Document:

STANDARD INDUSTRIAL/COMMERCIAL
                    MULTI-TENANT LEASE - GROSS
           AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION

1.   Basic Provisions ("Basic Provision").
     1.1    Parties: This Lease ("Lease") dated for _________ purposes only
December 19, 2003 made by and between TENNANT DESERT PROPERTIES, LLC
("Lessor") AND AQUENTIUM, INC. ("Lessee"), (collectively the "Parties", or
individually a "Party").
     1.2(a) Premises: That certain portion of the Project (as defined below),
including all improvements therein or to be provided by Lessor under the terms
of this Lease, commonly known by the street address of 19125 N. Indian Ave
located in the City of Palm Springs, County of Riverside, State of CA, with
zip code _______________, as outlined on Exhibit ____ attached hereto
("Premises") and generally described as (describe briefly the nature of the
Premises): 10,000 Sq. Ft. of warehouse space plus two (2) offices in the front
section of the subject bldg. (Part of an approx. 84,772 s.f. Ind. Bldg.) In
addition to Lessee's rights to use and occupy the Premises as hereinafter
specified, Lessee shall have non-exclusive rights to the Common Areas (as
defined in Paragraph 2.7 below) as hereinafter specified, but shall not have
any rights to the roof, exterior walls or utility raceways of the building
containing the Premises ("Building") or to any other buildings in the Project.
The Premises, the Building, the Common Areas, the land upon which they are
located, along with all other buildings and improvements thereon, are herein
collectively referred to as the "Project." (See also Paragraph 2.)
     1.2(b) Parking: ten (10 unreserved vehicle parking spaces ("Unreserved
Parking Spaces") and ________________ reserved vehicle parking spaces
("Reserved Parking Spaces"). (See also Paragraph 2.6.)
     1.3    Term: Ninety (90) days xxx and   -       months ("Original Term")
commencing Jan. 1, 2004 ("Commencement date") and ending March 31, 2004
("Expiration Date"). (See also Paragraph 3.)
     1.4    Early Possession: ___________________ ("Early Possession Date")
(See also Paragraphs 3.2 and 3.3.)
     1.5    Base Rent: $ 4,500.00 per month ("Base Rent"), payable on the See
Addendum day of each month commencing ______________________. (See also
Paragraph 4.)
[ ] If this box is checked, there are provisions in this Lease for the Base
rent  to be adjusted.
     1.6    Lessee's Share of Common Area Operating Expenses:  none  percent
(__%) ("Lessee's Share").
     1.7    Base Rent and Other Monies Paid Upon Execution:
            (a)  Base Rent: $ 4,500.00 for the period Jan. 1st thru Jan. 31st
                 2004
            (b)  Common Area Operating Expenses: $ none for the period ______
            (c)  Security Deposit: $ 4,500.00 ("Security Deposit"). (See also
                 Paragraph 5.)
            (d)  Other: $__________ for _________________________________
            (e)  Total Due Upon Execution of this Lease: $ 18,000.00 (See
                 Addendum)
     1.8    Agreed Use: Administration offices, manufacturing and storage
(manufacturing and storage in conformity with city codes, septic system and
environmental laws and regulations) (See also Paragraph 6.)
     1.9    Insuring Party: Lessor is the "Insuring Party". (See also
Paragraph 8.)
     1.10   Real Estate Brokers: (See also Paragraph 15.)
            (a)  Representation: The following real estate brokers (the
"Brokers") and brokerage relationships exist in this transaction (check
applicable boxes):
[ ] __________________________________ represents Lessor exclusively
("Lessor's Broker");
[ ] __________________________________ represents Lessee exclusively
("Lessees's Broker"); or
[x]   ORR COMPANY   represents both Lessor and Lessee ("Dual Agency")
            (b)  Payment to Brokers: Upon execution and delivery of this Lease
by both Parties, Lessor shall pay to the Brokers the brokerage fee agreed to
in a separate written agreement (or if there is no such agreement, the sum of
___________________ or ____% of the total Base Rent for the brokerage services
rendered by the Brokers).
     1.11   Guarantor. The obligations of the Lessee under this Lease are to
be guaranteed by  ______________________________________________("Guarantor").
(See also Paragraph 37)
     1.12   Addenda and Exhibits. Attached hereto is an Addendum or Addenda
consisting of Paragraphs 50 through 52 and Exhibits ____ through ____, all of
which constitute a part of this Lease.

2.   Premises.
     2.1    Letting. Lessor hereby leases to Lessee, and Lessee hereby leases
from Lessor, the Premises, for the term, at the rental, and upon all of the
terms, covenants and conditions set forth in this Lease. Unless otherwise
provided herein, any statement of size set forth in this Lease, or that may
have been used in calculating Rent, is an approximation which the parties
agree is reasonable and any payments based thereon are not subject to revision
whether or not the actual size is more or less.
     2.2    Condition. Lessor shall deliver that portion of the Premises
contained within the building ("Unit") to Lessee broom clean and free of
debris on the Commencement Date or the Early Possession Date, whichever first
occurs ("Start Date"), and, so long as the required service contracts
described in Paragraph 7.1(b) below are obtained by Lessee and in effect
within thirty days following the Start Date, warrants that the existing
electrical, plumbing, fire sprinkler, lighting, heating, ventilating and air
conditioning systems ("HVAC"), loading doors, if any, and all other such
elements in the Unit, other than those constructed by Lessee, shall be in good
operating condition on said date and that the structural elements in the Unit,
other than those constructed by Lessee, shall be in good operating condition
on said date and that the structural elements of the roof, bearing walls and
foundation of the Unit shall be free of material defects. If a non-compliance
with such warranty exists as of the Start Date, or if one of such systems or
elements should malfunction or fail within the appropriate warranty period,
Lessor shall, at Lessor's sole obligation with respect to such matter, except
as otherwise provided in this Lease, promptly after receipt of written notice
from Lessee setting forth with specialty the nature and extent of such
non-compliance, malfunction or failure, rectify same at Lessor's expense. The
warranty periods shall be as follows: (i) 6 months as to the HVAC systems; and
(ii) 30 days as to the remaining systems and other elements of the Unit. If
Lessee does not give Lessor the required notice within the appropriate
warranty period, correction of any such non-compliance, malfunction or failure
shall be the obligation of Lessee at Lessee's sole cost and expense (except
for the repairs to the fire sprinkler systems, roof, foundations, and/or
bearing walls - see Paragraph 7).
     2.3    Compliance. Lessor warrants that the improvements on the Premises
and the Common Areas comply with the building codes that were in effect at the
time that each such improvement, or portion thereof, was constructed, and also
with applicable laws, covenants or restrictions of record, regulations, and
ordinances in effect on the Start Date ("Applicable Requirements"). Said
warranty does not apply to the use to which Lessee will put the Premises or to
any Alterations or Utility Installations (as defined in Paragraph 7.3(a).)
Made or to be made by Lessee. NOTE: Lessee is responsible for determining
whether or not the zoning is appropriate
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for Lessee's intended use, and acknowledges that past uses of the Premises may
no longer be allowed. If the Premises do not comply with said warranty, Lessor
shall, except as otherwise provided, promptly alter receipt of written notice
from Lessee setting forth with specificity the nature ane extent of such
non-compliance, rectify the same at Lessors expense. If Lessee does not give
Lessor written notice of a non-compliance with this warranty within 6 months
following the start Date, correction of that non-compliance shall be the
obligation of the Lessee and Lessee's sole cost and expense. If the Applicable
Requirements are hereafter changed so as to require during the term of this
lease the construction of an addition to or an alteration of the Unit,
Premises and/or building, the remediation of any Hazardous Substance, or the
reinforcement or other physical modification of the Unit, Premises and/or
Building ("Capital Expenditure"), Lessor and Lessee shall allocate the cost of
such work as follows:
            (a) Subject to Paragraph 2.3(c) below, if such Capital
Expenditures are required as a result of the specific and unique use of the
Premises by Lessee as compared with uses by tenants in general, Lessee shall
be fully responsible for the cost thereof, provided however, that if such
Capital Expenditure is required during the last 2 years of this Lease and the
cost thereof exceeds 6 months Base Rent. Lessee may instead terminate this
Lease unless Lessor notifies Lessee, in writing, within 10 days after receipt
of Lessee's termination notice that Lessor has elected to pay the difference
between the actual cost thereof and the amount equal to 6 months Base Rent. If
Lessee elects termination, Lessee shall immediately cease the use of the
Premises which requires such Capital Expenditure and deliver to Lessor written
notice specifying a termination date at least 90 days thereafter. Such
termination date shall, however, in no event be earlier than the last day that
Lessee could legally utilize the Premises without commencing such Capital
Expenditure.
            (b) If such Capital Expenditure is not the result of the specific
and unique use of the Premises by Lessee (such as, governmentally mandated
seismic modifications), then Lessor and Lessee shall allocate the obligation
to pay for the portion of such costs reasonably attributable to the Premises
pursuant to the formula set out in Paragraph 7.1(d); provided, however, that
if such Capital Expenditure is required during the last 2 years of this Lease
or if Lessor reasonably determines that it is not economically feasible to pay
its share hereof, Lessor shall have the option to terminate this Lease upon 90
days prior written notice to Lessee unless Lessee notifies Lessor, in writing,
within 10 days after the receipt of Lessor's termination notice that Lessee
will pay for such Capital Expenditure. If lessor does not elect to terminate,
and fails to tender its share of any such Capital Expenditure, Lessee may
advance such funds and deduct same, with interest, from Rent until Lessor's
share of such costs have been fully paid. Of Lessee is unable to finance
Lessor's share or if the balance of the Rent due and payable for the remainder
of this Lease is not sufficient to fully reimburse Lessee on an offset basis.
Lessee shall have the right to terminate this Lease upon 30 days written
notice to Lessor.
             (c) Notwithstanding the above, the provisions concerning Capital
Expenditures are intended to apply only to non-voluntary, unexpected, and new
Applicable Requirements. If the Capital Expenditures are instead triggered by
Lessee as a result of an actual or proposed change in use, change in intensity
of use, or modification to the Premises then, and in that event, Lessee shall
be fully responsible for the cost thereof, and Lessee shall not have any right
to terminate this Lease.
     2.4    Acknowledgments. Lessee acknowledges that: (a) it has been advised
by Lessor and/ or Brokers to satisfy itself with respect to the condition of
the Premises (including but not limited to the electrical, HVAC and fire
sprinkler systems, security environmental aspects, and compliance with
Applicable requirements and the Americans with Disabilities Act), and their
suitability for Lessee's intended use, (b) Lessee has made such investigation
as it deems necessary with reference to such matters and assumes all
responsibility therefor as the same relate to its occupancy of the Premises,
and (c) neither Lessor, Lessor's agents, nor brokers have made any oral or
written representations or warranties with respect to said matters other than
as set forth in this Lease. I addition, Lessor acknowledges that: (i) Brokers
have made no representations, promises or warranties concerning Lessee's
ability to honor the Lease or suitability to occupy the Premises, and (ii) it
is Lessor's sole responsibility to investigate the financial capability and/or
suitability of all proposed tenants.
     2.5    Lessee as Prior Owner/Occupant. The warranties made by Lessor in
Paragraph 2 shall be of no force or effect if immediately prior to the Start
Date Lessee was the owner or occupant of the Premises. In such event, Lessee
shall be responsible for any necessary corrective work.
     2.6    Vehicle Parking. Lessee shall be entitled to use the number of
Unreserved Parking Spaces and Reserved Parking Spaces specified in Paragraph
1.2(b) on those portions of the Common Ares designated from time to time by
Lessor for parking Lessee shall not use more parking spaces than said number.
Said parking spaces shall be sued for parking by vehicles no larger than
full-sized passenger automobiles or pick-up trucks, herein called "Permitted
Size Vehicles." Lessor may regulate the loading and unloading of vehicles by
adopting Rules and Regulations as provided in Paragraph 2.9. No vehicles other
than Permitted Size Vehicles may be parked in the Common Area without the
prior written permission of Lessor.
            (a)  Lessee shall not permit or allow any vehicles that belong to
or are controlled by Lessee or Lessee's employees, suppliers, shippers,
customers, contractors or invitees to be loaded, unloaded, or parked in areas
other than those designated by Lessor for such activities.
            (b)  Lessee shall not service or store any vehicles in the Common
Areas.
            (c)  If Lessee permits or allows any of the prohibited activities
described in this Paragraph 2.6, 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 Lessor.
     2.7    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 Project and interior utility raceways and installations within the
Unit that are provided and designated by the Lessor from time to time for the
general non-exclusive use of Lessor, Lessee and other tenants of the Project
and their respective employees; suppliers, shippers, customers, contractors
and invitees, including parking areas, loading and unloading areas, trash
areas, roadways, walkways, driveways and landscaped areas.
     2.8    Common Areas - Lessee's Rights. Lessor grants to Lessee, for the
benefit of Lessee and its employees, suppliers, shippers, contractors,
customers and invitees, during the term of this Lease, the non-exclusive right
to use, in common with others entitled to such use, the Common Areas as they
exist from time to time, subject to any rights, powers, and privileges
reserved by Lessor under the terms hereof or under the terms of any rules and
regulations or restrictions governing the use of the Project. Under no
ci8rcumstances shall the right herein granted to use the Common Areas be
deemed to include the right to store any property, temporarily or permanently,
in the Common areas. Any such storage shall be permitted only by the prior
written consent of Lessor or Lessor's designated agent, which consent may be
revoked at any time. In the event that any unauthorized storage shall occur,
then Lessor shall have the right, without notice, in addition to such other
rights and remedies that it may have, to remove the property and charge the
cost to Lessee, which cost shall be immediately payable upon demand by Lessor.
     2.9    Common Areas - Rules and Regulations. 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
establish, modify, amend, and enforce reasonable rules and regulations ("Rules
and Regulations") for the management, safety , care, and cleanliness of the
grounds, the parking and unloading of vehicles and the preservation of good
order, as well as for the convenience of other occupants or tenants of the
Building and the Project and their invitees. Lessee agrees to abide by and
conform to all such Rules and Regulations, and to cause its employees,
suppliers, shippers, customers, contractors and invitees to so abide and
conform. Lessor shall not be responsible to Lessee for the non-compliance with
said Rules and Regulations by other tenants of the Project.
     2.10    Common Areas - Changes. Lessor shall have the right, in Lessor's
sole discretion, from time to time:
            (a)  To make changes to the common Areas, including, without
limitation, changes in the location, size, shape and number of driveways,
entrances, parking spaces, loading and unloading areas, ingress, egress,
direction of traffic, landscaped areas, walkways and utility raceways;
            (b)  To close temporarily any of the Common Areas for maintenance
purposes so long as reasonable access to the Premises remains available;
            (c)  To designate other land outside the boundaries of the Project
to be a part of the Common Areas;
            (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 Project, or any portion thereof;
and

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

3.   Term.
     3.1    Term, the Commencement Date, Expiration Date and Original Term of
this Lease are as specified in Paragraph 1.3.
     3.2    Early Possession. If lessee totally or partially occupies the
Premises prior to the Commencement Date, the obligation to bay Blase Rent
shall be abated for the period of such early possession. All other terms of
this Lease (including but not limited to the obligations to pay Lessee's Share
of Common Area Operating Expenses, Real Property Taxes and insurance premiums
and to maintain the Premises) shall, however be in effect during such period.
Any such early possession shall not affect the Expiration Date.
     3.3    Delay in Possession. Lessor agrees to use its best commercially
reasonable efforts to deliver possession of the Premises to Lessee by the
Commencement Date. If despite said efforts, Lessor is unable to deliver
possession as agrees. Lessor shall not be subject to any liability therefor,
not shall failure effect the validity of this Lease. Lessee shall not,
however, be obligated to pay Rent or perform its other obligations until it
receives possession of the Premises. If possession is not delivered within 60
days after the Commencement Date, Lessee may, at its option, by notice in
writing within 10 days after the end of such 60 day period, cancel this Lease
in which event the Parties shall be discharged from all obligations hereunder.
If such written notice is not received by Lessor by the Start Date and Lessee
does not terminate this Lease, as aforesaid, any period of rent abatement that
Lessee would otherwise have enjoyed shall run from the date of delivery of
possession and continue for a period equal to what Lessee would otherwise have
enjoyed under the terms hereof, but minus any days of delay caused by the acts
or omissions of Lessee. If possession of the Premises is not delivered with in
4 months after the Commencement Date, this Lease shall terminate unless other
agreements are reached between Lessor and Lessee, in writing.
     3.4   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 8.5). Pending delivery of such
evidence, Lessee shall be required to perform all of its obligations under
this Lease from and after the Start Date, including the payment of Rent,
notwithstanding Lessors election to withhold possession pending receipt of
such evidences of insurance. Further, if Lessee is required to perform any
other conditions prior to or concurrent with the Start Date, the Start Date
shall occur but Lessor may elect to withhold possession until such conditions
are satisfied.

4.   Rent.
     4.1    Rent Defined. All monetary obligations of Lessee to Lessor under
the terms of this Lease (except for the Security Deposit) are deemed to be
rent ("Rent").
     4.2    Common Area Operating Expenses. Lessee shall pay to Lessor during
the term hereof, in addition to the Base Rent Lessee's Share (as specified in
Paragraph 1.6.) Of all Common Area Operating Expenses, as hereinafter defined,
during each calendar year of the term of this Lease, in accordance with the
following provisions:
            (a)  "Common Area Operating Expenses" are defined, for purposes of
this Lease, as all costs incurred by Lessor relating to the ownership and
operation of the Project, including, but not limited to, the following:
                 (i)   The operation, repair and maintenance, in neat, clan,
good order and condition, but not the replacement (see subparagraph (e)), of
the following:
                       (aa) The Common Areas and Common Area improvements,
including parking areas, loading and unloading areas, trash areas, roadways,
parkways, walkways, driveways, landscaped areas, bumpers, irrigation systems,
Common Area lighting facilities, fences and gates, elevators, roofs and roof
drainage systems.
                       (bb)  Exterior signs and any tenant directories.
                       (cc)  Any fire sprinkler systems.
                 (ii)  The operation, repair and maintenance, in neat, clean,
good order and condition, but not the replacement (see subparagraph (e)). of
the following:
                 (iii) Trash disposal, pest control services, property
management, security services, and the costs of any environmental inspections.
                 (iv)  Reserves set aside for maintenance and repair of Common
Areas.
                 (v)   Any increase above the Base Real Property Taxes (as
defined in Paragraph 10).
                 (vi)  Any "Insurance Cost Increase" (as defined in Paragraph
8).
                 (vii) Any deductible portion of an insured loss concerning
the Building or the Common Areas.
                 (viii) The cost of any Capital Expenditure to the Building or
the Project not covered under the provisions of Paragraph 2.3 provided;
however, that Lessor shall allocate the cost of any such Capital Expenditure
over a 12 year period and Lessee shall not be required to pay more than
Lessee's Share of 1/144th of the cost of such Capital Expenditure in any given
month.
                 (ix)  Any other services to be provided by Lessor that are
stated elsewhere in this Lease to be a Common Area Operating Expense.
            (b)  Any Common Area Operating Expenses and Real Property Taxes
that are specifically attributable to the Unit, the building or to any other
building in the Project or to the operation, repair and maintenance thereof,
shall be allocated entirely to such Unit, Building, or other building.
However, any Common Area Operating Expenses and real Property Taxes that are
not specifically attributable to the Building or to any other building or to
the operation, repair and maintenance thereof, shall be equitably allocated by
Lessor to all buildings in the Project.
            (c)  The inclusion of the improvements, facilities and services
set forth in Subparagraph 4.2(a) shall not be deemed to impose an obligation
upon Lessor to either have said improvements or facilities or to provide those
services unless the Project already has the same, Lessor already provides the
services, or Lessor has agreed elsewhere in this Lease to provide the same or
some of them.
            (d)  Lessee's Share of Common Area Operating Expenses shall be
payable by Lessee within 10 days after a reasonably detailed statement of
actual expenses is presented to Lessee. At Lessor's option, however, an amount
may be estimated by Lessor from time to time of Lessee's Share of annual
Common Area Operating Expenses and the same shall be payable monthly or
quarterly, as Lessor shall designate, during each 12 month period of the Lease
term, on the same day as the Base Rent is due hereunder. Lessor shall deliver
to Lessee within 60 days after the expiration of each calendar year a
reasonably detailed statement showing Lessee's Share of the actual Common Area
Operating Expenses incurred during the preceding year. If Lessee's payments
under this Paragraph 4.2(d) during the preceding year exceed Lessee's Share as
indicated on such statement, Lessor shall be credited the amount of such
over-payment against Lessee' Share of Common Area Operating Expenses next
becoming due. If Lessee's payments under this Paragraph 4.2(d) during the
preceding year were less than Lessee's Share as indicated on such statement,
Lessee shall pay to Lessor the amount of the deficiency within 10 days after
delivery by Lessor to Lessee of the statement.
            (e)   When a capital component such as the roof, foundations,
exterior walls or a Common Area capital improvement, such as the parking lot
paving, elevators, fences, etc. requires replacement, rather than repair or
maintenance, Lessor shall, at Lessor's expense. Be responsible for such
replacement. Such expenses and/or costs are not Common Area Operating
Expenses.
     4.3    Payment. Lessee shall cause payment of Rent to be received by
Lessor in lawful money of the United States, without offset or deduction
(except as specifically permitted in this Lease), on or before the day on
which it is due. Rent for any period during the term hereof which is for less
than one full calendar month shall be prorated based upon the actual number of
days of said month. Payment of Rent shall be made to Lessor at its address
stated herein or to such other persons or place as Lessor may from time to
time designate in writing. Acceptance of a payment which is less than the
amount then due shall not be a waiver of Lessor's rights to the balance of
such Rent, regardless of Lessor's endorsement of any check so stating. In the
event that any check, draft, or other instrument of payment being given by
Lessee to Lessor is dishonored for any reason, Lessee agrees to pay Lessor the
sum of $25.

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 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 the Security Deposit, Lessee shall within 10 days after
written request therefor deposit monies with Lessor sufficient to restore.

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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 monies with Lessor so that the total
amount of the security Deposit 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 Agreed Use 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 Lessors 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 such change in financial condition. Lessor shall not be
required to keep the Security deposit separate from its general accounts.
Within 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
30 days after the Premises have been vacated pursuant to Paragraph 7.4(c)
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 paid by
Lessee under this Lease.

6.   Use.
     6.1    Use. Lessee shall use and occupy the Premises only for the Agreed
Use, or any other legal use which is reasonably comparable thereto, and for no
other purpose. Lessee shall not use or permit the use of the Premises in a
manner that is unlawful, creates damage, waste or a nuisance, or that disturbs
occupants of or causes damage to neighboring premises or properties. Lessor
shall not unreasonably withhold or delay its consent to any written request
for a modification of the agreed 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, and/or is not significantly more burdensome to the
Premises. If Lessor elects to withhold consent, Lessor shall within 7 days
after such request give written notification of same, which  notice shall
include an explanation of Lessor's objections to the change in the Agreed Use.
     6.2    Hazardous Substances.
            (a)  Reportable Uses Require Consent. 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, petroleum, 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
Lessee's expense) with all Applicable requirements. "Reportable Use" shall
mean (i) the 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 required to be filed with, any
governmental authority, and/or (iii) 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 normal
course of the Agreed Use, 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
damage or expose Lessor to any liability therefor. In addition, Lessor may
condition its consent to any Reportable Use upon receiving such additional
assurances as Lessor reasonably deems necessary to protect itself, the public,
the Premises and/or the environment against damage, contamination injury
and/or 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 Substance.
            (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 contamination 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 lessor, 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 involving any Hazardous Substance brought
onto the Premises by or for Lessee, or any third party (provided, however,
that Lessee shall have o liability under this Lease with respect to
underground migration of any Hazardous Substance under the Premises from areas
outside of the Project). 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 obligations under this Lease with respect to Hazardous Substances, unless
specifically so agreed by Lessor and Lessee shall release Lessee from its
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 and all environmental damages, including the
cost of remediation, which existed as a result of Hazardous Substances on the
Premises prior to the Start Date or which are caused by the gross negligence
or willful misconduct of Lessor, its agents or employees. Lessor's
obligations, as 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 Start 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 carry out Lessor's investigative and remedial
responsibilities.
            (g) Lessor Termination Option. If a Hazardous Substance Condition
(see Paragraph 9.1(e)) 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 this Lease shall continue in full force and effect, but subject to
Lessor's rights under Paragraph 6.2(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 12 times then the monthly
Base Rent of $100,000, whichever is greater, give written notice to Lessee,
with 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 60 days following the date of such notice. In the event Lessor
elects to give a termination notice, Lessee may, within 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 12 times the then monthly Base Rent or $100,000,
whichever is greater. Lessee shall provide Lessor with said funds or
satisfactory assurance thereof with 30 days following 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 on Lessors notice of termination.

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     6.3    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 now in effect or become effective after the
Start Date. Lessee shall, within 10 days alter 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, notify
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.
     6.4    Inspection: Compliance. Lessor and Lessor's "Lender" (as defined
in Paragraph 30) and 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 cost 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 inspection, so long as such
inspection is reasonably related to the violation or contamination.

7.   Maintenance; Repairs; Utility Installations; Trade Fixtures and
Alterations.
     7.1    Lessee's Obligations.
            (a) In General. Subject to the provisions of Paragraph 2.2
(Condition), 2.3 (Compliance, 6.3 (Lessee's Compliance with Applicable
requirements), 7.2 (Lessor's Obligations) , 9 (Damage or Destruction and 14
(Condemnation), Lessee shall, at Lessee's sole expense, keep the Premises,
Utility Installations (intended for Lessee's exclusive use, no matter where
located, and Alterations in good order, condition and repair (whether or not
the portion of the Premises requiring repairs, or the means of repairing the
same are reasonably or readily accessible to Lessee, and whether or not the
need for such repairs occurs as a result of Lessee's use, any prior use, the
elements or the age of such portion of the Premises), including, but not
limited to, all equipment or facilities, such as plumbing, HVAC equipment,
electrical, lighting facilities, boilers, pressure vessels, fixtures, interior
walls, interior surfaces of exterior walls, ceilings, floors, windows, doors,
plate glass and skylights but excluding any items which are the responsibility
of Lessor pursuant to Paragraph 7.2. Lessee, in keeping the Premises in good
order, condition and repair, shall exercise and perform good maintenance
practices, specifically including the procurement and maintenance of the
service contracts required by Paragraph 7.1(b) below. Lessee's obligations
shall include restorations, replacements or renewals when necessary to keep
the Premises and all improvements thereon or a part thereof in good order,
condition and state of repair.
            (b) Service Contracts. Lessee shall, at Lessee's sole expense,
procure and maintain contracts, with copies to Lessor, in customary form and
substance for, and with contractors specializing and experienced in the
maintenance of the following equipment and improvements, if any, if and when
installed on the Premises: (i) HVAC equipment, (ii) boiler and pressure
vessels, (iii) (illegible), and (iv) any other equipment, if reasonably
required by Lessor. However, Lessor reserves the right, upon notice to Lessee,
to procure and maintain any or all such service contracts, and if Lessor so
elects, Lessee shall reimburse Lessor, upon demand, for the cost thereof.
            (c) Failure to Perform. If Lessee fails to perform Lessee's
obligations under this Paragraph 7.1, Lessor may enter upon the Premises after
10 days' prior written notice to Lessee (except in the case of an emergency,
in which case no notice shall be required), perform such obligations on
Lessee's behalf, and put the Premises in good order, condition and repair, and
Lessee shall promptly reimburse Lessor for the cost thereof.
            (d) Replacement. Subject to Lessee's indemnification of Lessor as
set forth in Paragraph 8.7 below, and without relieving Lessor liability
resulting from Lessee's failure to exercise and perform good maintenance
practices, if an item described in Paragraph 7.4(b) cannot be repaired other
than at a cost which is in excess of 50% of the cost of replacing such item,
then such item shall be replaced by Lessor, and the cost thereof shall be
prorated between the Parties and Lessee shall only be obligated to pay, each
month during the remainder of the term of this Lease, on the date on which
Base Rent is due, an amount equal to the product of multiplying the cost of
such replacement by a fraction, the numerator of which is one, and the
denominator of which is 144 (ie. 1/144th of the cost per month). Lessee shall
pay interest on the unamortized balance at a rate that is commercially
reasonable in the judgement of Lessor's accountants. Lessee may, however,
repay its obligation at any time.
     7.2    Lessor's Obligations. Subject to the provisions of Paragraphs 2.2
(Condition), 2.3 (Compliance), 4.2 (Common Area Operating Expenses), 6. (Use,
7.1 (Lessee's Obligations), 9.(Damage or Destruction) and 14.(Condemnation),
Lessor, subject to reimbursement pursuant to Paragraph 4.2, shall keep in good
order, condition and repair the foundations, exterior walls, structural
condition of interior bearing walls, exterior roof, fire sprinkler system,
Common Area fire alarm and/or smoke detection systems, fire hydrants, parking
lots, walkways, parkways, driveways, landscaping, fences, signs and utility
systems serving the Common Areas and all parts thereof, as well as providing
the services for which there is a common Area Operating Expense pursuant to
Paragraph 4.2. Lessor shall not be obligated to paint the exterior or interior
surfaces of exterior walls nor shall Lessor be obligated to maintain, repair
or replace windows, doors or plate glass of the Premises. Lessee expressly
waives the benefit of any statute now or hereafter in effect to the extent it
is inconsistent with the terms of this Lease.
     7.3    Utility Installations; Trade Fixtures; Alterations.
            (a) Definitions. The term "Utility Installations" refers to all
floor and window coverings, air lines, power panels, electrical distribution,
security and fire protection systems, communication systems, lighting
fixtures, HVAC equipment, plumbing, and fencing to or on the Premises. The
term "Trade Fixtures" shall mean Lessee's machinery and equipment that can be
removed without doing material damage to the Premises. The term "Alterations"
shall mean any modification of the improvements, other than Utility
Installations or Trade Fixtures, whether by addition or deletion. "Lessee
Owned Alterations and/or Utility Installations" are defined as Alterations
and/or Utility Installations made by Lessee that are not yet owned by Lessor
pursuant to Paragraph 7.4(a).
            (b) Consent. Lessee shall not make any alterations or Utility
Installations to the Premises without Lessor's prior written consent. Lessee
may, however, make non-structural Utility Installations to the interior of the
Premises (excluding the roof) without such consent but upon notice to Lessor,
as long as they are not visible from the outside, do not involve puncturing,
relocating or removing the roof or any existing walls, and the cumulative cost
thereof during this Lease as extended does not exceed a sum equal to 3
months's Base Rent in the aggregate or a sum equal to one month's Base Rent in
any one year. Notwithstanding the foregoing Lessee shall not make or permit
any roof penetrations and/or install anything on the roof without the prior
written approval of Lessor. Lessor may, as a precondition of granting such
approval, require Lessee to utilize a contractor chosen and/or approved by
Lessor. Any Alterations or Utility Installations that Lessee shall desire to
make and which require the consent of the Lessor shall be presented to Lessor
in written form with detailed plans. Consent shall be deemed conditioned upon
Lessee's: (i) acquiring all applicable governmental permits, (ii) furnishing
Lessor with copies of both the permits and the plans and specifications prior
to commencement of the work, and (iii) compliance with all conditions of said
permits and other Applicable Requirements in a prompt and expeditious manner.
Any Alterations or Utility Installations shall be performed in a workmanlike
manner with good and sufficient materials. Lessee shall promptly upon
completion furnish Lessor with as-built plans and specifications. For work
which costs and amount in excess of one month's Base Rent, Lessor may
condition its consent upon Lessee providing a lien and completion bond in an
amount in excess of one month's Base Rent. Lessor may condition its consent
upon Lessee providing a lien and completion bond in an amount equal to 150% of
the estimated cost of such Alteration or Utility Installation and/or upon
Lessee's posting an additional Security Deposit with Lessor.
            (c) Indemnification. Lessee shall pay, when due, all claims for
labor or materials furnished or alleged to have been furnished to or for
Lessee at or for use on the Premises, which claims are or may be secured by
any mechanic's or materialmen's lien against the Premises or any interest
therein. Lessee shall give Lessor not less than 10 days notice prior to the
commencement of any work in, on or about the Premises, and Lessor shall have
the right to post notices of non-responsibility. If Lessee shall contest the
validity of any such lien, claim or demand, then Lessee shall, at its sole
expense defend and protect itself, Lessor and the Premises against the same
and shall pay and satisfy any such adverse judgment that may be rendered
thereon before the enforcement thereof. If lessor shall require, Lessee shall
furnish a surety bond in an amount equal to 150% of the amount of such
contested lien, claim or demand, indemnifying Lessor against liability for the
same. If lessor elects to participate in any such action, Lessee shall pay
Lessor's attorneys' fees and costs.

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     7.4    Ownership; Removal; Surrender; and Restoration.
            (a) Ownership. Subject to Lessor's right to require removal or
elect ownership as hereinafter provided, all Alterations and Utility
Installations made by Lessee shall be the property of Lessee, but considered a
part of the Premises, Lessor may, at any time, elect in writing to be the
owner of all or any specified part of the Lessee Owned Alterations and Utility
Installations. Unless otherwise instructed per paragraph 7.4(b) hereof, all
Lessee Owned Alterations and Utility Installations shall, at the expiration or
termination of this Lease, become the property of Lessor and be surrendered by
Lessee with the Premises.
            (b) Removal. By delivery to Lessee of written notice from Lessor
not earlier than 90 and not later than 30 days prior to the end of the term of
this Lease, Lessor may require that any or all Lessee Owned Alterations or
Utility Installations be removed by the expiration or termination of this
Lease.  Lessor may require the removal at any time of all or any part of any
Lessee Owned Alterations, or Utility Installations made without the required
consent.
            (c) Surrender; Restoration. Lessee shall surrender the Premises by
the Expiration Date or any earlier termination date with all of the
improvements, parts and surfaces thereof broom clean and free of debris, and
in good operating order, condition and state of repair, ordinary wear and tear
excepted. "Ordinary wear and tear" shall not include any damage or
deterioration that would have been prevented by good maintenance practice.
Notwithstanding the foregoing, if this Lease is for 12 months or less, then
Lessee shall surrender the Premises in the same condition as delivered to
Lessee on the Start Date with NO allowance for ordinary wear and tear. Lessee
shall repair any damage occasioned by the installation, maintenance or removal
of Trade Fixtures, Lessee owned Alterations and/or Utility Installations,
furnishings and equipment as well as the removal of any storage tank installed
by or for Lessee. Lessee shall also completely remove from the Premises any
and all Hazardous Substances brought onto the Premises by or for Lessee, or
any third party (except Hazardous Substances which were deposited via
underground migration from areas outside of the Project) even if such removal
would require Lessee to perform or pay for work that exceeds statutory
requirements. Trade Fixtures shall remain the property of Lessee and shall be
removed by Lessee. The failure by Lessee to timely vacate the Premises
pursuant to this Paragraph 7.4(c) without the express written consent of
Lessor shall constitute a holdover under the provisions of Paragraph 26 below.

8.   Insurance; Indemnify.
     8.1    Payment of Premium Increases.
            (a) As used herein, the term "Insurance Cost Increase" is defined
as any increase in the actual cost of the insurance applicable to the building
and/or the Project and required to be carried by Lessor, pursuant to
Paragraphs 8.2(b), 8.2(a) and 8.3(b) ("required Insurance"), over and above
the Base Premium, as hereinafter defined, calculated on an annual basis.
Insurance Cost Increase shall include, but not be limited to, requirements of
the holder of a mortgage or deed of trust covering the Premises, building
and/or Project, increased valuation of the Premises, Building and/or Project,
and/or a general premium rate increase. The term Insurance Cost Increase shall
not, however, include any premium increases resulting from the nature of the
occupancy of any other tenant of the Building. If the parties insert a dollar
amount in Paragraph 1.9, such amount shall be considered the "Base Premium."
The Base Premium shall be the annual premium applicable to the 12 month period
immediately preceding the Start Date. If however, the Project was not insured
for the entirety of such 12 month period, then the Base Premium shall be the
lowest annual premium reasonably obtainable for the Required Insurance as of
the Start Date, assuring the most nominal use possible of the Building. In any
event, however, shall Lessee be responsible for any portion of the premium
cost attributable to liability insurance coverage in excess of $2,000,000
procured under Paragraph 8.2(b).
            (b) Lessee shall pay any Insurance Cost Increase to Lessor
pursuant to Paragraph 4.2. Premiums for policy periods commencing prior to, or
extending beyond, the term of this Lease shall be prorated to coincide with
the corresponding Start Date or Expiration Date.
     8.2    Liability Insurance.
            (a) Carried by Lessee. Lessee shall obtain and keep in force a
Commercial General Liability policy of insurance protecting Lessee and Lessor
as an additional insured 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 $1,000,000 per occurrence with an annual aggregate of not less
than $2,000,000, and "Additional Insured-Managers or Lessors of Premises
Endorsement" and contain the "Amendment of the Pollution Exclusion
Endorsement" for damage caused by heat, smoke or fumes from a hostile fire.
The policy shall not contain any intra-insured exclusions as between insured
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 similarly insurance carried by Lessor, whose
insurance shall be considered excess insurance only.
            (b) Carried by Lessor. Lessor shall maintain liability insurance
as described in Paragraph 8.2(a), in addition to, and not in lieu of, the
insurance required to be maintained by Lessee. Lessee shall not be named as an
additional insured therein.
     8.3    Property Insurance - Building, Improvements and Rental Value.
            (a) Building and Improvements. Lessor shall obtain and keep in
force a policy or policies of insurance in the name of Lessor, with loss
payable to Lessor, any ground-lessor, and to any Lender insuring loss or
damage to the Premises. The amount of such insurance shall be equal to the
full replacement cost of the Premises, as the same shall exist from time to
time, or the amount required by any Lender, but in no event more than the
commercially reasonable and available insurable value thereof. Lessee Owned
Alterations and Utility Installations, Trade Fixtures, and Lessee's personal
property shall be insured by Lessee under Paragraph 8.4. If the coverage is
available and commercially appropriate, such policy or policies shall insure
against all risks of direct physical loss or damage (except the perils of
flood and/or earthquake unless required by a Lender), including coverage for
debris removal and the enforcement of any Applicable Requirements requiring
the upgrading, demolition, reconstruction or replacement of any portion of the
Premises as the result of a covered loss. Said policy or policies shall also
contain an agreed valuation provision in lieu of any coinsurance clause,
waiver of subrogation, and inflation guard protection causing an increase in
the annual property insurance coverage amount by a factor of not less than the
adjusted U.S. Department of Labor Consumer Price Index for All Urban Consumers
for the city nearest to where the Premises are located. If such insurance
coverage has a deductible clause, the deductible amount shall not exceed
$1,000 per occurrence.
            (b) Rental Value. Lessor shall also obtain and keep in force a
policy or policies in the name of Lessor with loss payable to Lessor and any
Lender, insuring the loss of the full Rent for one year with an extended
period of indemnity for an additional 180 days ("Rental Value Insurance").
Said insurance shall contain an agreed valuation provision in lieu of any
coinsurance clause, and the amount of coverage shall be adjusted annually to
reflect the projected Rent otherwise payable by Lessee, for the next 12 month
period.
            (c) Adjacent Premises. Lessee shall pay for any increase in the
premiums for the property insurance of the Building and for the Common Areas
or other buildings in the Project if said increase is caused by Lessee's acts,
omissions, use or occupancy of the Premises.
            (d) Lessee's Improvements. Since Lessor is the Insuring Party,
Lessor shall not be required to insure Lessee Owned Alterations and Utility
Installations unless the item in question has become the property of Lessor
under the terms of this Lease.
     8.4    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 (illegible) 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.

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     8.5    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
Policyholders Rating" of at least B+, V, as set forth 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 after 30 days
prior written notice to Lessor. Lessee shall, at least 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 other 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.
     8.6    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 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 therein. The effect of such releases and waivers is not
limited by the amount of insurance carried or required, or by any deductibles
applicable thereto. 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.
     8.7    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, judgements, 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 satisfactory 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.
     8.8    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 operations of the Building, 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 nor from the failure of Lessor to
enforce the provisions of any other lease in the Project. 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 Partial Damage" shall mean damage or destruction to
the improvements on the Premises, other than Lessee Owned Alterations and
Utility Installations, which can reasonably be repaired in 3 months or less
from the date of the damage or destruction and the cost thereof does not
exceed a sum equal to 6 month's Base rent. Lessor shall notify Lessee in
writing within 30 days from the date of the damage or destruction as to
whether or not the damage is Partial or Total.
            (b) "Premises Total destruction" shall mean damage or destruction
to the improvements on the Premises, other than Lessee Owned Alterations and
Utility Installations and Trade Fixtures, which cannot reasonably be repaired
in 3 months or less from the date of the damage or destruction and/or the cost
thereof exceeds a sum equal to 6 month's Base Rent. Lessor shall notify Lessee
in writing within 30 days from the date of the damage or destruction as to
whether or not the damage is Partial or Total.
            (c) "Insured Loss" shall mean damage or destruction to
improvements on the Premises, other than Lessee owned Alterations and Utility
Installations and Trade Fixtures, which was caused by an event required to be
covered by the insurance described in Paragraph 8.3(a), irrespective of any
deductible amounts or coverage limits involved.
            (d) "Replacement Cost" shall mean the cost to repair or rebuild
the improvements owned by Lessor at the time of the occurrence to their
condition existing immediately prior thereto, including demolition, debris
removal and upgrading required by the operation of Applicable Requirements,
and without deduction for depreciation.
            (e) "Hazardous Substance Condition" shall mean the occurrence or
discovery of a condition involving the presence of, or contamination by, a
Hazardous substance as defined in Paragraph 6.2(a), in, on, or under the
Premises.
     9.2    Partial Damage - Insured Loss. If a Premises Partial Damage that
is an Insured Loss occurs, then Lessor shall, at Lessor's expense, repair such
damage (but not Lessee's Trade Fixtures or Lessee Owned Alterations and
Utility Installations) as soon as reasonably possible and this Lease shall
continue in full force and effect; provided, however, that Lessee shall, at
Lessor's election make the repair of any damage or destruction the total cost
to repair of which is $5,000 or less, and, in such event, Lessor shall make
any applicable insurance proceeds available to Lessee on a reasonable basis
for that purpose. Notwithstanding the foregoing, if the required insurance was
not in force or the insurance proceeds are not sufficient to effect such
repair, the Insuring Party shall promptly contribute the shortage in proceeds
as and when required to complete said repairs. In the event, however, such
shortage was due to the fact that, by reason of the unique nature of the
improvements, full replacement cost insurance coverage was not commercially
reasonable and available, Lessor shall have no obligation to pay for the
shortage in insurance proceeds or to fully restore the unique aspects of the
Premises unless Lessee provides Lessor with the funds to cover same, or
adequate assurance thereof, within 10 days following receipt of written notice
of such shortage and request therefor. If Lessor receives said funds or
adequate assurance thereof within said 10 day period, the party responsible
for making the repairs shall complete them as soon as reasonably possible and
this shortage in proceeds, in which case this Lease shall remain in full force
and effect, or (ii) have this Lease terminate 30 days thereafter Lessee shall
not be entitled to reimbursement of any funds contributed by Lessee to repair
any such damage or destruction. Premises Partial Damage due to flood or
earthquake shall be subject to Paragraph 9.3, notwithstanding that there may
be some insurance coverage, but the net proceeds of any such insurance shall
be made available for the repairs if made by either party.
     9.3    Partial damage - Uninsured Loss. If a Premises Partial Damage that
is not an Insured Loss occurs, unless caused by a negligent or willful act of
Lessee (in which event Lessee shall make the repairs at Lessee's expense),
Lessor may either: (i) repair such damage as soon as reasonably possible at
Lessor's expense, in which event this Lease shall continue in full force and
effect, or (ii) terminate this Lease by giving written notice to Lessee within
30 days after receipt by Lessor of knowledge of the occurrence of such damage.
Such termination shall be effective 60 days following the date of such notice.
In the event Lessor elects to terminate this Lease, Lessee shall have the
right within 10 days after receipt of the termination notice to give written
notice to Lessor of Lessee's commitment to pay for the repair of such damage
without reimbursement from Lessor. Lessee shall provide Lessor with said funds
or satisfactory assurance thereof within 30 days after making such commitment.
In such event this Lease shall continue in full force and effect, and Lessor
shall proceed to make such repairs as soon as reasonably possible after the
required funds are available. If Lessee does not make the required commitment,
this Lease shall terminate as of the date specified in the termination notice.
     9.4    Total Destruction. Notwithstanding any other provision hereof, if
a Premises Total Destruction occurs, this Lease shall terminate 60 days
following such Destruction. If the damage or destruction was caused by the
gross negligence or willful misconduct of Lessee, Lessor shall proceed to make
such repairs as soon as reasonably possible after the required funds are
available. If Lessee does not make the required commitment, this Lease shall
terminate as of the date specified in the termination notice.
     9.5    Damage Near End of Term. If at any time during the last 6 months
of this Lease there is damage for which the cost to repair exceeds one month's
Base Rent, whether or not an Insured Loss, Lessor may terminate this Lease
effective 60 days following the date of occurrence of such damage by giving a
written termination notice to Lessee with 30 days after the date of occurrence
of such damage. Notwithstanding the foregoing, if Lessee at that time has an
exercisable option to extend this Lease or to purchase the Premises, then
Lessee may preserve this Lease by, (a) exercising such option and (b)
providing Lessor with any shortage in insurance proceeds for adequate
assurance thereof) needed to make the repairs on or before the earlier of (I)
the due date which is 10 days after Lessee's receipt of Lessor's written
notice purporting to terminate this Lease, or (ii) the day prior to the date
upon which such option

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expires. If Lessee duly exercises such option during such period and provides
Lessor with funds (or adequate assurance thereof) to cover any shortage in
insurance proceeds, Lessor shall, at Lessor's commercially reasonable expense,
repair such damage as soon as reasonably possible and this Lease shall
continue in full force and effect. If Lessee fails to exercise such option and
provide such funds or assurance during such period, then this Lease shall
terminate on the date specified in the termination notice and Lessee's option
shall be extinguished.
     9.6    Abatement of Rent; Lessee's Remedies.
            (a) Abatement. In the event of Premises Partial Damage or Premises
Total Destruction or a Hazardous Substance Condition for which Lessee is not
responsible under this Lease, the Rent payable by Lessee for the period
required for the repair, remediation or restoration of such damage shall be
abated in proportion to the degree to which Lessee's use of the Premises is
impaired but not to exceed the process received from the Rental Value
Insurance. All other obligations of Lessee hereunder shall be performed by
Lessee, an Lessor shall have no liability for any such damage, destruction,
remediation, repair or restoration except as provided herein.
            (b) Remedies. IF Lessor shall be obligated to repair or restore
the Premises and does not commence, in a substantial and meaningful way, such
repair or restoration within 90 days after such obligation shall accrue,
Lessee may, at any time prior to the commencement of such repair or
restoration, give written notice to Lessor and to any Lenders of which Lessee
has actual notice, of Lessee's election to terminate this Lease on a date not
less than 60 days following the giving of such notice. If Lessee gives such
notice and such repair or restoration is not commenced with in 30 days
thereafter, this Lease shall terminate as of the date specified in said
notice. If the repair or restoration is commenced within such 30 days
thereafter, this Lease shall terminate as of the date specified in said
notice. If the repair ro restoration is commenced within such 30 days , this
Lease shall continue in full force and effect. "Commence shall mean either the
unconditional authorization of the preparation of the required plans, or the
beginning of the actual work on the Premises, whichever first occurs.
     9.7    Termination; Advance Payments. Upon termination of this Lease
pursuant to Paragraph 6.2(g) or Paragraph 9, an equitable adjustment shall be
made concerning advance Base Rent and any other advance payments made by
Lessee to Lessor. Lessor shall, in addition, return to Lessee so much of
Lessee's Security Deposit as has not been, or is not then required to be, used
by Lessor.
     9.8    Waive Statues. Lessor and Lessee agree that the terms of this
Lease shall govern the effect of any damage to or destruction of the Premises
with respect to the termination of this Lease and hereby waive the provisions
of any present or future statute to the extent inconsistent herewith.

10.  Real Property Taxes.
     10.1   Definitions.
            (a) "Real Property Taxes." As used herein, the term "Real Property
Taxes" shall include any form of assessment; real estate, general, special ,
ordinary or extraordinary, or rental levy or tax (other than inheritance,
personal income or estate taxes) improvement bond; and/or license fee imposed
upon or levied against any legal or equitable interest of Lessor in the
Project. Lessor's right to other income therefrom, and/or Lessor's business of
leasing, by any authority having the direct or indirect power to tax and where
the funds are generated with reference to the Project address and where the
proceeds so generated are to be applied by the city, county or other local
taxing authority of a jurisdiction within which the Project is located. The
term "real Property Taxes" shall also include any tax, fee, levy, assessment
or charge, or any increase therein, imposed by reason of events occurring
during the term of this Lease, including but not limited to, a change in the
ownership of the Project or any portion thereof or a change in the
improvements thereon.
            (b) "Base Real Property Taxes" As used herein, the term "Base Real
Property Taxes" shall be the amount of Real Property Taxes, which are assessed
against the Premises, Building, Project or Common Areas in the calendar year
during which the Lease is executed. In calculating Real Property Taxes for any
calendar year, the Real Property Taxes for any real estate tax year shall be
included in the calculation of Real Property Taxes for such calendar year
based upon the number of days which such calendar year and tax year have in
common.
     10.2   Payment of Taxes. Lessor shall pay the real Property Taxes
applicable to the Project, and except as otherwise provided in Paragraph 10.3,
any increases in such amounts over the Base real Property Taxes shall be
included in the calculation of Common Area Operating Expenses in accordance
with the provisions of Paragraph 4.2.
     10.3   Additional Improvements. Common Area Operating Expenses shall not
include Real Property Taxes specified in the tax assessor's records and work
sheets as being caused by additional improvements placed upon the Project by
other lessees or by tax assessor's records and work sheets as being caused by
additional improvements placed upon the Project by other lessees or by Lessor
for the exclusive enjoyment of such other lessees. Notwithstanding Paragraph
10.2 hereof, Lessee shall, however, pay to Lessor at the time Common Area
Operating expenses are payable under Paragraph 4.2, the entirety of any
increase in Real Property Taxes, if assessed solely by reason of Alterations,
Trade Fixtures or Utility Installations placed upon the Premises by Lessee or
at Lessee's request.
     10.4   Joint Assessment. If the Building is not separately assessed, Real
Property Taxes allocated to the Building shall be an equitable proportion of
the Real Property Taxes for all of the land and improvements included within
the tax parcel assessed, such proportion to e determined by Lessor from the
respective valuations assigned in the assessor's work sheets or such other
information as may be reasonably available. Lessor's reasonable determination
thereof, in good faith, shall be conclusive.
     10.5   Personal Property Taxes. Lessee shall pay prior to delinquency all
taxes assessed against and levied upon Lessee Owned Alterations and Utility
Installations, Trade Fixtures, furnishings, equipment and all personal
property of Lessee contained in the Premises. When possible, Lessee shall
cause its Lessee Owned Alterations and Utility Installations, Trade Fixtures,
furnishings, equipment and all other personal property to be assessed and
billed separately from the real property of Lessor. If any of Lessees said
property shall be assessed with Lessor's real property, Lessee shall pay
Lessor the taxes attributable to Lessee's property with in 10 days after
receipt of a written statement setting forth the taxes applicable to Lessee's
property.

11. Utilities. Lessee shall pay for all water, gas, heat, light, power,
telephone, trash disposal and other utilities and services supplied to the
Premises, together with any taxes thereon. Notwithstanding the provisions of
Paragraph 4.2, if at any time in Lessor's sole judgment, Lessor determines
that Lessee is using a disproportionate amount of water, electricity or other
commonly metered utilities, or that Lessee is generating such a large volume
of trash as to require an increase in the size of the dumpster and/or an
increase in then umber of times per month that the dumpster is emptied, then
Lessor may increase Lessee's Base Rent by an amount equal to such increased
costs.

12.  Assignment and Subletting.
     12.1   Lessor's Consent Required.
            (a)  Lessee shall not voluntarily or by operation of law assign,
transfer, mortgage or encumber (collectively, "assign or assignment") or
sublet all or any part of Lessee's interest in this Lease or in the Premises
without Lessor's prior written consent.
            (b) A change in the control of Lessee shall constitute an
assignment requiring consent.  The transfer on a cumulative basis of 25% or
more of the voting control of Lessee shall constitute a change in control for
this purpose.
            (c) The involvement of Lessee or its assets in any transaction, or
series of transactions (by way of merger, sale acquisition, financing,
transfer, leveraged buy-out or otherwise), whether or not a formal assignment
or hypothecation of this Lease or Lessee's assets occurs, which results or
will result in a reduction of the Net Worth of Lessee by an amount greater
than 25% of such Net worth as it was represented at the time of the execution
of this Lease or at the time of the most recent assignment to which Lessor has
consented, or as it exists immediately prior to said transaction or
transactions constituting such reduction, whichever was or is greater, shall
be considered an assignment of this Lease to which Lessor may withhold its
consent. "Net Worth of Lessee" shall mean the net worth of Lessee (excluding
any guarantors) established under generally accepted accounting principles.
            (d) An assignment or subletting without consent shall, at Lessor's
option, be a Default curable after notice per Paragraph 13.1(c) or a
noncurable Breach with out 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
30 days written notice, increase the monthly Base Rent to 100% of the Base
Rent then in effect. Further in the event of such Breach and rental
adjustment, (i) the purchase price of any option to purchase the Premises held
by Lessee shall be subject to similar adjustment to 110% of the price
previously in effect, and (ii) all fixed and non-fixed rental adjustments
scheduled during the remainder of the Lease term shall be increased to 110% of
the scheduled adjusted rent.
            (e) Lessee's remedy for any breach of Paragraph 12.1 by Lessor
shall be limited to compensatory damages and/or injunctive relief.
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     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 of sublessee of the obligations of Lessee under this Lease, (ii)
release Lessee of any obligations hereunder, or (iii) alter the primary
liability Lessee for the payment of Rent or for the performance of any other
obligations to be performed by Lessee,
            (b) Lessor may accept Rent or performance of 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 Lessor's right to exercise its remedies or Lessee's Default or
Breach.
            (c) Lessor's 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 Lessee 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 or 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 of the Premises, if any, together with a fee of
$1,000 or 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 is greater, as consideration for Lessor's considering and processing
said request. Lessee agrees to provide Lessor with such other or addition
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
Lessee 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) Lessee hereby assigns and transfers to lessor al of Lessee's
interest in all Rent payable on any sublease, and Lessor may collect such Rent
and apply same toward Lessee'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 of Lessee to
perform and comply with any of Lessee's obligations to such sublease. 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 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 of 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.
            (e) Lessor shall deliver a copy of any notice of Default or Breach
by Lessee to the sublessee, who shall have the right to cure the Default of
Lessee within the grace period, if any, specified in such notice. The
sublessee shall have a right of reimbursement and offset from and against
Lessee for any such Defaults cured by the sublessee.

13.  Default; 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 and
Regulations under this Lease. A 'Breach is defined as the occurrence of one or
more of the following Defaults.
            (a) The abandonment of the Premises; or the vacating of the
Premises without providing a commercially reasonable level of security, or
where the coverage of the property insurance described in Paragraph 8.3 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 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 3
business days following written notice to Lessee.
            (c) The failure by Lessee to provide (i) reasonable written
evidence of compliance with Applicable Requirements, (ii) the service
contracts, (iii) the recission of an unauthorized assignment or subletting,
(iv) an Estoppel Certificate, (v) a requested subordination, (vi) evidence
concerning any guaranty and/or Guarantor, (vii) any document requested under
Paragraph 4.1 (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 10 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 rules adopted under Paragraph 2.9 hereof,
other than those described in subparagraphs 13.1(), (b), or (c), above, where
such Default continues for a period of 30 days after written notice; provided,
however, that if the nature of Lessee's Default is such that more than 30 days
are reasonable required for its cure, then it shall not be deemed to be in a
Breach if Lessee commences such cure within said 30 day period and thereafter
diligently prosecutes such cure to completion.
            (e) The occurrence 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. Section 101 or any successor
statute thereto (unless, in the case of a petition filed against Lessee, the
same is dismissed within 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 30 days; or (iv) the attachment, execution or other
judicial seizure of substantially all of Lessee's assets located at the
Premises of Lessee's interest in this Lease where such seizure is not
discharged within 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, and Lessee's failure, within 60 days following written
notice of any such event, to provide written alternative assurance of
security, which when coupled with the then existing resources of Lessee,
equals or exceeds the combined financial resources of Lessee and the
Guarantors that existed at the time of execution of this Lease.
     13.2   Remedies. If Lessee fails to perform any of its affirmative duties
or obligations, within 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 cost and expenses of any such performance by Lessor
shall be due and payable by Lessee upon receipt of invoice therefor. 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 limiting Lessor in the exercise
of any right or remedy which Lessor may have by reason of such Breach:

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            (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 at
the time of termination; (ii) the worth oat the time of award of the amount by
which the unpaid rent which would have been earned after termination until the
time of award exceeds the amount of such rental loss that 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 reasonable 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 (illegible),
including necessary renovation and alteration of the Premises, reasonable
attorneys' fees, and that portion of any (illegible) 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 y discounting such amount
at the discount rate of the Federal Reserve Ban of the district within which
the Premises are located at the time of award plus one percent. 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 provisions remedy of unlawful detainer,
Lessor shall have 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 to 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 to Lessee to cure the Default within the greater of the two
such grace periods shall constitute both an unlawful detainer and a Breach of
this Lease entitling Lessor to the remedies provided for in this Lease and/or
by said statute.
            (b) Constitute the 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
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 al of 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 charge, bonus, inducement of 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 5 days after such amount
shall be due, then, without any requirement for notice to Lessee, Lessee shall
pay to Lessor a one-time late charge equal to 10% of each such overdue amount
or $100, whichever is greater. 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 or 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 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   Interest. Any monetary payment due Lessor hereunder, other than
late charges, not received by Lessor, when due as to scheduled payments (such
as Base Rent) or within 30 days following the date on which it was due for
non-scheduled payment, shall bear interest from the date when due, as to
scheduled payments, or the 31st day after it was due as to non-scheduled
payments. The interest ("Interest") charted shall be equal to the prime rate
reported in the Wall Street Journal as published closest prior to the date
when due plus 4%, but shall not exceed the maximum rate allowed by law.
Interest is payable in addition to the potential late charge provided for in
Paragraph 13.4.
     13.6   Breach b Lessor.
            (a) Notice of Breach. Lessor shall not be deemed in breach of this
Lese unless Lessor fails within a reasonable time to perform an obligation
required to be performed by Lessor. For purposes of this Paragraph, a
reasonable time shall in no event be less than 30 days after receipt by
Lessor, and any Lender whose name and address shall have been furnished Lessee
win writing of such purpose of written notice specifying wherein such
obligation of Lessor, has not been performed; provided, however, that if the
nature of Lessor's obligation is such that more than 30 days are reasonably
required for its performance, then Lessor shall not be in breach if
performance is commenced within such 30 day period and thereafter diligently
pursued to completion.
            (b) Performance by Lessee on Behalf of Lessor. In the event that
neither Lessor nor Lender cures said breach within 30 days after receipt of
said notice, or if having commenced said cure they do not diligently pursue it
to completion, then Lessee may elect to cure said breach at Lessee's expense
and offset from Rent an amount equal to the greater of one month's Base Rent
or the Security Deposit, and to pay an excess of such expense under protest,
reserving Lessee's right to reimburse from Lessor. Lessee shall document the
cost of said cure and supply said documentation to Lessor.

14.  Condemnation. If the Premises or any portion thereof are taken under the
power of eminent domain or sold under the threat of the exercise of said power
(collectively "Condemnation"), this Lease shall terminate as to the part taken
as of the date the condemning authority takes title or possession, whichever
first occurs. If more than 10% of the floor are of the Unit, or more than 25%
of Lessee's Reserved Parking Spaces, is taken by Condemnation, Lessee may, at
Lessee's option, to be exercised in writing within 10 days after Lessor shall
have given Lessee written notice of such taking ( or in the absence of such
notice, within 10 days after the condemning authority shall have taken
possession) 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 Base Rent shall be reduced
in proportion to the reduction in utility of the Premises caused by such
Condemnation. Condemnation awards and/or payments shall be the property of
Lessor, whether such awarded shall be made as compensation for diminution in
value of the leasehold, the value of the part taken, or for severance damages;
provided, however, that Lessee shall be entitled to any compensation for
Lessee's relocation expenses, loss of business goodwill and/or Trade Fixtures,
without regard to whether or not this Lease is terminated pursuant to the
provisions of this Paragraph. All alterations and Utility Installations made
to the Premises by Lessee, for purposes of Condemnation only, shall be
considered the property of the Lessee and Lessee shall be entitled to any and
all compensation which is payable therefor. In the event that this Lease is
not terminated by reason of the Condemnation, Lessor shall repair any damage
to the Premises cause d by such Condemnation.

15.  Brokerage Fees.
     15.1   Additional Commission. In addition to the payments owed pursuant
to Paragraph 1.10 above, and unless Lessor and the Brokers otherwise agree in
writing, Lessor agrees that: (a) if Lessee exercises any Option, (b) if Lessee
acquires from Lessor any rights to the Premises or other premises owned by
Lessor and located within the Project, (c) if Lessee remains in possession of
the Premises, with the consent of Lessor, after the expiration of this Lease,
or (d) if Base Rent is increased, whether by agreement or operation of an
escalation clause herein, then, Lessor shall bay Brokers a fee in accordance
with the schedule of the Brokers in effect at the time of the execution of
this Lease.

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     15.2   Assumption of Obligations. Any buyer or transferee of Lessor's
interest in this Lease shall be deemed to have assumed Lessor's obligation
hereunder. Brokers shall be third party beneficiaries of the provisions of
Paragraphs 1.10, 15, 22 and 31. If Lessor fails to pay Brokers any amounts due
as and for brokerage fees pertaining to this Lease when due, the n such
amounts shall accrue interest. In addition, if Lessor fails to pay any amounts
to Lessee's Broker when due, Lessee's Broker may send written notice to lessor
and Lessee of such failure and if Lessor fails to pay such amounts within 10
days after said notice, Lessee shall pay said monies to its Broker and offset
such amounts against Rent. In addition, Lessee's Broker shall be deemed to be
a third party beneficiary of any commission agreement entered into by and/or
between Lessor and Lessor's Broker for the limited purpose of collecting any
brokerage fee awarded.
     15.3   Representations and Indemnities of Broker Relationships. Lessee
and Lessor each represent and warrant to the other that it has had no dealings
with any person, firm, broker or finder (other than the Brokers, if any) in
connection wit this Lease, and that no one other than said named Brokers is
entitled to any commission or finder's fee in connection herewith. Lessee an
Lessor do each hereby agree to indemnity, protect, defend and hold the other
harmless from and against liability for compensation or charges which may be
claimed by any such unnamed broker, finder or other similar party by reason of
any dealings or actions of the indemnifying Party, including any costs,
expenses, attorneys' fees reasonably incurred with respect thereto.
16. Estoppel Certificates.
            (a)  Each Party (as "Responding Party") shall within 10 days after
written notice from the other Party (the "Requesting Party") execute,
acknowledge and deliver to the Requesting Party a statement in writing in form
similar to the then most current "Estoppel Certificate" form published by the
American Industrial Real Estate Association, plus such additional information,
confirmation and or statements as may be reasonably requested by the
Requesting Party.
            (b) If the Responding Party shall fail to execute or deliver the
Estoppel Certificate within such 10 day period, the Requesting Party may
execute an Estoppel Certificate stating that: (i) the Lease is in full force
and effect without modification except as may be represented by the Requesting
Party, (ii) there are no 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. Prospective purchasers and
encumbrancers may rely upon the Requesting Party's Estoppel Certificate, and
the Responding Party shall be estopped from denying the truth of the facts
contained in said Certificate.
            (c) If Lessor desires to finance, refinance, or sell the Premises,
or any pert thereof, Lessee and all Guarantors shall deliver to any potential
lender or purchaser designated by Lessor such financial statements as may be
reasonably required by such lender or purchaser, including but not limited to
Lessee's financial statements for the past 3 years. 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.

17.  Definition of Lessor. The term "Lessor" as used herein shall mean the
owner or owners at the time in question of the fee title to the Premises, or,
if this is a sublease, of the Lessee's interest in the prior lease. In the
event of a transfer of Lessor's title or interest in the Premises or this
Lease, Lessor shall deliver to the transferee or assignee (in cash or by
credit) any unused security Deposit, as aforesaid, the prior Lessor shall be
relieved of all liability with respect to the obligations and/or covenants
under this Lease thereafter to be performed by the Lessor. Subject to the
foregoing, the obligations and/or covenants under this Lease thereafter to be
binding only upon the Lessor as hereinabove defined. Notwithstanding the
above, and subject to the provisions of this paragraph 20 below, the original
Lessor under this Lease, and all subsequent holders of the Lessor's interest
in this Lease shall remain liable and responsible with regard to the potential
duties and liabilities of Lessor pertaining to Hazardous Substances as
outlined in Paragraph 6.2 above.

18.  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.

19.  Days. Unless otherwise specifically indicated to the contrary, the word
"days" as used in this Lease shall mean and refer to calendar days.

20.  Limitation on Liability. Subject to the provisions of Paragraph 17 above,
the obligations of Lessor under this Lease shall not constitute personal
obligations of Lessor, the individual partners of Lessor or its or their
individual partners, directors, officers or shareholders, and Lessee shall
look to the Premises, and to no other assets of Lessor, for the satisfaction
of any liability of Lessor with respect to this Lease, and shall not seek
recourse against the individual partners of Lessor, or its or their individual
partners, directors, officers or shareholder, or any of their personal assets
for such satisfaction.

21.  Time of Essence. Time is of the essence with respect to the performance
of all obligations to be performed or observed by the Parties under this
Lease.

22.  No Prior or Other Agreements; Broker Disclaimer. This Lease contains all
agreements between the Parties with respect to any matter mentioned herein,
and no other prior or contemporaneous agreement or understanding shall be
effective. Lessor and Lessee each represents and warrants to the Brokers that
it has made, and is relying solely upon, its own investigation as to the
nature, quality, character and financial responsibility of the other Party to
this Lease and as to the use, nature, quality and character of the Premises.
Brokers have not responsibility with respect thereto or with respect to any
default or breach thereof by either Party. The liability (including court
costs and attorneys' fees), of any Broker with respect to negotiation,
execution, delivery or performance by either Lessor or Lessee under this Lease
or any amendment or modification hereto shall be limited to an amount up to
the fee received by such Broker pursuant to this Lease; provided, however,
that the foregoing limitation on each Broker's liability shall not be
applicable to any gross negligence of willful misconduct of such Broker.

23.  Notices.
     23.1   Notice Requirements. All notices required or permitted by this
Lease or applicable law shall be in writing and may be delivered in person (by
hand or by courier) or may be sent by regular, certified or registered mail or
U.S. Postal Service Express Mail, with postage prepaid, or by facsimile
transmission, and shall be deemed sufficiently given if served in a manner
specified in this Paragraph 23. The addresses noted adjacent to a Party's
signature on this Lease shall be that Party's address for delivery or mailing
of notices. Either Party may by written notice to the other specify a
different address for notice, except that upon Lessee's taking possession of
the Premises, the Premises shall constitute Lessee's address for notice. A
copy of all notices to Lessor shall be concurrently transmitted to such party
or parties at such addresses as Lessor may from time to time hereafter
designate in writing.
     23.2   Date of Notice. Any notice sent by registered or certified mail,
return receipt requested, shall be deemed given on the date of delivery shown
on the receipt card, or if no delivery date is shown, the postmark thereon. If
sent by regular mail the notice shall be deemed given 48 hours after te same
is addressed as required herein ad mailed with postage prepaid. Notices
delivered by Unites States Express Mail or overnight courier that guarantee
next day delivery shall be deemed given 24 hours after delivery of the same to
the Postal Service courier. Notices transmitted by facsimile transmission or
similar means shall be deemed delivered upon telephone confirmation of receipt
(confirmation report from fax machine is sufficient), provided a copy is also
delivered via delivery or mail. If notice s received on a Saturday, Sunday or
legal holiday, it shall be deemed received on the next business day. ]

24.  Waivers.   No waiver by Lessor of the Default or Breach of any term,
covenant or condition hereof by Lessee, shall be deemed a waiver of any other
term, covenant or condition hereof, or of any subsequent Default or Breach by
Lessee of the same or of any other term, covenant or condition hereof.
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 or similar act by Lessee, or be construed as the basis of an
estoppel to enforce the provision or provisions of this Lease requiring such
consent. The acceptance of Rent by Lessor shall not be a waiver of any Default
or Breach by Lessee. Any payment by Lessee may be accepted by Lessor on
account of monies or damages due Lessor, notwithstanding any qualifying
statements or conditions made by Lessee in connection therewith, which such
statements and/or conditions shall be of no force or effect whatsoever unless
specifically agreed to in writing by Lessor at or before the time of deposit
of such payment.

25.  Disclosures Regarding the Nature of a Real Estate Agency Relationship.
     (a)    When entering into a discussion with a real estate agent regarding
a real estate transaction, a Lessor or Lessee should from the outset
understand what type of agency relationship or representation it has with the
agent or agents in the transaction. Lessor and Lessee acknowledge being
advised by the Brokers in this transaction, as follows:
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            (i) Lessor's Agent   Lessor's agent under a listing agreement with
the Lessor acts as the agent for the Lessor only. A Lessor's agent or subagent
has the following affirmative obligations: To the Lessor: A fiduciary duty of
utmost care, integrity, honesty and loyalty in dealings with the Lessor. To
the Lessee and the Lessor: a. diligent exercise of reasonable skills and care
in performance of the agent's duties. b. A duty of honesty and fair dealing
and good faith. c. A duty to disclose all facts known to the agent materially
affecting the value or desirability of the property that are not known to, or
within the diligent attention and observation of, the Parties. An agent is not
obligated to reveal to either Party any confidential information obtained from
the other Party which does not involve the affirmative duties set forth above.
            (ii) Lessee's Agent. An agent can agree to act as agent for the
Lessee only. In these situations, the agent is not the Lessor's agent, even if
by agreement the agent may receive compensation for services rendered, either
in full or in part from the Lessor. An agent acting only for a Lessee has the
following affirmative obligations. To the Lessee: A fiduciary duty of utmost
care, integrity, honesty, and loyalty in dealings with the Lessee. To the
Lessee and the Lessor: a. Diligent exercise of reasonable skills and care to
performance of the agent's duties. b. A duty of honest and fair dealing and
good faith. c. A duty to disclose all facts known to the agent materially
affecting the value or desirability of the property that are not known to, or
within the diligent attention and observation of, the Parties. An agent is not
obligated to reveal to either Party any confidential information obtained from
the other Party which does not involve the affirmative duties set forth above.
            (iii) Agent Representing Both Lessor and Lessee. A real estate
agent, either acting directly or through one or more associate licenses, can
legally be the agent of both the Lessor and the Lessee in a transaction, but
only with the knowledge and consent of both the Lessor and the Lessee. In a
dual agency situation, the agent has the following affirmative obligations to
both the Lessor and the Lessee; a. A fiduciary duty of utmost care, integrity,
honesty and loyalty in the dealings with either Lessor or the Lessee. b. Other
duties to the Lessor and the Lessee as stated above in subparagraphs (i) or
(ii). In representing both Lessor and Lessee, the agent may not without the
express permission of the respective Party, disclose to the other Party that
the Lessor will accept rent in an amount less than that indicated in the
listing or that the Lessee is willing to pay a higher rent than that offered.
The above duties of the agent in a real estate transaction do not relieve a
Lessor or Lessee from the responsibility to protect their own interests.
Lessor and Lessee should carefully read all agreements to assure that they
adequate ly express their understanding of the transaction. A real estate
agent is a person qualified to advise about real estate. If legal or tax
advice is desired, consult a competent professional.
     (b)    Brokers have no responsibility with respect to any default or
breach hereof by either party. The liability (including court costs and
attorneys' fees), of any Broker with respect to any breach of duty, error or
omission relating to this Lease shall not exceed the fee received by such
Broker pursuant to this Lease; provided, however, that the foregoing
limitation on each Broker's liability shall not be applicable to any gross
negligence or willful misconduct of such Broker.
     (c)    Buyer and Seller agree to identify to Brokers as "confidential"
any communication or information given to Brokers that is considered by such
Party to be confidential.

26.   No Right to Holdover. Lessee has no right to retain possession of the
Premises or any part thereof beyond the expiration or termination of this
Lease. In the event that Lessee holds over, then the Base Rent shall be
increased to 150% of the Base Rent applicable immediately preceding the
expiration or termination. Nothing contained herein shall be construed as
consent by Lessor to any holding over by Lessee.

27.   Cumulative Remedies. No remedy or election hereunder shall be deemed
exclusive but shall, whenever possible, be cumulative with all other remedies
at law or in equity.

28.   Covenants and Conditions; Construction of Agreement.  All provisions of
this Lease to be observed or performed by Lessee are both covenants and
conditions. In construing this Lease, all headings and titles are for the
convenience of the Parties only and shall not be considered a part of this
Lease. Whenever required by the context, the singular shall include the plural
and vice versa. This Lease shall not be construed as if prepared by one of the
Parties, but rather according to its fair meaning as a whole, as if both
Parties had prepared it.

29.   Binding Effect; Choice of Law. This Lease shall be binding upon the
parties, their personal representatives, successors and assigns and be
governed by the laws of the State in which the Premises are located. Any
litigation between the Parties hereto concerning this Lease shall be initiated
in the county in which the Premises are located.

30.   Subordination; Attornment; Non-Disturbance.
      30.1  Subordination. This Lease and any Option granted hereby shall
subject and subordinate to any ground lease mortgage, deed of trust, or other
hypothecation or security device (collectively, "Security Device"), now or
hereafter placed upon the Premises, to any and all advances made on the
security thereof, and to all renewals, modifications, and extensions thereof.
Lessee agrees that the holders of any such Security Devices (in this Lease
together referred to as "Lender") shall have no liability or obligation to
perform any of the obligations of Lessor under this Lease. Any Lender may
elect to have this Lease and/or any Option granted hereby superior to the lien
of its Security Device by giving written notice thereof to Lessee, whereupon
this Lease and such Options shall be deemed prior to such Security Device,
notwithstanding the relative dates of the documentation or recordation
thereof.
     30.2   Attornment.  Subject to the non-disturbance provisions of
Paragraph 30.3, Lessee agrees to attorn to a Lender or any other party who
acquires ownership of the Premises by reason of a foreclosure of a Security
Device, and that in the event of such foreclosure, such new owner shall not:
(a) be liable for any act or omission of any prior lessor or with respect to
events occurring prior to acquisition of ownership; (b) be liable for the
return of any security deposit paid to any prior lessor.
     30.3   Non-Disturbance. With respect to Security Devices entered into by
Lessor after the execution of this Lease, Lessor's subordination of this Lease
shall be subject to receiving a commercially reasonable non-disturbance
agreement (a "Non-Disturbance Agreement") from the Lender which
Non-Disturbance Agreement provides that Lessee's possession of the Premises,
and this Lease, including any options to extend the term hereof, will not be
disturbed so long as Lessee is not in Breach hereof and attorns to the record
owner of the Premises. Further, within 60 days after the execution of this
Lease, Lessor shall use its commercially r4easonable efforts to obtain a
Nin-Disturbance Agreement from the holder of any pre-existing Security Device
which is secured by the Premises. In the event that Lessor is unable to
provide the Non-Disturbance Agreement within said 60 days, then Lessee may, at
Lessee's option, directly contact Lender and attempt to negotiate for the
execution and delivery of a Non-Disturbance Agreement.
     30.4   Self-Executing. The agreements contained in this Paragraph 30
shall be effective without the execution of any further documents; provided,
however, that, upon written request from Lessor or a Lender in connection with
a sale, financing or refinancing of the Premises, Lessee and Lessor shall
execute such further writings as may be reasonably required to separately
document any subordination, attornment and/or Non-Disturbance Agreement
provided for herein.

31.  Attorneys' Fees. If any Party or Broker brings an action or proceeding
involving the Premises whether founded in tort, contract or equity, or to
declare rights hereunder, the Prevailing Party (as hereafter defined) in any
such proceeding, action or appeal thereon, shall be entitled to reasonable
attorneys' fees. Such fees may be awarded in the same suit or recovered in a
separate suit, whether or not such action or proceeding is pursued to decision
or judgement. The term, "Prevailing Party" shall include, without limitation,
a Party or Broker who substantially obtains or defeats the relief sought, as
the case may be, whether by compromise, settlement, judgment, or the
abandonment by the other Party or Broker of its claim or defense. The
attorneys' fees reasonably incurred. In addition, Lessor shall be entitled to
attorneys' fees, costs and expenses incurred in the preparation and service of
notices of Default and consultations in connection therewith, whether or not a
legal action is subsequently commenced in connection with such Default or
resulting Breach ($2,000 is a reasonable minimum per occurrence for such
services and consultation).

32.  Lessor's access; Showing Premises; Repairs. Lessor and Lessor's agents
shall have the right to enter the Premises at any time in the case of an
emergency, and otherwise at reasonable times for the purpose of showing the
same to prospective purchasers, lenders, or tenants, and making such
alterations, repairs, improvements or additions to the Premises as Lessor may
deem necessary. All such activities shall be without abatement of rent or
liability to Lessee. Lessor may at any time place on the Premises any ordinary
"For Sale" signs and Lessor may during the last 6 months of the term hereof
place on the Premises any ordinary "For Lease" signs. Lessee may at any time
place on the Premises any ordinary "For Sublease " sign.

33.  Auctions. Lessee shall not conduct, nor permit to be conducted, any
auction upon the Premises without Lessor's prior written consent. Lessor shall
not be obligated to exercise any standard of reasonableness in determining
whether to permit an auction.

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34.  Signs. Except for ordinary "For Sublease" signs which may be placed only
on the Premises, Lessee shall not place any sign upon the Project without
Lessor's prior written consent. All signs must comply with all Applicable
Requirements.

35.  Termination; Merger. Unless specifically stated otherwise in writing by
Lessor, the voluntary or other surrender of this Lese by Lessee, the mutual
term inaction or cancellation hereof, or a termination hereof by Lessor for
Breach by Lessee, shall automatically terminate sublease or lesser estate in
the Premises; provided, however, that Lessor may elect to continue any one or
all existing subtenancies. Lessor's failure within 10 days following any such
event to elect to the contrary by written notice to the holder of any such
lesser interest, shall constitute Lessor's election to have such event
constitute the termination of such interest.

36.  Consents. Except as otherwise provided herein, wherever in this Lease the
consent of a Party is required to an act by or for the other Party, such
consent shall not be unreasonably withheld or delayed. Lessor's actual
reasonable costs and expenses (including but not limited to architects',
attorneys', engineers' and other consultants' fees) incurred in the
consideration of, or response to, a request by Lessee for any Lessor consent,
including but not limited to consents to an assignment, a subletting or the
presence or use of a Hazardous Substance, shall be paid by Lessee upon receipt
of an invoice and supporting documentation therefor. Lessor's consent to any
act, assignment or subletting shall not constitute an acknowledgment that no
Default or Breach by Lessee of this Lease exists, nor shall such consent be
deemed a waiver of any then existing Default or Breach, except as may be
otherwise specifically stated in writing by Lessor at the time of such
consent. The failure to specify herein any particular condition to Lessor's
consent shall not preclude the imposition by Lessor at the time of consent of
such further or other conditions as are then reasonable with reference to the
particular matter for which consent is being given. In the event that either
Party disagrees with any determination made by the other hereunder and
reasonably requests the reasons for such determination, the determining party
shall furnish its reasons in writing and reasonable detail with 19 business
days following such request.

37.  Guarantor.
     37.1   Execution. The Guarantors, if any, shall each execute a guaranty
in the form most recently published by the American Industrial Real Estate
Association, and each such Guarantor shall have the same obligations as Lessee
under this Lease.
     37.2   Default. It shall constitute a Default of the Lessee if any
Guarantor fails or refuses, upon request to provide; (a) evidence of the
execution of the guaranty, including the authority of the party signing on the
guarantor's behalf to obligate Guarantor, and in the case of a corporate
Guarantor, a certified copy of a resolution of its board of directors
authorizing the making of such guaranty, (b) current financial statements, (c)
an Estoppel Certificate, or (d) written confirmation that the guaranty is
still in effect.

38.  Quiet Possession.  Subject to payment by Lessee of the Rent and
performance of all of the covenants, conditions and provisions on Lessee's
part to be observed and performed under this Lease, Lessee shall have quite
possession and quiet enjoyment of the Premises during the term hereof.

39.  Options. If Lessee is granted an option, as defined below, then the
following provisions shall apply.
     39.1   Definition. "Option" shall mean: (a) the right to extend the term
of or renew 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.
     39.2   Options Personal To Original Lessee. Any 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 of the premises and, if requested by Lessor, with
Lessee certifying that Lessee has no intention of thereafter assigning or
subletting.
     39.3   Multiple Options. In the event that Lessee has any multiple
Options to extend or renew this Lease, a later Option cannot be exercised
unless the prior Options have been validly exercised.
     39.4   Effect of Default on Options.
            (a)  Lessee shall have no right to exercise an 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 3 or more notices of separate Default, whether or not the Defaults
are cured, during the 12 month period immediately preceding the exercise of
the Option.
            (b) The period of time within 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 39.4(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 30 days after such rent becomes due
(without any necessity of Lessor to give notice thereof), (ii) Lessor gives to
Lessee 3 or more notices of separate Default during any 12 month period,
whether or not the Defaults are cured, or (iii) if Lessee commits a Breach of
this Lease.

40.  Security Measures. Lessee hereby acknowledges that the Rent payable to
Lessor hereunder does not include the cost of guard service or other security
measures, and that Lessor shall have no obligation whatsoever to provide same.
Lessee assumes all responsibility for the protection of the Premises, Lessee,
its agents and invitees and their property from the acts of third parties.

41.  Reservations. Lessor reserves the right: (i) to grant, without the
consent or joinder of Lessee, such easements, rights and dedications that
Lessor deems necessary, (ii) to cause the recordation of parcel maps and
restrictions, and (iii) to create and/or install new utility raceways, so long
as such easements, rights, dedications, maps, restrictions, and utility
raceways do not unreasonably interfere with the use of the Premises by Lessee.
Lessee agrees to sign any documents reasonably requested by Lessor to
effectuate such rights.

42.  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 part of said Party to pay such sum 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.

43.  Authority. It either Party hereto is a corporation , trust, limited
liability company, partnership, or similar entity, each individual executing
this Lease on behalf of such entity represents and warrants that he or she is
duly authorized to execute and deliver this Lease on its behalf. Each party
shall, within 30 days after request, deliver to the other party satisfactory
evidence of such authority.

44.  Conflict.  Any conflict between the printed provisions of this Leased and
the typewritten or handwritten provisions shall be controlled by the
typewritten or handwritten provisions.

45.  Offer. Preparation of this Lease by either party or their agent and
submission of same to the other Party shall not be deemed an offer to lease to
the other Party. This Lease is not intended to be binding until executed and
delivered by all Parties hereto.

46.  Amendments. This Lease may be modified only in writing, signed by the
Parties in interest at the time of the modification. As long as they do not
materially change Lessee's ob ligations hereunder, Lessee agrees to make such
reasonable non-monetary modifications to this Lease as may be reasonably
required by a Lender in connection with the obtaining of normal financing or
refinancing of the Premises.

47.  Multiple Parties. If more than one person or entity is named herein as
either Lessor or Lessee, such multiple Parties shall have joint and several
responsibility to comply with the terms of this Lease.

48.  Waiver of Jury Trial. The Parties hereby waive their respective rights to
trial by jury in any action or proceeding involving the Property arising out
of this Agreement.

49.  Mediation and Arbitration of Disputes. An Addendum requiring the
Mediation and/or the Arbitration of all disputes between the Parties and/or
Brokers arising out of this Lease    is    is not attached to this Lease.

LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM
AND PROVISION CONTAINED HEREIN, AND BY THE 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.

________                                                       ________
________                                                       ________
Initials                                                       Initials

     PAGE 13

(C)1998- American Industrial Real Estate Association       FORM MTG - 2-11-98
------------------------------------------------------------------------------

<PAGE>

ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN
INDUSTRIAL REAL ESTATE ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL
SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE
TRANSACTION TO WHICH IT RELATES. THE PARTIES ARE 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
       OPERATING SYSTEMS, COMPLIANCE WITH THE AMERICANS WITH DISABILITIES ACT
       AND THE SUITABILITY OF THE PREMISES FOR LESSEE'S INTENDED USE.

WARNING: IF THE PREMISES ARE LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN
PROVISIONS OF THE LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE
STATE IN WHICH THE PREMISES ARE LOCATED.  The parties hereto have executed
this Lease at the place and on the dates specified above their respective
signatures.

Executed at:   Palm Springs               Executed at:    Palm Desert Ca
             ----------------------------              -----------------------
on:   12/31/03                            on:  12/22/03
   --------------------------------------    ---------------------------------
By LESSOR: TENANT DESERT PROPERTIES, LLC. By LESSEE:   AQUENTIUM, INC.
           ------------------------------           --------------------------
By: /s/ Joseph Tennant                    By: /s/ Mark Taggatz
   --------------------------------------     --------------------------------
Name Printed: Joseph Tennant              Name Printed:   Mark Taggatz
             ---------------------------               -----------------------
Title:  Managing Member                   Title:   President
       ----------------------------------        -----------------------------
By:                                       By:
    -------------------------------------     --------------------------------
Name Printed:                             Name Printed:
             ----------------------------              -----------------------
Title:                                    Title:
       ----------------------------------       ------------------------------
Address:   P.O. Box 6835                  Address: 31500 Grape St., Ste 3401
           Santa Rosa, CA 95406                    Lake Elsinore, CA 92532
        ---------------------------------         ----------------------------

Telephone:   (503) 241-1255               Telephone: (909) 346-3224
           ------------------------------            -------------------------
Facsimile:   (503) 299-6653               Facsimile: (909) 346-3224
           ------------------------------            -------------------------
Federal ID No.                            Federal ID No.
              ---------------------------               ----------------------

These forms are often modified to meet changing requirements of law and needs
of the industry. Always write or call to make sure you are utilizing the most
current form: American Industrial Real Estate Association, 700 South Flower
Street, Suite 600, Los Angeles, CA 90017 . (213)687-8777.

(C)Copyright 1998-By American Industrial Real Estate Association.
                       All rights reserved.
   No part of these works may be reproduced in any form without
                     permission in writing.

     PAGE 14

(C)1998-American Industrial Real Estate Association      Form MTG-2-11/98
------------------------------------------------------------------------------

<PAGE>

                           ADDENDUM TO
                AIR STANDARD INDUSTRIAL/COMMERCIAL
                     MULTITENANT GROSS LEASE
                     DATED DECEMBER 19, 2003
      BY AND BETWEEN TENNANT DESERT PROPERTIES, LLC (LESSOR)
                   AND AQUENTIUM, INC. (LESSEE)

Paragraph 50.  TOTAL DUE UPON EXECUTION OF LEASE.:
Eighteen thousand dollars ($18,000)-($13,500 which is 3 months rent at $4,500
per month plus $4,500 security deposit) to be paid upon Lessor's execution of
this lease by issuance of $18,000 worth of stock certificates based upon the
going market rate at the time of execution of this lease.

Paragraph 51.   OPTION TO LEASE 100% OF THE SUBJECT BUILDING:
At anytime during the term of this lease, Lessee has the option to lease 100%
(approx. 84,772 S.F.) of the subject building per the attached final lease
draft which has been approved by Lessor and signed by Lessee. Lessor agrees
that upon receipt of a cashiers check for $61,517.92 Lessor will sign and
return an executed copy of the 100% lease to Lessee. Upon execution of the
100% lease this lease (10,000 SF) will be automatically terminated. In the
event there is any unavoidable delays in fin-alizing the 100% lease by April
1, 2004, it is agreed that this lease (10,000 SF) will be extended on a month
to month basis.

Paragraph 52.   ASSIGNMENT OF EXISTING LEASE:
Upon execution of the 100% lease all other existing leases in the subject
building will be assigned to Lessee and Lessee agrees to comply with the terms
and conditions of each lease.

ADDED:

Date           12-31     , 2003          Date       12/22       , 2003
      ---------------------------------       --------------------------------

LESSOR:                                  LESSEE:
TENNANT PROPERTIES, LLC                  AQUENTIUM, INC

by /s/ Joseph Tennant                    by /s/ Mark Taggatz
   -------------------------------------    ----------------------------------
       Joseph Tennant, Managing Member          Mark TaggatzQuickLinks
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EXHIBIT 4.2  

 
 

HOLD-BACK SHARE ESCROW AGREEMENT    
    

        This Hold-Back Share Escrow Agreement (this "Agreement"), dated as of November 3, 2003 (the
"Closing Date"), by and among: Evolving Systems, Inc., a Delaware corporation ("Parent"); John M.
Cullen, Jr., an individual resident of the state of Ohio, in his capacity as the representative of the Company Shareholders ("Representative"), and in
his capacity as one of the Company Shareholders, and each other shareholder of CMS Communications, Inc., an Ohio corporation ("Company"), listed
as a signatory hereto (collectively with John M. Cullen, Jr., the "Company Shareholders"); and Wells Fargo Bank West, N.A., as escrow agent
("Escrow Agent"). 

        This
is the escrow agreement attached as Exhibit B-1 and referred to as the "Hold-Back Share Escrow Agreement" in the Agreement and Plan of Merger dated as
of November 3, 2003 (the "Merger Agreement"), among Parent, Company, Merger Sub and the Company Shareholders. Capitalized terms used in this Agreement without definition shall have the
respective meanings given to them in the Merger Agreement. 

        The
parties, intending to be legally bound, hereby agree as follows: 

1.     APPOINTMENT OF ESCROW AGENT  

        Parent and the Company Shareholders hereby appoint Escrow Agent as escrow agent for the purposes set forth herein and Escrow Agent hereby accepts such appointment
on the terms set forth herein. 

2.     APPOINTMENT OF REPRESENTATIVE  

        The Company Shareholders hereby confirm the appointment of Representative to act on their behalf for the purposes set forth herein and Representative hereby
accepts such appointment on the terms set forth herein and in the Merger Agreement. 

3.     ESTABLISHMENT OF ESCROW  

        (a)   For
the purposes set forth herein, Parent has caused or will cause on the date hereof to be deposited with Escrow Agent certificates (the "Escrow Certificates")
representing ten percent (10%) of the shares of Parent Common Stock issued to each of the Company Shareholders pursuant to Section 1.2(b) of the Merger Agreement (the
"Escrow Shares"). The Escrow Certificates shall be issued in the names of the Company Shareholders as set forth in Exhibit B attached hereto.
Each of the Company Shareholders has caused to be deposited with the Escrow Agent irrevocable stock powers executed in blank with respect to such Company Shareholders' Escrow Certificates (the "Stock
Powers"). Escrow Agent acknowledges receipt thereof. 

        (b)   Escrow
Agent hereby agrees to hold, safeguard and disburse the Escrow Deposit (as defined below) pursuant to the terms and conditions hereof. 

        (c)   The
Escrow Shares held by the Escrow Agent shall be deemed issued and outstanding with respect to any matter on which stockholders of Parent have a right to vote and
each of the Company Shareholders shall be entitled to vote his Escrow Shares. 

        (d)   If
during the term of this Agreement, Parent pays or declares any dividend or distribution on the Parent Common Stock, the dividend or distribution payable with respect
to the Escrow Shares shall be delivered by Parent to Escrow Agent and shall constitute part of the Escrow Deposit (as defined below). 

 

4.     INVESTMENT OF FUNDS  

        Escrow Agent shall invest and reinvest from time to time any and all funds received with respect to the Escrow Shares (the "Escrow
Fund" and, together with the Escrow Shares, the "Escrow Deposit"), as directed by Representative in writing (subject to
Section 4(d)) (a) in any obligation of, or guaranteed as to principal and interest by, the United States or any agency or instrumentality thereof (provided that the full faith and credit
of the United States supports the obligation or guarantee of such agency or instrumentality), (b) in commercial paper of any United States issuer rated "Prime-1" by Moody's Investor
Services, Inc. or rated "A-1" by Standard and Poor's Rating Service or municipal bonds, including without limitation municipal revenue bonds, (c) in any money market fund
that invests solely in such obligations or types described in Section 4(a), including repurchase agreements with respect thereto, or (d) in any other investment agreed to in writing by
Parent and Representative. In the absence of direction, Escrow Agent shall invest the Escrow Fund in the Wells Fargo 100% Treasury Fund. Any earnings on the Escrow Fund shall be invested from time to
time, to the extent possible, in accordance with the provisions set forth above. Escrow Agent is authorized to liquidate in accordance with its customary procedures any portion of the Escrow Fund
consisting of investments to provide for payments required to be made under this Agreement. 

5.     CLAIMS  

        (a)   From
time to time on or before the first anniversary of the Closing Date (the "Release Date"), Parent may give a Notice
of Claim pursuant to Section 5.2(g) of the Merger Agreement to Representative and Escrow Agent, which Notice of Claim shall include, among other things, Parent's good faith estimate of
the reasonably foreseeable maximum amount of the alleged Damages (the "Claimed Amount"). If Representative gives notice to Parent and Escrow Agent of
his election to contest any Claim (a "Counter Notice") within twenty (20) days following delivery by Parent of such related Notice of Claim, such
Claim shall be resolved as provided in Section 5.2 of the Merger Agreement, and any amounts to be distributed by Escrow Agent pursuant to such Claim shall be distributed in accordance with
Section 5(b) below. If no Counter Notice is received by Escrow Agent within such twenty-day (20-day) period, then the Claimed Amount as set forth in such Notice
of Claim shall be deemed established for purposes of this Agreement and the Merger Agreement and, at the end of such twenty-day (20-day) period, Escrow Agent shall pay to
Parent the Claimed Amount set forth in such Notice of Claim from (and only to the extent of) first, the Escrow Fund and second, the Escrow Shares. Escrow Agent shall not inquire into or consider
whether a Notice of Claim complies with the requirements of the Merger Agreement. 

        (b)   In
the event the Escrow Shares are to be used, in whole or in part, to pay any Claimed Amount, then the number of Escrow Shares to be tendered to Parent in satisfaction
of such Claimed Amount shall be calculated by valuing each Escrow Shares at the Parent Average Price Per Share. Unless otherwise set forth in joint written instructions of Parent and Representative
(or as otherwise required by Section 5(c) below), any tender by Escrow Agent to Parent of Escrow Shares in satisfaction, in whole or in part, of any Claimed Amount, shall be made from
the Company Shareholders on a pro rata basis in accordance with their respective ownership percentages of the Escrow Shares. The Escrow Agent shall promptly deliver to Parent the Escrow Certificates
representing, in the aggregate, a sufficient number of Escrow Shares to satisfy the Claimed Amount (or any portion thereof to be satisfied by the tender of Escrow Shares), along with the Stock Powers
representing that number of Escrow Shares to be delivered by each Company Shareholder based upon his pro rata ownership of the Escrow Shares. To the extent that less than all of the Escrow Shares
evidenced by the Certificates tendered in accordance with the preceding sentence are required to satisfy the Claimed Amount (or the appropriate portion thereof), (1) Parent shall cause its
transfer agent to promptly issue certificates evidencing the balance of any such Escrow Shares in the names of the appropriate Company Shareholders (the "Replacement
Certificates") and deposit the Replacement 

2

 

Certificates
with the Escrow Agent within three (3) business days following the delivery of the Escrow Certificates to Parent and (2) the appropriate Company Shareholders shall
executed and deliver to the Escrow Agent irrevocable stock powers executed in blank with respect to such Company Shareholder's Replacement Certificates (the "Replacement Stock Powers"). The shares of
Parent Common Stock represented by the Replacement Certificates shall constitute Escrow Shares. If it shall be necessary to use a fraction of an Escrow Share to satisfy the dollar value of any Claimed
Amount, then, a whole Escrow Share shall be tendered to Parent, and Parent shall, within three business days, deliver to the Escrow Agent an amount of cash equal to the Parent Average Price Per
Share multiplied by the fraction of such Escrow Share not used to satisfy the Claimed Amount, such amount to be held as part of the Escrow Fund. 

        (c)   If
a Counter Notice is given in response to a Notice of Claim, Escrow Agent shall make payment with respect thereto only in accordance with (i) joint written
instructions of Parent, on the one hand, and Representative, on the other hand, or (ii) a final, nonappealable order of a court of competent jurisdiction. Any court order shall be accompanied
by a legal opinion by counsel for the presenting party satisfactory to Escrow Agent to the effect that the order is final and nonappealable. Escrow Agent shall act on such court order and legal
opinion without further question. 

6.     TERMINATION OF ESCROW  

        (a)   Not
later than 1:00 p.m. Mountain Standard Time on the first business day following the Release Date, Escrow Agent shall initiate payment and distribution to the
Company Shareholders (or their assigns) the excess, if any, of the Escrow Deposit (i.e. payment of the Escrow Fund and delivery of the Escrow Certificates and any Replacement Certificates, as the case
may be) and the related Stock Powers, and any Replacement Stock Powers, as the case may be) over the sum of the Claimed Amounts set forth in Notices of Claim given on or before the Release Date,
excluding Claimed Amounts (or any portion thereof) (i) which have been paid from the Escrow Deposit, or (ii) as to which Representative has given a Counter Notice and subsequent to which
Representative and Parent jointly instruct Escrow Agent that such amount no longer constitutes a Claimed Amount. 

        (b)   If,
following the Release Date, Escrow Agent retains in escrow any portion of the Escrow Fund and/or the Escrow Shares in respect of any Claim, such portion of the
Escrow Fund and the Escrow Shares shall be distributed by Escrow Agent pursuant to such Claim in accordance with Section 5(b) of this Agreement. 

7.     DUTIES OF ESCROW AGENT  

        (a)   Escrow
Agent shall not be under any duty to give the Escrow Deposit held by it hereunder any greater degree of care than it gives its own similar property and shall not
be required to invest any funds held hereunder except as directed in Section 4 of this Agreement. Uninvested funds held hereunder shall not earn or accrue interest. 

        (b)   Escrow
Agent shall not be liable for actions or omissions hereunder, except for its own gross negligence or willful misconduct and, except with respect to claims based
upon such gross negligence or willful misconduct that are successfully asserted against Escrow Agent, the other parties hereto shall jointly and severally indemnify and hold harmless Escrow Agent (and
any successor Escrow Agent) from and against any and all losses, liabilities, claims, actions, damages and expenses, including reasonable attorneys' fees and disbursements, arising out of and in
connection with this Agreement. Without limiting the foregoing, Escrow Agent shall in no event be liable in connection with its investment or reinvestment of any cash held by it hereunder in good
faith, in accordance with the terms hereof, including, without limitation, any liability for any delays (not resulting from its gross negligence or willful misconduct) in the investment or
reinvestment of the Escrow Fund or any loss of interest incident to any such delays. 

3

 

        (c)   Escrow
Agent shall be entitled to rely upon any order, judgment, certification, demand, notice, instrument or other writing delivered to it hereunder without being
required to determine the authenticity or the correctness of any fact stated therein or the propriety or validity of the service thereof. Escrow Agent may act in reliance upon any instrument or
signature reasonably believed by it to be genuine and may assume that the person purporting to give receipt or advice or make any statement or execute any document in connection with the provisions
hereof has been duly authorized to do so. Escrow Agent may conclusively presume that the undersigned representative of any party hereto which is an entity other than a natural person has full power
and authority to instruct Escrow Agent on behalf of that party unless written notice to the contrary is delivered to Escrow Agent. 

        (d)   Escrow
Agent may act pursuant to the advice of counsel with respect to any matter relating to this Agreement and shall not be liable for any action taken or omitted by
it in good faith in accordance with such advice. 

        (e)   Escrow
Agent does not have any interest in the Escrow Deposit deposited hereunder but is serving as escrow holder only and has only possession thereof. Any payments of
income from the Escrow Fund shall be subject to withholding regulations then in force with respect to United States taxes. The parties hereto will provide Escrow Agent with appropriate Internal
Revenue Service Forms W-9 for tax identification number certification, or nonresident alien certifications. This Section 7(e) and Section 7(b) above shall
survive notwithstanding any termination of this Agreement or the resignation of Escrow Agent. 

        (f)    Escrow
Agent makes no representation as to the validity, value, genuineness or collectability of any security or other document or instrument held by or delivered to it. 

        (g)   Escrow
Agent shall not be called upon to advise any party as to the wisdom in selling or retaining or taking or refraining from any action with respect to any securities
or other property deposited hereunder. 

        (h)   Escrow
Agent (and any successor Escrow Agent) may at any time resign as such by delivering the Escrow Deposit to any successor Escrow Agent jointly designated by the
other parties hereto in writing, or to any court of competent jurisdiction, whereupon Escrow Agent shall be discharged of and from any and all further obligations arising in connection with this
Agreement. The resignation of Escrow Agent will take effect on the earlier of (i) the appointment of a successor (including a court of competent jurisdiction) or (ii) the day which is
thirty (30) days after the date of delivery of its written notice of resignation to the other parties hereto. If, at that time, Escrow Agent has not received a designation of a successor Escrow
Agent, Escrow Agent's sole responsibility after that time shall be to retain and safeguard the Escrow Deposit until receipt of a designation of a successor Escrow Agent or a joint written disposition
instruction by the other parties hereto or a final, nonappealable order of a court of competent jurisdiction. 

        (i)    In
the event of any disagreement between the other parties hereto resulting in adverse claims or demands being made in connection with the Escrow Deposit or in the event
that Escrow Agent is in doubt as to what action it should take hereunder, Escrow Agent shall be entitled to retain the Escrow Deposit until Escrow Agent shall have received (i) a final,
nonappealable order of a court of competent jurisdiction directing delivery of the Escrow Deposit, or (ii) a written agreement executed by the other parties hereto directing delivery of the
Escrow Deposit, in which event Escrow Agent shall disburse the Escrow Deposit, in accordance with such order or agreement. Any court order shall be accompanied by a legal opinion by counsel for the
presenting party satisfactory to Escrow Agent to the effect that the order is final and nonappealable. Escrow Agent shall act on such court order and legal opinion without further question. 

        (j)    Parent
and the Company Shareholders shall pay Escrow Agent compensation (as payment in full) for the services to be rendered by Escrow Agent hereunder in the amount set
forth on Exhibit A

4

 

attached
hereto and agree to reimburse Escrow Agent for all reasonable expenses, disbursements and advances incurred or made by Escrow Agent in performance of its duties hereunder (including
reasonable fees, expenses and disbursements of its counsel). Any such compensation and reimbursement to which Escrow Agent is entitled shall be borne fifty percent (50%) by the Company Shareholders
and fifty percent (50%) by Parent. Any fees or expenses of Escrow Agent or its counsel that are not paid as provided for herein may be taken from any property held by Escrow Agent hereunder. 

        (k)   No
printed or other matter in any language (including, without limitation, prospectuses, notices, reports and promotional material) that mentions Escrow Agent's name or
the rights, powers or duties of Escrow Agent shall be issued by the other parties hereto or on such parties' behalf unless Escrow Agent shall first have given its specific written consent thereto.
Notwithstanding the above, Escrow Agent hereby expressly consents to the mention of Escrow Agent's name in the Merger Agreement and any securities filings required to be made by law. 

8.     DUTIES OF REPRESENTATIVE  

        (a)   The
duties of Representative hereunder shall be limited to the observance of the express provisions of this Agreement, and the responsibilities of Representative, as
representative of the Company Shareholders, are as set forth in the Merger Agreement. 

        (b)   Representative
may resign or be replaced pursuant to the terms of the Merger Agreement. 

9.     LIMITED RESPONSIBILITY  

        This Agreement expressly sets forth all the duties of Escrow Agent with respect to any and all matters pertinent hereto. No implied duties or obligations shall be
read into this Agreement against Escrow Agent. Escrow Agent shall not be bound by the provisions of any agreement among the other parties hereto except this Agreement. 

10.   OWNERSHIP FOR TAX PURPOSES  

        Company Shareholders agree that, for purposes of federal and other taxes based on income, Company Shareholders (or their successors) will be treated as the owners
of the Escrow Deposit and that Company Shareholders will report all income, if any, that is earned on, or derived from, the Escrow Deposit as its income in the taxable year or years in which
such income is properly includible and pay any taxes attributable thereto. 

11.   NOTICES  

        All notices, consents, waivers and other communications required or permitted under this Agreement shall be in writing and shall be deemed given to a party when
(a) delivered to the appropriate address by hand or by a nationally recognized overnight courier service (costs prepaid); or (b) sent by facsimile (with confirmation by the transmitting
equipment); in each case to the following addresses and facsimile numbers and marked to the attention of the person (by name or title) designated below (or to such other address, facsimile number or
person as a party may designate by notice to the other parties): 

        if
to Representative or the Company Shareholders: 

CMS
Communications, Inc.

580 North Fourth Street

Suite 640

Columbus, OH 43215

Attn: John M. Cullen, Jr.

Facsimile: (614) 355-0049 

5

 

        with
a copy to: 

Vorys,
Sater, Seymour and Pease LLP

52 East Gay Street

Columbus, OH 43215

Attn: Susan E. Brown, Esq.

Facsimile: (614) 719-4642 

        if
to Parent: 

Evolving
Systems, Inc.

9777 Mt. Pyramid Ct., Suite 100

Englewood, CO 80112

Attn: Anita Moseley, General Counsel

Facsimile: (303) 802-1138 

        with
a copy to: 

Holme
Roberts & Owen LLP

1700 Lincoln St., Suite 4100

Denver, CO 80203-4541

Attn: Charles D. Maguire, Jr.

Facsimile: (303) 866-0200 

        if
to Escrow Agent: 

Wells
Fargo Bank West, N.A.

1740 Broadway, MAC C7301024

Denver, CO 80274

Attn: David Rinehart

Facsimile: (303) 863-5645 

12.   EXECUTION OF AGREEMENT AND ADDITIONAL DOCUMENTS  

        This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same agreement. The exchange of copies of this Agreement and of signature pages by facsimile transmission shall constitute effective execution
and delivery of this Agreement as to the parties and may be used in lieu of the original Agreement for all purposes. Signatures of the parties transmitted by facsimile shall be deemed to be their
original signatures for any purposes whatsoever. The parties to this Agreement agree to complete, execute and deliver all other forms, investments and documents reasonably requested by the Escrow
Agent, including, without limitation, the Escrow Agent's Customer Identification Checklist. 

13.   SECTION HEADINGS, CONSTRUCTION  

        The headings of sections in this Agreement are provided for convenience only and will not affect its construction or interpretation. 

14.   WAIVER  

        The rights and remedies of the parties to this Agreement are cumulative and not alternative. Neither the failure nor any delay by any party in exercising any
right, power or privilege under this Agreement or the documents referred to in this Agreement will operate as a waiver of such right, power or privilege, and no single or partial exercise of any such
right, power or privilege will preclude any other or further exercise of such right, power or privilege or the exercise of any other right, power 

6

 

or
privilege. To the maximum extent permitted by applicable law, (a) no claim or right arising out of this Agreement or the documents referred to in this Agreement can be discharged by one
party, in whole or in part, by a waiver or renunciation of the claim or right unless in writing signed by the other party; (b) no waiver that may be given by a party will be applicable except
in the specific instance for which it is given; and (c) no notice to or demand on one party will be deemed to be a waiver of any obligation of such party or of the right of the party giving
such notice or demand to take further action without notice or demand as provided in this Agreement or the documents referred to in this Agreement. 

15.   PARTIES IN INTEREST  

        Except as otherwise provided in this Agreement, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective heirs,
legal representatives, successors and assigns of the parties to this Agreement. 

16.   ENTIRE AGREEMENT AND MODIFICATION  

        This Agreement supersedes all prior agreements among the parties with respect to its subject matter and constitutes (along with the documents (including the
Merger Agreement) referred to in this Agreement) a complete and exclusive statement of the terms of the agreement between the parties with respect to its subject matter. This Agreement may not be
amended except by a written agreement executed by Parent, Representative and Escrow Agent. 

17.   GOVERNING LAW  

        This Agreement shall be governed by the laws of the State of Colorado without regard to conflicts of law principles that would require the application of any
other law. 

18.   TRANSFER OF ESCROW SHARES  

        The Company Shareholders shall not be permitted to transfer any of the Escrow Shares hereunder except in accordance with applicable securities laws and only to
such Company Shareholder's family member or a trust, partnership or limited liability company for the benefit of the Company Shareholder or such Company Shareholder's immediate family member and then
only on the condition that any transferee of Escrow Shares agrees to be bound by the terms of this Agreement by executing and delivering to Parent and Escrow Agent a counterpart signature page to this
Agreement. In furtherance of the foregoing, the transferee shall deposit with the Escrow Agent the Escrow Certificate representing the Escrow Shares transferred hereby (the
"Transferred Share Certificate"), along with a Stock Power for such shares duly executed in blank by such transferee, whereupon the Escrow Shares
represented by the Transferred Share Certificate shall become "Escrow Shares" for all purposes hereunder. In the event less than all of the Escrow Shares evidenced by an Escrow Certificate are to be
transferred in accordance with this section, Parent shall cause transfer agent to promptly issue (i) the Transferred Share Certificate to the transferee and (ii) an Escrow Certificate
representing the balance of the Escrow Shares not transferred hereby to the transferring Company Shareholder. 

EXECUTION
PAGE FOLLOWS 

7

 

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

	

 	
 	
PARENT:
	
 	
 	
Evolving Systems, Inc.
	
 	
 	

By:	
 	

/s/  ANITA T. MOSELEY      

	 	 	Name:	 	Anita T. Moseley
	 	 	Title:	 	Senior Vice President
	

 	
 	
ESCROW AGENT:
	
 	
 	
Wells Fargo Bank West, N.A.
	
 	
 	

By:	
 	

/s/  DAVID RINEHART      

	 	 	Name:	 	David Rinehart
	 	 	Title:	 	Trust Officer
	

 	
 	
REPRESENTATIVE:
	
 	
 	

/s/  JOHN M. CULLEN, JR.      
 John M. Cullen, Jr.
	

 	
 	
COMPANY SHAREHOLDERS:
	
 	
 	

/s/  JOHN M. CULLEN, JR.      
 John M. Cullen, Jr.
	

 	
 	

/s/  JEFFREY A. CURRAN      
 Jeffrey A. Curran
	

 	
 	

/s/  MICHAEL E. BRANNON      
 Michael E. Brannon
	

 	
 	

/s/  STEPHEN J. VALACHOVIC      
 Stephen J. Valachovic

8

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HOLD-BACK SHARE ESCROW AGREEMENT

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00060-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00060-of-00352.parquet"}]]