized
                  as a result thereof, or without providing reasonable
                  assurances to minimize potential vandalism.

            (b)   The failure of Lessee to make any payment of Rent, Operating
                  Expense, Capital Expense, Insurance, Real Property Tax, or any
                  Security Deposit required to be made by Lessee hereunder,
                  whether to Lessor or to a third party, when due, to provide
                  reasonable evidence of insurance or surety bond, or to fulfill
                  any obligation under this Lease which endangers or threatens
                  life or property, where such failure continues for a period of
                  three (3) days following written notice to Lessee.

            (c)   The failure of any Lessee to provide (i) reasonable written
                  evidence of compliance with Applicable Requirements, (ii) the
                  service contracts, (iii) the rescission of an unauthorized
                  assignment or subletting, (iv) a Tenancy Statement, (v) a
                  requested subordination, (vi) evidence concerning any guaranty
                  and/or Guarantor, (vii) any document requested under Paragraph
                  40 (easements), or (viii) any other documentation or
                  information which Lessor may reasonably require of Lessee
                  under the terms of this Lease, where any such failure
                  continues for a period of three (3) days following written
                  notice to Lessee.

            (d)   A Default by Lessee as to the terms, covenants, conditions or
                  provisions of this Lease or of the attached rules adopted
                  hereunder including, without limitation, Vehicle Parking
                  (Paragraph 2.2), Security Deposit (Paragraph 5), Use
                  (Paragraph 6), Maintenance and Alterations (Paragraphs 7.2,
                  7.3 and 7.4), Utilities (Paragraph 11), Assignment and
                  Subletting (Paragraph 12), Lessor's Access (Paragraph 32),
                  Hazardous Substances (Paragraph 49), where such Default
                  continues for a period of three (3) days after written notice.

                                    Page 24
<PAGE>   25
            (e)   The occurrences of any of the following events: (i) the making
                  of any general arrangement or assignment for the benefit of
                  creditors; (ii) becoming a "debtor" as defined in 11 U.S.C.
                  Sec. 101 or any successor statute thereto (unless, in the case
                  of a petition filed against Lessee, the same is dismissed
                  within sixty (60) days); (iii) the appointment of a trustee or
                  receiver to take possession of substantially all of Lessee's
                  assets located at the Premises or of Lessee's interest in this
                  Lease, where possession is not restored to Lessee within
                  thirty (30) days; or (iv) the attachment, execution or other
                  judicial seizure of substantially all of Lessee's assets
                  located at the Premises or of Lessee's interest in this Lease,
                  where such seizure is not discharged within thirty (30) days;
                  provided, however, in the event that any provision of this
                  subparagraph (e) is contrary to any applicable law, such
                  provision shall be of no force or effect, and not affect the
                  validity of the remaining provisions.

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

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

            (h)   In the event Lessee has one or more additional leases for
                  another premises in the Office Building Project then is
                  acknowledged and agreed that a default under such additional
                  lease(s) shall also constitute a default under this lease.

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

                                    Page 25
<PAGE>   26
            (a)   Terminate Lessee's right to possession of the Premises by any
                  lawful means, in which case this Lease shall terminate and
                  Lessee shall immediately surrender possession to Lessor. In
                  such event Lessor shall be entitled to recover from Lessee:
                  (i) the unpaid Rent which had been earned after termination
                  until the time of award exceeds the amount of such rental loss
                  that the Lessee proves could have been reasonably avoided;
                  (iii) the worth at the time of award of the amount by which
                  the unpaid rent for the balance of the term after the time of
                  award exceeds the amount of such rental loss that the Lessee
                  proves could be reasonably avoided; and (iv) any other amount
                  necessary to compensate Lessor for all the detriment
                  proximately caused by the Lessee's failure to perform its
                  obligations under this Lease or which in the ordinary course
                  of things would be likely to result therefrom, including but
                  not limited to the cost of recovering possession of the
                  Premises, expenses of reletting, including necessary
                  renovation and alteration of the Premises, reasonable
                  attorneys' fees, and that portion of any leasing commission
                  paid by Lessor in connection with this Lease applicable to the
                  unexpired term of this Lease. The worth at the time of award
                  of the amount referred to in provision (iii) of the
                  immediately preceding sentence shall be computed by
                  discounting such amount at the discount rate of the Federal
                  Reserve Bank of the District within which the Premises are
                  located at the time of award plus one percent (1%). Efforts by
                  Lessor to mitigate damages caused by lessee's Breach of this
                  Lease shall not waive Lessor's right to recover damages under
                  Paragraph 12. If termination of this Lease is obtained through
                  the provisional remedy of unlawful detainer, Lessor shall have
                  the right to recover in such proceeding any unpaid Rent and
                  damages as are recoverable therein, or Lessor may reserve the
                  right to recover all or any part thereof in a separate suit.
                  If a notice and grace period required under Paragraph 13.1 was
                  not previously given, a notice t pay rent or quit, or to
                  perform or quit given to Lessee under the unlawful detainer
                  statute shall also constitute the notice required by Paragraph
                  13.1. In such case, the applicable grace period required by
                  Paragraph 13.1 and the unlawful detainer statute shall run
                  concurrently, and the failure of Lessee to cure the Default
                  within the greater of the two such grace periods shall
                  constitute an unlawful detainer and a Breach of this Lease
                  entitling Lessor to the remedies provided for in this Lease
                  and/or by statute.

            (b)   Continue this Lease and Lessee's right to possession and
                  recover the Rent as it becomes due, in which event Lessee may
                  sublet or assign, subject only to reasonable limitations. Acts
                  of maintenance, efforts to relet, and/or the appointment of a
                  receiver to protect the Lessor's interests, shall not
                  constitute a termination of the Lessee's right to possession.

            (c)   Pursue any other remedy now or hereafter available under the
                  laws or judicial decisions of the state wherein the Premises
                  are located. The expiration or termination of this Lease
                  and/or the termination of Lessee's right to possession shall
                  not relieve Lessee from liability under any

                                    Page 26
<PAGE>   27
                  indemnity provisions of this Lease as to matters occurring or
                  accruing during the term hereof or by reason of Lessee's
                  occupancy of the premises.

      13.3  INDUCEMENT RECAPTURE. Any agreement for free or abated rent or other
      charges or for the giving or paying by Lessor to or for Lessee of any cash
      or other bonus, inducement or consideration for Lessee's entering into
      this Lease, all of which concessions are hereinafter referred to as
      "Inducement Provisions," shall be deemed conditioned upon Lessee's full
      and faithful performance of all the terms, covenants and conditions of
      this Lease. Upon Breach of this Lease by Lessee, any such Inducement
      Provision shall automatically be deemed deleted from this Lease and of no
      further force or effect, and any rent, other charges, bonus, inducement or
      consideration theretofore abated, given or paid by Lessor under such an
      inducement Provision shall be immediately due and payable by Lessee to
      Lessor, notwithstanding any subsequent cure of said Breach by Lessee. The
      acceptance by Lessor of rent or the cure of the Breach which initiated the
      operation of this paragraph shall not be deemed a waiver by Lessor of the
      provisions of this paragraph unless specifically so stated in writing by
      Lessor at the time of such acceptance.

      13.4  LATE CHARGES. Lessee hereby acknowledges that late payment by Lessee
      of Rent will cause Lessor to incur costs not contemplated by this Lease,
      the exact amount of which will be extremely difficult to ascertain. Such
      costs include, but are not limited to, processing and accounting charges,
      and late charges, which may be imposed upon Lessor by any Lender.
      Accordingly, if any Rent shall not be received by Lessor within five (5)
      days after such amount shall be due, then, without any requirements for
      notice to Lessee, Lessee shall pay to Lessor a one-time late charge equal
      to six percent (6%) of each such overdue amount. The parties hereby agree
      that such late charge represents a fair and reasonable estimate of the
      costs Lessor will incur by reason of such late payment. Acceptance of such
      late charge by Lessor shall in no event constitute a waiver of Lessee's
      Default of Breach with respect to such overdue amount, nor prevent the
      exercise of any of the other rights and remedies granted hereunder. In the
      event that a late charge is payable hereunder, whether or not collected,
      for three (3) consecutive installments of Base Rent, then notwithstanding
      any provision of this Lease to the contrary, Base Rent shall, at Lessor's
      option, become due and payable quarterly in advance.

      13.5  RETURNED CHECK CHARGES. Lessee hereby acknowledges and agrees that a
      service charge of $50.00 will be assessed and charged to Lessee for such
      check, which is returned because of insufficient funds.

      13.6  NOTICES TO PAY RENT CHARGE. Lessee hereby acknowledges and agrees
      that a charge of $74.00 will be assessed and charged to Lessee for each
      Three Day Notice to Pay Rent or Quit (or other termination notice based on
      Default) served on Lessee.

14.   CONDEMNATION. If the Premises or any portion thereof or the Office
      Building Project are taken under the power of eminent domain, or sold
      under the threat of the exercise of said power (all of which are herein
      called "condemnation"), this Lease shall terminate as to the part so taken
      as of the date of the condemning authority takes title or

                                    Page 27
<PAGE>   28
      possession, whichever first occurs; provided that if so much of the
      Premises or the Office Building Project are taken by such condemnation as
      would substantially and adversely affect the operation and profitability
      of Lessee's business conducted from the Premises. Lessee shall have the
      option, to be exercised only in writing within thirty (30) days after
      Lessor shall have given Lessee written notice of such taking (or in the
      absence of such notice, within thirty (30) days after the condemning
      authority shall have taken possession), to terminate this Lease as of the
      date the condemning authority takes such possession. If Lessee does not
      terminate this Lease in accordance with the foregoing, this Lease shall
      remain in full force and effect as to the portion of the Premises
      remaining, except that the rent and Lessee's Share of Operating Expense
      increase shall be reduced in the proportion that the floor area of the
      Premises is taken bears to the total floor area of the Premises, Common
      Areas taken shall be excluded from the Common Areas usable by Lessee and
      no reduction of rent shall occur with respect thereto or by reason
      thereof. Lessor shall have the option in its sold discretion to terminate
      this Lease as of the taking of possession by the condemning authority, by
      giving written notice to Lessee of such election within thirty (30) days
      after receipt of notice of a taking by condemnation of any part of the
      Premises or the Office Building Project. Any award for the taking of all
      or any part of the Premises or the Office Building Project under the power
      of eminent domain or nay diminution in value of the leasehold or for the
      taking of the fee, or as severance damages; provided, however, that Lessee
      shall be entitled to any separate award for loss of or damage to Lessee's
      trade fixtures removable personal property and unamortized tenant
      improvements that have been paid for by Lessee. For that purpose cost of
      such improvements shall be amortized over the original term of this Lease
      excluding any options. In the event that this Lease is not terminated by
      reason of such condemnation, Lessor shall to the extent of severance
      damages received by Lessor in connection with such condemnation, repair
      any damage to the Premises caused by such condemnation except to the
      extent that Lessee has been reimbursed therefor by the condemning
      authority. Lessee shall pay any amount in excess of such severance damages
      required to complete such repair.

15.   ESTOPPEL CERTIFICATE.

            (a)   Each party (as "responding party") shall at any time upon not
                  less than ten (10) days' prior written notice from the other
                  party ("requesting party") excuse, acknowledge and deliver to
                  the requesting party a statement 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 which the rent and other charges are
                  paid in advance, if any, and (ii) acknowledging that there are
                  not, to the respond party's knowledge, any uncured defaults on
                  the part of the requesting party, or specifying such defaults
                  if any are claimed. Any such statement may be conclusively
                  relied upon by and prospective purchaser or encumbrancer of
                  the Office Building Project or of the business of Lessee.

            (b)   At the requesting party's option, the failure to deliver such
                  statement within such time shall be a material default of this
                  Lease by the party who

                                    Page 28
<PAGE>   29
                  is to respond, without any further notice to such party, or it
                  shall be conclusive upon such party that (i) this Lease is in
                  full force and effect, without modification except as may be
                  represented by the requesting party, (ii) there are not
                  uncured defaults in the requesting party's performance, and
                  (iii) if Lessor is the requesting party, not more than one
                  month's rent has been paid in advance.

            (c)   If Lessor desires to finance, refinance, or sell the Office
                  Building Project, or any part thereof, Lessee hereby agrees to
                  deliver to any lender or purchaser designated by Lessor such
                  financial statements of Lessee as may be reasonably required
                  by such lender or purchaser. Such statements shall include the
                  past three (3) years' financial statements of Lessee. All such
                  financial statements shall be received by Lessor and such
                  lender or purchaser in confidence and shall be used only for
                  the purposes herein set forth.

16.   LESSOR'S LIABILITY. The term "Lessor" as used herein shall mean only the
      owner or owners, at the time in question, of the fee title or a lessee's
      interest in a ground lease of the Office Building Project, in the event of
      any transfer of such title or interest, Lessor herein named (and in case
      of any subsequent transfers then the grantor) shall be relieved from and
      after the date of such transfer of all liability as respects Lessor's
      obligations thereafter to be performed, provided that any funds in the
      hands of Lessor or the then grantor at the time of such transfer, in which
      Lessee has an interest, shall be delivered to the grantee. The obligations
      contained in this Lease to be performed by Lessor shall, subject as
      aforesaid, be binding on Lessor's successors and assigns, only during
      their respective periods of ownership.

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

18.   INTEREST ON PAST-DUE OBLIGATIONS. Except as expressly herein provided, any
      amount due to Lessor not paid when due shall bear interest at the maximum
      rate then allowable by law or judgments from the date due. Payment of such
      interest shall not excuse or cure any default by Lessee under this Lease;
      provided, however, that interest shall not be payable on late charges
      incurred by Lessee.

19.   TIME OF ESSENCE. Time is of the essence with respect to the obligations to
      be performed under this Lease.

20.   ADDITIONAL RENT. All monetary obligations of Lessee to Lessor under the
      terms of this Lease, including but not limited to Lessee's Share of
      Operating Expense Increase, Capital Expense Increase, Insurance Premium
      Increase, Real Property Tax Increase, late charges, Three-Day Notice
      charges (Paragraph 13.6), returned check charges, attorney's fees and any
      other expenses payable by Lessee hereunder shall be deemed to be rent.

                                    Page 29
<PAGE>   30
      20.1  CREDITS TO LESSEE'S ACCOUNT. Lessor shall promptly credit Lessee's
      account for all payments received from Lessee. Such payments shall be
      first credited to those sums due under this Lease Agreement, including but
      not limited to, Base Rent, Operating Expense Increase, Capital Expenses,
      Insurance Premium Increase, Real Property Tax Increase, late charges,
      3-Day Notice charges (Paragraph 13.6), returned check fees and attorney's
      fees, which were incurred earliest in time (oldest chargeable items).
      Nothing in this paragraph (including Lessor's acceptance of a partial
      payment on account balance) shall be construed nor constitute a waiver by
      Lessor of any provision hereof or of any subsequent breach by Lessee of
      the same or any other provision.

21.   INCORPORATION OF PRIOR AGREEMENTS; AMENDMENTS. This Lease contains all
      agreements of the parties with respect to any matter mentioned herein. No
      prior or contemporaneous agreement or understanding pertaining to any such
      matter shall be effective. This Lease may be modified in writing only,
      signed by the parties in interest at the time of the modification. Except
      as otherwise stated in this Lease, Lessee hereby acknowledged that neither
      Borelli Investment Company nor any cooperating broker on this transaction
      nor the Lessor or any employee or agents of any of said persons has made
      any oral or written warranties or representations to Lessee relative to
      the condition or use by Lessee of the Premises or the Office Building
      Project and Lessee acknowledges that Lessee assumes all responsibility
      regarding the Occupational Safety Health Act and the Americans with
      Disabilities Act, the legal use and adaptability of the Premises and the
      compliance thereof with all applicable laws and regulations in effect
      during the term of this Lease.

22.   NOTICES. Any notice required or permitted to be given hereunder shall be
      in writing and may be given by personal delivery or by certified or
      registered mail, and shall be deemed sufficiently given if delivered or
      addressed to Lessee or to Lessor at the address noted below or adjacent to
      the signature of the respective parties, as the case may be. Mailed
      notices shall be deemed given upon actual receipt at the address required,
      or forty-eight hours following deposit in the mail, postage prepaid,
      whichever first occurs. Either party may by notice to the other specify a
      different address for notice purposes except that upon Lessee's taking
      possession of the Premises, the Premises shall constitute Lessee's address
      for notice purposes. A copy of all notices required or permitted to be
      given to Lessor hereunder shall be concurrently transmitted to such party
      or parties at such address as Lessor may from time to time hereafter
      designate by notice to Lessee.

23.   WAIVERS. No waiver by Lessor of any provision hereof shall be deemed a
      waiver of any other provision hereof or of any subsequent breach by Lessee
      of the same or any other provision. Lessor's consent to, or approval of,
      any act shall not be deemed to render unnecessary the obtaining of
      Lessor's consent to or approval of any subsequent act by Lessee. The
      acceptance of rent hereunder by Lessor shall not be a waiver of any
      preceding breach by Lessee of any provision hereof, other than the failure
      of Lessee to pay the particular rent so accepted, regardless of Lessor's
      knowledge of such preceding breach at the time of acceptance of such rent.

                                    Page 30
<PAGE>   31
24.   RECORDING. Either Lessor or Lessee shall, upon request to the other,
      execute, acknowledge and deliver to the other a `short form' memorandum of
      this Lease for recording purposes.

25.   HOLDING OVER. If Lessee, with Lessor's consent, remains in possession of
      the Premises or any part thereof after the expiration of the term hereof,
      such occupancy shall be a tenancy as defined in Section 1945 of the
      California Civil Code with all of the provisions of this Lease pertaining
      to the obligations of Lessee, except that the rent payable shall be two
      hundred percent (200%) of the rent payable immediately preceding the
      termination date of this Lease, and all Options, if any, granted under the
      terms of this Lease shall be deemed terminated and be of no further effect
      during said tenancy.

26.   BROKERAGE COMMISSIONS. Lessee represents and warrants that Lessee has
      dealt with no broker or agent other than none. Lessee agrees to indemnify
      and hold the Lessor harmless from and against any claims by any other
      broker, agent or other person/entity claiming a commission or other form
      of compensation by virtue of having dealt with Lessee with regard to this
      leasing transmission. The provisions of this paragraph shall survive the
      termination of this Lease.

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

28.   COVENANTS AND CONDITIONS. Each provision of this Lease performable by
      Lessee shall be deemed both a covenant and condition.

29.   BINDING EFFECT; CHOICE OF LAW. Subject to any provision hereof restricting
      assignment or subletting by Lessee and subject to the provisions of
      paragraph 16, this Lease shall bind the parties, their personal
      representative, successors and assigns. This Lease shall be governed by
      the laws of the State where the Office Building Project is located and any
      litigation concerning this Lease between the parties hereto shall be
      initiated in the county in which the Office Building Project is located.

30.   SUBORDINATION.

            (a)   This Lease, and any Option or right of first refusal granted
                  hereby, at Lessor's option, shall be subordinate to any ground
                  lease, mortgage, deed of trust, or any other hypothecation or
                  security now or hereafter placed upon the Office Building
                  Project and to any and all advances made on the security
                  thereof and to all renewals, modifications, consolidations,
                  replacements and extensions thereof. Notwithstanding such
                  subordination, Lessee's right to quiet possession of the
                  Premises shall not be disturbed if Lessee is not in default
                  and so long as Lessee shall pay the rent and observe and
                  perform all of the provisions of this Lease, unless this Lease
                  is otherwise terminated pursuant to its terms. If any
                  mortgagee, trustee or ground lessor shall elect to have this
                  Lease and any Options granted hereby prior to the lien of its
                  mortgage, deed of trust or ground

                                    Page 31
<PAGE>   32
                  lease, and shall given written notice thereof to Lessee, this
                  Lease and such Options shall be deemed prior to such mortgage,
                  deed of trust or ground lease, whether this Lease or such
                  Options are dated prior or subsequent to the date of said
                  mortgage, deed of trust or ground lease or the date of
                  recording thereof.

            (b)   Lessee agrees to execute any documents required to effectuate
                  an attornment, a subordination or to make this Lease or any
                  Option granted herein prior to the lien of any mortgage, deed
                  of trust or ground lease, as the case may be. Lessee's failure
                  to execute such documents within ten (10) days after written
                  demand shall constitute a material default by Lessee hereunder
                  without further notice to Lessee or, at Lessor's option,
                  Lessor shall execute such documents on behalf of Lessee and
                  Lessee's attorney-in-fact. Lessee does herby make, constitute
                  and irrevocably appoint Lessor as Lessee's attorney-in-fact
                  and in lessee's name, place and stead, to execute such
                  documents in accordance with this paragraph 30(b).

31.   ATTORNEYS' FEES.

      31.1  If either party or R.N. Borelli, Inc., dba Borelli Investment
      Company brings (or defends) an action to enforce the terms hereof or
      declare rights hereunder, the prevailing party in any such action, trial
      or appeal thereon, shall be entitled to their reasonable attorneys' fees
      to be paid by the losing party as fixed by the court in the same or a
      separate suit, and whether or not such action is pursued to decision or
      judgment.

      31.2  THE ATTORNEYS' FEE AWARD SHALL NOT BE COMPUTED IN ACCORDANCE WITH
      ANY COURT FEE SCHEDULE, BUT SHALL BE SUCH AS TO FULLY REIMBURSE ALL
      ATTORNEYS' FEES REASONABLY INCURRED IN GOOD FAITH.

      31.3  LESSOR SHALL BE ENTITLED TO REASONABLE ATTORNEYS' FEES AND ALL OTHER
      COSTS AND EXPENSES INCURRED IN THE PREPARATION AND SERVICE OF NOTICE OF
      DEFAULT AND CONSULTATIONS IN CONNECTION THEREWITH AND ANY OTHER LEGAL
      SERVICES NECESSITATED BY LESSEE DEFAULT, WHETHER OR NOT A LEGAL ACTION IS
      SUBSEQUENTLY COMMENCED IN CONNECTION WITH SUCH DEFAULT.

      31.4  JURY TRIAL WAIVER. Lessor and Lessee hereby waive their respective
      right to trial by jury of any cause of action, claim, counterclaim or
      cross-complaint in any action, proceeding and/or hearing brought by either
      Lessor against Lessee or Lessee against Lessor or any matter whatsoever
      arising out of, or in any way connected with, this lease, the relationship
      of Lessor and Lessee, Lessee's use or occupancy of the premises, or any
      claim or injury or damage, or the enforcement of any remedy under any law,
      statue, or regulation, emergency or otherwise, now or hereafter in effect.

                                    Page 32
<PAGE>   33
32.   LESSOR'S ACCESS.

      32.1  LESSOR AND LESSOR'S AGENTS SHALL HAVE THE RIGHT TO ENTER THE
      PREMISES AT REASONABLE TIMES (MONDAY THROUGH FRIDAY, DURING NORMAL
      BUSINESS HOURS, FOLLOWING TWENTY-FOUR (24) HOURS TELEPHONIC NOTICE BY
      LESSOR OR LESSOR'S AGENTS) FOR THE PURPOSE OF INSPECTING THE SAME,
      PERFORMING ANY SERVICE REQUIRED OF LESSOR, SHOWING THE SAME TO PROSPECTIVE
      PURCHASERS, LENDERS, OR LESSEE'S, TAKING SUCH SAFETY MEASURES, ERECTING
      SUCH SCAFFOLDING OR OTHER NECESSARY STRUCTURES, MAKING SUCH ALTERATIONS,
      REPAIRS, IMPROVEMENTS OR ADDITIONS TO THE PREMISES OR THE OFFICE BUILDING
      PROJECT AS LESSOR MAY REASONABLY DEEM NECESSARY OR DESIRABLE AND THE
      ERECTING, USING AND MAINTAINING OF UTILITIES, SERVICES, PIPES AND CONDUITS
      THROUGH THE PREMISES AND/OR OTHER PREMISES AS LONG AS THERE IS NO MATERIAL
      ADVERSE EFFECT TO LESSEE'S USE OF THE PREMISES. Lessor may at any time
      place on or about the Premises or the Building any ordinary "For Sale"
      signs and Lessor may at any time during the last six (6) months of the
      term hereof place on or about the Premises any ordinary "For Lease" signs.

      32.2  ALL ACTIVITIES OF LESSOR PURSUANT TO THIS PARAGRAPH SHALL BE WITHOUT
      ABATEMENT OF RENT, NOR SHALL LESSOR HAVE ANY LIABILITY TO LESSEE FOR THE
      SAME.

      32.3  LESSOR SHALL HAVE THE RIGHT TO RETAIN KEYS TO THE PREMISES AND TO
      UNLOCK ALL DOORS IN OR UPON THE PREMISES OTHER THAN TO FILES, VAULTS AND
      SAFES, AND IN THE CASE OF AN EMERGENCY TO ENTER THE PREMISES BY ANY
      REASONABLY APPROPRIATE MEANS, AND ANY SUCH ENTRY SHALL NOT BE DEEMED A
      FORCEABLE OR UNLAWFUL ENTRY OR DETAINER OF THE PREMISES OR AN EVICTION.
      Lessee waives any charges for damages or injuries or interference with
      Lessee's property or business in connection therewith.

33.   AUCTIONS. Lessee shall not conduct, nor permit to be conducted, either
      voluntarily or involuntarily, an auction upon the premises or the Common
      Areas without first having obtained Lessor's prior written consent.
      Notwithstanding anything to the contrary in this Lease, Lessor shall not
      be obligated to exercise any standard of reasonableness in determining
      whether to grant such consent. The holding of any auction on the Premises
      or Common Areas in violation of this paragraph shall constitute a material
      default of this Lease.

34.   SIGNS. Lessee shall not place any sign upon the Premises or the Office
      Building Project without Lessor's prior written consent. Under no
      circumstances shall Lessee place a sign on any roof of the Office Building
      Project.

35.   MERGER. The voluntary or other surrender of this Lease by Lessee, or a
      mutual cancellation thereof, or a termination by Lessor, shall not work a
      merger, and shall, at the option of Lessor, terminate all or any existing
      subtenancies or may, at the option of Lessor, operate as an assignment to
      Lessor of any or all of such subtenancies.

36.   CONSENTS. Except for paragraphs 33 (auctions) and 34 (signs) hereof,
      wherever in this Lease the consent of one party is required to an act of
      the other party such consent shall not be unreasonably withheld or
      delayed.

                                    Page 33
<PAGE>   34
37.   GUARANTOR. In the event that there is a guarantor of this Lease, said
      guarantor shall have the same obligations as Lessee under this Lease.

38.   OPTIONS.

      38.1  DEFINITIONS. "Options" shall mean: (a) the right to extend the term
      of or review this Lease or to extend or renew any lease that Lessee has on
      other property of Lessor; (b) the right of first refusal or first offer to
      lease either the Premises or other property of Lessor; (c) the right to
      purchase or the right of first refusal to purchase the Premises or other
      property of Lessor.

      38.2  OPTIONS PERSONAL TO ORIGINAL LESSEE: Each option granted to Lessee
      in this Lease is personal to the original Lessee, and cannot be assigned
      or exercised by anyone other than said original Lessee and only while the
      original Lessee is in full possession of the Premises and, if requested by
      Lessor, with Lessee certifying that Lessee has no intention of thereafter
      assigning or subletting.

      38.3  MULTIPLE OPTIONS. In the event the Lessor has any multiple options
      to extend or review this Lease, a lesser Option cannot be exercised unless
      the prior Options have been validly exercised.

      38.4  EFFECT OF DEFAULT ON OPTIONS.

            (a)   Lessee shall have no right to exercise the Option: (i) during
                  the period commencing with the giving of any notice of Default
                  and continuing until said Default is cured; (ii) during the
                  period of time any Rent is unpaid (without regard to whether
                  notice thereof is given Lessee); (iii) during the time Lessee
                  is in Breach of this Lease; or (iv) in the event that Lessee
                  has been given three (3) or more notices of separate Default,
                  whether or not the Defaults are cured, during the twelve (12)
                  month period immediately preceding the exercise of the Option:
                  (v) becoming a "debtor" as defined in U.S.C. Sec. 101 during
                  the term of this Lease.

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

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

                                    Page 34
<PAGE>   35
39.   SECURITY MEASURES - LESSOR'S RESERVATIONS.

      39.1  Lessee hereby acknowledges that Lessor shall have no obligations
      whatsoever to provide guard service or other security measures for the
      Project in the Common Areas.

      39.2  Lessee shall not:

            (a)   Use a representation (photographic or otherwise) of the
                  Building or the Office Building Project or their name(s) in
                  connection with Lessee's business;

            (b)   Suffer or permit anyone, except in emergency, to go upon the
                  roof of the Building.

40.   EASEMENTS.

      40.1  Lessor reserves to itself the right, from time to time, to grant
      such easements, rights and dedications that Lessor deems necessary to
      desirable and to cause the recordation of Parcel Maps and restrictions, so
      long as such easements, rights, dedications, Maps and restrictions do not
      unreasonably interfere with the use of the Premises by Lessee. Lessee
      shall sign any of the aforementioned documents upon request of Lessor and
      failure to do so shall constitute a material default of this Lease by
      Lessee without the need for further notice to Lessee.

      40.2  The obstruction of Lessee's view, air, or light by any structure
      erected in the vicinity of the Building, whether by Lessor or third
      parties shall in no way effect this Lease or impose any liability upon
      Lessor.

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

42.   AUTHORITY. If Lessee is a corporation, trust, or general or limited
      partnership, Lessee, and each individual executing this Lease on behalf of
      such entity represent and warrant that such individual is duly authorized
      to execute and deliver this Lease on behalf of said entity. If Lessee is a
      corporation, trust or partnership, Lessee shall, within thirty (30) days
      after execution of this Lease, deliver to Lessor evidence of such
      authority satisfactory to Lessor.

43.   CONFLICT. Any conflict between the printed provisions, Exhibits or
      Addendum of this Lease and the typewritten or handwritten provisions, if
      any, shall be controlled by the typewritten or handwritten provisions.

                                    Page 35
<PAGE>   36
44.   NO OFFER. Preparation of this Lease by Lessor's agent and submission of
      same to Lessee shall not be deemed on offer to Lessee to lease. This Lease
      shall become binding upon Lessor and Lessee only when fully executed by
      both parties.

45.   LENDER MODIFICATIONS. Lessee agrees to make such reasonable modifications
      to this Lease as may be reasonably required by an institutional lender in
      connection with the obtaining of normal financing or refinancing of the
      Office Building Project.

46.   MULTIPLE PARTIES. If more than one person or entity is named as either
      Lessor or Lessee herein, except as otherwise expressly provided herein,
      the obligations of the Lessor or Lessee herein shall be the joint and
      several responsibility of all persons or entities named herein as such
      Lessor or Lessee, respectively.

47.   WORK LETTER. This Lease is supplemented by that certain Work Letter of
      even date executed by Lessor and Lessee, attached hereto as Exhibit C and
      incorporated herein by this reference.

48.   ATTACHMENTS. Attached hereto are the following documents ("Exhibits"),
      which are incorporated and become part of this Lease:

            (a)   Floor Plan;

            (b)   Rules and Regulations.

49.   HAZARDOUS SUBSTANCES.

      49.1  REPORTABLE USER REQUIRE CONSENT.

            (a)   The term "Hazardous Substance" as used in this Lease shall
                  mean any product, substance, or waste whose presence, use,
                  manufacture, disposal, transportation, or release, either by
                  itself or in combination with other materials expected to be
                  on the Premises, is either (i) potentially injurious to the
                  public health, safety or welfare, the environment or the
                  Premises, (ii) regulated or monitored by any governmental
                  authority, or (iii) a basis for potential liability of Lessor
                  to any governmental agency or third party under any applicable
                  statute or common law theory. Hazardous Substances shall
                  include, but not be limited to, hydrocarbons, petroleums,
                  gasoline, and/or crude oil or any products, by-products or
                  fractions thereof. Lessee shall not engage in any activity in
                  or on the Premises which constitutes a Reportable Use of
                  Hazardous Substances without the express prior written consent
                  of Lessor and timely compliance (at Lessor's expense) with all
                  applicable laws, covenants, or restrictions of record,
                  building codes, regulations and ordinances ("Applicable
                  Requirements"). "Reportable Use" shall mean (i) installation
                  or use of any above or below ground storage tank, (ii) the
                  generation, possession, storage, use, transportation, or
                  disposal of a Hazardous Substance that requires a permit from,
                  or with respect to which a report, notice, registration or
                  business plan is required to be filed with, any governmental
                  authority, and/or (iii)

                                    Page 36
<PAGE>   37
                  the presence at the Premises of a Hazardous Substance with
                  respect to which any Applicable Requirements required that a
                  notice be given to persons entering or occupying the Premises
                  or neighboring properties. Notwithstanding the foregoing,
                  Lessee may use any ordinary and customary materials reasonably
                  required to be used in the normal course of the Use as
                  specified in paragraph 1.4 so long as such use is in
                  compliance with all Applicable Requirements, is not a
                  Reportable Use, and does not expose the Premises or
                  neighboring property to any meaningful risk of contamination
                  or damages or expose Lessor to any liability, including, but
                  not limited to, the installation (and removal on or before
                  Lease expiration or termination) of protective modifications
                  (such as concrete encasements) and/or increasing the Security
                  Deposit .

            (b)   DUTY TO INFORM LESSOR. If Lessee knows, or has reasonable
                  cause to believe, that a Hazardous Substance has come to be
                  located in, on, under or about the Premises, other than as
                  previously consented to by Lessor, Lessee shall immediately
                  give written notice of such fact to Lessor, and provide Lessor
                  with a copy of any report, notice, claim or other
                  documentation which it has concerning the presence of such
                  Hazardous Substances.

            (c)   LESSEE REMEDIATION. Lessee shall not cause or permit any
                  Hazardous Substance to be spilled or released in, on, under,
                  or about the Premises (including through the plumbing or
                  sanitary sewer system) and shall promptly, at Lessee's
                  expense, take all investigatory and/or remedial action
                  reasonably recommended, whether or not formally ordered or
                  required, for the cleanup of any combination of, and for the
                  maintenance, security and/or monitoring of the Premises or
                  neighboring properties, that was caused or materially
                  contributed to by Lessee, or pertaining to or involving any
                  Hazardous Substance brought onto the Premises during the term
                  of this Lease, by or for Lessee, or any third party.

            (d)   LESSEE INDEMNIFICATION. Lessee shall indemnify, defend and
                  hold Lessor, its agents, employees, lenders and ground lesser,
                  if any, harmless from and against any and all loss of rents
                  and/or damages, liabilities, judgments, claims, expenses,
                  penalties, and attorneys' and consultants' fees arising out of
                  or in involving any Hazardous Substance brought onto the
                  Premises by or for Lessee, or any third party (provided,
                  however, that Lessee shall have no liability under this Lease
                  with respect to underground migration of any Hazardous
                  Substance under the Premises from adjacent properties).
                  Lessee's obligations shall include, but not be limited to, the
                  effects of any contamination or injury to person, property or
                  the environment created or suffered by Lessee, and the cost of
                  investigation, removal, remediation, restoration and/or
                  abatement, and shall survive the expiration or termination of
                  this Lease. No termination, cancellation or release agreement
                  entered into by Lessor and Lessee shall release Lessee from
                  its

                                    Page 37
<PAGE>   38
                  obligations under this Lease with respect to Hazardous
                  Substances, unless specifically so agreed by Lessor in writing
                  at the time of such agreement.

            (e)   LESSOR INDEMNIFICATION. Lessor and its successors and assigns
                  shall indemnify, defend, reimburse and hold Lessee, its
                  employees and lenders, harmless from and against any all
                  environmental damages, including the cost remediation, which
                  existed as a result of Hazardous Substances on the Premises
                  prior to the Commencement Date or which are caused by the
                  gross negligence or willful misconduct of Lessor, its agents
                  or employees. Lessor's obligations, if and when required by
                  the Applicable Requirements, shall include, but not be limited
                  to, the cost of investigation, removal, remediation,
                  restoration and/or abatement, and shall survive the expiration
                  or termination of this Lease.

            (f)   INVESTIGATIONS AND REMEDIATIONS. Lessor shall retain the
                  responsibility and pay for any investigations or remediation
                  measures required by governmental entities having jurisdiction
                  with respect to the existence of Hazardous Substances on the
                  Premises prior to the Commencement Date unless such
                  remediation measure is required as a result of Lessee's use
                  (including "Alterations", as defined in paragraph 7.3(a)
                  below) of the Premises, in which event Lessee shall be
                  responsible for such payment. Lessee shall cooperate fully in
                  any such activities at the request of Lessor, including
                  allowing Lessor and Lessor's agents to have reasonable access
                  to the Premises at reasonable times in order to carryout
                  Lessor's investigative and remedial responsibility.

            (g)   LESSOR TERMINATION OPTION. If a Hazardous Substance Condition
                  occurs during the term of this Lease, unless Lessee is legally
                  responsible therefor (in which case Lessee shall make the
                  investigation and remediation thereof required by the
                  Applicable Requirements and the Lease shall continue in full
                  force and effect, but subject to Lessor's rights under
                  Paragraph 51(d) and Paragraph 13), Lessor may, at Lessor's
                  option, either (i) investigate and remediate such Hazardous
                  Substance Condition, if required, as soon as reasonably
                  possible at Lessor's expense, in which event this Lease shall
                  continue in full force and effect, or (ii) if the estimated
                  cost to remediate such condition exceeds twelve (12) times the
                  then monthly Base Rent or $100,000, whichever is greater, give
                  written notice to Lessee, within thirty (30) days after
                  receipt by Lessor of knowledge of the occurrence of such
                  Hazardous Substance Condition, of Lessor's desire to terminate
                  this Lease as of the date sixty (60) days following the date
                  of such notice. In the event Lessor elects to give a
                  termination notice, Lessee may, within ten (10) days
                  thereafter, give written notice to Lessor of Lessee's
                  commitment to pay the amount by which the cost of the
                  remediation of such Hazardous Substance Condition exceeds an
                  amount equal to twelve (12) times the then monthly Base Rent
                  or $100,000, whichever is greater. Lessee shall provide Lessor
                  with said funds or satisfactory assurance thereof within
                  thirty (30) days following

                                    Page 38
<PAGE>   39
                  such commitment. In such event, this Lease shall continue in
                  full force and effect, and Lessor shall proceed to make such
                  remediation as soon as reasonably possible after the required
                  funds are available. If Lessee does not give such notice and
                  provide the required funds or assurance thereof within the
                  time provided, this Lease shall terminate as of the date
                  specified in Lessor's notice of termination.

      49.2  LESSEE'S COMPLIANCE WITH APPLICABLE REQUIREMENTS. Except as
      otherwise provided in this Lease. Lessee shall, at Lessee's sole expense,
      fully, diligently and in a timely manner, materially comply with all
      Applicable Requirements, the requirements of any applicable fire insurance
      underwriter or rating bureau, and the recommendations of Lessor's
      engineers and/or consultants which relate in any manner to the Premises,
      without regard to whether said requirements are not in effect or become
      effective after the Commencement Date. Lessee shall, within ten (10) days
      after receipt of Lessor's written request, provide Lessor with copies of
      all permits and other documents, and other information evidencing Lessee's
      compliance with any Applicable Requirements specified by Lessor, and shall
      immediately upon receipt, modify Lessor in writing (with copies of any
      documents involved) of any threatened or actual claim, notice, citation,
      warning, complaint or report pertaining to or involving the failure of
      Lessee or the Premises to comply with any Applicable Requirements.

      49.3  INSPECTION; COMPLIANCE. Lessor and Lessor's consultants shall have
      the right to enter into Premises at any time, in the case of an emergency,
      and otherwise at reasonable times, for the purpose of inspecting the
      condition of the Premises and for verifying compliance by Lessee with this
      Lease. The post of any such inspections shall be paid by Lessor, unless a
      violation of Applicable Requirements, or a contamination is found to exist
      or be imminent, or the inspection is requested or ordered by a
      governmental authority. In such case, Lessee shall upon request reimburse
      Lessor for the cost of such inspections, so long as such inspection is
      reasonably related to the violation or contamination.

50.   TENANT IMPROVEMENTS. Lessor, at its sole cost and expense, shall provide
      the following improvements:

            1.    Paint the interior walls per the building standard
            2.    Install new carpet per the building standard
            3.    Add one (1) wall per Exhibit A
            4.    Remove one (1) wall and one (1) door per Exhibit A
            5.    Detail the suite

51.   OFFER. This offer to lease shall remain open until Tuesday, August 22,
      2009 at 2:00 p.m.

52.   Lessee shall submit to Lessor the sum of $13,878.00 as first months rent
      and security deposit no later than Tuesday, August 22, 2000 at 2:00 p.m.

53.   Lessor must have copy of Insurance Certificate before keys will be given
      out for this unit.

                                    Page 39
<PAGE>   40
In the event of an emergency after normal business hours, Lessor should contact
one of the three individuals listed below including their after hours telephone
number.

1.  Name____________    Email_______________    Telephone Number (___)__________

2.  Name____________    Email_______________    Telephone Number (___)__________

3.  Name____________    Email_______________    Telephone Number (___)__________

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

ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY LESSOR OR BORELLI
INVESTMENT COMPANY AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX
CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT RELATES. THE LESSEE IS
URGED TO:

1.    SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.

2.    RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF
      THE PREMISES. SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE
      POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING OF THE PREMISES, THE
      STRUCTURAL INTEGRITY, THE CONDITION OF THE ROOF AND OPERATION SYSTEMS, AND
      THE SUITABILITY OF THE PREMISES FOR LESSEE'S INTENDED USE.

                                    Page 40
<PAGE>   41
LESSOR:                                 LESSEE:
Clay Street Capital, Inc.               National Scientific Corporation
a California Corporation                a Texas Corporation

By: /s/ William Neverett                By: /s/ L.L. Ross
    --------------------                    -------------

Its: President                          Its: Chairman/CEO

                                        Please Print Name and Title

Executed at: Borelli Investment         Executed at: Phoenix, AZ
Company

On: September 7, 2000                   On: 8/22/00

Address: 1798 Technology Drive #200     Address: 4455 E. Camelback Rd., Ste. 160
         San Jose, CA 95110-1300                 Phoenix, AZ 85010

                                    Page 41
<PAGE>   42
                                  EXHIBIT "B"

                            RULES AND REGULATIONS FOR
                              STANDARD OFFICE LEASE

GENERAL RULES

1.    Lessee shall not suffer or permit the obstruction of any Common Areas,
including driveways, walkways and stairways.

2.    Lessor reserves the right to refuse access to any persons Lessor in good
faith judges to be a threat to the safety, reputation, or property of the Office
Building Project and its occupants.

3.    Lessee shall not make or permit any noise or odors that annoy or interfere
with other lessee's or persons having business within the Office Building
Project.

4.    Lessee shall not keep animals or birds within the Office Building Project,
and shall not bring bicycles, motorcycles or other vehicles into areas not
designated as authorized for same.

5.    Lessee shall not make, suffer or permit litter except in appropriate
receptacles for that purpose.

6.    Lessee shall not alter any lock or install new or additional locks or
bolts.

7.    Lessee shall be responsible for the inappropriate use of any toilet rooms,
plumbing or other utilities. No foreign substances of any kind are to be
inserted therein.

8.    Lessee shall not deface the walls, partitions or other surfaces of the
Premises or Office Building Project.

9.    Lessee shall not suffer or permit any thing in or around the Premises or
Building that causes excessive vibration or floor loading in any part of the
Office Building Project.

10.   Furniture, significant freight and equipment shall be moved into or out of
the building only with the Lessor's knowledge and consent, and subject to such
reasonable limitations, techniques and timing, as may be designated by Lessor.
Lessee shall be responsible for any damage to the Office Building Project
arising from any such activity.

11.   Lessee shall not employ any service or contractor for services or work to
be performed in the Building, except as approved by Lessor.

12.   Lessor reserves the right to close and lock the Building on Saturdays,
Sundays and legal holidays, and on other days between the hours of 3:00 p.m. and
8:00 a.m. of the following day. If Lessee uses the Premises during such period,
Lessee shall be responsible for securely locking any doors it may have opened
for entry.

13.   Lessee shall return all keys at the termination of its tenancy and shall
be responsible for the cost of replacing any keys that are lost.

                                    Page 42
<PAGE>   43
14.   No window coverings, shades or awnings shall be installed or used by
Lessee.

15.   No Lessee, employee or invitee shall go upon the roof of the Building.

16.   Lessee shall not suffer or permit smoking or carrying of lighted cigars or
cigarettes in areas reasonably designated by Lessor or by applicable
governmental agencies as non-smoking areas.

17.   Lessee shall not use any method of heating or air conditioning other than
as provided by Lessor.

18.   Lessee shall not install, maintain or operate any vending machines upon
the Premises without Lessor's written consent.

19.   The premises shall not be used for lodging or manufacturing, cooking or
food preparation.

20.   Lessee shall comply with all safety, fire protection and evacuation
regulations established by Lessor or any applicable governmental agency.

21.   Lessor reserves the right to waive any one of these rules or regulations,
and/or as to any particular Lessee, and any such waiver shall not constitute a
waiver of any other rule or regulation or any subsequent application thereof to
such Lessee.

22.   Lessee assumes all risks from theft or vandalism and agrees to keep its
Premises locked as may be required.

23.   Lessor reserves the right to make such other reasonable rules and
regulations as it may from time to time deem necessary for the appropriate
operation and safety of the Office Building Project and its occupants. Lessee
agrees to abide by these and such rules and regulations.

PARKING RULES

1.    Parking areas shall be used only for parking by vehicles no longer than
full size, passenger automobiles herein called "Permitted Size Vehicles."
Vehicles other than Permitted Size Vehicles are herein referred to as "Oversized
Vehicles."

2.    Lessee shall not permit or allow any vehicles that belong to or are
controlled by Lessee or Lessee's employees, suppliers, shippers, customers, or
invitees to be loaded, unloaded, or parked in areas other than those designated
by Lessor for such activities.

3.    Parking stickers or identification devices shall be the property of Lessor
and be returned to Lessor by the holder thereof upon termination of the holder's
parking privileges. Lessee will pay such replacement charge as is reasonably
established by Lessor for the loss of such devices.

4.    Lessor reserves the right to refuse the sale of monthly identification
devices to any person or entity that willfully refuses to comply with the
applicable rules, regulations, laws and/or agreements.

                                    Page 43
<PAGE>   44
5.    Lessor reserves the right to relocate all or a part of parking spaces from
floor to floor, within one floor, and/or to reasonably adjacent offsite
location(s), and to reasonably allocate them between compact and standard size
spaces, as long as the same complies with applicable laws, ordinances and
regulations.

6.    Users of the parking area will obey all posted signs and park only in the
areas designated for vehicle parking.

7.    Unless otherwise instructed, every person using the parking area is
required to park and lock his own vehicle. Lessor will not be responsible for
any damage to vehicles, injury to persons or loss of property, all of which
risks are assumed by the party using the parking area.

8.    Validation, if established, will be permissible only by such method or
methods as Lessor and/or its licensee may establish at rates generally
applicable to visitor parking.

9.    The maintenance, washing, waxing or cleaning of vehicles in the parking
structure or Common Areas is prohibited.

10.   Lessee shall be responsible for seeing that all of its employees, agents
and invitees comply with the applicable parking rules, regulations, laws and
agreements.

11.   Lessor reserves the right to modify these rules and/or adopt such other
responsible and non-discriminatory rules and regulations as it may deem
necessary for the property operation of the parking area. Should it become
necessary to designate parking stalls based on Lessee's use of the parking area,
Lessor reserves the right (at Lessor's sole discretion) to designate certain
parking stalls for a particular Lessee's usage with all costs incident to such
designation payable by Lessee.

12.   Such parking use as is herein provided is intended merely as a license
only and no bailment is intended or shall be created hereby.

                                    Page 44<PAGE>   1
                                                                   Exhibit 10.11

                             TARGUN PROPERTIES, INC.
                            LEASE & SERVICE AGREEMENT

This agreement is made on this 1st day of October between TARGUN PROPERTIES,
INC., an Arizona Corporation (hereinafter referred to as "Lessor"), and NATIONAL
SCIENTIFIC CORPORATION, an Arizona Corporation, (hereinafter referred to as
"Lessee"). Lessor has entered into a lease for the space described below:

        Suite E-160, Offices# 21, 23, 27, 28, 29 & 30
        4455 E Camelback Rd.
        Phoenix, Arizona  85018

Lessee desires to lease from Lessor a certain portion of Suite E-160 for the
purpose of conducting Lessee's business together with the rights in common to
the "Common Areas" of the Suite.

In consideration of the covenants and promises each to the other made herein,
the parties hereto agree as follows:

1.    PREMISES.  In consideration of the rents and covenants to be paid and
performed by Lessee, Lessor does hereby lease to Lessee, and Lessee does
hereby hire from Lessor, upon the terms and conditions hereinafter set forth,
Office Numbers 21, 23, 27, 28, 29 & 30 within the Suite E-160 (The Park
Executive Suites) located at 4455 Camelback Rd. (hereinafter the
"Premises").  All of the property at 4455 E. Camelback Rd., Phoenix, Arizona
85018, including, but not limited to, the buildings, equipment rooms,
grounds, walls, parking areas and driveways is hereinafter referred to as The
Suites.

      A. An exclusive right to occupy offices numbered 21, 23, 27, 28, 29 & 30.
Said office will be occupied by no more than four (4) persons. If any additional
persons occupy the office, Lessee shall pay to Lessor an additional (Fifty
dollars) $50.00 per month for each additional person who occupies the office.

      B. A non-exclusive right in common with other Lessees, their associates,
arid other parties contracting with Lessor to the use of services offered by
Lessor and to the use of the common areas of the Premises, including but not
limited to the reception area, amenities, copy machine room, conference room,
and corridors, as provided by Lessor on this floor in the Suite.

2.    TERM.

      A. The term shall commence on October 1, 2000, and terminate on September
30, 2001, subject to the provisions hereinafter provided.

      B. If the Premises are not ready for occupancy on the commencement date of
the Lease, this Lease shall remain in full force and effect. Lessee should
physically inspect the Premises to verify that the Premises will be ready on any
promised date. Lessor shall not be liable to Lessee for any loss or damages
resulting from the Premises not being ready for occupancy on the commencement
date of this Lease, and the term (Or any rent increase date

                                       1
<PAGE>   2
herein) shall not be extended, but in such event all rent shall be abated during
the period between the commencement of the said Term arid the time when the
Premises are available to Lessee, the term of the Lease shall commence, and rent
shall commence without any deduction or offset, on the date Lessee moves into
the leased space or has a telephone installed, whichever occurs first.

      C. Either party may terminate this Lease at the expiration of the term set
forth herein. Lessee must give thirty (30) days written notice to Lessor of
Lessee's intent to terminate the Lease at the expiration of the term. If Lessee
vacates said premises before the expiration date, Lessee will be held
responsible to Lessor for all rent owed until specified termination date. If
Lessee does not renew Lease or sign a new tease prior to the expiration of
Lease, Lessor reserves the right to immediately terminate rental and serve an
immediate eviction notice. Also, if Lessee fails to give thirty (30) day Written
notice of his intent to vacate the premises at the end of the term, Lessee will
automatically be considered a month-to-month tenant and will be responsible for
the current market rental rate of the premises decided at Lessor's discretion,
until such time that Lessee does give thirty (30) days written notice of
Lessee's intent to vacate premises.

3.    RENT.  Lessee agrees to pay to Lessor (as rental for the Premises
described in Paragraph I hereof) the following monthly sum of:

<TABLE>
<S>                                               <C>
          $     4,190.00     Base Rent             $     100.56             State Rental Tax
           -----------------                        -----------------------

          $                  Telephone Rent        $                        Other
           -----------------                        -----------------------
          $                  Telephone Answering   $                        Other
           -----------------                        -----------------------
          $                  Furniture Rental      $     130.00             Covered  Parking
           -----------------                        -----------------------

                                  $     4,420.56     TOTAL MONTHLY RENTAL
                                   -----------------
</TABLE>

All rents shall be due and payable on the first of each month. Rents become
delinquent after the 5th of each month at which time Lessee is considered in
default of Lease and is responsible for any and all penalties set forth herein
as described in paragraph 12 of Lease.

4.    SECURITY DEPOSIT.  Upon execution of this Lease by Lessee, Lessee will
submit a security deposit in the amount of $250.00, $100.00 of which is
non-refundable per office.

      A. Lessee's security deposit represents a bond on the part of the Lessee
for the faithful performance of the provisions of this Lease. The security
deposit will not be interest bearing to Lessee and may be commingled by Lessor
with other funds of Lessor. The security deposit will not and shall not be
applied as rent by Lessor or Lessee, and shall be retained by Lessor during
Lessee's tenancy. If Lessee remains in the Premises after the expiration date of
the Lease, the security deposit will be retained by Lessor until Lessee's
security deposit as is reasonably necessary to remedy and defaults of Lessee in
the payment of rent, to repair damages to the Premises caused by the Lessee, and
the parties expressly agree that the security deposit is made for all the
aforesaid specific purposes. If the space rented has been previously occupied,
Lessee acknowledges inspection of the carpeting, flooring, walls, wall
coverings, ceiling, and door of the leased premises and acknowledges that there
are no holes, stains or other damage

                                       2
<PAGE>   3
thereto if not specified in detail at the bottom of the last page of this Lease.
If Lessee's space is not completed or available for inspection, Lessee has ten
(10) days after the commencement date of this Lease to send a letter via
Certified Mail to lessor identifying any holes, stains, or other damages. If
Lessee has paid all of the rent due under this Lease, Lessor shall return to
Lessee the entire security deposit (less $100.00 for cleaning and painting and
any offsets for damages) for each suite occupied by Lessee after sixty (60) days
after Lessee moves out of the Premises. If any law exists or is enacted which
contradicts any provision of these security deposit provisions, Lessor is not
liable to Lessee for any damages unless Lessee sends Lessor by Certified Mail a
copy of the applicable case of code and Lessor fails to cure same within seven
(7) days.

5.    MASTER LEASE. Lessee recognizes that there is a Master Lease of which
Lessee's office (s) is a portion, and Lessee shall have no greater rights to the
use and occupancy of the Premises than Lessor has with the Building under
Lessor's Master Lease. Lessee is bound to Lessor in the same manner as Lessor is
bound to the Building with respect to all standard lease provisions, such as
eminent domain, destruction of building, etc., as well as the rules and
regulations of the Building. Lessee agrees to release and forever hold the
Lessor harmless from any claim of damages, Liabilities or losses alleged or
proven to be due, in whole or in part, to any dispute which might arise between
Lessor and Landlord under the Master Lease. In the event of termination of the
Master Lease, Lessee shall, at the option of Lessor's Landlord, attorn to
Lessor's Landlord and recognize Lessor's Landlord as Lessor under this Sublease.
This Paragraph does not obligate Lessee in any way to the Building or to anyone
else, for anyone else's rent, or any payment whatever, except expressly set
forth in this Agreement. Although Lessor's rent may be increased under the
Master Lease if taxes, utilities or maintenance costs increase, Lessee's rent
will not be increased during the term of this Lease (except otherwise provided
in Paragraph 3 hereof).

      All reference to Lessee in the Agreement is to mean Sub-Lessee; reference
to Lessor is to mean Sub-Lessor; and reference to Lease is to mean Sub-Lease.

6.    IMPROVEMENTS.

      A. Lessee may not make any improvements within the office leased herein
without the written permission of Lessor.

      Lessee shall pay for any such improvements. Lessee may remove any
improvements paid for by Lessee provided that Lessee repairs any holes, gaps or
other damage to walls, ceiling, flooring or their coverings. Lessee will remove
any improvements (other than additional, normal height electrical outlets)
installed by Lessee and restore the Premises to the condition prior to Lessee's
occupancy if the next tenant in that space objects to Lessee's improvements.
Lessee may not remove any improvement for which Lessor contributed payment
without Lessor's prior written consent. During the restoration period, Lessee
shall pay rent to Lessor as provided herein as if said space were otherwise
occupied by Lessee.

      B. If Lessee requires any additional air conditioning or electrical
outlets of separate circuits for a computer or other office equipment, Lessee
will be responsible for the entire cost thereof. Lessee will order all
additional air conditioning or electrical work through, or with the approval of,
the Building Manager.

                                       3
<PAGE>   4
7.    REPAIRS. The Building which leases the Premises to Lessor is responsible
for construction of the Premises and repairs to elevator, air conditioning,
electrical, plumbing and structural supports under the Master Lease. Lessor is
not liable to Lessee by reason of any defect, inadequacy, or insufficiency in
same. Lessee may not deduct or offset any amount from rent due herein because of
any problem regarding construction, repairs or lack thereof. Lessor will
coordinate any repair or complaint of Lessee; however, any claim by Lessee with
respect thereto shall be made solely against the Building and Lessor hereby
assigns to Lessee, solely for the purpose of making and prosecuting any claim,
repairs for dangerous conditions existing in the common areas within the Suite.
Lessee is responsible for, and shall indemnify and hold Lessor harmless from and
against, any damage to persons or property caused by Lessee, or Lessee's
employees, agents, clients, guests or invitees. Lessee is not responsible for
repairing wall holes from normal sized nails used to hang pictures.

8.    UTILITIES, SERVICES, MAINTENANCE, AND CONSTRUCTION. Under Lessor's Master
Lease, the Building provides utilities, services (janitorial, heat and air
conditioning), and maintenance. Janitorial services include carpet vacuuming,
but not shampooing. Heat and air conditioning is provided during generally
recognized business days and hours; however, Lessee will have access to the
Premises 24 hours a day, 7 days a week, subject to the Building's rules
requiring proper identification after normal business hours. Lessor is not
liable to Lessee by reason of any failure to provide, or the inadequacy of
utilities, janitorial, heat or air conditioning services or maintenance. Lessor
is not responsible for any negligence of the Building's agents, servants, or
employees. Lessee may not deduct or offset any amount from rent due herein
because of any problem regarding utilities, heat, air conditioning, janitorial
services, maintenance services or defective construction of Premises. Upon
request by Lessee, Lessor will write the Building regarding any complaint about
maintenance or construction; however, any claim by Lessee with respect thereto
shall be made by Lessee directly to the Building, under the Master Lease. Lessor
is not responsible for maintaining, repairing, or cleaning the floor coverings,
wall covering or venetian blinds within Lessee's Premises, other than normal
janitorial service provided by the Building.

      A. EXTRAORDINARY CONSUMPTION OF SERVICES. Lessee shall not, without the
written consent of Lessor, use any apparatus or device in the Premises, other
than a reasonable number of small business machines, that will in any way
increase the amount of electricity or water usually furnished or supplied for
use of the Premises as general office space, or that will materially affect the
temperature otherwise maintained by the air conditioning or heating system. In
Lessor's sole discretion, Lessee agrees to pay promptly upon demand by Lessor
all additional water or electric current consumed, plus any additional expenses
incurred in keeping track of said consumption, including the cost of installing
separate meters in and to the Leased Premises if Lessor deems it necessary.

9.    TELEPHONE AND RECEPTION. Lessor agrees to provide telephone answering for
one Line and reception service as reasonably required by Lessee from 8:00 a.m.
to 5:00 p.m., Monday through Friday, nationally recognized holidays excepted.
Additional lines will be answered at a cost of $25.00 per month per line. Lessee
shall be responsible for its own telephone expense, and the installation and
monthly service charges, if any, from the telephone company by reason of
Lessee's Lines being connected to the reception desk and telephone room

                                       4
<PAGE>   5
consoles, whether billed to Lessor or Lessee. Any telephone expense billed to
Lessor (including any telephone company double charge) shall be paid or
reimbursed by Lessee to Lessor.

       If the telephone company does not install Lessee's phone on or before the
commencement date of this Lease, the commencement date shall not be extended,
nor shall rent be abated. Lessor will assist Lessee in ordering lines and
equipment through Lessor's interconnect telephone company; however, it is
Lessee's responsibility to make certain lines are installed in Lessee's office
and to Lessor' central call director in a timely fashion.

      Lessee recognizes that telephone answering and reception services are
never perfect and that even the best receptionists and telephone operators make
mistakes. Lessor strives to provide excellent telephone answering and reception
services; however, reception services are functions that are under the control
of Lessee in that Lessee may perform either or both of these functions directly
through Lessee's employees. Lessee hereby agrees to assume the risk of negligent
(passive and/or active) performance of telephone answering id/or reception
service. Lessee agrees that Lessor shall not be liable for any loss of business
or damage of any sort occurring through or in connection with, or incidental to
the furnishing of, or the failure to furnish, telephone answering or reception
service. Further, Lessee agrees to indemnify, release and hold Lessor harmless
from any loss, damage, claim or liability arising out of or in connection with
any telephone answering and/or reception service provided or not provided by
Lessor's employees to Lessee or to any caller, visitor or associate of Lessee.
Lessor shall not be liable for any loss of business or damages of any sort for
authorizing or permitting the telephone company to disconnect Lessee's telephone
service if Lessee has not paid its telephone bill.

       Lessor acknowledges that Lessee's separate number connected to the
central call director belongs to Lessee. If, upon termination of this Lease, the
telephone company requires Lessor's signature to assign said telephone number to
Lessee, Lessee may sign Lessor's name to the telephone company form.

       Lessee provides open message/mail slots for all tenants. Lessee
acknowledges that Lessor is not responsible for loss or theft of messages or
mail.

       Upon termination of this Lease, Lessor will write on all mail
"Moved-Please Forward to Sender" and return such mail to the post office. Lessor
will not store mail nor place a forwarding address on it unless Lessee pays the
then-prevailing charge for said service.

10.   PARKING. Lessee may have monthly parking in the Building's parking
      facilities, if any, according to the Building's rules, regulations and
rates.

11.   ANIMALS AND VEHICLES. Lessee will not bring, nor permit any of its
      visitors to bring, any animal (except seeing-eye dog), bicycle or other
vehicle (except for a wheelchair) into the Suite.

12.   DEFAULT; REMEDIES.

      A. By Lessee. Lessee will be in default under the Lease if any of the
following occurs:

                                       5
<PAGE>   6
            1. If Lessee fails to pay the rent or make any other payment
required by the Lease within three (3) working days after Lessor sends Lessee a
written notice or demand for payment

            2. If on three or more occasions in any twelve month period Lessor
does not receive either Lessee's regular monthly payment of rent and other
regularly recurring charges on or before the first business day of the month or
any other payment on or before the date it is due.

            3. If Lessee assigns the Lease or mortgages its interest in the
Lease or sublets any part of the Premises.

            4. If Lessee abandons the Premises, or ceases to operate its
business on the Premises, or becomes bankrupt or insolvent, or makes any general
assignment of all or a substantial part of its property for the benefit of
creditors, or if a receiver is appointed to operate Lessee's business or to take
possession of all or a substantial part of Lessee's property.

            5. If Lessee fails to maintain the insurance as required by the
Lease.

            6. If Lessee breaches any other provision of the Lease and fails to
cure the breach within fifteen (15) days after Lessor sends written notice of
the breach, or, if the breach cannot be cured within fifteen days, then if
Lessee does not proceed with reasonable diligence to cure the breach within such
additional time as may be reasonably necessary under the circumstances.

            7. If Lessee is disruptive and/or uses obscenities or vulgar
language so as to disturb any of the other tenants or Lessor's employees.

      B. Lessor's Remedies. If Lessee is in default, then Lessor may take any of
the following actions:

            1. Fees.

                  a.    If rent and monthly service charges have not been
                        received by the 5th of the month, a late charge of
                        $30.00 will be charged.

                  b.    If rent or monthly service charges have not been
                        received by the 6th of the month, an additional late
                        charge of $10.00 per day, or ten percent (10%) of the
                        total monthly rental, whichever is greater, shall be
                        charged until the rent and service charges, including
                        the late charge, are paid in full.

                  c.    If one or more checks are dishonored by Lessee's bank in
                        a twelve (12) month period, Lessor may require, during
                        the balance of the Lessee's tenancy, payment by
                        cashier's check or money order. Lessee's failure to
                        comply therewith will constitute a material breach and
                        permit Lessor to terminate this Lease.

                                       6
<PAGE>   7
                  d.    If a check is dishonored by Lessee's bank, a $50
                        returned check fee will be charged.

                  e.    In the event that Lessee becomes delinquent in the
                        payment or rent, or is unable to meet the monthly rental
                        obligation on a timely basis requiring eviction, require
                        cleaning and/or repairs at the expense of Lessor, Lessee
                        agrees to pay all collection agency fees that are
                        required for collection of Lessee's debt.

            2. Re-entry and repossession. Lessor may re-enter and take
possession of all or any part of the Premises and remove Lessee and any person
claiming under Lessee from the Premises, and without committing a trespass or
becoming liable for any loss or damage that may be occasioned thereby. Lessor
may also change the locks to the Premises without notice at Lessee's expense.
Re-entry and repossession of the Premises will not by themselves terminate the
Lease.

            3. Removal, storage and sale of property. Lessor may remove any
property, including fixtures, from the Premises and store the same at Lessee's
expense in a warehouse or any other location, or Lessor may lease the property
on the Premises pending sale or other disposition. if Lessor leaves the property
on the Premises or stores it at another location owned or controlled by Lessor,
then Lessor may charge Lessee a reasonable fee for storing and handling the
property comparable to what Lessor would have had to pay to a third party for
such services. Lessor will not be liable under any circumstances to Lessee or to
anyone else for any damage to the property. Lessor shall proceed to sell
Lessee's property in accordance with Arizona law.

            4. Reletting the Premises. Lessor may relet the Premises at whatever
rent and on whatever terms and conditions it deems advisable. The term of any
new Lease may be shorter or longer than the remaining term of this Lease. In
reletting the Premises, Lessor may make any alterations or repairs to the
Premises it feels are necessary or desirable; may subdivide the Premises into
more than one unit and lease each portion separately; may sell Lessee's
improvements, fixtures and other property located on the Premises to the new
tenant, or include such improvements, fixtures and property as part of the
Premises without additional cost; may advertise the Premises for sale or lease;
may hire brokers or other agents; and, may do anything else it deems necessary
or helpful in reletting the Premises. Lessee will be liable to Lessor for all
costs and expenses of the reletting including but not limited to rental
concessions to the new tenant, broker's commissions and tenant improvements, and
will remain liable for the rent and all other charges arising under the Lease,
less any income received from the new tenant, unless the Lease is terminated as
set forth below.

            5. Termination of Lease. Lessor may terminate the Lease at any time
after Lessee defaults by sending a written notice to Lessee expressly stating
that the Lease is being terminated. Termination will be effective on the date of
the notice or on any other date set forth in the notice. Until Lessor sends
Lessee such a notice, the Lease will remain in full force and effect, and Lessee
will remain liable for paying the rent and other charges that come due under the
Lease and for performing all other terms and conditions of the Lease. No other
action taken by Lessor, including repossession of the Premises, removing or
selling Lessee's separate

                                       7
<PAGE>   8
property, reletting the Premises, or filing suit for possession or for damages,
will terminate the Lease or release Lessee from its continuing liability for
complying with its terms and conditions.

            6. Damages. Lessor may recover from Lessee all costs and expenses
Lessor incurs as a direct or indirect consequence of Lessee's breach, including
the cost of storing and selling Lessee's property, reletting the Premises, and
bringing suit against Lessee for possession or damages. If Lessor made or paid
for any improvements to the Premises, or granted Lessee any improvement
allowance or credit against rent for Lessee's improvements, then Lessor shall
also be entitled to recover the unamortized portion of the cost of such
improvements or the amount of such allowance or credit, determined by
multiplying the total amount of such cost or allowance or credit by a fraction,
the denominator of which is the total number of months of the initial lease term
and the numerator of which is the number of months of the term remaining at the
time of Lessee's default. Also, if the Lease provides for any month during which
no rent or a reduced rent is payable, or for any other rent concession to
Lessee, then, upon default, Lessee shall become liable for the full amount of
the monthly base rent, plus applicable taxes, for such months, and Lessor shall
be entitles to recover as additional rent the amount that would have payable by
Lessee for such months if the monthly base rent provided for had been payable
throughout the entire term of the Lease. Unless Lessor terminates the Lease,
Lessee will also remain liable for any difference between the rent and other
charges called for by the Lease and the rent and other charges collected by
Lessor from any new tenant. For any month in which or collects less from a
successor tenant than is payable under this Lease, Lessor may demand that Lessee
immediately make up the difference, and Lessor may bring suit against Lessee if
Lessee fails to do so. If Lessor does terminate the Lease, then Lessee will no
longer be liable on a continuing monthly basis for the rent and other charges
that would have become due under the Lease thereafter, hut Lessee will remain
liable for all sums accrued under the Lease to the date of termination, as well
as for all costs and expenses incurred by Lessor, and any other damages
sustained by Lessor, as a consequence of Lessee's breach. Also, Lessor may
recover from Lessee the difference between the present value at the date of
termination of the rent payable under law or in equity for breach of contract,
damages or other appropriate relief. The rights and remedies described herein
are cumulative, not exclusive, and Lessor's exercise of any one right or remedy
will not preclude the simultaneous or subsequent exercise of any other right or
remedy.

13.   INDEMNIFICATION OF LESSOR; INSURANCE. Lessor shall not be liable or
answerable to Lessee or any other person, firm or corporation for any injury or
damage resulting from the condition, or any defect in, the Premises. Lessee
agrees to indemnify Lessor against, and hold Lessor and the Premises and
Building free and harmless from any and all penalties, costs, expenses
(including attorney's fees), claims, demands and causes of action arising out of
or in connection with (a) any accident or other occurrence in or on the
facilities (including, without limiting the generality of the term "facilities~,
stairways, passageways or hallways), the use of which Lessee may have in
conjunction with other tenants of the Building, which such injury or damage
shall be caused in part or in whole by the act, neglect, fault or omission of
any duty with respect to the same by Lessee, its agents, servants, employees,
invitees, permittees, customers, clients or guest, (b) the condition of, or and
condition of, or any defect in, Lessee's fixtures or equipment or any part
thereof, (c) the use or occupancy of the Premises by Lessee or any tenant of
Lessee, or (d) any breach of this Lease by Lessee. Lessor is not liable for any
lost or stolen items in the possession of Lessee's office.

                                       8
<PAGE>   9
      Lessee agrees to and shall at its own cost and expense procure and
maintain during the entire Lease Term and any extensions thereof comprehensive
public liability insurance covering the Premises and their surrounding areas and
naming Lessor as an additional Insured. The liability coverage under such
insurance shall not be less than Five hundred Thousand Dollars ($500,000) for
injury or death of one person in any one accident or occurrence; One Million
Dollars ($1,000,000) for injury or death of more than one person in any one
accident or occurrence; and One Hundred Thousand Dollars ($100,000) for property
damage. The amounts of insurance coverage stated herein may be reduced by mutual
agreement of the parties. Any such reduction must be stated in writing and
executed F ~he parties. Lessee shall provide Lessor with certificates of such
insurance evidencing Lessee's compliance. All policies of insurance also provide
that such insurance will not be canceled, except after ten (10) days written
notice to Lessor. The original of all policies shall remain in the possession of
the Lessee, provided, however, that the Lessor shall be issued copies by a
responsible company or companies authorized to do business in the State of
Arizona. In no event shall the limits of said policies be considered as limiting
the liability of Lessee to Lessor under the first section of this Paragraph 13.

14.   USE OF PREMISES. Lessee shall not do or permit anything to be done which
will invalidate or increase the cost of any fire, extended coverage or any other
insurance policy covering the Building and/or property located therein.

      Lessee shall not do or permit anything to be done in or about the Premises
which will in any way obstruct or interfere with the rights of other tenants or
occupants of the floor, or injure or annoy them, or use or allow the Premises to
be sued for any improper, immoral, unlawful or objectionable purpose, nor shall
Lessee cause, maintain or permit any nuisance in, on or about the Premises. This
prohibition includes, but is not limited to, loud music, other loud noises,
burning incense or other offensive or objectionable odors.

      Lessee may use and occupy the leased Premises for general office use and
for no other business or purpose without written consent of Lessor. Lessee
shall, at its own expense, perform and fully satisfy all laws, statutes, and
regulations which may relate to or affect the occupancy of the leased Premises
or any governmental authorities having jurisdiction over the subject Premises.

15.   KEYS. Lessor will supply one (1) key to the door of each office. Lessee
will pay the Building's prevailing charge for elevator keys, security cards or
keys to enter the building after normal business hours, or additional office
keys. Lessor is not responsible for changing any lock. If the master key kept by
Lessor's receptionist is stolen, lost or misplaced, Lessor is not responsible
for changing Lessee's locks. Lessee understands that Lessor is not liable for
thefts and Lessee may install a dead bolt lock on or change the tumbler to
Lessee's office door (s) upon written approval of Lessor; in which event Lessee
must give a copy of the key to Lessor to be used in emergencies and for
maintenance purposes. Lessee agrees to return all keys to Lessor immediately
upon vacating its office. Failure to return all keys immediately will result in
a charge of Lessee for changing the locks, which will be an amount not less that
Twenty-live Dollars ($25). Lessee agrees to pay this charge within ten (10) days
of request by Lessor.

                                       9
<PAGE>   10
16.   ENTRY BY LESSOR. Lessor shall have the right to enter the Premises at any
time to inspect the same or to cure any default including a breach of the
Building's rules and regulations), to supply any service to be provided by
Lessor hereunder, to submit the Premises to prospective purchaser, tenants or
mortgagees, to post notices of non-responsibility, and to alter, improve or
repair the Premises and any portion of the building, without abatement of rent,
necessary structures where reasonably required by the character work to be
performed, always providing that the business of Lessee shall not be interfered
with unreasonably. Lessee hereby waives any claim for damages for any injury,
inconvenience or interference with Lessee's business, any loss of occupancy or
quiet enjoyment of the Premises, and any other loss occasioned by Lessor's entry
for any of the aforesaid purposed.

       For each of the aforesaid purposes, Lessor shall at all times have and
retain a key with which to unlock all of the doors upon the Premises, excluding
Lessee's vaults, and Lessor shall have the right to use any and all means to
open said doors in an emergency in order to obtain entry to the Premises, and
any entry to the Premises obtained by Lessor shall not under any circumstances
constitute forcible or unlawful entry into or a detainer of the Premises or an
eviction of Lessee from the Premises or any portion therefor. Lessor shall not
be liable for the consequences of admitting by passkey, or refusing to admit to
the Premises, Lessee or any agent or employee of Lessee.

17.   LESSOR'S RIGHT TO CURE DEFAULTS. All convents and agreements to be
performed by Lessee under any of the terms of the Lease shall be at its sole
cost and expense and, except as otherwise specifically provided herein, without
any abatement of rent If Lessee shall fail to pay any sum of money other than
rent, required to be paid by it hereunder or shall fail to perform any other act
on its part to be performed hereunder, Lessor may but shall not be obligated so
to do, and without waiving any rights of Lessor or releasing Lessee from any
obligations of Lessee hereunder, make such payment or perform such other act All
sums so paid or expenses incurred by Lessor and all necessary incidental costs
together with interest thereon at the rate of eighteen percent (18%) per annum
from the date of such payment by Lessor shall be considered as rent owing
hereunder and shall be payable to Lessor on demand or, at the option of Lessor,
may be added to any rent then due or thereafter becoming due under this Lease.
In addition, Lessor shall have the same right and remedies in the event of the
nonpayment thereof be Lessee as in the case of default by lessee in the payment
of any rent hereunder.

18.   DELAYS, DEFAULT BY LESSOR. Lessor shall not be responsible for any delay
or failure in the observance or performances of any term or condition of this
Lease to be observed or performed by Lessor to the extent that such delay
results from action or order of governmental authorities; civil commotions;
strikes, fires, acts of God or the public enemy; act or default of any Lessee in
the Building, inability to procure labor, material, fuel, electricity, or other
forms of energy; or any other cause beyond the reasonable control of Lessor,
whether or not similar to the matters herein specifically enumerated. Any delay
shall extend by like time any period or performance by `or and shall not be
deemed a breach of, or failure to perform, this Lease or any provisions thereof.

       In the event of any default under this Lease by Lessor, Lessee, before
exercising any rights that it may have at law to cancel this Lease, shall have
given notice of such default to Lessor and shall have offered Lessor a
reasonable opportunity to correct and cure the default.

                                       10
<PAGE>   11
Lessee also agrees to give the holders of any mortgages or deeds of trust
(mortgages), by registered mail, a copy of any notice of default served upon
Lessor, provided that prior to such notice Lessee has been notified in writing
(by way of Notice of Assignment of Rents and Leases, or otherwise) of the
addresses of such mortgagees. Lessee further agrees that if Lessor shall have
failed to cure such default within the aforesaid time limit, then the mortgagees
shall have an additional thirty (30) days within which to cure such default or
if such default cannot be cured within that time, then such additional time as
may be necessary if within such thirty (30) days any mortgagees has commenced
and is diligently pursuing the remedies necessary to cure such default
(including but not limited to commencement of foreclosure proceedings if
necessary to effect such cure), in which event this Lease shall not be
terminated while such remedies are being so diligently pursued.

19.   NOTICE TO LESSOR OR LESSEE. All notices required or desired to be given
under this Lease must be in writing and shall he personally given or delivered
by certified or registered mail addressed to the Lessee at the address of the
Premises and to the Lessor at the address of the Suite in which the Premises are
located. Personal delivery to the floor receptionist does not constitute notice
to either Lessor or Lessee. Either party may, by written notice to the other,
specify a different address for notice purposes.

20.   TENANT HOLDOVER. In the event that Lessee, without the written consent of
Lessor shall hold over the expiration of the term of this Lease, then Lessee
hereby waives all notice to quit and agrees to pay Lessor, for the period that
the Lessee is in possession after the expiration of this Lease, a monthly rental
which is twice the total monthly rental payable pursuant to Paragraph 3 of this
Lease, together with all damages sustained by Lessor on account of such holding
over. If Lessee occupies any part of the Premises for any portion of any
calendar month, Lessee will be liable for rent for the full calendar month.
Lessee expressly agrees to hold Lessor harmless for all loss and damages, direct
or consequential, which Lessor may suffer in defense of claims by other parties
against Lessor arising out of the holding over by Lessee, including without
limitation, attorney's fees which may be incurred by Lessor in defense of such
claims. The foregoing provision shall not service as permission for Lessee to
hold over nor serve to extend the term of this Lease. Acceptance of rent by the
Lessor subsequent to the expiration of the term shall not constitute consent to
any holding over.

21.   TRANSFER OF LESSOR'S INTEREST. In the event Lessor transfers its
reversionary interest in the Premises (other than a transfer for security
purposes only), Lessor shall be relieved of all obligations accruing hereunder
after the effective date of such transfer, including, but not limited to, the
return of security deposits or other funds held by Lessor, provided that such
obligations have expressly assumed in writing by the transferee, and Lessee
agreed to attorn to the transferee.

      Lessee agrees at any time and from time to time at the request of Lessor,
to execute, acknowledge and deliver to Lessor within ten (10) days from the date
of said request, a statement in writing certifying that this Lease is unmodified
and in full and effect (or if there have been modifications), and the dates to
which the fixed rent and other charges have been paid in advance, if any, it
being intended that any such statement delivered pursuant to this paragraph may
be relied upon by any prospective purchaser, mortgagee or assignee of any
mortgage of the Premises.

                                       11
<PAGE>   12
22.   RETURN OF POSSESSION. Lessee shall vacate the leased Premises in good
order and repair in which such property was at the commencement of this Lease,
ordinary wear and tear excepted. Lessee shall remove all its property no later
than 5:00 p.m. on the day upon which this Lease or any extension thereof ends
whether upon notice or by holdover or otherwise. Lessor shall have the same
rights to enforce this covenant by ejectment and for damages or otherwise as for
the breach of any other conditional therein, and remove from the leased Premises
all property, materials or equipment installed by Lessee, provided that such
property is removed without injury of the leased Premises.

23.   CONFERENCE ROOM. Lessee may use the conference room(s) on a reserved basis
or without reservation if not previously reserved. Lessee will not be allowed to
request any standing or permanent reservation of the conference room(s). Lessee
will pay the then-current rate for conference room usage over five (5) hours per
calendar month per office leased. Any use of the conference room(s) by Lessee's
visitors will be considered to be use by Lessee, whether or not Lessee is
present at the time of such use, and Lessee will be responsible for any charges
incurred for such use.

24.   LESSOR'S EMPLOYEES. Lessee acknowledges that Lessor expends substantial
amounts of money and effort to acquire, train and retain employees for the
services provided to Lessee, including employment agency and training costs.
Lessee agrees that during the term of, or any extension or renewal of, the Lease
and for a period on one (1) year thereafter, Lessee will not hire or attempt to
hire in any capacity whatever, full-time, part-time or on a work for hire basis,
on behalf of itself or any person or entity by whom Lessee (if an individual) is
employed, any employee of Lessor. This prohibition shall apply during the period
of any such employee's employment by Lessor and for ninety (90) days thereafter.
The parties agree that it would be very difficult to ascertain the damages
suffered by Lessor for Lessee's breach of the provision. Therefore, it is agreed
that in the event of a breach of this provision by Lessee, Lessee will pay to
Lessor as liquidated damages, and not as a penalty, a sum of money equal to
three (3) months pay for the subject employee at the rate paid by Lessor during
such employee's last full month employment by Lessor.

25.   ATTORNEY'S FEES. In the event it becomes necessary for either party to
employ an attorney in order to enforce the terms of this Lease, or to protect
the rights of either party hereunder, and such party is successful in an action
in connection therewith, the other party agrees to pay such prevailing party the
reasonable attorney's fees and legal costs incurred.

26.   COVENANT NOT TO COMPETE. Tenant agrees that during the terms of this
Lease, he shall not in or about the Premises, engage in the primary or
incidental business of providing photocopy service, facsimile receipt and
transmissions, secretarial services of any kind, or any similar services which
are provided by Lessor for the benefit of its tenants.

                                       12
<PAGE>   13
LESSEE:                                    LESSOR:
      /s/ L.L. Ross                        TARGUN PROPERTIES, INC.
------------------------------------
BY:         L.L. Ross                      BY:   /s/ Michael Targun
   ---------------------------                ---------------------

TITLE:      Chairman/CEO                   TITLE:      President
      ------------------------                   ---------------

S.S.#/TAX ID            86-087077
            ---------------------

HOME
ADDRESS:
        -------------------------

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

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

PHONE:
        -------------------------
DATE:
        -------------------------

                                       13
<PAGE>   14
                                 LEASE ADDENDUM

This amendment supplements and amends the provisions of the Lease Agreement
dated August 7, 1998, by and between TARGUN PROPERTIES, INC. (Lessor") and,
NATIONAL SCIENTIFIC CORPORATION ("Lessee"). In the event of any conflict or
inconsistency between the provisions of this Amendment and the provisions of the
Lease, this Amendment shall prevail.

                  LEASE ADDENDUM EXPIRING SEPTEMBER 30, 2001

        (initials)                                            /s/ MG (initials)
--------                                                      ------

      Effective Date:  February 12, 2001

As of February 12, 2001, National Scientific will occupy Office 24 at the rate
of $910 per month until Unit 22 is available (estimated date of availability:
4/1/01) The security deposit from Unit 24 will be applied to Unit 22 upon
occupation. The Monthly rate for Unit 22 will be reduced $100.00/month, for a
monthly total of $1,210.00.*

Terms and conditions: Except to the extent inconsistent with the terms and
conditions set forth above, all the conditions and covenant of that certain
Lease Agreement dated August 21, 1998 as well as all exhibits, schedules,
attachments, addendums of clarification shall be binding upon Lessor and Lessee.
This agreement shall not constitute an agreement by the Lessor and shall not be
binding upon Lessor unless and until the Agreement shall be executed by both
parties.

AGREED TO this 16 day of February, 2001.

LESSEE:                                         LESSOR:

NATIONAL SCIENTIFIC CORPORATION           TARGUN PROPERTIES, INC.

      /s/ Michael Grollman                                  /s/ Michael Targun
------------------------------------------      -------------------------------

Its:        COO                                 Its:  President
    --------------------------------                --------------------------

* The following sentence was written in and initialed by the parties: If Unit 22
is not available by 4/1/00, then this lease amendment is void.

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