Document:

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                                                                    EXHIBIT 10.2

                            INDUSTRIAL SPACE LEASE
                              (Single Tenant Net)

THIS LEASE, dated March 30, 2000 for reference purposes only, is made by and
between BR3 PARTNERS, A GENERAL PARTNERSHIP ("LANDLORD"), and ULTRACARD, INC., A
NEVADA CORPORATION.("TENANT"), to be effective and binding upon the parties as
of the date the last of the designated signatories to this Lease shall have
executed this Lease (the "Effective Date of this Lease").

                                   ARTICLE 1
                                  REFERENCES

1.1 REFERENCES: All references in this Lease (subject to any further
clarifications contained in this Lease) to the following terms shall have the
following meaning or refer to the respective address, person, date, time period,
amount, percentage, calendar year or fiscal year as below set forth:

A.   Tenant's Address for Notices:

     1.   After Lease Commencement: 980 University Avenue
                                    Los Gatos, CA 95032

     2.  Prior to Lease Commencement:  1550 South Bascom Avenue, Suite 100
                                       Campbell, CA

B.   Tenant's Representative:               Dan Kehoe
                Phone Number:               408-558-7000 (Prior to Commencement)

C.   Landlord's Address for Notices:        BR3 Partners

                                            985 University Avenue

                                            Suite 12

                                            Los Gatos, CA 95032

D.   Landlord's Representative:             Jim Rees

              Phone Number:                 408-354-5222

E.   Intended Commencement Date:            August 1, 2000

F.   Intended Term:                         Sixty (60) months

G.   Lease Expiration Date:                 Sixty (60) months from the Actual
                                            Lease Commencement Date

H.   Tenant's Punchlist Period:             Ten (10) days after occupancy

I.   First Month's Prepaid Rent:            $162,680.0

J.   Last Month's Prepaid Rent:             0

K.   Tenant's Security Deposit:             $996,000.00 (see Addendum, Paragraph
                                            5)

L.   Late Charge Amount:                    10% of the delinquent amount

M.   Tenant's Required Liability Coverage:  $3,000,000.00 Combined Single Limit

N.   Brokers:                               CPS

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0.   Property: That certain real property situated in the Town of Los Gatos,
     County of Santa Clara, State of California, as presently improved with one
     building, which real property is shown on the Site Plan attached hereto as
     Exhibit "A" and is commonly known as or otherwise described as follows:

               980 University Avenue
               Los Gatos, CA 95032

P.   Building: That certain Building within the Property in which the Leased
     Premises are located, which Building is shown outlined in red on Exhibit
     "A" hereto.

Q.   Outside Areas: The "Outside Areas" shall mean all areas within the Property
     which are located outside the buildings, such as pedestrian walkways,
     parking areas, landscaped areas, open areas and enclosed trash disposal
     areas.

R.   Leased Premises: All the interior space within the Building, consisting of
     approximately 66,400 square feet and, for purposes of this Lease, agreed to
     contain said number of square feet. The Leased Premises are commonly known
     as or otherwise described as follows:

               980 University Avenue
               Los Gatos, CA 95032

S.   Base Monthly Rent: The term "Base Monthly Rent" shall mean the following:

               Months 1-12        $162,680.00 Per Month
               Months 13-24       $169,187.00 Per Month
               Months 25-36       $175,955.00 Per Month
               Months 37-48       $182,993.00 Per Month
               Months 49-60       $190,313.00 Per Month

T.   Permitted Use: The term "Permitted Use" shall mean the following:

               Manufacture, warehousing, repair, and sales and service of
               electronic equipment and all related support functions including
               office and research and development.

U.   Exhibits: The term "Exhibits" shall mean the Exhibits to this Lease which
     are described as follows:

     Exhibit "A" - Site Plan showing the Property and delineating the Building
     in which the Lease Premises are located.

     Exhibit "B" - Floor Plan outlining the Lease Premises.

     Exhibit "C" - Tenant Improvement Agreement

     Exhibit "D" - Acceptance Agreement

     Exhibit "E" - Lease Guaranty

V.   Addenda: The term "Addenda" shall mean the Addendum (or Addenda) to this
     Lease which is (or are) described as follows:

               First Addendum to Lease

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                                  ARTICLE 2:
                     LEASED PREMISES, TERM AND POSSESSION

2.1 DEMISE OF LEASED PREMISES: Landlord hereby leases to Tenant and Tenant
hereby leases from Landlord for Tenant's own use in the conduct of Tenant's
business and not for purposes of speculating in real estate, for the Lease Term
and upon the the terms and subject to the conditions of this Lease, that certain
interior space described in Article 1 as the Lease Premises, reserving and
excepting to Landlord the exclusive right to all profits to be derived from any
assignments or subletting by Tenant during the Lease Term by reason of the
appreciation in the fair market rental value of the Leased Premises. Tenant's
lease of the Leased Premises, together with the appurtenant right to use the
Outside Areas as described in Paragraph 2.2 below, shall be conditioned upon and
be subject to the continuing compliance by Tenant with (i) all the terms and
conditions of this Lease, (ii) all Laws governing the use of the Leased Premises
and the Property, (iii) all Private Restrictions, easements and other matters
now of public record respecting the use of the Leased Premises and the Property,
and (iv) all reasonable rules and regulations from time to time established by
Landlord.

2.2 RIGHT TO USE OUTSIDE AREAS: As an appurtenant right to Tenant's right to the
use and occupancy of the Leased Premises, Tenant shall have the right to use the
Outside Areas in conjunction with its use of the Leased Premises solely for the
purposes for which they were designed and intended and for no other purposes
whatsoever. Tenant's right to so use the Outside Areas shall be subject to the
limitations on such use as set forth in Article 4 and shall terminate
concurrently with any termination of this Lease.

2.3 LEASE COMMENCEMENT DATE AND LEASE TERM: The term of this Lease shall begin,
and the Lease Commencement Date shall be deemed to have occurred, on the
Intended Commencement Date (as set forth in Article I) unless either (i)
Landlord is unable to deliver possession of the Leased Premises to Tenant on the
Intended Commencement Date, in which case the Lease Commencement Date shall be
as determined pursuant to Paragraph 2.4 below or (ii) Tenant enters into
possession of the Leased Premises prior to the Intended Commencement Date, in
which case the Lease Commencement Date shall be as determined pursuant to
Paragraph 2.7 below (the "Lease Commencement Date"). The term of this Lease
shall end on the Lease Expiration Date (as set forth in Article I), irrespective
of whatever date the Lease Commencement Date is determined to be pursuant to the
foregoing sentence. The Lease Term shall be that period of time commencing on
the Lease Commencement Date and ending on the Lease Expiration Date (the "Lease
Term").

2.4 DELIVERY OF POSSESSION: Landlord shall deliver to Tenant possession of the
Leased Premises on or before the Intended Commencement Date (as set forth in
Article 1) in their presently existing condition, broom clean, unless Landlord
shall have agreed, as a condition to Tenant's obligation to accept possession of
the Leased Premises pursuant to a written Addenda attached to and made a part of
this Lease, to modify existing interior improvements or to make, construct
and/or install additional specified improvements within the Leased Premises or
to the Outside Areas, in which case Landlord shall deliver to Tenant possession
of the Leased Premises on or before the Intended Commencement Date as so
modified and/or improved. If Landlord is unable to so deliver possession of the
Leased premises to Tenant in the agreed condition on or before the Intended
Commencement Date, for whatever reason, Landlord shall not be in default under
this Lease, nor shall this Lease be void, voidable or cancelable by Tenant until
the lapse of one hundred twenty days after the Intended Commencement date (the
"delivery grace period"); however, the Lease Commencement Date shall not be
deemed to have occurred until such date as Landlord notifies Tenant that the
Leased Premises are in the agreed condition and are Ready for Occupancy.
Additionally, the delivery grace period above set forth shall be extended for
such number of days as Landlord may be delayed in making the agreed improvements
and/or delivering possession of the Leased Premises to Tenant by reason of Force
Majeure or the actions of Tenant. If Landlord is unable to deliver possession of
the Leased Premises in the agreed condition to Tenant within the described
delivery grace period (including any extensions thereof by reason of Force
Majeure or the actions of Tenant), then Tenant's sole remedy shall be to cancel
and terminate this Lease, and in no event shall Landlord be liable in damages to
Tenant for such delay. Tenant may not cancel this Lease at any time after the
date Landlord notifies Tenant that the Leased Premises have been put into the
agreed condition and are Ready for Occupancy.

2.5 ACCEPTANCE OF POSSESSION: Tenant acknowledges that it has inspected the
Leased Premises and is willing to accept them in their existing condition, broom
clean, unless Landlord shall have agreed, as a condition to Tenant's obligation
to accept possession of the Leased Premises pursuant to a written Addenda
attached to and made a part of this Lease, to modify existing interior
improvements or to make, construct and/or install specified improvements within
the Leased Premises, in which case Tenant agrees to accept possession of the
Leased Premises when Landlord has substantially completed such modifications or
improvements and the Leased Premises are Ready for Occupancy. If Landlord shall
have so modified existing improvements or constructed additional improvements
within the Leased Premises for Tenant, Tenant shall, within Tenant's Punchlist
Period (as set forth in Article 1) which shall commence on the date that
Landlord notifies Tenant that the agreed improvements have been completed and
the Lease Premises are Ready for Occupancy, submit to Landlord a punchlist of
all incomplete and/or improper work performed by Landlord, Upon the expiration
of Tenant's Punchlist Period, Tenant shall be conclusively deemed to have
accepted the Leased Premises in their then-existing condition as so delivered by
Landlord to Tenant, except as to those items reasonably set forth in the
punchlist submitted to Landlord prior to the expiration of said period. Landlord
agrees to correct all items reasonably set forth in Tenant's punchlist, provided
that such punchlist was submitted to Landlord within Tenant's Punchlist Period.
Additionally, Landlord agrees to place in good working order all existing
plumbing, lighting, heating, ventilating and air conditioning systems within the
Leased Premises and all man doors and roll-up truck doors serving the Leased
Premises to the extent that such systems and/or items are not in good operating
condition as of the date Tenant accepts possession of the Leased Premises;
provided that, and

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only if, Tenant notifies Landlord in writing of such failures or deficiencies
within five business days from the date Tenant so accepts possession of the
Leased Premises.

2.6 SURRENDER OF POSSESSION: Immediately prior to the expiration or upon the
sooner termination of this Lease, Tenant shall remove all of Tenant's signs from
the exterior of the Building and shall remove all of Tenant's equipment, trade
fixtures, furniture, supplies, wall decorations and other personal property from
within the Leased Premises, the Building and the Outside Areas, and shall vacate
and surrender the Leased Premises, the Building, the Outside Areas and the
Property to Landlord in the same condition, broom clean, as existed at the Lease
Commencement Date, reasonable wear and tear excepted. Tenant shall repair all
damage to the Leased Premises, the exterior of the Building and the Outside
Areas caused by Tenant's removal of Tenant's property. Tenant shall patch and
refinish, to Landlord's reasonable satisfaction, all penetrations made by Tenant
or its employees to the floor, walls or ceiling of the Leased Premises, whether
such penetrations were made with Landlord's approval or not. Tenant shall repair
or replace all stained or damaged ceiling tiles, wall coverings and floor
coverings to the reasonable satisfaction of Landlord. Tenant shall repair all
damage caused by Tenant to the exterior surface of the Building and the paved
surfaces of the Outside Areas and, where necessary, replace or resurface same.
Additionally, Tenant shall, prior to the expiration or sooner termination of
this Lease, remove any improvements constructed or installed by Tenant which
Landlord requests be so removed by Tenant and repair all damage caused by such
removal. If the Leased Premises, the Building, the Outside Areas and the
Property are not surrendered to Landlord in the condition required by this
Paragraph at the expiration or sooner termination of this Lease, Landlord may at
Tenant's expense, so remove Tenant's signs, property and/or improvements not so
removed and make such repairs and replacements not so made or hire, at Tenant's
expense, independent contractors to perform such work. Tenant shall be liable to
Landlord for all costs incurred by Landlord in returning the Leased Premises,
the Building and the Outside Areas to the required condition, together with
interest on all costs so incurred from the date paid by Landlord at the then
maximum rate of interest not prohibited or made usurious by Law until paid.
Tenant shall pay to Landlord the amount of all costs so incurred plus interest
as above set forth within ten days of Landlord's billing Tenant for same. Tenant
shall indemnify Landlord against loss or liability resulting from delay by
Tenant in so surrendering the Leased Premises, including, without limitation,
any claims made by any succeeding tenant or any losses to Landlord due to lost
opportunities to lease to succeeding tenants.

2.7 EARLY OCCUPANCY: If Tenant enters into possession of the Leased Premises
prior to the Intended Commencement Date (or permits its contractors to enter the
Leased Premises prior to the Intended Commencement Date), unless otherwise
agreed in writing by Landlord, the Lease Commencement Date shall be deemed to
have occurred on such sooner date, and Tenant shall be obligated to perform all
its obligations under this Lease, including the obligation to pay rent, from
that sooner date.

                                  ARTICLE 3:
                   RENT, LATE CHARGES AND SECURITY DEPOSITS

3.1 BASE MONTHLY RENT: Commencing on the Lease Commencement Date (as determined
pursuant to Paragraph 2.3 above) and continuing throughout the Lease Term,
Tenant shall pay to Landlord, without prior demand therefore, in advance on the
first day of each calendar month, as base monthly rent, the amount set forth as
"Base Monthly Rent" in Article 1 (the "Base Monthly Rent").

3.2 ADDITIONAL RENT: Commencing on the Lease Commencement Date (as determined
pursuant to Paragraph 2.3 above) and continuing throughout the Lease Term, in
addition to the Base Monthly Rent, Tenant shall pay to Landlord as additional
rent (the "Additional Rent") the following amounts:

     A.   An amount equal to all Property Operating Expenses (as defined in
Article 13) incurred by Landlord. Payment shall be made by whichever of the
following methods (or combination of methods) is (are) from time to time
designated by Landlord:

          (1)  Landlord may bill to Tenant, on a periodic basis not more
frequently than monthly, the amount of such expenses (or group of expenses) as
paid or incurred by Landlord, and Tenant shall pay to Landlord the amount of
such expenses within ten days after receipt of a written bill therefore from
Landlord; and/or

          (2)  Landlord may deliver to Tenant Landlord's reasonable estimate of
any given expense (such as Landlord's Insurance Costs or Real Property Taxes),
or group of expenses, which it anticipates will be paid or incurred for the
ensuing calendar or fiscal year, as Landlord may determine, and Tenant shall pay
to Landlord an amount equal to the estimated amount of such expenses for such
year in equal monthly installments during such year with the installments of
Base Monthly Rent.

          (3)  Landlord reserves the right to change from time to time the
methods of billing Tenant for any given expense or group of expenses or the
periodic basis on which such expenses are billed.

     B.   Landlord's share of the consideration received by Tenant upon certain
assignments and sublettings as required by Article 7.

     C.   Any legal fees and costs that Tenant is obligated to pay or reimburse
to Landlord pursuant to Article 13: and

     D.   Any other charges or reimbursements due Landlord from Tenant pursuant
to the terms of this Lease other than late charges and interest on defaulted
rent.

3.3 YEAR-END ADJUSTMENTS: If Landlord shall have elected to bill Tenant for the
Property Operating Expenses (or any group of such expenses) on an estimated
basis in accordance with the provisions of Paragraph 3.2A(2) above, Landlord
shall furnish to Tenant within three months following the end of the applicable
calendar or fiscal year, as the case may be, a statement setting

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forth (i) the amount of such expenses paid or incurred during the just ended
calendar or fiscal year, as appropriate, and (ii) the amount that Tenant has
paid to Landlord for credit against such expenses for such period. If Tenant
shall have paid more than its obligation for such expenses for the stated
period, Landlord shall, at its election, either (i) credit the amount of such
overpayment toward the next ensuing payment or payments of Additional Rent that
would otherwise be due or (ii) refund in cash to Tenant the amount of such
overpayment. If such year end statement shall show that Tenant did not pay its
obligation for such expenses in full, then Tenant shall pay to Landlord the
amount of such underpayment within ten days from Landlord's billing of same to
Tenant. The provisions of this Paragraph shall survive the expiration or sooner
termination of this Lease.

3.4 LATE CHARGE AND INTEREST ON RENT IN DEFAULT: Tenant acknowledges that the
late payment by Tenant of any monthly installment of Base Monthly Rent or any
Additional Rent will cause Landlord to incur certain costs and expenses not
contemplated under this Lease, the exact amounts of which are extremely
difficult or impractical to fix. Such costs and expenses will include, without
limitation, administration and collection costs and processing and accounting
expenses. Therefore, if any installment of Base Monthly Rent is not received by
Landlord from Tenant within six calendar days after the same becomes due, Tenant
shall immediately pay to Landlord a late charge in an amount equal to the amount
set forth in Article I as the "Late Charge Amount", and if any Additional Rent
is not received by Landlord within six calendar days after same becomes due,
Tenant shall immediately pay to Landlord a late charge in an amount equal to ten
percent of the Additional Rent not so paid. Landlord and Tenant agree that this
late charge represents a reasonable estimate of such costs and expenses and is
fair compensation to Landlord for the anticipated loss Landlord would suffer by
reason of Tenant's failure to make timely payment. In no event shall this
provision for a late charge be deemed to grant to Tenant a grace period or
extension of time within to pay any rental installment or prevent Landlord from
exercising any right or remedy available to Landlord upon Tenant's failure to
pay each rental installment due under this Lease when due, including the right
to terminate this Lease. If any rent remains delinquent for a period in excess
of six calendar days, than, in addition to such late charge, Tenant shall pay to
Landlord interest on any rent that is not so paid from said sixth day at the
then maximum rate of interest not prohibited or made usurious by Law until paid.

3.5 PAYMENT OF RENT: All rent shall be paid in lawful money of the United
States, without any abatement, reduction or offset for any reason whatsoever, to
Landlord at such address as Landlord may designate from time to time. Tenant's
obligation to pay Base Monthly Rent and all Additional Rent shall be
appropriately prorated at the commencement and expiration of the Lease Term. The
failure by Tenant to pay any Additional Rent as required pursuant to this Lease
when due shall be treated the same as a failure by Tenant to pay Base Monthly
Rent when due, and Landlord shall have the same rights and remedies against
Tenant as Landlord would have if Tenant failed to pay: the Base Monthly Rent
when due.

3.6 PREPAID RENT: Tenant has paid to Landlord the amount set forth in Article 1
as "First Month's Prepaid Rent" as prepayment of rent for credit against the
first installment(s) of Base Monthly Rent due hereunder. Additionally, Tenant
has paid to Landlord the amount set forth in Article I as "Last Month's Prepaid
Rent" as prepayment of rent for credit against the last installment's of Base
Monthly Rent due hereunder, subject, however, to the provisions of Paragraph 3.7
below:

3.7 SECURITY DEPOSIT: Tenant has deposited with Landlord the amount set forth in
Article 1 as the "Security Deposit" as security for the performance by Tenant of
the terms of this Lease to be performed by Tenant, and not as prepayment of
rent. Landlord may apply such portion or portions of the Security Deposit as are
reasonably necessary for the following purposes: (i) to remedy any default by
Tenant in the payment of Base Monthly Rent or Additional Rent or a late charge
or interest on defaulted rent; (ii) to repair damage to the Leased Premises, the
Building or the Outside Areas caused by Tenant; (iii) to clean and repair the
Leased Premises, the Building or the Outside Areas following their surrender to
Landlord if not surrendered in the condition required pursuant to the provisions
of Article 2; and (iv) to remedy any other default of Tenant to the extent
permitted by Law including, without limitation, paying in full on Tenant's
behalf any sums claimed by materialmen or contractors of Tenant to be owing to
them by Tenant for work done or improvements made at Tenant's request to the
Leased Premises. In this regard, Tenant hereby waives any restrictions on the
uses to which the Security Deposit may be applied as contained in Section
1950.7(c) of the California Civil Code and/or any successor statute. In the
event the Security Deposit or any portion thereof is so used, Tenant shall pay
to Landlord, promptly upon demand, an amount in cash sufficient to restore the
Security Deposit to the full original sum. If Tenant fails to promptly restore
the Security Deposit and if Tenant shall have paid to Landlord any sums as "Last
Month's Prepaid Rent", Landlord may, in addition to any other remedy Landlord
may have under this Lease, reduce the amount of Tenant's Last Month's Prepaid
Rent by transferring all or portions of such Last Month's Prepaid Rent to
Tenant's Security Deposit until such Security Deposit is restored to the amount
set forth in Article 1. Landlord shall not be deemed a trustee of the Security
Deposit. Landlord may use the Security Deposit in Landlord's ordinary business
and shall not be required to segregate it from its general accounts. Tenant
shall not be entitled to any interest on the Security Deposit. If Landlord
transfers the Building or the Property during the Lease Term, Landlord may pay
the Security Deposit to any subsequent owner in conformity with the provisions
of Section 1950.7 of the California Civil Code and/or any successor statute, in
which event the transferring landlord shall be released from all liability for
the return of the Security Deposit. Tenant specifically grants to Landlord (and
Tenant hereby waives the provisions of California Civil Code Section 1950.7 to
the contrary) a period of sixty days following a surrender of the Leased
Premises by Tenant to Landlord within which to restore the Security Deposit
(less permitted deductions) to Tenant, it being agreed between Landlord and
Tenant that sixty days is a reasonable period of time within which to inspect
the Leased Premises, make required repairs, receive and verify workmen's
billings therefore, and prepare a final accounting with respect to such deposit.
In no event shall the Security Deposit, or any portion thereof, be considered
prepaid rent.

                                  ARTICLE 4:
                    USE OF LEASE PREMISES AND OUTSIDE AREA

4.1 PERMITTED USE: Tenant shall be entitled to use the Leased Premises solely
for the "Permitted Use" as set forth in Article I and for no other purpose
whatsoever. Tenant shall continuously and without interruption use the Leased
Premises for such purpose for the entire Lease Term. Any discontinuance of such
use for a period of thirty consecutive calendar days shall be, at Landlord's
election, a default by Tenant under the terms of this Lease. Tenant shall have
the right to use the Outside Areas in conjunction with

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its Permitted Use of the Leased Premises solely for the purposes for which they
were designed and intended and for no other purposes whatsoever.

4.2 GENERAL LIMITATIONS ON USE: Tenant shall not do or permit anything to be
done in or about the Leased Premises, the Building, the Outside Areas or the
Property which does or could (i) jeopardize the structural integrity of the
Building or (ii) cause damage to any part of the Leased Premises, the Building,
the Outside Areas or the Property. Tenant shall not operate any equipment within
the Leased Premises which does or could (i) injure, vibrate or shake the Leased
Premises or the Building, (ii) damage, overload or impair the efficient
operation of any electrical, plumbing, heating, ventilating or air conditioning
systems within or servicing the Leased Premises or the Building or (iii) damage
or impair the efficient operation of the sprinkler systems (if any) within or
servicing the Leased Premises or the Building. Tenant shall not install any
equipment or antennas on or make any penetrations of the exterior walls or roof
of the Building. Tenant shall not affix any equipment to or make any
penetrations or cuts in the floor, ceiling or walls of the Leased Premises.
Tenant shall not place any loads upon the floors, wails, ceiling or roof systems
which could endanger the structural integrity of the Building or damage its
floors, foundations or supporting structural components. Tenant shall not place
any explosive, flammable or harmful fluids or other waste materials in the
drainage systems of the Leased Premises, the Building, the Outside Areas or the
Property. Tenant shall not drain or discharge any fluids in the landscaped areas
or across the paved areas of the Property. Tenant shall not use any of the
Outside Areas for the storage of its materials, supplies, inventory or
equipment, and all such materials, supplies, inventory or equipment shall at all
times be stored within the Leased Premises. Tenant shall not commit nor permit
to be committed any waste in or about the Leased Premises, the Building, the
Outside Areas or the Property.

4.3 NOISE AND EMISSIONS: All noise generated by Tenant in its use of the Leased
Premises shall be confined or muffled so that it does not interfere with the
businesses of or annoy the occupants and/or users of adjacent properties. All
dust, fumes, odors and other emissions generated by Tenant's use of the Leased
Premises shall be sufficiently dissipated in accordance with sound environmental
practices and exhausted from the Leased Premises in such a manner so as not to
interfere with the businesses of or annoy the occupants and/or users of adjacent
properties, or cause any damage to the Leased Premises, the Building, the
Outside Areas or the Property or any component part thereof or the property of
adjacent property owners.

4.4 TRASH DISPOSAL: Tenant shall provide trash bins (or other adequate garbage
disposal facilities) within the trash enclosure areas provided or permitted by
Landlord outside the Leased Premises sufficient for the interim disposal of all
of its trash, garbage and waste. All such trash, garbage and waste temporarily
stored in such areas shall be stored in such a manner so that it is not visible
from outside of such areas, and Tenant shall cause such trash, garbage and waste
to be regularly removed from the Property at Tenant's sole cost. Tenant shall at
all times keep the Leased Premises, the Building, the Outside Areas and the
Property in a clean, safe and neat condition free and clear of all trash,
garbage, waste and/or boxes, pallets and containers containing same at all
times.

4.5 PARKING: Tenant shall not, at any time, park or permit to be parked any
recreational vehicles, inoperative vehicles or equipment in the Outside Areas or
on any portion of the Property. Tenant agrees to assume responsibility for
compliance by its employees and invitees with the parking provisions contained
herein. If Tenant or its employees park any vehicle within the Property in
violation of these provisions, then Landlord may, in addition to any other
remedies Landlord may have under this Lease, charge Tenant, as Additional Rent,
and Tenant agrees to pay, as Additional Rent, Ten Dollars per day for each day
or partial day that each such vehicle is so parked within the Property.

4.6 SIGNS: Other than one business identification sign which is first approved
by Landlord in accordance with this Paragraph, Tenant shall not place or install
on or within any portion of the Leased Premises, the exterior of the Building,
the Outside Areas or the Property any sign, advertisement, banner, placard, or
picture which is visible from the exterior of the Leased Premises. Tenant shall
not place or install on or within any portion of the Leased Premises, the
exterior of the Building, the Outside Areas or the Property any business
identification sign which is visible from the exterior of the Leased Premises
until Landlord shall have first approved in writing the location, size, content,
design, method of attachment and material to be used in the making of such sign.
Any sign, once approved by Landlord, shall be installed only in strict
compliance with Landlord's approval, at Tenant's expense, using a person first
approved by Landlord to install same. Landlord may remove any signs (which have
not been first approved in writing by Landlord), advertisements, banners
placards or pictures so placed by Tenant on or within the Leased Premises, the
exterior of the Building, the Outside Areas or the Property and charge to Tenant
the cost of such removal, together with any costs incurred by Landlord to repair
any damage caused thereby, including any cost incurred to restore the surface
upon which such sign was so affixed to its original condition. Tenant shall
remove all of Tenant's signs, repair any damage caused thereby, and restore the
surface upon which the sign was affixed to its original condition, all to
Landlord's reasonable satisfaction, upon the termination of this Lease.

4.7 COMPLIANCE WITH LAWS AND PRIVATE RESTRICTIONS: Tenant shall abide by and
shall promptly observe and comply with, at its sole cost and expense, all Laws
and Private Restrictions respecting the use and occupancy of the Leased
Premises, the Building, the Outside Areas or the Property including, without
limitation, all Laws governing the use and/or disposal of hazardous materials,
and shall defend with competent counsel, indemnify and hold Landlord harmless
from any claims, damages or liability resulting from Tenant's failure to do so.
The indemnity provision of this Paragraph shall survive the expiration or sooner
termination of this Lease, with respect to any activities of Tenant occurring on
or about the Property while Tenant was in possession of the Lease Premises.

4.8 COMPLIANCE WITH INSURANCE REQUIREMENTS: With respect to any insurance
policies required or permitted to be carried by Landlord in accordance with the
provisions of this Lease, Tenant shall not conduct (or permit any other person
to conduct) any activities nor keep, store or use (or allow any other person to
keep, store or use) any item or thing within the Leased Premises, the Building,
the Outside Areas or the Property which (i) is prohibited under the terms of any
of such policies, (ii) could result in the termination of the coverage afforded
under any of such policies, (iii) could give to the insurance carrier the right
to cancel any of such policies, or (iv) could cause an increase in the rates
(over standard rates) charges for the coverage afforded under any of such
policies. Tenant shall comply with all requirements of any insurance company,
insurance underwriter, or Board of Fire

                                       6
<PAGE>

Underwriters which are necessary to maintain, at standard rates, the insurance
coverage's carried by either Landlord or Tenant pursuant to this Lease.

4.9  LANDLORD'S RIGHT TO ENTER: Landlord and its agents shall have the right to
enter the Leased Premises during normal business hours after giving Tenant
reasonable notice and subject to Tenant's reasonable security measures for the
purpose of (i) inspecting the same; (ii) showing the Leased Premises to
prospective purchasers, mortgages or tenants: (iii) making necessary
alterations, additions or repairs; (iv) performing any of Tenant's obligations
when Tenant has failed to do so. Landlord shall have the right to enter the
Leased Premises during normal business hours (or as otherwise agreed), subject
to Tenant's reasonable security measures, for purposes of supplying any
maintenance or services agreed to be supplied by Landlord. Landlord shall have
the right to enter the Outside Areas during normal business hours for purposes
of (i) inspecting the exterior of the Building and Outside Areas, (ii) posting
notices of non-responsibility, and (iii) supplying any services to be provided
by Landlord. Any entry into the Leased Premises or the Outside Areas obtained by
Landlord in accordance with this Paragraph shall not under any circumstances be
construed or deemed to be a forcible or unlawful entry into, or a detainer of,
the Leased Premises, or an eviction, actual or constructive of Tenant from the
Leased Premises or any portion thereof.

4.10 USE OF OUTSIDE AREAS: Tenant, in its use of the Outside Areas, shall at all
times keep the Outside Areas in a safe condition free and clear of all
materials, equipment, debris, trash (except within existing enclosed trash
areas), inoperable vehicles, and other items which are not specifically
permitted by Landlord to be stored or located thereon by Tenant. If, in the
opinion of Landlord, unauthorized persons are using any of the Outside Areas by
reason of, or under claim of, the express or implied authority or consent of
Tenant, then Tenant, upon demand of Landlord, shall restrain, to the fullest
extent then allowed by Law, such unauthorized use, and shall initiate such
appropriate proceedings as may be required to so restrain such use.

4.11 RULES AND REGULATIONS: Landlord shall have the right from time to time to
establish reasonable rules and regulations and/or amendments or additions
thereto respecting the use of the Leased Premises and the Outside Areas for the
care and orderly management of the Property. Upon delivery to Tenant of a copy
of such rules and regulations or any amendments or additions thereto, Tenant
shall comply with such rules and regulations. A violation by Tenant of any of
such rules and regulations shall constitute a default by Tenant under this
Lease. If there is a conflict between the rules and regulations and any of the
provisions of this Lease, the provisions of this Lease shall prevail. Landlord
shall not be responsible or liable to Tenant for the violation of such rules and
regulations by any other tenant of the Property.

4.12 ENVIRONMENTAL PROTECTION: Landlord may voluntarily cooperate in a
reasonable manner with the efforts of all governmental agencies in reducing
actual or potential environmental damage. Tenant shall not be entitled to
terminate this Lease or to any reduction in or abatement of rent by reason of
such compliance or cooperation. Tenant agrees at all times to cooperate fully
with Landlord and to abide by all rules and regulations and requirements which
Landlord may reasonably prescribe in order to comply with the requirements and
recommendations of governmental agencies regulating, or otherwise involved in,
the protection of the environment.

                                   ARTICLE 5
                 REPAIRS, MAINTENANCE, SERVICES AND UTILITIES

5.1  REPAIR AND MAINTENANCE: Except in the case of damage to or destruction of
the Leased Premises, the Building, the Outside Areas or the Property caused by
an Act of God or other peril, in which case the provisions of Article 10 shall
control, the parties shall have the following obligations and responsibilities
with respect to the repair and maintenance of the Leased Premises, the Building
and the Outside Areas.

     A.   Tenants Obligation:  Tenant shall, at all times during the Lease Term
and at its sole cost and expense, regularly clean and continuously keep and
maintain in good order, condition and repair the Leased Premises and every part
thereof including, without limiting the generality of the foregoing, (i) all
interior walls, floors and ceilings, (ii) all windows, doors and skylights,
(iii) all electrical wiring, conduits, connectors and fixtures, (iv) all
plumbing, pipes, sinks, toilets, faucets and drains, (v) all lighting fixtures,
bulbs and lamps, (vi) all heating ventilating and air conditioning equipment,
and (vii) all entranceways to the Leased Premises. Tenant, if requested to do so
by Landlord, shall hire, at Tenant's sole cost and expense, a licensed heating,
ventilating and air conditioning contractor to regularly and periodically (not
less frequently than every three months) inspect and perform required
maintenance on the heating, ventilating and air conditioning equipment and
systems serving the Leased Premises, or alternatively, Landlord may, at its
election, contract in its own name for such regular and periodic inspections of
and maintenance on such heating, ventilating and air conditioning equipment and
systems and charge to Tenant, as additional Rent, the cost thereof. Tenant
shall, at all times during the Lease Term, keep in a clean and safe condition
the Outside Areas. Tenant shall regularly and periodically sweep and clean the
driveways and parking areas. Tenant shall, at its sole cost and expense, repair
all damage to the Leased Premises, the Building, the Outside Areas or the
Property caused by the activities of Tenant, its employees, invitees or
contractors promptly following written notice from Landlord to so repair such
damage. If Tenant shall fail to perform the required maintenance or fail to make
repairs required of it pursuant to this Paragraph within a reasonable period of
time following notice from Landlord to do so, then Landlord may, at its election
and without waiving any other remedy it may otherwise have under this Lease or
at Law, perform such maintenance or make such repairs and charge to Tenant, as
Additional Rent, the costs so incurred by Landlord for same. All glass within or
a part of the Leased Premises, both interior and exterior, is at the sole risk
of Tenant and any broken glass shall promptly be replaced by Tenant at Tenant's
expense with glass of the same kind, size and quality.

     B.   Landlord's Obligation:  Landlord shall, at all times during the Lease
Term, maintain in good condition and repair: (i) the exterior and structural
parts of the Building (including the foundation, subflooring, load-bearing and
exterior wails, and roof); and (ii) the landscaped areas located outside the
Building. The provisions of this Subparagraph B shall in no way limit the right
of Landlord to charge to Tenant, as Additional Rent pursuant to Article 3 (to
the extent permitted pursuant to Article 3), the costs incurred by Landlord in
performing such maintenance and/or making such repairs.

                                       7
<PAGE>

5.2 UTILITIES: Tenant shall arrange, at its sole cost and expense and in its own
name, for the supply of gas and electricity to the Leased Premises. In the event
that such services are not separately metered, Tenant shall, at its sole
expense, cause such meters to be installed. Landlord shall maintain the water
meter(s) in its own name, provided, however, that if at any time during the
Lease Term Landlord shall require Tenant to put the water service in Tenant's
name, Tenant shall do so at Tenant's sole cost. Tenant shall be responsible for
determining if the local supplier of water, gas and electricity can supply the
needs of Tenant and whether or not the existing water, gas and electrical
distribution systems within the Building and the Leased Premises are adequate
for Tenant's needs. Tenant shall be responsible for determining if the existing
sanitary and storm sewer systems now servicing the Leased Premises and the
Property are adequate for Tenant's needs. Tenant shall pay all charges for
water, gas, electricity, and storm and sanitary sewer services as so supplied to
the Leased Premises, irrespective of whether or not the services are maintained
in Landlord's or Tenant's name.

5.3 SECURITY: Tenant acknowledges that Landlord has not undertaken any duty
whatsoever to provide security for the Leased Premises, the Building, the
Outside Areas or the Property and accordingly, Landlord is not responsible for
the security of same or the protection of Tenant's property or Tenant's
employees, invitees or contractors. To the extent Tenant determines that such
security or protection services are advisable or necessary, Tenant shall arrange
for and pay the costs of providing same.

5.4 ENERGY AND RESOURCE CONSUMPTION: Landlord may voluntarily cooperate in a
reasonable manner with the efforts of governmental agencies and/or utility
suppliers in reducing energy or other resource consumption within the Property.
Tenant shall not be entitled to terminate this Lease or to any reduction in or
abatement of rent by reason of such compliance or cooperation. Tenant agrees at
all times to cooperate fully with Landlord and to abide by all reasonable rules
established by Landlord (i) in order to maximize the efficient operation of the
electrical, heating, ventilating and air conditioning systems and all other
energy or other resource consumption systems within the Property and/or (ii) in
order to comply with the requirements and recommendations of utility suppliers
and governmental agencies regulating the consumption of energy and/or other
resources.

5.5 LIMITATION OF LANDLORD'S LIABILITY: Landlord shall not be liable to Tenant
for injury to Tenant, its employees, agents, invitees or contractors, damage to
Tenant's property or loss of Tenant's business or profits, nor shall Tenant be
entitled to terminate this Lease or to any reduction in or abatement of rent by
reason of (i) Landlord's failure to provide security services or systems within
the Property for the protection of the Leased Premises, the Building or the
Outside areas, or the protection of Tenant's property or Tenant's employees,
invitees, agents or contractors, or (ii) Landlord's failure to perform any
maintenance or repairs to the Leased Premises, the Building, the Outside Areas
or the Properly until Tenant shall have first notified Landlord, in writing, of
the need for such maintenance or repairs, and then only after Landlord shall
have had a reasonable period of time following its receipt of such notice within
which to perform such maintenance or repairs, or (iii) any failure,
interruption, rationing or other curtailment in the supply of water, electric
current, gas or other utility service to the Leased Premises, the Building, the
Outside Areas or the Property from whatever cause (other than Landlord's sole
active negligence or willful misconduct), or (iv) the unauthorized intrusion or
entry into the Leased Premises by third parties (other than Landlord). Under no
circumstances whatsoever shall Landlord be liable to Tenant for loss of Tenant's
business or profits, consequential damages, punitive damages nor shall Tenant be
entitled to, under any circumstances, terminate this Lease.

                                   ARTICLE 6
                         ALTERATIONS AND IMPROVEMENTS

6.1 TENANT: Tenant shall not make any alterations to or modifications of the
Leased Premises or construct any improvements within the Leased Premises until
Landlord shall have first approved, in writing, the plans and specifications
therefore, which approval shall not be unreasonably withheld. All such
modifications, alterations or improvements, once so approved, shall be made,
constructed or installed by Tenant at Tenant's expense (including all permit
fees and governmental charges related thereto), using a licensed contractor
first approved by Landlord, in substantial compliance with the Landlord approved
plans and specifications therefore. All work undertaken by Tenant shall be done
in accordance with all Laws and in a good and workmanlike manner using new
materials of good quality. Tenant shall not commence the making of any such
modifications or alterations or the construction of any such improvements until
(i) all required governmental approvals and permits shall have been obtained,
(ii) all requirements regarding insurance imposed by this Lease have been
satisfied, (iii) Tenant shall have given Landlord at least five business days
prior written notice of its intention to commence such work so that Landlord may
post and file notices of non-responsibility, and (iv) if requested by Landlord,
Tenant shall have obtained contingent liability and broad form builder's risk
insurance in an amount satisfactory to Landlord to cover any perils relating to
the proposed work not covered by insurance carried by Tenant pursuant to Article
9. In no event shall Tenant make any modifications, alterations or improvements
whatsoever to the Outside Areas or the exterior or structural components of the
Building including, without limitation, any cuts or penetrations in the floor,
roof or exterior walls of the Leased Premises. As used in this Article, the term
"modifications, alterations and/or improvements" shall include, without
limitation, the installation of additional electrical outlets, overhead lighting
fixtures, drains, sinks, partitions, doorways, or the like.

6.2 OWNERSHIP OF IMPROVEMENTS: All modifications, alterations and improvements
made or added to the Leased Premises by Tenant (other than Tenant's inventory,
equipment, movable furniture, wall decorations and trade fixtures) shall be
deemed real property and a part of the Leased Premises, but shall remain the
property of Tenant during the Lease Term. Any such modifications, alterations or
improvements, once completed, shall not be altered or removed from the Leased
Premises during the Lease Term without Landlord written approval first obtained
in accordance with the provisions of Paragraph 6.1 above. At the expiration or
sooner termination of this Lease, all such modifications, alterations and
improvements (other than Tenant's inventory, equipment, movable furniture, wall
decorations and trade fixtures) shall automatically become the property of
Landlord and shall be surrendered to Landlord as a part of the Leased Premises
as required pursuant to Article 2, unless Landlord shall require Tenant to
remove any of such modifications, alterations or improvements in accordance with
the provisions of Article 2, in which case Tenant shall so remove same. Landlord
shall have no obligation to reimburse to Tenant all or any portion of the cost
or value of any such

                                       8
<PAGE>

modifications, alterations or improvements so surrendered to Landlord. All
modifications, alterations or improvements which are installed or constructed on
or attached to the Leased Premises by Landlord at Landlord's expense shall be
deemed real property and a part of the Leased Premises and shall be the property
of Landlord. All lighting, plumbing, electrical, heating, ventilating and air
conditioning fixtures, partitioning, window coverings, wall coverings and floor
coverings installed by Tenant shall be deemed improvements to the Leased
Premises and not trade fixtures of Tenant.

6.3 ALTERATIONS REQUIRED BY LAW: Tenant shall make all modifications,
alterations and improvements to the Leased Premises, at its sole cost, that are
required by any Law because of (i) Tenant's use or occupancy of the Leased
Premises, the Building, the Outside Areas or the Property, (ii) Tenant's
application for any permit or governmental approval, or (iii) Tenant's making of
any modifications, alterations or improvements to or within the Leased Premises.
If Landlord shall, at any time during the Lease Term, be required by any
governmental authority to make any modifications, alterations or improvements to
the Building or the Property, the cost incurred by Landlord in making such
modifications, alterations or improvements, including an eighteen percent per
annum cost of money factor, shall be amortized by Landlord over the useful life
of such modifications, alterations or improvements, as determined in accordance
with generally accepted accounting standards, and the monthly amortized cost of
such modifications, alterations and improvements as so amortized shall be
considered a Property Maintenance Cost.

6.4 LIENS: Tenant shall keep the Property and every part thereof free from any
liens and shall pay when due all bills arising out of any work performed,
materials furnished, or obligations incurred by Tenant, its agents, employees or
contractors relating to the Property. If any such claim of lien is recorded
against Tenant's interest in this Lease, the Property or any part thereof,
Tenant shall bond against, discharge or otherwise cause such lien to be entirely
released within ten days after the same has been so recorded. Tenant's failure
to do so shall be conclusively deemed a material default under the terms of this
Lease.

                                  ARTICLE 7:
                      ASSIGNMENT AND SUBLETTING BY TENANT

7.1 BY TENANT: Tenant shall not sublet the Leased Premises for any portion
thereof or assign or encumber its interest in this Lease, whether voluntarily or
by operation of Law, without Landlord's prior written consent first obtained in
accordance with the provisions of this Article 7. Any attempted subletting,
assignment or encumbrance without Landlord's prior written consent, at
Landlord's election, shall constitute a default by Tenant under the terms of
this Lease. Notwithstanding the foregoing, Tenant may sublease up to, but not
exceeding, fifty percent (50%) of the Leased Premises, in the aggregate (taking
into account any then-existing sublettings of the Leased Premises to any
Affiliate(s) (as defined below)), to an Affiliate without the prior written
consent of Landlord provided that, in each instance, (i) Tenant provides
Landlord with prior written notice of the sublease in question and promptly
furnishes Landlord with the documents and information described in Section 7.3
below, (ii) the conditions described in Section 7.4 below have been fully and
completely satisfied with respect to such proposed sublease (with any purported
sublease to an Affiliate made prior to such satisfaction being void and, at
Landlord's election, shall constitute a material default by Tenant under this
Lease, all as provided in Section 7.4 below), (iii) all other terms and
conditions of this Article 7 shall apply to such sublease (other than the
requirement that Tenant obtain the prior written consent of Landlord thereto),
and (iv) such sublease is not a subterfuge by Tenant to avoid its obligations or
the transfer restrictions under this Lease. For purposes hereof, an "Affiliate"
shall mean any entity that controls, is controlled by or is under common control
with Tenant, and "control" shall mean the direct or indirect ownership of more
than fifty percent (50%) of the voting securities of any entity or possession of
the right to vote more than fifty percent (50%) of the voting interest in the
ordinary direction of the entity's affairs. Any dissolution, merger,
consolidation or other reorganization of an Affiliate following a sublease to
such Affiliate permitted to be made hereunder without Landlord's consent, or the
sale or other transfer in the aggregate over the Lease Term of a controlling
percentage (as defined in Section 7.2 below, with the term "Tenant" as used in
such definition meaning such Affiliate for purposes of such application) of the
capital stock of such Affiliate, shall be deemed a voluntarily assignment of
Tenant's interest in this Lease as it relates to the portion of the Leased
Premises being subleased by such Affiliate, which assignment shall be subject to
all the terms and conditions of this Article 7, including, without limitation,
the notice and consent requirements set forth in this Article 7. The acceptance
of rent by Landlord from any person or entity other than Tenant, or the
acceptance of rent by Landlord from Tenant with knowledge of a violation of the
provisions of this Paragraph, shall not be deemed to be a waiver by Landlord of
any provision of this Article or this Lease or to be a consent to any subletting
by Tenant or any assignment or encumbrance of Tenant's interest in this Lease.

7.2 MERGER OR REORGANIZATION: If Tenant is a corporation, any dissolution,
merger, consolidation or other reorganization of Tenant, or the sale or other
transfer in the aggregate over the Lease Term of a controlling percentage of the
capital stock of Tenant, shall be deemed a voluntary assignment of Tenant's
interest in this Lease. The phrase "controlling percentage" means the ownership
of and the right to vote stock possessing more than fifty percent of the total
combined voting power of all classes of Tenant's capital stock issued,
outstanding and entitled to vote for the election of directors. If Tenant is a
partnership, a withdrawal or change, voluntary, involuntary or by operation of
Law, of any general partner, or the dissolution of the partnership, shall be
deemed a voluntary assignment of Tenant's interest in this Lease.

7.3 LANDLORD'S ELECTION: If Tenant shall desire to assign its interest under
this Lease or to sublet the Leased Premises, Tenant must first notify Landlord,
in writing, of its intent to so assign or sublet, at lease sixty days in advance
of the date it intends to so assign its interest in this Lease or sublet the
Leased Premises but not sooner than one hundred eighty days in advance of such
date, specifying in detail the terms of such proposed assignment or subletting,
including the name of the proposed assignee or sublessee, the proposed
assignee's or sublessee's intended use of the Leased Premises, a current
financial statement of such proposed assignee or sublessee, the form of
documents to be used in effectuating such assignment or subletting and such
other information as Landlord may reasonably request. Landlord shall have a
period of fifteen days following receipt of such notice and the required
information within which to do one of the following: (a) cancel and terminate
this Lease effective as of the intended subletting or assignment date set forth
in Tenant's notice (provided, however as it relates to sublettings, said
cancellation and termination right shall only apply to a proposed subletting if,
by reason of the proposed subletting in question, seventy-five percent (75%)

                                       9
<PAGE>

or more of the Leased Premises, in the aggregate (taking into account any then-
exiting sublettings of the Leased Premises), will be sublet), or (b) if Landlord
shall not have elected to cancel and terminate this lease to either (i) consent
to such requested assignment or subletting subject to Tenant's compliance with
the conditions set forth in Paragraph 7.4 below or (ii) refuse to so consent to
such requested assignment or subletting, provided that such consent shall not be
unreasonably refused. During said fifteen day period, Tenant covenants and
agrees to supply to Landlord, upon request, all necessary or relevant
information which Landlord may reasonably request respecting such proposed
assignment of subletting and/or the proposed assignee or sublessee.

7.4 CONDITIONS TO LANDLORD'S CONSENT: If Landlord elects to consent, or shall
have been ordered to so consent by a court of competent jurisdiction, to such
requested assignment, subletting or encumbrance, such consent shall be expressly
conditioned upon the occurrence of each of the conditions below set forth, and
any purported assignment, subletting or encumbrance made or ordered prior to the
full and complete satisfaction of each of the following conditions shall be void
and, at the election of Landlord, which election may be exercised at any time
following such a purported assignment, subletting or encumbrance but prior to
the satisfaction of each of the stated conditions, shall constitute a material
default by Tenant under this Lease until cured by satisfying in full each such
condition by the assignee, sublessee or encumbrancer. The conditions are as
follows:

     A.  Landlord having approved in form and substance the assignment or
sublease agreement (or the encumbrance agreement), which approval shall not be
unreasonably withheld by Landlord if the requirements of this Article 7 are
otherwise complied with.

     B.  Each such sublessee or assignee having agreed, in writing satisfactory
to Landlord and its counsel and for the benefit of Landlord, to assume, to be
bound by, and to perform the obligations of this Lease to be performed by Tenant
(or, in the case of an encumbrance, each such encumbrancer having similarly
agreed to assume, be bound by and to perform Tenant's obligations upon a
foreclosure or transfer in lieu thereof).

     C.  Tenant having fully and completely performed all of its obligations
under the terms of this Lease through and including the date of such assignment
or subletting.

     D.  Tenant having reimbursed to Landlord all reasonable costs and
reasonable attorney's fees incurred by Landlord in conjunction with the
processing and documentation of any such requested subletting, assignment or
encumbrance.

     E.  Tenant having delivered to Landlord a complete and fully executed
duplicate original of such sublease agreement, assignment agreement or
encumbrance (as applicable) and all related agreements.

     F.  Tenant having paid, or having agreed in writing to pay as to future
payments, to Landlord one hundred percent of all assignment consideration or
excess rentals to be paid to Tenant or to any other on Tenant's behalf or for
Tenant's benefit for such assignment or subletting as follows:

          (1)  If Tenant assigns its interest under this Lease and if all or a
portion of the consideration for such assignment is to be paid by the assignee
at the time of the assignment, that Tenant shall have paid to Landlord and
Landlord shall have received an amount equal to one hundred percent of the
assignment consideration so paid or to be paid (whichever is the greater) at the
time of the assignment by the assignee; or

          (2)  If Tenant assigns its interest under this Lease and if Tenant is
to receive all or a portion of the consideration for such assignment in future
installments, that Tenant and Tenant's assignee shall have entered into a
written agreement with and for the benefit of Landlord satisfactory to Landlord
and its counsel whereby Tenant and Tenant's assignee jointly agree to pay to
Landlord an amount equal to one hundred percent of all such future assignment
consideration installments to be paid by such assignee as and when such
assignment consideration is so paid.

          (3)  If Tenant subleases the Leased Premises, that Tenant and Tenant's
sublessee shall have entered into a written agreement with and for the benefit
of Landlord satisfactory to Landlord and its counsel whereby Tenant and Tenant's
sublessee jointly agree to pay to Landlord one hundred percent of all excess
rentals to be paid by such sublessee as and when such excess rentals are so
paid.

7.5 ASSIGNMENT CONSIDERATION AND EXCESS RENTALS DEFINED: For purposes of this
Article, the term "assignment consideration" shall mean all consideration to be
paid by the assignee to Tenant or to any other on Tenant's behalf or for
Tenant's benefit as consideration for such assignment, less any commissions paid
by Tenant to a licensed real estate broker for arranging such assignment (not to
exceed then standard rates), and the term "excess rentals" shall mean all
consideration to be paid by the sublessee to Tenant or to any other on Tenant's
behalf or for Tenant's benefit for the sublease of the Leased Premises in excess
of the rent due to Landlord under the terms of this Lease for the same period,
less any commissions paid by Tenant to a licensed real estate broker for
arranging such sublease (not to exceed then standard rates). Tenant agrees that
the portion of any assignment consideration and/or excess rentals arising from
any assignment or subletting by Tenant which is to be paid to Landlord pursuant
to this Article now is and shall then be the property of Landlord and not the
property of Tenant. Assignment Consideration and Excess Rentals shall also
include: any consideration of any kind received, or to be received, by Tenant as
a result of the Transfer, if such sums are related to Tenant's interest in this
Lease or in the Premises, including payments from or on behalf of the transferee
(in excess of the book value thereof) for Tenant's assets, fixtures, leasehold
improvements, inventory, accounts, goodwill, equipment, furniture, and general
intangibles.

7.6 PAYMENTS: All payments required by this Article to be made to Landlord shall
be made in cash in full as and when they become due. At the time Tenant,
Tenant's assignee or sublessee makes each such payment to Landlord, Tenant or
Tenant's assignee or sublessee, as the case may be, shall deliver to Landlord an
itemized statement in reasonable detail showing the method by which the amount
due Landlord was calculated and certified by the party making such payment as
true and correct.

7.7 GOOD FAITH: The rights granted to Tenant by this Article are granted in
consideration of Tenant's express covenant that all pertinent allocations which
are made by Tenant between the rental value of the Leased Premises and the value
of any of Tenant's personal property which may be conveyed or leased generally
concurrently with and which may reasonably be considered a part of the same
transaction as the permitted assignment or subletting shall be made fairly,
honestly, and in good faith. If Tenant shall breach this Covenant of Good Faith,
Landlord may immediately declare Tenant to be in default under the terms of this
Lease and terminate this Lease and/or exercise any other rights and remedies
Landlord would have under the terms of this Lease in the case of a material
default by Tenant under this Lease.

                                       10
<PAGE>

7.8 EFFECT OF LANDLORD'S CONSENT: No subletting, assignment or encumbrance, even
with the consent of Landlord, shall relieve Tenant of its personal and primary
obligations to pay rent and to perform all of the other obligations to be
performed by Tenant hereunder. Consent by Landlord to one or more assignments or
encumbrances of Tenant's interest in this Lease or to one or more sublettings of
the Leased Premises shall not be deemed to be a consent to any subsequent
assignment, encumbrance or subletting. If Landlord shall have been ordered by a
court of competent jurisdiction to consent to a requested assignment or
subletting, or such an assignment or subletting shall have been ordered over the
objections of Landlord, such assignment or subletting shall not be binding
between the assignee (or sublessee) and Landlord until such time as all
conditions set forth in Paragraph 7.4 above have been fully satisfied (to the
extent not then satisfied) by the assignee or sublessee, including, without
limitation, the payment to Landlord of all agreed assignment considerations
and/or excess rentals then due Landlord.

                                   ARTICLE 8
               LIMITATION ON LANDLORD'S LIABILITY AND INDEMNITY

8.1 LIMITATION ON LANDLORD'S LIABILITY AND RELEASE: Landlord shall not be liable
to Tenant for, and Tenant hereby releases Landlord and its partners, principals,
officers, and agents and employees from, any and all liability, whether in
contract, tort or on any other basis, for any injury to or any damage sustained
by Tenant, Tenant's agents, employees, contractors or invitees; any damage to
Tenant's property; or any loss to Tenant's business, loss of Tenant's profits or
other financial loss of Tenant resulting from or attributable to the condition
of, the management of, the repair or maintenance of, the protection of, the
supply of services or utilities to, the damage to or destruction of the Leased
Premises, the Building, the Project or the Common Areas, including without
limitation (i) the failure, interruption, rationing or other curtailment or
cessation in the supply of electricity, water, gas or other utility service to
the Project, the Building or the Leased Premises; (ii) the vandalism or forcible
entry into the Building or the Leased Premises; (iii) the penetration of water
into or onto any portion of the Leased Premises through roof leaks or otherwise;
(iv) the failure to provide security and/or adequate lighting in or about the
Project, the Building or the Leased Premises; (v) the existence of any design or
construction defects within the Project, the Building or the Leased Premises;
(vi) the failure of any mechanical systems to function properly (such as the
HVAC systems); (vii) the blockage of access to any portion of the Project, the
Building or the Leased Premises, except that Tenant does not so release Landlord
from such liability to the extent such damage was proximately caused by
Landlord's gross negligence, willful misconduct, or Landlord's failure to
perform an obligation expressly undertaken pursuant to this Lease after a
reasonable period of time shall have lapsed following receipt of written notice
from Tenant to so perform such obligation. In this regard, Tenant acknowledges
that is fully apprised of the provisions of Law relating to releases, and
particularly to those provisions contained in Section 1542 of the California
Civil Code which reads as follows:

          A general release does not exceed to claims which the creditor does
          not know or suspect to exist in his favor at the time of executing the
          release, which if known by him must have materially affected his
          settlement with the debtor.

Notwithstanding such statutory provision, and for the purpose of implementing a
full and complete release and discharge, Tenant hereby (i) waives the benefit of
such statutory provision and (ii) acknowledges that, subject to the exceptions
specifically set forth herein, the release and discharge set forth in this
Paragraph is a full and complete settlement and release and discharge of all
claims and is intended to include in its effect, without limitation, all claims
which Tenant, as of the date hereof, does not know of or suspect to exist in its
favor.

8.2 TENANTS INDEMNIFICATION OF LANDLORD: Tenant shall defend with competent
counsel satisfactory to Landlord any claims made or legal actions filed or
threatened against Landlord with respect to the violation of any law, or the
death, bodily injury, personal injury, property damage, or interference with
contractual or property rights suffered by any third party (including other
tenants within the Project) occurring within the Leased Premises or resulting
from Tenant's use or occupancy of the Leased Premises, the Building or the
Outside Areas, or resulting from Tenant's activities in or about the Leased
Premises, the Building, the Outside Areas or the Property, and Tenant shall
indemnify and hold Landlord, Landlord's principals, employees, agents and
contractors harmless from any loss, liability, penalties, or expense whatsoever
(including any loss attributable to vacant space which otherwise would have been
leased, but for such activities) resulting therefrom, except to the extent
proximately caused by the gross negligence or willful misconduct of Landlord.
This indemnity agreement shall survive until the latter to occur of (i) the date
of the expiration, or sooner termination, of this Lease, or (ii) the date Tenant
actually vacates the Leased Premises.

                                  ARTICLE 9:

9.1 TENANT'S INSURANCE: Tenant shall maintain insurance complying with all of
the following:

     A.  Tenant shall procure, pay for and keep in full force and effect, at all
times during the Lease Term, the following:

     (1) Commercial general liability insurance insuring Tenant against
liability for personal injury, bodily injury, death and damage to property
occurring within the Leased Premises, or resulting from Tenants use or occupancy
of the Leased Premises, the Building, the Outside Areas or the Property, or
resulting from Tenant's activities in or about the Leased Premises or the
Property, with combined single limit coverage of no less than the amount of
Tenant's Required Liability coverage (as set forth in Article 1), which
insurance shall contain a "broad form liability" endorsement insuring Tenant's
performance of Tenant's obligation to indemnify Landlord as contained in Article
8.2.
     (2) Fire and property damage insurance in so-called "fire and extended
coverage" form insuring Tenant against loss from physical damage to Tenant's
personal property, inventory, trade fixtures and improvements within the Leased
Premises with coverage for the full actual replacement cost thereof;

     (3) Plate-glass insurance, at actual replacement cost;

     (4) Pressure vessel insurance, if applicable;

                                       11
<PAGE>

     (5) Product liability insurance (including, without limitation, if food
and/or beverages are distributed, sold and/or consumed within the Leased
Premises, to the extent obtainable, coverage for liability arising out of the
distribution, sale, use or consumption of food and/or beverages (including
alcoholic beverages, if applicable, at the Leased Premises) for not less than
Tenant's Required Liability Coverage (as set forth in Article 1);

     (6) Workers compensation insurance and any other employee benefit insurance
sufficient to comply with all Laws; and

     (7) With respect to making of alterations or the construction of
improvements or the like undertaken by Tenant, contingent liability and
builder's risk insurance, in an amount and with coverage satisfactory to
Landlord.

     B.  Each policy of liability insurance required to be carried by Tenant
pursuant to this Paragraph or actually carried by Tenant with respect to the
Leased Premises or the Property (i) shall, except with respect to insurance
required by Subparagraph A(6) above, name Landlord, and such others as are
designated by Landlord, as additional insurers; (ii) shall be primary insurance
providing that the insurer shall be liable for the full amount of the loss, up
to and including the total amount of liability set forth in the declaration of
coverage, without the right of contribution from or prior payment by any other
insurance coverage of Landlord; (iii) shall be in a form satisfactory to
Landlord; (iv) shall be carried with companies reasonably acceptable to
Landlord; (v) shall provide that such policy shall not be subject to
cancellation, lapse or change except after at least thirty days prior written
notice to Landlord; and (vi) shall contain a so-called "severability" or "cross
liability" endorsement. Each policy of property, insurance maintained by Tenant
with respect to the Leased Premises or the Property or any property therein (i)
shall provide that such policy shall not be subject to cancellation, lapse or
change except after at least thirty days prior written notice to Landlord and
(ii) shall contain a waiver and/or a permission to waive by the insurer of any
right of subrogation against Landlord, its principals, officers, employees,
agents and contractors, which might arise by reason of any payment under such
policy or by reason of any omission of Landlord, its principals, officers,
employees, agents or contractors.

     C.  Prior to the time Tenant or any of its contractors enters the Leased
Premises, Tenant shall deliver to Landlord, with respect to each policy of
insurance required to be carried by tenant pursuant to this Article, a copy of
such policy (appropriately authenticated by the insurer as having been issued,
premium paid) or a certificate of the insurer certifying in form satisfactory to
Landlord that a policy has been issued, premium paid, providing the coverage
required by this Paragraph and containing the provisions specified herein. With
respect to each renewal or replacement of any such insurance, the requirements
of this Paragraph must be complied with not less than thirty days prior to the
expiration or cancellation of the policy being renewed or replaced. Landlord
may, at any time and from time to time, inspect and/or copy any and all
insurance policies required to be carried by Tenant pursuant to this Article. If
Landlord's Lender, insurance broker or advisor or counsel reasonably determines
at any time that the amount of coverage set forth in Paragraph 9.1A for any
policy of insurance Tenant is required to carry pursuant to this Article is not
adequate, then Tenant shall increase the amount of coverage for such insurance
to such greater amount as Landlord's Lender, insurance broker or advisor or
counsel reasonably deems adequate; provided, however, such increased level of
coverage may not exceed the level of coverage for such insurance commonly
carried by comparable businesses similarly situated and operating under similar
circumstances.

9.2  LANDLORD'S INSURANCE: With respect to insurance maintained by Landlord:

     A.  Landlord shall maintain, as the minimum coverage required of it by this
Lease, fire and property damage insurance in so-called "all-risk" form insuring
Landlord (and such others as Landlord may designate) against loss from physical
damage to the Building with coverage of not less than ninety percent of the full
actual replacement cost thereof and against loss of rents for a period of not
less than six months. Such fire and property damage insurance, at Landlord's
election but without any requirements on Landlord's behalf to do so, (i) may be
written in so-called "all risk" form, excluding only those perils commonly
excluded from such coverage by Landlord's then property damage insurer; (ii) may
provide coverage for physical damage to the improvements so insured for up to
the entire full actual replacement cost thereof; (iii) may be endorsed to cover
loss or damage caused by any additional perils against which Landlord may elect
to insure, including earthquake and/or flood; (iv) may provide coverage for loss
of rents for a period of up to twelve months; and/or (v) may contain
"deductibles" not exceeding Two Thousand Five Hundred Dollars per occurrence or
up to ten percent of the Building's replacement value in the case of earthquake
and/or flood insurance). Landlord shall not be required to cause such insurance
to cover any of Tenant's personal property, inventory and trade fixtures, or any
modifications, alterations or improvements made or constructed by Tenant to or
within the Leased Premises.

     B.  Landlord shall maintain comprehensive general liability insurance
insuring Landlord (and such others as are designated by Landlord) against
liability for personal injury, bodily injury, death, and damage to property
occurring in, on or about, or resulting from the use or occupancy of the
Property, or any portion thereof, with combined single limit coverage of at
least Two Million Dollars. Landlord may carry such greater coverage as Landlord
or Landlord's Lender, insurance broker or advisor or counsel may from time to
time determine is reasonably necessary for the adequate protection of Landlord
and the Property.

     C.  Landlord may maintain any other insurance which in the opinion of its
insurance broker or advisor or legal counsel is prudent to carry under the given
circumstances.

9.3  MUTUAL WAIVER OF SUBROGATION: Landlord hereby releases Tenant, and Tenant
hereby releases Landlord and its respective principals, officers, agents,
employees and servants, from any and all liability for loss, damage or injury to
the property of the other in or about the Leased Premises or the Property which
is caused by or results from a peril or event or happening which would be
covered by insurance required to be carried by the party sustaining such loss
under the terms of this Lease, or is covered by insurance actually carried and
in force at the time of the loss, by the party sustaining such loss: provided,
however that such waiver shall be effective only to the extent permitted by the
insurance covering such loss and to the extent such insurance is not prejudiced
thereby:

                                  ARTICLE 10:
                           DAMAGE TO LEASE PREMISES

10.1 LANDLORD'S DUTY TO RESTORE: If the Leased Premises, the Building or the
Outside Areas are damaged by any peril after the Effective Date of this Lease,
Landlord shall restore the same, as and when required by this Paragraph, unless
this Lease is terminated by Landlord pursuant to Paragraph 10.3 or by Tenant
pursuant to Paragraph 10.4. If this Lease is not so terminated, then upon
availability of the insurance proceeds to Landlord (if the loss is covered by
insurance) and the issuance of all necessary

                                       12
<PAGE>

governmental permits, Landlord shall commence and diligently prosecute to
completion the restoration of the Leased Premises, the Building or the Outside
Areas, as the case may be, to the extent then allowed by Law, to substantially
the same condition in which it existed as of the Lease Commencement Date.
Landlord's obligation to restore shall be limited to the improvements
constructed by Landlord. Landlord shall have no obligation to restore any
Improvements made by Tenant to the Leased Premises or any of Tenant's personal
property, inventory or trade fixtures. Upon completion of the restoration by
Landlord, Tenant shall forthwith replace or fully repair all of Tenant's
personal property, inventory, trade fixtures and other improvements constructed
by Tenant to like or similar condition as existed at the time of such damage or
destruction.

10.2 INSURANCE PROCEEDS: All insurance proceeds available from the fire and
property damage insurance carried by Landlord shall be paid to and become the
property of Landlord. If this Lease is terminated pursuant to either Paragraph
10.3 or 10.4, all insurance proceeds available from insurance carried by Tenant
which cover loss of property that is Landlord's property or would become
Landlord's property on termination of this Lease shall be paid to and become the
property of Landlord, and the remainder of such proceeds shall be paid to and
become the property of Tenant. If this Lease is not terminated pursuant to
either Paragraph 10.3 or 10.4 all insurance proceeds available from insurance
carried by Tenant which cover loss to property that is Landlord's property shall
be paid to and become the property of Landlord, and all proceeds available from
such insurance which cover loss to property which would only become the property
of Landlord upon the termination of this Lease shall be paid to and remain the
property of Tenant.

10.3 LANDLORD'S RIGHT TO TERMINATE: Landlord shall have the option to terminate
this Lease in the event any of the following occurs, which option may be
exercised only be by delivery to Tenant of a written notice of election to
terminate within thirty days after the date of such damage or destruction.

     A.  The Building is damaged by any peril covered by valid and collectible
insurance actually carried by Landlord and in force at the time of such damage
or destruction (an "insured peril") to such an extent that the estimated cost to
restore the Building exceeds the lesser of (i) the insurance proceeds available
from insurance actually carried by Landlord, or (ii) fifty percent 50% of the
then actual replacement cost thereof;

     B.  The Building is damaged by an uninsured peril, which peril Landlord was
required to insure against pursuant to the provisions of Article 9 of this
Lease, to such an extent that the estimated cost to restore the Building exceeds
the lesser of (i) the insurance proceeds which would have been available had
Landlord carried such required insurance, or (ii) fifty percent (50%) of the
then actual replacement cost thereof:

     C.  The Building is damaged by an uninsured peril, which peril Landlord was
not required to insure against pursuant to the provisions of Article 9 of this
Lease, to any extent.

     D.  The Building is damaged by any peril and, because of the Laws then in
force, the Building (i) can not be restored at reasonable cost or (ii) if
restored, can not be used for the same use being made thereof before such
damage.

10.4 TENANT'S RIGHT TO TERMINATE: If the Leased Premises, the Building or the
Outside Areas are damaged by any peril and Landlord does not elect to terminate
this Lease or is not entitled to terminate this Lease pursuant to this Article,
then as soon as reasonably practicable, Landlord shall furnish Tenant with the
written opinion of Landlord's architect or construction consultant as to when
the restoration work required of Landlord may be complete. Tenant shall have the
option to terminate this Lease in the event any of the following occurs, which
option may be exercised in the case of A or B below only by delivery to Landlord
of a written notice of election to terminate within seven days after Tenant
receives from Landlord the estimate of the time needed to complete such
restoration:

     A.  If the time estimated to substantially complete the restoration exceeds
nine months from and after the date of such damage; or

     B.  If the damage occurred within nine months of the last day of the Lease
Term and the time estimated to substantially complete the restoration exceeds
ninety days from and after the date such restoration is commenced; or

     C.  Landlord does not complete the restoration within nine months from the
date of the damage, provided that such nine month period of time shall be
extended for such number of days as Landlord may be delayed by reason of Force
Majeure.

10.5 TENANT'S WAIVER: Landlord and Tenant agree that the provisions of Paragraph
10.4 above, captioned "Tenant's Right to Terminate", are intended to supersede
and replace the provisions contained in California Civil Code, Section 1932,
Subdivision 2, and California Civil Code, Section 1934, and accordingly, Tenant
hereby waives the provisions of said Civil Code Sections and the provisions of
any successor Code Sections or similar laws hereinafter enacted.

10.6 ABATEMENT OF RENT: In the event of damage to the Leased Premises which does
not result in the termination of this Lease, the Base Monthly Rent (and any
Additional Rent) shall be temporarily abated during the period of restoration in
proportion to the degree to which Tenant's use of the Leased Premises is
impaired by such damage.

                                  ARTICLE 11
                                 CONDEMNATION

11.1 TENANT'S RIGHT TO TERMINATE: Except as otherwise provided in Paragraph 11.4
below regarding temporary takings, Tenant shall have the option to terminate
this Lease if, as a result of any taking, (i) all of the Leased Premises is
taken, (ii) thirty three and one-third percent or more of the Leased Premises is
taken and the part of the Leased Premises that remains cannot, within a
reasonable period of time, be made reasonably suitable for the continued
operation of Tenant's business, or (iii) there is a taking of a portion of the
Outside Areas and, as a result of such taking, Landlord cannot provide parking
spaces within the Property (or within a reasonable distance therefrom) equal in
number to at lease sixty six and two -thirds percent of the number of parking
spaces existing within the Outside Areas immediately prior to such taking,
whether by rearrangement of the remaining parking areas in the Outside Areas
(including, if Landlord elects, construction of multi-deck parking structures or
restriping for compact cars

                                       13
<PAGE>

where permitted by Law). Tenant must exercise such option within a reasonable
period of time, to be effective on the later to occur of (i) the date that
possession of that portion of the Leased Premises or the Outside Areas that is
condemned is taken by the condemnor or (ii) the date Tenant vacated the Leased
Premises.

11.2 LANDLORD'S RIGHT TO TERMINATE: Except as otherwise provided in Paragraph
11.4 below regarding temporary takings, Landlord shall have the option to
terminate this Lease if, as a result of any taking, (i) all or a substantial
part of the Leased Premises is taken, (ii) more than thirty-three and one-third
percent of the Outside Areas is taken, or (iii) because of the Laws then in
force, the Leased Premises may not be used for the same use being made thereof
before such taking, whether or not restored as required by Paragraph 11.3 below.
Any such option to terminate by Landlord must be exercisable within a reasonable
period of time, to be effective as of the date possession is taken by the
condemnor.

11.3 RESTORATION: If any part of the Leased Premises, the Building or the
Outside Areas is taken and this Lease is not terminated then Landlord shall
repair any damage occasioned thereby to the remainder thereof to a condition
reasonably suitable for Tenant's continued operations and otherwise, to the
extent practicable, in the manner and to the extent provided in Paragraph 10. 1.

11.4 TEMPORARY TAKING: If any portion of the Leased Premises is temporarily
taken for a period of one year or less and such period does not extend beyond
the Lease Expiration Date, this Lease shall remain in effect. If any portion of
the Leased Premises is temporarily taken for a period which either exceeds one
year or which extends beyond the Lease Expiration Date, then Tenant shall each
independently have the option to terminate this Lease, effective on the date
possession is taken by the condemnor.

11.5 DIVISION OF CONDEMNATION AWARD: Any award for any taking of the Property,
the Building, the Outside Areas or the Leased Premises, or any portion thereof,
shall belong to and be paid to Landlord, and Tenant hereby assigns to Landlord
all of its right, title and interest in any such award; provided, however, that
Tenant shall be entitled to receive any portion of the award that is made
specifically (i) for the taking of personal property, inventory or trade
fixtures belong to Tenant, (ii) for the interruption of Tenant's business or its
moving costs, (iii) for loss of Tenant's goodwill, or (iv) for any temporary
taking where this Lease is not terminated as a result of such taking. The rights
of Landlord and Tenant regarding any condemnation shall be determined as
provided in this Article, and each party hereby waives the provisions of Section
1265.130 of the California Code of Civil Procedure, and the provisions of any
similar law hereinafter enacted, allowing either party to petition the Superior
Court to terminate this Lease and/or otherwise allocate condemnation awards
between Landlord and Tenant in the event of a taking of the Leased Premises.

11.6 ABATEMENT OF RENT: In the event of a taking of the Leased Premises which
does not result in a termination of this Lease (other than a temporary taking),
then, as of the date possession is taken by the condemning authority, the Base
Monthly Rent shall be reduced in the same proportion that the area of that part
of the Leased Premises so taken (less any addition to the area of the Leased
Premises by reason of any reconstruction) bears to the area of the Leased
Premises immediately prior to such taking.

11.7 TAKING DEFINED: The term "taking" or "taken" as used in this Article 11
shall mean any transfer or conveyance of all or any portion of the Property to a
public or quasi-public agency or other entity having the power of eminent domain
pursuant to or as a result of the exercise of such power by such an agency,
including any inverse condemnation and/or any sale or transfer by Landlord of
all or any portion of the Property to such an agency under threat of
condemnation or the exercise of such power.

                                  ARTICLE 12:
                             DEFAULT AND REMEDIES

12.1 EVENTS OF TENANT'S DEFAULT: Tenant shall be in default of its obligation
under this Lease if any of the following events occur:

     A. Tenant shall have failed to pay Base Monthly Rent or any Additional Rent
when due; or

     B. Tenant shall have done or permitted to have been done any act, use or
thing in its use, occupancy or possession of the Leased Premises or the Building
or the Outside which is prohibited by the terms of this Lease; or

     C. Tenant shall have failed to perform any term, covenant or condition of
this Lease, except those requiring the payment of Base Monthly Rent or
Additional Rent, within ten days after written notice from Landlord to Tenant
specifying the nature of such failure and requesting Tenant to perform same.

     D. Tenant shall have sublet the Leased Premises or assigned or encumbered
its interest in this Lease in violation of the provisions contained in Article
7, whether voluntarily or by operation of Law; or

     E. Tenant shall have abandoned the Leased Premises; or

     F. Tenant or any Guarantor of this Lease shall have permitted or suffered
the sequestration or attachment of, or execution on, or the appointment of a
custodian or receiver with respect to, all or any substantial part of the
property or assets of Tenant (or such Guarantor) or any property or asset
essential to the conduct of Tenant's (or such Guarantors) business, and Tenant
(or such Guarantor) shall have failed to obtain a return or release of the same
within thirty days thereafter, or prior to sale pursuant to such sequestration,
attachment or levy, whichever is earlier; or

     G. Tenant or any Guarantor of this Lease shall have made a general
assignment of all or a substantial part of its assets for the benefit of its
creditors; or

     H. Tenant or any Guarantor of this Lease shall have allowed (or sought) to
have entered against it a decree or order which (i) grants or constitutes an
order for relief, appointment of a trustee, or confirmation or a reorganization
plan under the bankruptcy

                                       14
<PAGE>

laws of the United States; (ii) approves as properly filed a petition seeking
liquidation or reorganization under said bankruptcy laws or any other debtor's
relief law or similar statue of the United States or any state thereof; or (iii)
otherwise directs the winding up or liquidation of Tenant; provided, however, if
any decree or order was entered without Tenant's consent or over Tenant's
objection, Landlord may not terminate this Lease pursuant to this Subparagraph
if such decree or order is rescinded or reversed within thirty days after its
original entry.

     I.  Tenant or any Guarantor of this Lease shall have availed itself of the
protection of any debtor's relief law, moratorium law or other similar Law which
does not require the prior entry of a decree or order.

     J.  Tenant shall have failed to deliver an estoppel certificate within the
time and as required by Section 13.6 or failure to deliver any document or
instrument within the time as required by Section 13.3.

12.2 LANDLORD'S REMEDIES: In the event of any default by Tenant, and without
limiting Landlord's right to indemnification as provided in Article 8.2,
Landlord shall have the following remedies, in addition to all other rights and
remedies provided by Law or otherwise provided in this Lease, to which Landlord
may resort cumulatively, or in the alternative:

     A.  Landlord may, at Landlord's election, keep this Lease in effect and
enforce, by an action at law or in equity, all of its rights and remedies under
this Lease including, without limitation, (i) the right to recover the rent and
other sums as they become due by appropriate legal action, (ii) the right to
make payments required by Tenant, or perform Tenant's obligations and be
reimbursed by Tenant for the cost thereof with interest at the then maximum rate
of interest not prohibited by Law from the date the sum is paid by Landlord
until Landlord is reimbursed by Tenant, and (iii) the remedies of injunctive
relief and specific performance to prevent Tenant from violating the terms of
this Lease and/or to compel Tenant to perform its obligations under this Lease,
as the case may be.

     B.  Landlord may, at Landlord's election, terminate this Lease by giving
Tenant written notice of termination, in which event this Lease shall terminate
on the date set forth for termination in such notice. Any termination under this
Subparagraph shall not relieve Tenant from its obligation to pay to Landlord all
Base Monthly Rent and Additional Rent then or thereafter due, or any other sums
due or thereafter accruing to Landlord, or from any claim against Tenant for
damages previously accrued or then or thereafter accruing. In no event shall any
one or more of the following actions by Landlord, in the absence of a written
election by Landlord to terminate this Lease, constitute a termination of this
Lease:

     1.  Appointment of a receiver or keeper in order to protect Landlord's
interest hereunder;

     2.  Consent to any subletting of the Leased Premises or assignment of this
Lease by Tenant, whether pursuant to the provisions hereof or otherwise; or

     3.  Any other action by Landlord or Landlord's agents intended to mitigate
the adverse effects of any breach of this Lease by Tenant, including, without
limitation, any action taken to maintain and preserve the Lease Premises or any
action taken to relet the Leased Premises, or any portion thereof, for the
account of Tenant and in the name of Tenant.

     C.  In the event Tenant breaches this Lease and abandons the Leased
Premises, Landlord may terminate this Lease, but this Lease shall not terminate
unless Landlord gives Tenant written notice of termination. If Landlord does not
terminate this Lease by giving written notice of termination, Landlord may
enforce all its rights and remedies under this Lease, including the right to
recover rent as it becomes due under this Lease as provided in California Civil
Code Section 1951.4 as in effect on the Effective Date of this Lease.

     D.  In the event Landlord terminates this Lease, Landlord shall be
entitled, at Landlord's election, to damages in an amount as set forth in
California Civil Code Section 1951.2, as in effect on the Effective Date of this
Lease. For purposes of computing damages pursuant to Section 1951.2, an interest
rate equal to the maximum rate of interest then not prohibited by Law shall be
used where permitted. Such damages shall include, without limitation:

     (1) 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 Tenant proves could be reasonably avoided, computed by
discounting such amount at the discount rate of the Federal Reserve Bank of San
Francisco, at the time of award plus one percent; and

     (2) Any other amount necessary to compensate Landlord for all detriment
proximately caused by Tenant's failure to perform Tenant's obligations under
this Lease, or which in the ordinary course of things would be likely to result
therefrom, including without limitation, the following: (i) expenses for
cleaning, repairing or restoring the Leased Premises; (ii) expenses for
altering, remodeling or otherwise improving the Leased Premises for the purpose
of reletting, including removal of existing leasehold improvements and/or
installation of additional leasehold improvements (regardless of how the same is
funded, including reduction of rent, a direct payment or allowance to a new
tenant, or otherwise); (iii) broker's fees, advertising costs and other expenses
of reletting the Leased Premises; (iv) costs of carrying and maintaining the
Leased Premises, such as taxes, insurance premiums, utility charges and security
precautions; (v) expenses incurred in removing, disposing of and/or storing any
of Tenant's personal property, inventory or trade fixtures remaining therein;
(vi)attorney's fees, expert witness fees, court costs and other reasonable
expenses incurred by Landlord (but not limited to taxable costs) in retaking
possession of the Leased, establishing damages hereunder, and re-leasing the
Leased Premises; and (vii) any other expenses, costs or damages otherwise
incurred or suffered as a result of Tenant's default.

12.3 LANDLORD'S DEFAULT AND TENANT'S REMEDIES: In the event Landlord fails to
perform any of its obligations under this Lease, Landlord shall nevertheless not
be in default under the terms of this Lease until such time as Tenant shall have
first given Landlord written notice specifying the nature of such failure to
perform its obligations, and then only after Landlord shall

                                       15
<PAGE>

have had a reasonable period of time following its receipt of such notice within
which to perform such obligations. In the event of Landlord's default as above
set forth, then, and only then, Tenant shall have the following remedies only:

     A.  Tenant may then proceed in equity or at law to compel Landlord to
perform its obligations and/or to recover damages proximately caused by such
failure to perform (except as and to the extent Tenant has waived its right to
damages as provided in this Lease).

     B.  Tenant, at its option, may then cure any default of Landlord at
Landlord's cost. If, pursuant to this Subparagraph, Tenant reasonably pays any
sum to any third party or does any act that requires the payment of any sum to
any third part at any time by reason of Landlord's default, the sum paid by
Tenant shall be immediately due from Landlord to Tenant at the time Tenant
supplies Landlord with an invoice therefore (provided such invoice sets forth
and is accompanied by a written statement of Tenant setting forth in reasonable
detail the amount paid, the party to whom it was paid, the date it was paid, and
the reasons giving rise to such payment), together with interest at twelve
percent per annum from the date of such invoice until Tenant is reimbursed by
Landlord. Tenant may not offset such sums against any installment of rent due
Landlord under the terms of this Lease.

12.4 LIMITATION ON TENANT'S RECOURSE: If Landlord is a corporation, trust,
partnership, joint venture, unincorporated association, or other form of
business entity, Tenant agrees that (i) the obligations of Landlord under this
Lease shall not constitute personal obligations of the officers, directors,
trustees, partners, joint venturers, members, owners, stockholders, or other
principals of such business entity and (ii) Tenant shall have recourse only to
the assets of such business entity for the satisfaction of such obligations and
not against the assets of such officers, directors, trustees, partners, joint
venturers, members, owners, stockholders or principals (other than to the extent
of their interest in the assets owned by such business entity). Additionally, if
Landlord is a partnership, then Tenant convenants and agrees:

     A.  No partner of Landlord shall be sued or named as a party in any suit or
action brought by Tenant with respect to any alleged breach of this Lease
(except to the extent necessary to secure jurisdiction over the partnership and
then only for that sole purpose);

     B.  No service of process shall be made against any partner of Landlord
except for the sole purpose of securing jurisdiction over the partnership; and

     C.  No writ of execution will ever be levied against the assets of any
partner of Landlord other than to the extent of his interest in the assets of
the partnership.

Tenant further agrees that each of the foregoing covenants and agreements shall
be enforceable by Landlord and by any partner of Landlord and shall be
applicable to any actual or alleged misrepresentation or nondisclosure made
respecting this Lease or the Leased Premises or any factual or alleged failure,
default or breach of any covenant or agreement either expressly or implicitly
contained in this Lease or imposed by statue or at common law.

12.5 TENANT'S WAIVER: Landlord and Tenant agree that the provisions of Paragraph
12.3 above are intended to supersede and replace the provisions of California
Civil Code Sections 1932(1), 1941 and 1942, and accordingly, Tenant hereby
waives the provisions of California Civil Code Sections 1932(1), 1941 and 1942
and/or any similar or successor Law regarding Tenant's right to terminate this
Lease or to make repairs and deduct the expenses of such repairs from the rent
due under this Lease. Tenant hereby waives any right of redemption or relief
from forfeiture under the Laws of the State of California, or under any other
present or future Law, in the event Tenant is evicted or Landlord takes
possession of the Leased Premises by reason of any default by Tenant.

                                  ARTICLE 13
                              GENERAL PROVISIONS

13.1 TAXES ON TENANT'S PROPERTY: Tenant shall pay before delinquency any and all
taxes, assessments, license fees, use fees, permit fees and public charges of
whatever nature or description levied, assessed or imposed against Tenant or
Landlord by a governmental agency arising out of, caused by reason of or based
upon Tenant's estate in this Lease, Tenant's ownership of property, improvements
made by Tenant to the Leased Premises or the Outside Areas, improvements made by
Landlord for Tenant's use within the Leased Premises or the Outside Areas,
Tenant's use (or estimated use) of public facilities or services or Tenant's
consumption (or estimated consumption) of public utilities, energy, water or
other resources. Upon demand by Landlord, Tenant shall furnish Landlord with
satisfactory evidence of these payments. If any such taxes, assessments, fees or
public charges are levied against Landlord, Landlord's property, the Building or
the Property, or if the assessed value of the Building or the Property is
increased by the inclusion herein of a value placed upon same, then Landlord,
after giving written notice to Tenant, shall have the right, regardless of the
validity thereof, to pay such taxes, assessment, fee or public charge and bill
Tenant, as Additional Rent, the amount of such taxes, assessment, fee or public
charge so paid on Tenant's behalf. Tenant shall, within ten days from the date
it receives an invoice from Landlord setting forth the amount of such taxes,
assessment, fee or public charge and bill Tenant, as Additional Rent, the amount
of such taxes, assessment, fee or public charge so paid on Tenant's behalf,
Tenant shall, within ten days from the date it receives an invoice from Landlord
setting forth the amount of such taxes, assessment, fee or public charge so
levied, pay to Landlord, as Additional Rent, the amount set forth in said
invoice. Failure by Tenant to pay the amount so invoiced within said ten day
period shall be conclusively deemed a default by Tenant under this Lease. Tenant
shall have the right, and the Landlord's full cooperation if Tenant is not then
in default under the terms of this Lease, to bring suit in any court of
competent jurisdiction to recover from the taxing authority the amount of any
such taxes, assessment, fee or public charge so paid.

13.2 HOLDING OVER: This Lease shall terminate without further notice on the
Lease Expiration Date (as set forth in Article 1). Any holding over by Tenant
after expiration of the Lease Term shall neither constitute a renewal nor
extension of this Lease nor give Tenant any rights in or to the Leased Premises
except as expressly provided in this Paragraph. Any such holding over shall be
deemed an unlawful detainer of the Leased Premises unless Landlord has consented
to same. Any such holding over to which Landlord has consented shall be
construed to be a tenancy from month to month, on the same terms and conditions
herein specified

                                       16
<PAGE>

insofar as applicable, except that the Base Monthly Rent shall be increased to
an amount equal to one hundred fifty percent of the Base Monthly Rent payable
during the last full month immediately preceding such holding over.

13.3 SUBORDINATION TO MORTGAGES: This Lease is subject to and subordinate to all
underlying ground leases, mortgages and deeds of trust which affect the Building
or the Property and which are of public record as of the Effective Date of this
Lease, and to all renewals, modifications, consolidations, replacements and
extensions thereof. However, if the lessor under any such ground lease or any
lender holding any such mortgage or deed of trust shall advise Landlord that it
desires or requires this Lease to be made prior and superior thereto, then, upon
written request of Landlord to Tenant, Tenant shall promptly execute,
acknowledge and deliver any and all documents or instruments which Landlord and
such lessor or lender deem necessary or desirable to make this Lease prior
thereto. Tenant hereby consents to Landlord's ground leasing the land underlying
the Building or the Property and/or encumbering the Building or the Property as
security for future loans on such terms as Landlord shall desire, all of which
future ground leases, mortgages or deeds of trust shall be subject to and
subordinate to this Lease. However, if any lessor under any such future ground
lease or any lender holding such future mortgage or deed of trust shall desire
or require that this Lease be made subject to and subordinate to such future
ground lease, mortgage or deed of trust, then Tenant agrees, within ten days
after Landlord's written request therefor, to execute, acknowledge and deliver
to Landlord any and all documents or instruments requested by Landlord or by
such lessor or lender as may be necessary or proper to assure the subordination
of this Lease to such future ground lease, mortgage or deed of trust, but only
if such lessor or lender agrees to recognize Tenant's rights under this Lease
and agrees not to disturb Tenant's quiet possession of the Leased Premises so
long as Tenant is not in default under this Lease.

13.4 TENANT'S ATTORNMENT UPON FORECLOSURE: Tenant shall, upon request, attorn
(i) to any purchaser of the Building or the Property at any foreclosure sale or
private sale conducted pursuant to any security instrument encumbering the
Building or the Property, (ii) to any grantee or transferee designated in any
deed given in lieu of foreclosure of any security interest encumbering the
Building or the Property, or (iii) to the lessor under any underlying ground
lease of the land underlying the Building or the Property, should such ground
lease be terminated; provided that such purchaser, grantee or lessor recognizes
Tenant's rights under this Lease.

13.5 MORTGAGEE PROTECTION: In the event of any default on the part of Landlord,
Tenant will give notice by registered mail to any Lender or lessor under any
underlying ground lease who shall have requested, in writing, to Tenant that it
be provided with such notice, and Tenant shall offer such Lender or lessor a
reasonable opportunity to cure the default, including time to obtain possession
of the Leased Premises-by power of sale or judicial foreclosure or other
appropriate legal proceedings if reasonably necessary to effect a cure.

13.6 ESTOPPEL CERTIFICATES: Tenant will, following any request by Landlord,
promptly execute and deliver to Landlord an estoppel certificate (i) certifying
that this Lease is unmodified and in full force and effect, or, if modified,
stating the nature of such modification and certifying that this Lease, as so
modified, is in full force and effect, (ii) stating the date to which the rent
and other charges are paid in advance, if any, (iii) acknowledging that there
are not, to Tenant's knowledge, any uncured defaults on the part of Landlord
hereunder, or specifying such defaults if any are claimed, and (iv) certifying
such other information about this Lease as may be reasonably requested by
Landlord, its Lender or prospective lenders, investor or purchaser of the
Building or the Property. Tenant's failure to execute and deliver such estoppel
certificate within ten days after Landlord's request therefore shall be a
material default by Tenant under this Lease, and Landlord shall have all of the
rights and remedies available to Landlord as Landlord would otherwise have in
the case of any other material default by Tenant, including the right to
terminate this Lease and sue for damages proximately caused thereby, it being
agreed and understood by Tenant that Tenant's failure to do deliver such
estoppel certificate in a timely manner could result in Landlord being unable to
perform committed obligations to other third parties which were made by Landlord
in reliance upon this covenant of Tenant. Landlord and Tenant intend that any
statement delivered pursuant to this Paragraph may be relied upon by any Lender
or purchaser or prospective Lender or purchaser of the Building, the Property,
or any interest herein.

13.7 TENANT'S FINANCIAL INFORMATION: Tenant shall, within ten business days
after Landlord's request therefore, deliver to Landlord a copy of a current
financial statement and any such other information reasonably requested by
Landlord regarding Tenant's financial condition. Landlord shall be entitled to
disclose such financial statements or other information to its Lender, to any
present or prospective principal of or investor in Landlord, or to any
prospective Lender or purchaser of the Building, the Property or any portion
thereof or interest herein. Any such financial statement or other information
which is marked "confidential" or "company secrets" (or is otherwise similarly
marked by Tenant) shall be confidential and shall not be disclosed by Landlord
to any third party except as specifically provided in this Paragraph, unless the
same becomes a part of the public domain without the fault of Landlord.

13.8 TRANSFER BY LANDLORD: Landlord and its successors in interest shall have
the right to transfer their interest in the Building, the Property, or any
portion thereof at any time and to any person or entity. In the event of any
such transfer, the Landlord originally named herein (and in the case of any
subsequent transfer, the transferor), from the date of such transfer, (i) shall
be automatically relieved, without any further act by any person or entity, of
all liability for the performance of the obligations of the Landlord hereunder
which may accrue after the date of such transfer and (ii) shall be relieved of
all liability for the performance of the obligations of the Landlord hereunder
which have accrued before the date of transfer if its transferee agrees to
assume and perform all such prior obligations of the Landlord hereunder. Tenant
shall attorn to any such transferee. After the date of any such transfer, the
term "Landlord" as used herein shall mean the transferee of such interest in the
Building or the Property.

13.9 FORCE MAJEURE: The obligations of each of the parties under this Lease
(other than the obligations to pay money) shall be temporarily excused if such
party is prevented or delayed in performing such obligation by reason of any
strikes, lockouts or labor disputes; inability to obtain labor, materials, fuels
or reasonable substitutes therefore; governmental restrictions, regulations,
controls action or inaction; civil commotion; inclement weather, fire or other
acts of God; or other causes (except financial inability) beyond the reasonable
control of the party obligated to perform (including acts or omissions of the
other party) for a period equal to the period of any such prevention, delay or
stoppage.

                                       17
<PAGE>

13.10 NOTICES: Any notice required or desired to be given by a party regarding
this Lease shall be in writing and shall be personally served, or in lieu of
personal service may be given by depositing such notice in the United States
mail, registered or certified, postage prepaid, addressed to the other party as
follows:

      A.  If addressed to Landlord, to Landlord at its Address for Notices (as
set forth in Article 1).

      B.  If addressed to Tenant, to Tenant at its Address for Notices (as set
forth in Article 1).

Any notice given by registered mail shall be deemed to have been given on the
third business day after its deposit in the United States mail. Any notice given
by certified mail shall be deemed given on the date receipt was acknowledged to
the postal authorities. Any notice given by mail other than registered or
certified mail shall be deemed given only if received by the other party, and
then on the date of receipt. Each party may, by written notice to the other in
the manner aforesaid, change the address to which notices addressed to it shall
thereafter be mailed.

13.11 ATTORNEY'S FEES: In the event any party shall bring any action,
arbitration proceeding or legal proceeding alleging a breach of any provision of
this Lease, to recover rent, to terminate this Lease, or to enforce, protect,
determine any term or covenant of this Lease or rights or duties hereunder of
either party, the prevailing party shall be entitled to recover from the non-
prevailing party as a part of such action or proceeding, or in a separate action
for that purpose brought within one year from the determination of such
proceeding, reasonable attorney's fees, expert witness fees, court costs and
other reasonable expenses incurred by the prevailing party. In the event that
Landlord shall be required to retain counsel to enforce any provision of this
Lease, and if Tenant shall thereafter cure (or desire to cure) such default,
Landlord shall be conclusively deemed the prevailing party and Tenant shall pay
to Landlord all attorney's fees, expert witness fees, court costs and other
reasonable expenses so incurred by Landlord promptly upon demand. Landlord may
enforce this provision by either (i) requiring Tenant to pay such fees and costs
as a condition to curing its default or (ii) bringing a separate action to
enforce such payment, it being agreed by and between Landlord and Tenant that
Tenant's failure to pay such fees and costs upon demand shall constitute a
breach of this Lease in the same manner as a failure by Tenant to pay the Base
Monthly Rent, giving Landlord the same rights and remedies as if Tenant failed
to pay the Base Monthly Rent.

13.12 DEFINITIONS: Any term that is given a special meaning by any provision in
this Lease shall, unless otherwise specifically stated, have such meaning
whenever used in this Lease or in any Addenda or amendment hereto. In addition
to the terms defined in Article 1, the following terms shall have the following
meanings:

      A.  REAL PROPERTY TAXES: The term "Real Property Tax" or "Real Property
Taxes" shall each mean (i) all taxes, assessments, levies and other charges of
any kind or nature whatsoever, general and special, foreseen and unforeseen
(including all installments of principal and interest required to pay any
general or special assessments for public improvements and any increases
resulting from reassessments caused by any change in ownership or new
construction), now or hereafter imposed by any governmental or quasi-
governmental authority or special district having the direct or indirect power
or tax or levy assessments, which are levied or assessed for whatever reason
against the Project or any portion thereof, or Landlord's interest herein, or
the fixtures, equipment and other property of Landlord that is an integral part
of the Project and located thereon, or Landlord's business of owning, leasing or
managing the Project or the gross receipts, income or rentals from the Project;
(ii) all charges, levies or fees imposed by any governmental authority against
Landlord by reason of or based upon the use of or number of parking spaces
within the Project, the amount of public services or public utilities used or
consumed (e.g. water, gas electricity, sewage or surface water disposal) at the
Project, the number of persons employed by tenants of the Project, the size
(whether measured in area, volume, number of tenants or whatever) or the value
of the Project, or the type of use or uses conducted within the Project; and
(iii) all costs and fees (including attorneys fees) incurred by Landlord in
contesting any Real Property Tax and in negotiating with public authorities as
to any Real Property Tax. If, at any time during the Lease Term, the taxation or
assessment of the Project prevailing as of the Effective Date of this Lease
shall be altered so that in lieu of or in addition to any Real Property Tax
described above there shall be levied, assessed or imposed (whether by reason of
a change in the method of taxation or assessment, creation of a new tax or
charge, or any other cause) an alternate, substitute, or additional tax or
charge (i) on the value, size, use or occupancy of the Project or Landlord's
interest therein (ii) on a measured by the gross receipts, income or rentals
from the Project, or on Landlord's business of owning, leasing or managing the
Project or (iii) computed in any manner with respect to the operation of the
Project, then any such tax or charge, however designated, shall be included
within the meaning of the terms "Real Property Tax" or "Real Property Taxes" for
purposes of this Lease. If any Real Property Tax is partly based upon property
or rents related to the Project, then only that part of such Real Property Tax
that is fairly allocable to the Project shall be included within the meaning of
the terms "Real Property Tax" or "Real Property Taxes." Notwithstanding the
foregoing, the terms "Real Property Tax" or "Real Property Taxes" shall not
include estate, inheritance, transfer, gift or franchise taxes of Landlord or
the federal or state income tax imposed on Landlord's income from all sources.

      B.  LANDLORD'S INSURANCE COSTS: The term "Landlords Insurance Costs" shall
mean the costs to Landlord to carry and maintain the policies of fire and
property damage insurance for the Building and the Property and general
liability insurance required, or permitted, to be carried by Landlord pursuant
to Article 9, together with any deductible amounts paid by Landlord upon the
occurrence of any insured casualty or loss.

     C.  PROPERTY MAINTENANCE COSTS: The term "Property Maintenance Costs" shall
mean all costs and expenses (except Landlord's Insurance Costs and Real Property
Taxes) paid or incurred by Landlord in protecting, operating, maintaining,
repairing and preserving the Property and all parts thereof, including without
limitation, (i) professional management fees (not to exceed three percent of the
Property's scheduled gross rental income), (ii) the amortizing portion of any
costs incurred by Landlord in the making of any modifications, alterations or
improvements required by any governmental authority as set forth in Article 6,
which are so amortized during the Lease Term, and (iii) such other costs as may
be paid or incurred with respect to operating, maintaining and preserving the
Property, such as repairing and resurfacing the exterior surfaces of the
buildings (including roofs),

                                       18
<PAGE>

repairing and resurfacing paved areas, repairing structural parts of the
buildings, and replacing, when necessary, electrical, plumbing, heating,
ventilating and air conditioning systems serving the buildings.

     D.  READY FOR OCCUPANCY: The term "Ready for Occupancy" shall mean the date
upon which (i) the Leased Premises are available for Tenant's occupancy in a
broom clean condition and (ii) the improvements, if any, to be made to the
Leased Premises by Landlord as a condition to Tenant's obligation to accept
possession of the Leased Premises have been substantially completed and the
appropriate governmental building department (i.e. The City building department,
if the Property is located within a City, or otherwise the County building
department) shall have approved the construction of the improvements as complete
or is willing to so approve the construction of the improvements as complete
subject only to compliance with specified conditions which are the
responsibility of Tenant to satisfy or is willing to allow Tenant to occupy
subject to its receiving assurances that specified work will be completed.

     E.  PROPERTY OPERATING EXPENSES: The term "Property Operating Expenses"
shall mean and include all the Real Property Taxes, plus all Landlord's
Insurance Costs, plus all the Property Maintenance Costs, plus an accounting fee
equal to five percent of all such costs.

     F.  LAW: The term "Law" shall mean any judicial decision and any statute,
constitution, ordinance, resolution, regulation, rule administrative order, or
other requirement of any municipal, county, state, federal, or other
governmental agency or authority having jurisdiction over the parties to this
Lease, the Leased Premises, the Building or the Property, or any of them in
effect either at the Effective Date of this Lease or at any time during the
Lease Term, including, without limitation, any regulation, order, or policy of
any quasi-official entity or body (e.g. a board of fire examiners or a public
utility or special district).

     G.  LENDER: The term "Lender" shall mean the holder of any Note or other
evidence of indebtedness secured by the Property or any portion thereof.

     H.  PRIVATE RESTRICTIONS: The term "Private Restrictions" shall mean all
recorded covenants, conditions and restrictions, private agreements, easements,
and any other recorded instruments affecting the use of the Property, as they
may exist from time to time.

     I.  RENT: The term "rent" shall mean collectively Base Monthly Rent and all
Additional Rent.

13.13 GENERAL WAIVERS: One party's consent to or approval of any act by the
other party requiring the first party's consent or approval shall not be deemed
to waive or render unnecessary the first party's consent to or approval of any
subsequent similar act by the other party. No waiver of any provision hereof or
any breach of any provision hereof shall be effective unless in writing and
signed by the waiving party. The receipt by Landlord of any rent or payment with
or without knowledge of the breach of any other provision hereof shall not be
deemed a waiver of any such breach. No waiver of any provision of this Lease
shall be deemed a continuing waiver unless such waiver specifically states so in
writing and is signed by both Landlord and Tenant. No delay or omission in the
exercise of any right or remedy accruing to either party upon any breach by the
other party under this Lease shall impair such right or remedy or be construed
as a waiver of any such breach theretofore or thereafter occurring. The waiver
by either party of any breach of any provision of this Lease shall not be deemed
to be a waiver of any subsequent breach of the same or any other provisions
herein contained.

13.14 MISCELLANEOUS: Should any provision of this Lease prove to be invalid or
illegal, such invalidity or illegality, shall in no way affect, impair or
invalidate any other provision hereof, and such remaining provisions shall
remain in full force and effect. Time is of the essence with respect to the
performance of every provision of this Lease in which time of performance is a
factor. Any copy of this Lease which is executed by the parties shall be deemed
an original for all purposes. This Lease shall, subject to the provisions
regarding assignment, apply to and bind the respective heirs, successors,
executors, administrators and assigns of Landlord and Tenant. The term "party"
shall mean Landlord or Tenant as the context implies. If Tenant consists of more
than one person or entity, then all members of Tenant shall be jointly and
severally liable hereunder. This Lease shall be construed and enforced in
accordance with the Laws of the State in which the Leased Premises are located.
The language in all parts of this Lease shall in all cases be construed as a
whole according to its fair meaning, and not strictly for or against either
Landlord or Tenant. The captions used in this Lease are for convenience only and
shall not be considered in the construction or interpretation of any provision
hereof. When the context of this Lease requires, the neuter gender includes the
masculine, the feminine, a partnership or corporation or joint venture, and the
singular includes the plural. The terms "must", "shall", "will", and "agree" are
mandatory. The term "may" is permissive. When a party is required to do
something by this Lease, it shall do so at its sole cost and expense without
right of reimbursement from the other party unless specific provision is made
therefore. Where Tenant is obligated not to perform any act or is not permitted
to perform any act, Tenant is also obligated to restrain any others reasonably
within its control, including agents, invitees, contractors, subcontractors and
employees, from performing said act. Landlord shall not become or be deemed a
partner or a join venturer with Tenant by reason of any of the provisions of
this Lease.

                                  ARTICLE 14
                              CORPORATE AUTHORITY
                         BROKERS AND ENTIRE AGREEMENT

14.1  CORPORATE AUTHORITY: If Tenant is a corporation, each individual executing
this Lease on behalf of said corporation represents and warrants that Tenant is
validly formed and duly authorized and existing, that Tenant is qualified to do
business in the State in which the Leased Premises are located, that Tenant has
the full right and legal authority to enter into this Lease, that he is duly
authorized to execute and deliver this Lease on behalf of Tenant in accordance
with the bylaws and/or a board of director's resolution of Tenant, and that this
Lease is binding upon Tenant in accordance with its terms. Tenant shall, within
thirty days after execution of this Lease, deliver to Landlord a certified copy
of the resolution of its board of directors authorizing or ratifying the
execution of this Lease, and if Tenant fails to do so, Landlord at its sole
election may elect to (i) extend the Intended Commencement

                                       19
<PAGE>

Date by such number of days that Tenant shall have delayed in so delivering such
corporate resolution to Landlord or (ii) terminate this Lease.

14.2 BROKERAGE COMMISSIONS: Tenant warrants that it has not had any dealings
with any real estate broker(s), leasing agent(s), finder(s) or salesmen, other
than the Brokers (as named in Article 1) with respect to the lease by it of the
Leased Premises pursuant to this Lease, and that it will indemnify, defend with
competent counsel, and hold Landlord harmless from any liability for the payment
of any real estate brokerage commissions, leasing commissions or finder's fees
claimed by any other real estate broker(s), leasing agent(s), finder(s), or
salesmen to be earned or due and payable by reason of Tenant's agreement or
promise (implied or otherwise) to pay (or to have Landlord pay) such a
commission or finder's fee by reason of its leasing the Leased Premises pursuant
to this Lease.

14.3 ENTIRE AGREEMENT: This Lease, the Exhibits (as described in Article 1) and
the Addenda (as described in Article 1), which Exhibits and Addenda are by this
reference incorporated herein, constitute the entire agreement between the
parties, and there are no other agreements, understandings or representations
between the parties relating to the lease by Landlord of the "Leased Premises to
Tenant, except as expressed herein. No subsequent changes, modifications or
additions to this Lease shall be binding upon the parties unless in writing an
signed by both Landlord and Tenant.

14.4 LANDLORD'S REPRESENTATION: Tenant acknowledges that neither Landlord nor
any of its agents made any representations or warranties respecting the Project,
the Building or the Leased Premises, upon which Tenant relied in entering into
this Lease, which are not expressly set forth in this Lease. Tenant further
acknowledges that neither Landlord nor any of its agents made any
representations as to (i) whether the Leased Premises may be used for Tenant's
intended use under existing Law, or (ii) the suitability of the Leased Premises
for the conduct of Tenant's business, or (iii) the exact square footage of the
Leased Premises, and that Tenant relied solely upon its own investigations
respecting said matters. Tenant expressly waives any and all claims for damage
by reason of any statement, representation, warranty, promise or other agreement
of Landlord or Landlord's agent(s), if any, not contained in this Lease or in
any Addenda hereto.

     IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the
respective dates below set forth with the intent to be legally bound thereby as
of the Effective Date of this Lease first above set forth.

                                      AS LANDLORD
                                      -----------

                                      BR3 PARTNERS

                              By: /s/ James C. Rees
                                  -----------------------------------
                                    James C. Rees, Managing Partner

                              Date:  3/30/00
                                   ----------------------------------

                                       20
<PAGE>

                                        AS TENANT
                                        ---------

                                     ULTRACARD, INC.
                                  a Nevada Corporation

                              By: /s/ Dan Kehoe
                                 ----------------------------------------

                              Title: President & CEO
                                    -------------------------------------

                              By: Corinne Cox
                                 ----------------------------------------

                              Title: Corp. Sec. & Dir of Operations
                                     ------------------------------------

                              Date: 4-5-00
                                   --------------------------------------

     If Tenant is a CORPORATION, the authorized officers must sign on behalf of
the corporation and indicate the capacity in which they are signing. This Lease
must be executed by the chairman of the board, president or vice president, and
the secretary, assistant secretary, the chief financial officer or assistant
treasurer, unless the bylaws or a resolution of the board of directors shall
otherwise provide, in which event a certified copy of the bylaws or a certified
copy of the resolution, as the case may be, must be attached to this Lease.

                                       21
<PAGE>

                            First Addendum to Lease

Addendum to that lease dated March 1, 2000 by and between Boccardo Corporation
(Landlord) and UltraCard, Inc. (Tenant).

1. LANDLORD IMPROVEMENTS: Landlord, at Landlord's sole cost, shall repair, re-
   seal and stripe the parking areas.

2. PARKING: Landlord shall use its best effort to provide 200 parking spaces on
   site, subject to Tenant's review of proposed new parking spaces.

3. RENEWAL OPTION:

OPTION TO EXTEND
----------------

     1.   In General. Landlord hereby grants to Tenant one (1) option (the
          ----------
"Option") to extend the Lease Term for an additional term of three (3) years
commencing when the initial Lease Term expires ("Extended Term") provided that
no uncured Event of Tenant's Default exists at the time of Tenant's exercise of
the Option. Tenant shall exercise such Option, if at all, by giving Landlord
written notice of such exercise not less than one hundred eighty (180) days and
not more than two hundred seventy (270) days prior to the expiration of the
initial Lease Term. If the Option is properly exercised, the Lease Term shall be
extended for a period of three (3) years on all of the terms and conditions of
the Lease, except that (i) the Base Monthly Rent payable by Tenant under the
Lease during the Extended Term shall be the then-current fair market rental
value for the Premises as of the commencement date of the Extended Term, as
determined below, and (ii) Landlord shall be entitled to impose parking charges
on Tenant during the Extended Term at the rates then-being charged for parking
by landlords of similar projects located in the vicinity of the Project
("Prevailing Parking Charges"). If Tenant properly exercises the Option, the
term "Lease Term" as used in the Lease shall be deemed to include the Extended
Term, unless specified otherwise herein or in the Lease.

     2.   Personal Option. The Option is personal to UltraCard, Inc. and shall
          ---------------
not be assignable or transferable to any assignee of Tenant or any sublessee of
all or any portion of the Premises, whether voluntarily or involuntarily or
whether by operation of law or otherwise. If Tenant subleases or assigns or
otherwise transfers any interest under the Lease prior to the exercise of the
Option, the Option shall lapse. If Tenant subleases or assigns or otherwise
transfers any interest under the Lease after the exercise of the Option but
prior to the commencement of the Extended Term, the Option shall, at Landlord's
election, lapse and the Lease Term shall expire as if the Option was not
exercised.

     3.   Determination of Base Monthly Rent. Base Monthly Rent for the Extended
          ----------------------------------
Term shall be at fair market rental value, determined as follows:

          (a)  Landlord shall deliver to Tenant written notice of Landlord's
determination of fair market rental value within thirty (30) days after Landlord
receives notice from Tenant that Tenant has exercised the Option.

          (b)  If Tenant disputes Landlord's determination of the fair market
rental value as contained in Landlord's notice, Tenant shall notify Landlord in
writing within ten (10) days of its receipt of Landlord's determination, which
notice shall set forth Tenant's determination of the fair market rental value.
Should Tenant timely notify Landlord as aforesaid, Landlord and Tenant shall
attempt to resolve their differences within ten (10) days following Landlord's
receipt of Tenant's notice. Should Tenant fail to timely notify Landlord as
aforesaid, then Landlord's determination of fair market rental value as
contained in Landlord's notice shall constitute the Base Monthly Rent for the
Extended Term.

          (c)  Should Tenant timely notify Landlord as aforesaid and if Landlord
and Tenant cannot agree on fair market rental value during such ten (10) day
period, Landlord and Tenant shall each appoint a disinterested M.A.I. appraiser
experienced in appraising similar space in the county in which the Premises are
located and give notice of such appointment to the other within ten (10) days
after the expiration of the preceding ten (10) day period. If either Landlord or
Tenant shall fail timely to appoint an appraiser, then the single appraiser
appointed by one party shall proceed to make the determination of fair market
rental value. Such appraiser(s) shall, within thirty (30) days after the
appointment of the last of them to be appointed, complete their written
determinations of fair market rental value and furnish the same to Landlord and
Tenant. Each party shall pay the fees and costs of the appraiser appointed by
it. If the valuations vary by 5% or less of the lower value, the fair market
rental value shall be the average of the two valuations.

          (d)  If the valuations vary by more than 5% of the lower value, the
two appraisers shall, within ten (10) days after submission of the last
appraisal report, appoint a third disinterested M.A.I. appraiser experienced in
appraising similar space in the county in which the Premises are located. If the
two appraisers shall be unable to agree in a timely manner on the selection of
the third appraiser, then either appraiser, on behalf of both, may request
appointment of such third disinterested M.A.I. appraiser by the presiding judge
of the Superior Court of the county in which the Premises are located or through
the American Arbitration Association process. Such third appraiser shall, within
thirty (30) days after appointment, select one of the two valuations submitted
by the first two appraisers as such third appraiser's determination of fair
market value, and shall submit such decision to Landlord and Tenant. The fair
market rental value of the Premises as determined by the third appraiser shall
be controlling. All fees and costs incurred in connection with the determination
of fair market rental value by the third appraiser shall be paid one-half by
Landlord and one-half by Tenant.

          (e)  For purposes of this Rider, the fair market rental value of the
Premises shall take into consideration all current market factors, including,
without limitation, the quality, size and location of the Premises, and shall
incorporate customary or market rate increases during the Extended Term.

          (f)  Notwithstanding the foregoing, in no event shall the Base Monthly
Rent payable by Tenant during the Extended Term be less than the full unabated
Base Monthly Rent payable by Tenant for the last month of the initial Lease
Term.

4. SECURITY DEPOSIT: An amount equal to One Hundred Ninety Thousand Three
   Hundred Thirteen and 00/100ths Dollars ($190,313.00) In the form of cash
   shall be paid by Tenant within ten (10) days after Lease execution and an
   additional Eight Hundred and Five Thousand Six Hundred Eighty Seven and
   00/100ths Dollars ($805,687.000) in the form of cash or, at Tenant's option,
   a Letter of Credit, shall be paid by Tenant no more than thirty (30) days
   prior to occupancy and shall be refundable to Tenant pursuant to the terms of
   the Lease.

                                       22
<PAGE>

   Commencing with the second anniversary of the Commencement Date, on each
   anniversary of the Commencement Date during the initial term, Landlord shall
   reduce the required amount of the Performance Letter of Credit or cash by the
   sum of $166,000.00 each year, provided (i) an event of default has not
   occurred during the preceding twelve (12) month period, and (ii) Tenant's
   financial condition as of such anniversary date, at Landlord's sole and
   absolute discretion, Is substantially better than its financial condition as
   of the date of this Lease, which showing a profit will be the minimum
   requirement and (iii) Tenant has occupied not less than 70% of Premises for
   the twelve (12) months preceding the date upon which the Security Deposit
   reduction occurs.

5. LEASE TERMINATION BY METRICOM: This proposal is subject to termination of the
   existing lease by and between Metricom and Boccardo Corporation for the
   subject Premises.

LANDLORD                                  TENANT

BR3 Partners                              Ultra Card, Inc.

By:     /s/ James Rees                    By:    /s/ Corinne Cox
        -----------------------------            ------------------------------
        James Rees

Title:  Partner                           Title: Corp. Secretary
        -----------------------------            ------------------------------

Date:   3/30/00                           Date:  3-30-00
        -----------------------------            ------------------------------

                                       23
<PAGE>

                                  EXHIBIT "A"

                       [SITE PLAN OF UNIVERSITY AVENUE]
<PAGE>

                                  EXHIBIT "B"

[SECOND FLOOR PLAN]

[FIRST FLOOR PLAN]
<PAGE>

                                   EXHIBIT C
                                   ---------

                                  WORK LETTER
                                    (As-Is)

                          [INTENTIONALLY LEFT BLANK]

              Tenant to accept Premises in its "As-Is" condition;
        no Tenant Improvements of any kind being provided by Landlord.

Landlord to provide Tenant with an $8.00 psf tenant improvement allowance
($531,200.00) to be used for carpet, paint and removal/addition of walls.
<PAGE>

                                  EXHIBIT "D"
                             ACCEPTANCE AGREEMENT

     This Acceptance Agreement is made as of _______, by and between the parties
hereto with regard to that Lease dated March 30, 2000, by and between BR3
Partners as Landlord ("Landlord"), and UltraCard, Inc., a Nevada corporation as
Tenant ("Tenant"), affecting those premises commonly known as University Park,
located at 980 University Avenue, in the City of Los Gatos, State of California
(the "Premises"). The parties agree as follows:

     1.  Possession of the Premises has been delivered to Tenant and Tenant has
accepted and taken possession of the Premises.

     2.  The Lease Commencement Date is ______.

     3.  The Lease Term shall expire on __________ unless sooner terminated
according to the terms of the Lease or by mutual agreement.

     4.  The Base Monthly Rent due pursuant to the Lease is as follows:

                         Year 1=   $162,680.00 per month
                         Year 2=   $169,187.00 per month
                         Year 3=   $175,955.00 per month
                         Year 4=   $182,993.00 per month
                         Year 5=   $190,313.00 per month

     5. Landlord has received a Security Deposit in the amount of $996,000.00

     6. Landlord has received Prepaid Rent in the amount of $162,680.00, which
shall be applied to the first installment (s) of Base Monthly Rent.

     7. To the parties' knowledge, the Lease is in full force and effect,
neither party is in default of its obligations under the Lease, and Tenant has
no offsets, claims, or defenses to the enforcement of the Lease.

AS LANDLORD:                            AS TENANT:
BR3 Partners                            UltraCard, Inc.
                                        a Nevada Corporation.

By:________________________________     By_______________________________

Title:_____________________________     Title____________________________

Dated:_____________________________     Dated:___________________________
<PAGE>

                                LEASE GUARANTY
                                --------------

     This Lease Guaranty ("Guaranty") is dated as of March 30, 2000, by Upgrade
                           --------
International, Inc., for the benefit of BR3 Partners (the "Landlord").  This
                                                           --------
Guaranty is made in order to induce Landlord to execute the foregoing lease (the
"Lease") dated March 30, 2000 with UltraCard, Inc. (as "Tenant"). For  good and
 -----                                                  ------
valuable consideration, the receipt and sufficiency of which are hereby
acknowledge, the undersigned parties (collectively, jointly and severally
referred to as the "undersigned," "Guarantor" and "Guarantors") do hereby agree
                    -----------    ---------       ----------
as follows:

     1.   The Guarantors do hereby absolutely and unconditionally, joint and
severally, guarantee to Landlord, its successors and assigns, the full and
punctual performance and observance of all the covenants, conditions, and
agreements provided to be performed and observed by Tenant in said Lease,
including, without limitation, the prompt payment of the rent and all other
amounts provided in said Lease to be paid by Tenant, and all obligations of
Tenant under any storage agreement, work agreement or other agreement between
the parties now or hereafter entered in connection with said Lease or the leased
premises thereunder.

     2.   The liability of the Guarantors under this Guaranty shall not be
limited to a dollar amount; provided, however, so long as no uncured default
existed on the fifth anniversary of the Lease Commencement (as defined in the
Lease), with respect to any breach of Tenant's obligations occurring more than
five (5) years after Lease Commencement, the liability of the Guarantors; will
be limited to the sum of one million dollars ($5,000,000) exclusive of any fees
or costs incurred by Landlord pursuant to Paragraph 9 of this of this Guaranty.

     3.   The liability hereunder shall be primary, and that in any right of
action which shall accrue to the Landlord under the Lease, the Landlord may, at
it's option, proceed against the Guarantors and the Tenant, jointly and
severally and may proceed against the Guarantors without having commenced any
action against or having obtained any judgment against the Tenant. Landlord may
proceed against any one or more Guarantors without proceeding against the
others, and may release any Guarantor or any security deposit, security interest
or letter of credit without releasing the other Guarantors of any other security
deposit, security interest or letter of credit.

     4.   The Guarantors hereby waive acceptance and notice of acceptance of
this Guaranty, and notice of default, breach, non-payment, non-performance or
non-observance, and all other notices and all proof or demands. Without limiting
the foregoing, the Guarantors agree to keep themselves informed on all aspects
of Tenant's financial condition and the performance of Tenant's obligations to
Landlord and that Landlord has no duty to disclose to Guarantors any information
pertaining to Tenant.

     5.   The obligations hereunder shall in no way be terminated, affected or
impaired by reason of the granting by Landlord of any extensions or indulgences
to Tenant or by reason of the assertion against Tenant if any of the rights or
remedies reserved to Landlord pursuant to the provisions of said Lease or by the
relief of the Tenant from any of the Tenant's obligations under said Lease by
operation of law or otherwise, including without limitation the rejection of the
Lease in a bankruptcy proceeding, the Guarantors hereby waiving all suretyship
defenses. Without limiting the foregoing, the Guarantors hereby waive the
benefits and defenses of California Civil Code Sections 2839, 2845, 2847,2848,
2849, 2850. 2855 and 2856.

     6.   The failure of the Landlord to insist in any one, or more instances
upon strict performance or observance of any of the terms, provisions, or
covenants of the Lease or this Guaranty or to exercise any right therein or
herein contained shall not be construed or deemed to be a waiver or
relinquishment for the future of such term, provision, covenant or right, but
the same shall continue and remain in full force and effect. Receipt by the
Landlord of rent or other payments with knowledge of the breach of any provision
of the Lease shall not be deemed a waiver of such breach or of this Guaranty.
The Guarantors waive the right to plead any and all statutes of limitations as a
defense to its liability hereunder or the enforcement of the Guaranty.

     7.   This Guaranty shall remain and continue in full force and effect as to
any modification of the Lease whether or not the Guarantors shall have received
any notice of or consented to such modification of the Lease, including without
limitation the alteration, enlargement, or change of the premises described in
the Lease. Without the limiting the generality of the foregoing, the Guarantors
hereby expressly waive the rights and benefits of the California Civil Code
Section 2819. This Guaranty will apply to the Lease, any extension or renewal of
the Lease, and any holdover term following the term of the Lease, or any such
extension or renewal. No assignment or other transfer of the Lease, or any
interest therein shall operate to extinguish or diminish the liability of the
Guarantors hereunder.
<PAGE>

     8.   Until all of Tenant's obligations under the Lease are fully performed,
the Guarantors (a) waive any right of subrogation against Tenant by reason of
any payments or acts of performance by the Guarantors in compliance with the
obligations of the Guarantors under this Guaranty; (b) waive any other right
that the Guarantors may have against Tenant by reason of any one or more
payments or acts in compliance with the obligations of the Guarantors under this
Guaranty; and (c) subordinate any liability or indebtedness of Tenant held by
the Guarantors to the obligations of Tenant to Landlord under the Lease.

     9.   This Guaranty shall be enforced and construed in accordance with the
laws of the State of California. Guarantor irrevocably appoints Tenant as its
agent for service of process related to this Guaranty. The Guarantors will pay
on demand the full reasonable attorneys fees and costs incurred by Landlord, or
its successors and assigns, in connection with the enforcement of this Guaranty.

     10.  If any provision hereof or any of Guarantor's obligations hereunder
shall be, or are adjudged to be, unenforceable, the remainder of this Guaranty
and all of the Guarantors other obligations hereunder shall remain in full force
and effect and shall not be affected thereby. If it is determined by a court of
competent jurisdiction that the Guarantors have any rights not set forth herein,
in order for this Guaranty to be valid or enforceable.

     11.  This Guaranty shall be binding upon and inure to the benefit of the
parties and their respective heirs, administrators, executors, successors and
assigns. Landlord may, without notice to Guarantor, fully and freely assign its
interest in this Guaranty in whole or in part to any person or entity, and no
such assignment shall affect this Guaranty or in any way exonerate or release
Guarantor from its obligations under this Guaranty. If Landlord disposes of or
assigns its interest in the Lease, "Landlord" as used in this Guaranty shall
mean Landlord and Landlord's successors and assigns.

     12.  This Guaranty embodies the entire agreement among the Guarantors and
Landlord with respect to matters set forth herein. No course of prior dealing
among the Guarantors and Landlord, no usage of trade, and no parol or extrinsic
evidence of any nature shall be used to supplement, modify or vary any of other
terms hereof. This Guaranty may not be changed, modified, discharged, or
terminated orally or in any manner other than by a written agreement signed by
the Guarantors and Landlord.

     13.  This Guaranty may be executed in one or more counterparts and
delivered by facsimile transmission, each of which shall, for all purposes, be
deemed an original and all such counterparts taken together, shall constitute
one and the same instrument. There are no conditions to the full effectiveness
of this Guaranty, it being immediately enforceable and effective against the
undersigned. This Guaranty shall be effective against any and all Guarantors who
execute this Guaranty whether or not all intended Guarantors execute this
Guaranty and/or are bound hereunder.

     14.  Each party has received independent legal advice from is legal counsel
with respect to the advisability of executing this Guaranty and the meaning of
the provision hereof. The provisions of this Guaranty shall be construed as to
the fair meaning and not for or against any party based upon any attribution of
such party as the source of the language in question.

     IN WITNESS HEREOF, the undersigned have executed this Guaranty to be
effective as of the date set forth above:

          GUARANTOR:

          BY: /s/ Daniel Bland,                       Dated: Mar 30, 2000
              -------------------------------               ------------------
              Daniel Bland, President & CEO<PAGE>

                                 Exhibit 10(a)

                        Executive Employment Agreement

This Executive Employment Agreement ("Agreement"), is entered into as of April
                                      ---------
3, 2000, by and between OXIS International, Inc., its affiliated, related,
parent or subsidiary corporations (the "Company") located at 6040 N. Cutter
                                        -------
Circle, Suite 317, Portland, OR 97217-3935, and Jon S. Pitcher ("Executive")
                                                                 ---------
residing in Clackamas County, Oregon (collectively, the "parties").

                                   RECITALS

Executive and the Company desire that Executive continue as its Chief Financial
Officer for the Period of Employment (as defined below), upon the following
terms and conditions.

                                   AGREEMENT

ACCORDINGLY, the parties hereto agree as follows:
1.   General Release of Claims. In exchange for the consideration set forth in
     this Agreement, the parties agree to execute a release agreement with terms
     modeled on the General Release of Claims I, attached hereto as Exhibit A
                                                                    ---------
     and agreed to by the parties ("Release I"), in accordance with the terms
                                    ---------
     thereof.

2.   Period of Employment

          a.   Initial Term. Effective March 31, 2000, the Company shall employ
               ------------
     Executive to render Services (as defined below) to the Company in the
     position and with the duties and responsibilities described in Section 3
     for a term of twelve (12) months (the "Period of Employment"), unless the
                                            --------------------
     Period of Employment is terminated sooner in accordance with Section 8
     below.

          b.   Renewal. This Agreement will be automatically renewed one time
               -------
     for an additional one (1) year period (without any action taken by either
     party) on the last day of the Period of Employment, unless either party
     gives the other written notice of termination at least sixty (60) days
     before the last day of the Period of Employment.

          c.   Non-Renewal. If either party gives notice of termination in
               -----------
     accordance with Section 2 (b), and Executive signs a release agreement with
     terms modeled on the General Release of Claims II, attached hereto as
     Exhibit B, Executive shall receive a continuation of his then-current
     ---------
     salary for six (6) months after the Period of Employment; and,
     notwithstanding any vesting or termination provisions contained in
     Executive's applicable Stock Option Grants with the Company, Executive's
     unvested Options (as defined in Section 4 below) shall immediately vest
     eighteen (18) months after the effective date of this Agreement and
     Executive shall be able to exercise his vested Options at any time
     subsequent to the period of employment until a date one year after the
     eighteen (18) month anniversary of the effective date of this Agreement,
     and otherwise in accordance with and subject to Executive's applicable
     Stock Option Grants with the Company (collectively, "Non-Renewal
                                                          -----------
     Benefits").
     ---------

3.   Position, Duties, Responsibilities

          a.   Position. During the Period of Employment, the Company agrees to
               --------
     continue to employ Executive and Executive agrees to continue in the
     Company's employ as its Chief Financial Officer. Executive shall perform
     all duties appropriate to that position, as well as such other
     responsibilities as may reasonably be assigned by the Company including,
     but not limited to,

                                       1
<PAGE>

assisting the Company's Special Advisor with the divestiture of OXIS Health
Products and other non-related technology ("Divestiture") (collectively,
                                            -----------
"Services"). Executive shall report to the Company's Chief Executive Officer.
 --------
     b.   Other Activities. During the Period of Employment, Executive will not,
          ----------------
     except upon the prior written consent of the Company's CEO, which consent
     shall not be unreasonably withheld: (i) accept any other full-time
     employment, or (ii) engage, directly or indirectly, in any other business
     activity (whether or not pursued for pecuniary advantage) in the field of
     ethical pharmaceuticals that is or may be in direct competition with the
     business of the Company.

4.   Compensation. In exchange for Services and the other consideration he
     provides under this Agreement, Executive shall be entitled to an annual
     base salary of one hundred and thirty-five thousand dollars ($135,000.00)
     payable in accordance with the Company's regular payroll practices. In
     addition, the Board of Directors has awarded Executive options to purchase
     shares of the Company's Common Stock under, in accordance with, and subject
     to Executive's applicable Stock Option Grants (certain of the options under
     the 2000 Stock Option Agreement are subject to shareholder approval) with
     the Company (collectively, "Options"). Executive will not be entitled to
                                 -------
     any cash or other bonus for 1999. In addition, Executive's entitlement to
     shares under the 2000 Stock Option Grant may be accelerated in accordance
     with the terms thereof, as set forth in the Board of Directors' consent
     document dated January 31, 2000. Executive will be eligible to participate
     in the Company's benefit plans (including vacation and health insurance) as
     stated in the Company's employment policies (and as may be amended from
     time to time in the Company's sole discretion), provided that Executive
     shall receive such benefits at the same level provided from time to time to
     other senior executives of Company.

5.   Proprietary Information

          a.   Company Information. Executive agrees during his employment with
               -------------------
     the Company and for a period of three years thereafter, to hold in
     strictest confidence, and not to use or disclose to any person, firm or
     corporation any Proprietary Information of the Company. "Proprietary
                     -----------------------
     Information" means any Company proprietary or confidential information,
     technical data, trade secrets or know-how. This includes, but is not
     limited to, research, product plans, products, services, customer lists,
     customers, markets, software, developments, inventions, processes,
     formulas, technology, designs, drawings, engineering, hardware
     configuration information, marketing, finances or other Company business
     information. This information shall remain confidential whether it was
     disclosed to Executive either directly or indirectly in writing, orally or
     by drawings or observation. Proprietary Information does not include any of
     the foregoing items which has become publicly known and made generally
     available through no wrongful act of Executive or others who were under
     confidentiality obligations as to the items involved.
          b.   Former Employer Information. Executive agrees that he will not,
               ---------------------------
     during his employment with the Company, improperly use or disclose any
     proprietary information or trade secrets, or bring onto the premises of the
     Company any proprietary information belonging to any former or concurrent
     employer or other person or entity.
          c.   Third Party Information. Executive recognizes that the Company
               -----------------------
     has received and in the future will receive confidential or proprietary
     information from third parties. Executive agrees to hold all such
     confidential or proprietary information in the strictest confidence and not
     to disclose it to any person, firm or corporation or to use it except as
     necessary in carrying out his work for the Company consistent with the
     Company's agreement with such third party.
          d.   No Conflict. Executive represents and warrants that Executive's
               -----------
     execution of this Agreement, his employment with the Company, and the
     performance of his proposed duties under this Agreement shall not violate
     any obligations he may have to any former employer (or

                                       2
<PAGE>

other person or entity), including any obligations with respect to proprietary
or confidential information of any other person or entity.

6.   Inventions

          a.   Inventions Retained and Licensed. Executive has attached, as
               --------------------------------
Exhibit C, a list describing all inventions, original works of authorship,
---------
developments, improvements, and trade secrets which were made by Executive prior
to Executive's employment with the Company ("Prior Inventions"), which belong to
                                             ----------------
Executive, and which relate to the Company's actual and/or proposed business,
products or research and development.  If, in the course of his employment with
the Company, Executive incorporates into a Company product, process or machine a
Prior Invention owned by Executive or in which Executive has an interest, the
Company is hereby granted and shall have a nonexclusive, royalty-free,
irrevocable, perpetual, worldwide license to make, have made, modify, use and
sell such Prior Invention as part of or in connection with such product, process
or machine.
          b.   Assignment of Inventions.  Except as provided in Section 6.e
               ------------------------
below, Executive agrees that he will promptly make full written disclosure to
the Company, will hold in trust for the sole right and benefit of the Company,
and hereby assign to the Company, or its designee, all Executive's right, title,
and interest in and to any and all inventions, original works of authorship,
developments, concepts, improvements, designs, discoveries, ideas, trademarks or
trade secrets, whether or not patentable or registrable under copyright or
similar laws, which Executive may solely or jointly conceive or develop or
reduce to practice, or cause to be conceived or developed or reduced to practice
("Inventions"), while Executive is employed by the Company and within the course
  ----------
and scope of employment.  Executive further acknowledges that all original works
of authorship which are made by Executive (solely or jointly with others) within
the course and scope of and during his employment with the Company and which are
protectible by copyright are "works made for hire", as that term is defined in
the United States Copyright Act.  Executive understands and agrees that the
decision whether or not to commercialize or market any invention developed by
Executive solely or jointly with others is within the Company's sole discretion
and for the Company's sole benefit and that no royalty will be due to Executive
as a result of the Company's efforts to commercialize or market any such
invention.
          c.   Maintenance of Records. Executive agrees to keep and maintain
               ----------------------
adequate and current written records of all Inventions made by Executive (solely
or jointly with others) during Executive's employment with the Company and
subject to license or assignment under Section 6.a or 6.b. The records will be
in the form of notes, sketches, drawings, and any other format that may be
specified by the Company. The records will be available to and remain the sole
property of the Company at all times.
          d.   Patent and Copyright Registrations. Executive agrees to assist
               ----------------------------------
the Company, or its designee, at the Company's expense, in every proper way, to
secure the Company's rights in the Inventions and any copyrights, patents, mask
work rights or other intellectual property rights relating thereto in any and
all countries. Executive will disclose to the Company all pertinent information
and data which is necessary for the execution of all applications,
specifications, oaths, assignments and all other instruments necessary to apply
for and obtain such rights and in order to assign and convey to the Company, its
successors, assigns, and nominees the sole and exclusive rights, title and
interest in and to such Inventions, and any copyrights, patents, mask work
rights, or other intellectual property rights relating thereto. Executive
further agrees that Executive's obligation to execute or cause to be executed,
when it is in Executive's power to do so, any such instrument or papers shall
continue after the termination of this Agreement for a

                                       3
<PAGE>

reasonable duration. If the Company is unable, because of Executive's mental or
physical incapacity or for any other reason, to secure Executive's signature to
apply for or to pursue any application for any United States or foreign patents
or copyright registrations covering Inventions or original works of authorship
assigned to the company as above, then Executive hereby irrevocably designates
and appoints the Company and its duly authorized officers and agents as
Executive's agent and attorney in fact, to act for and in Executive's behalf and
stead to execute and file any such applications and to do all other lawfully
permitted acts to further the prosecution and issuance of letters-patent or
copyright registrations thereon with the same legal force and effect as if
executed by Executive.
          e.   Exception to Assignments. The provisions of this Agreement
               ------------------------
requiring assignment of Inventions to the Company do not apply to any invention
which qualifies for protection or different treatment under the provisions of
any applicable state law. Executive will advise the Company promptly in writing
of any inventions that Executive believes meet the criteria of any applicable
state law which affects ownership of Inventions.

7.   Post-Termination Activity

          a.   Executive acknowledges that the pursuit of the activities
forbidden by this subsection would necessarily involve the use or disclosure of
Proprietary Information in breach of this Agreement, but that proof of such a
breach would be extremely difficult. To forestall this use or disclosure,
Executive agrees that, during the Severance Period (if any) or for a period of
one year after the Period of Employment, whichever is longer, Executive shall
not, without the Company's prior written consent (i) divert or attempt to divert
from the Company any business of any kind in which the Company is then engaged;
(ii) employ, solicit for employment, or recommend for employment any person
employed by the Company (except where providing such job related references as
are common in the industry); or (iii) except as otherwise addressed in this
Agreement, accept employment with another company directly involved in
developing the technology then in development for the Company at the time of
Executive's termination in any state in which the Company conducts its business.
          b.   In addition, because Executive acknowledges the difficulty of
establishing when any intellectual property, invention, or proprietary
information was first conceived or developed by Executive, or whether it
resulted from access to Proprietary Information or Company equipment, supplies,
facilities, or data, Executive agrees that any intellectual property, invention,
or proprietary information related to the development of ethical pharmaceuticals
shall be rebuttably presumed to be an Invention, if reduced to practice by
Executive or with the aid of Executive within one (1) year after termination of
the Period of Employment.  Executive may rebut such presumption by producing
evidence which establishes to a preponderance that such intellectual property,
invention, or proprietary information was first conceived or developed by
Executive after the termination of the Period of Employment, or did not
otherwise result from access to Proprietary Information or Company equipment,
supplies, facilities, or data.

8.   Termination of Employment

          a.   Termination by Company not for Cause. At any time, the Company
               ------------------------------------
may terminate the Period of Employment for any reason other than for Cause (as
defined below) by providing Executive fourteen (14) days' advance written
notice.  The Company shall pay to Executive all compensation due and owing
through the last day actually worked and Executive shall be entitled to
Severance in accordance with Section 9 below, subject to the conditions therein.
In the event Company terminates the Period of Employment not for Cause,
Executive shall be released from the obligations of Section 7 .a (iii) above.
In addition, the Company may decline to allow the

                                       4
<PAGE>

renewal of the Agreement in accordance with Section 2 .b. above, regardless of
the existence of Cause, but in such case shall be obligated to provide only the
benefits set forth in Section 2 .c above.
          b.   Termination by Company for Cause.  At any time, and without
               --------------------------------
prior notice, the Company may terminate the Period of Employment for Cause (as
defined below). The Company shall pay Executive all compensation then due and
owing through the last day actually worked. Executive will not be entitled to
Severance. "Cause" shall mean Executive's: (i) Commission of a felony involving
            -----
moral turpitude; (ii) Repeated failure to perform services in accordance with
the reasonable requests of superiors within the course and scope of Executive's
duties; (iii) Commission of a material fraud, misappropriation, embezzlement or
other act of gross dishonesty which resulted in material loss, damage or injury
to the Company; or (iv) Death. Notwithstanding anything herein, however, if the
Period of Employment is terminated by reason of the death of Executive, all
unvested Options shall immediately vest and shall be exercisable by Executive's
estate or heirs for two years thereafter, otherwise in accordance with the terms
of his applicable Stock Option Grants with the Company.
          c.   By Executive Not for Good Reason. At any time, Executive may
               --------------------------------
terminate the Period of Employment for any reason other than Good Reason (as
defined below) by providing the Company fourteen (14) days' advance written
notice. The Company shall have the option, in its complete discretion, to make
termination of the Period of Employment effective at any time prior to the end
of such notice period, provided the Company pays Executive all compensation due
and owing through the last day actually worked. Thereafter, all of the Company's
obligations under this Agreement shall immediately and forever cease, except for
those required by law, except for those which expressly survive termination of
this Agreement and except that notwithstanding any vesting or termination
provisions contained in Executive's applicable Stock Option Grants with the
Company, Executive's unvested Options shall immediately vest upon such
termination and Executive shall be able to exercise his vested Options for one
year thereafter, otherwise in accordance with the terms of his applicable Stock
Option Agreements with the Company. Executive, however, will not be entitled to
Severance.
          d.   By Executive for Good Reason. At any time, and without prior
               ----------------------------
notice, Executive may terminate the Period of Employment for Good Reason (as
defined below). The Company shall pay Executive all compensation due and owing
through the last day actually worked, and Executive shall be entitled to
Severance in accordance with Section 9 below, subject to the conditions therein.
Thereafter, all obligations of the Company and Executive under this Agreement
shall terminate, except for those which expressly survive termination of this
Agreement. Neither the Company's giving of notice of termination in accordance
with Section 2.b nor its termination of the Period of Employment for Cause shall
constitute "Good Reason" for Executive to terminate the Period of Employment.
"Good Reason" only shall exist if the Company undertakes any of the following
 -----------
without Executive's prior consent:  (i) The assignment to Executive of any
duties or responsibilities which result in any material diminution or material
adverse change of Executive's position, status or circumstances of employment; a
change in Executive's titles or offices that results in any material diminution
or material adverse change of Executive's position, status or circumstances of
employment; or any removal of Executive from or any failure to re-elect
Executive to any of such positions, except in connection with the termination of
his employment for Cause, retirement, or any other voluntary termination of
employment by Executive other than a termination of employment by Executive for
Good Reason; (ii) A reduction by the Company in Executive's base salary by
greater than ten (10)

                                       5
<PAGE>

percent; (iii) Any failure by the Company to continue in effect any benefit plan
or arrangement, including incentive plans or plans to receive securities of the
Company, in which Executive is participating as of the date hereof (hereinafter
referred to as "Benefit Plans"), or the taking of any action by the Company
which would materially adversely affect Executive's participation in or reduce
Executive's benefits under the Benefit Plans or deprive Executive of any fringe
benefit enjoyed by Executive as in effect on the date hereof; provided, however,
that no termination of employment by Executive for Good Reason shall be deemed
to occur based upon this subsection 8.d (iii) if the Company offers a range of
benefit plans and programs which, taken as a whole, are comparable to the
Benefit Plans offered Executive before the action; (iv) A relocation of the
Executive, or the Company's principal offices if Executive's principal office is
at such offices, to a location more than fifty (50) miles from the location at
which Executive was performing his duties as of the date hereof, except for
required travel by Executive on the Company's business to an extent
substantially consistent with Executive's business travel obligations as of the
date hereof; (v) Any material breach by the Company of any provision of this
Agreement; (vi) Any failure by the Company to obtain the assumption of this
Agreement by any successor or assign of the Company; (vii) Any directive to
Executive to perform any act which would expose him to personal legal liability
or which, viewed objectively, is likely to constitute an unethical act; or
(viii) Any conduct directed to Executive by Company or any condition under which
Executive works which constitutes constructive discharge under the principles of
the governing law.

9.   Severance

          a.   In the event that the Period of Employment is terminated in
accordance with Sections 8.a or 8.d hereof and Executive signs a waiver
agreement with terms modeled on the General Waiver of Claims, attached hereto as
Exhibit D and agreed to by the parties (the "Waiver"), the Company shall
---------                                    ------
continue Executive's then current base salary and COBRA premiums in accordance
with the Company's normal payroll procedures for a period of twelve (12) months
(the "Severance Period"), and notwithstanding any vesting or termination
      ----------------
provisions contained in Executive's applicable Stock Option Grants with the
Company Executive's unvested Options shall immediately vest and Executive shall
have two years from the date of Executive's termination of employment to
exercise his vested options otherwise in accordance with the terms of his
applicable Stock Option Grants with the Company (collectively, "Severance"). In
the event the then current base salary is less than the compensation set out in
Section 4 of this Agreement, Executive shall be entitled to severance calculated
on the basis of the compensation set out in Section 4 of this Agreement.

          b.   Notwithstanding any other provision of this Agreement, Release I
or II, or the Waiver, at any time should Executive engage in or pursue any of
the activities described in Section 7 (except where advance consent has been
granted, or except where released from Section 7 .a (iii) by virtue of a
Termination by Company not for Cause or by virtue of a Termination by Executive
for Good Reason) or should Executive not fulfill his obligations in Section 10
below, the Company's obligation to pay and Executive's entitlement to any
Severance or Non-Renewal Benefits shall immediately and forever cease.

10.  Termination Obligations.

          Executive agrees that his obligations under Sections 5 and 6 of this
Agreement survive the expiration of this Agreement.

                                       6
<PAGE>

11.  Alternative Dispute Resolution

          a.   The Company and Executive mutually agree that any controversy or
claim arising out of or relating to this Agreement or the breach thereof, or any
other dispute between the parties, shall be submitted to mediation before a
mutually agreeable mediator, which cost is to be borne equally by the parties
hereto. In the event the parties are unable to agree upon a mediator, the
mediator shall be Douglass Hamilton or such person as Hamilton Mediation Inc.
designates. In the event mediation is unsuccessful in resolving the claim or
controversy, such claim or controversy shall be resolved by arbitration as
described below. The claims covered by this Agreement ("Arbitrable Claims")
                                                        -----------------
include, but are not limited to, claims for wages or other compensation due;
claims for breach of any contract (including this Agreement) or covenant
(express or implied); tort claims; claims for discrimination (including, but not
limited to, race, sex, religion, national origin, age, marital status, medical
condition, or disability); claims for benefits (except where an Executive
benefit or pension plan specifies that its claims procedure shall culminate in
an arbitration procedure different from this one), and claims for violation of
any federal, state, or other law, statute, regulation, or ordinance, except
claims excluded in the following paragraph. The parties hereto hereby waive any
rights they may have to trial by jury in regard to Arbitrable Claims.
          b.   Claims Executive may have for workers' compensation or
unemployment compensation benefits are not covered by this Agreement. Also not
covered is either party's right to obtain provisional remedies or interim relief
from a court of competent jurisdiction for any claim or controversy arising out
of or related to the unauthorized use, disclosure, or misappropriation of the
confidential and/or proprietary information of either party. Notwithstanding
anything in this Agreement to the contrary, however, should either party
initiate litigation in any court as authorized by this section, the other party
may assert any claims he or it may have as counterclaims or separate claims in
such court and shall not be obligated to resolve them by mediation and/or
arbitration.
          c.   Except as provided in Section 11.b, mediation and arbitration
under this Agreement shall be the exclusive remedy for all Arbitrable Claims.
The Company and Executive agree that arbitration shall be held in or near
Multnomah County, Oregon, or such location as the parties mutually agree upon,
and shall be in accordance with the then current Employment Dispute Resolution
Rules of the American Arbitration Association, before an arbitrator licensed to
practice law in the State of Oregon or such other forum as the parties have
agreed upon. The arbitrator shall have authority to award or grant legal,
equitable, and declaratory relief. Such arbitration shall be final and binding
on the parties. The Federal Arbitration Act shall govern the interpretation and
enforcement of this section pertaining to Alternative Dispute Resolution. The
parties shall use their best efforts to agree upon an Arbitrator. If the parties
are unable to agree upon an Arbitrator within 14 days of either party requesting
arbitration of a dispute, the Arbitrator shall be designated by Douglass
Hamilton or Hamilton Mediation Inc.
          d.   This Agreement to mediate and arbitrate survives termination of
the Period of Employment.

12.  Miscellaneous

          a.   Legal Fees. If any action at law or in equity or arbitration is
               ----------
necessary to enforce or interpret the terms of this Agreement, to the extent
permitted by law, the prevailing party shall be entitled to reasonable
attorneys' fees, costs, and necessary disbursements, in addition to any other
relief to which the prevailing party may be entitled.

                                       7
<PAGE>

          b.   Entire Agreement. This Agreement (inclusive of exhibits and
               ----------------
attachments and incorporated documents) represents the entire agreement and
understanding between the parties regarding its subject matter, supersedes and
replaces any and all prior agreements and understandings regarding its subject
matter.
          c.   Amendments, Waivers. This Agreement may only be modified by a
               -------------------
subsequent written agreement executed by the Chief Executive Officer of the
Company (after approval of the Company's Board of Directors) and Executive.
Failure to exercise any right under this Agreement shall not constitute a waiver
of such right.
          d.   Assignment; Successors and Assigns. This Agreement shall not be
               ----------------------------------
assignable by either party without the express written consent of the other.
          e.   Notices. All notices required or given herewith shall be
               -------
addressed to the parties at the addresses designated above by registered mail,
special delivery, or by certified courier service. Executive shall notify
Company in writing of any change of address. Notice of change of address shall
be effective only when done in accordance with this Section.
          f.   Severability; Governing Law. If any provision of this Agreement,
               ---------------------------
or its application to any person, place, or circumstance, is held by an
arbitrator or a court of competent jurisdiction to be invalid, unenforceable, or
void, such provision shall be enforced (by blue-penciling or otherwise) to the
greatest extent permitted by law, and the remainder of this Agreement and such
provision as applied to other persons, places, or circumstances shall remain in
full force and effect. This Agreement will be governed by the laws of the State
of Oregon.
          g.   Acknowledgment. Company and Executive acknowledge that they have
               --------------
been afforded every opportunity to and have read this Agreement, are fully aware
of its contents and legal effect, and have chosen to enter into this Agreement
freely, without coercion, and based upon their own judgment. The parties have
duly executed this Agreement as of the date first written above.

                                        EXECUTIVE

                                        /s/ Jon S. Pitcher
                                        ---------------------------
                                        Jon S. Pitcher

                                        COMPANY

                                        OXIS International, Inc.

                                        By: /s/ Ray R. Rogers
                                           ------------------------
                                        Name:  Ray R. Rogers
                                        Title: Chairman

                                        By: /s/ Stuart Lang
                                           ------------------------
                                        Name:  Stuart Lang
                                        Title: Chairman, Audit and
                                               Compensation Committee

                                       8

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