<PAGE>

                   SECURITIES AND EXCHANGE COMMISSION
                         Washington, D.C.  20549

                                FORM 10-K

(Mark One)
/X/   Annual report pursuant to Section 13 or 15(d) of the Securities
      Exchange Act of 1934 for the fiscal year ended December 31, 1998 or

/ /   Transaction report pursuant to Section 13 or 15(d) of the Securities
      Exchange Act of 1934 for the transition period
      from ____________________ to ________________________

Commission file number:      0-22529
                             -------

                             inTEST Corporation
- -----------------------------------------------------------------------------
            (Exact name of Registrant as specified in its charter)

           Delaware                                  22-2370659
- ---------------------------------         -----------------------------------
  (State or other jurisdiction           (I.R.S. Employer Identification No.)
or incorporation or organization)

    2 Pin Oak Lane, Cherry Hill, NJ                        08003
- ---------------------------------------                  ----------
(Address of principal executive office)                  (Zip Code)

Registrant's telephone number, including area code:	609-424-6886

Securities registered pursuant to Section 12(b) of the Act:	None

Securities registered pursuant to Section 12(g) of the Act:	Common Stock,
par value $0.01 per share.

Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes /X/   No / /

The aggregate market value of the voting and non-voting common equity held by
non-affiliates of the Registrant computed by reference to the closing price
of such stock on March 22, 1999 or $45,752,238 as quoted on the Nasdaq
National Market system.

The number of shares outstanding of the Registrant's Common Stock, as of
March 22, 1999 is 6,536,034.

Documents incorporated by reference.  Portions of the Registrant's 1999
Definitive Proxy Statement to be filed pursuant to Regulation 14A in
connection with the 1999 annual meeting of stockholders of the Registrant are
incorporated by reference into Part III of this Annual Report on Form 10-K.

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (ss. 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of Registrant's knowledge, in 
definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. / /




<PAGE>

                           inTEST Corporation
                       Annual Report on Form 10-K


                                 INDEX



Part I:                                                              Page
- -------                                                              ----

Item 1:   Business                                                     3


Item 2:   Properties                                                  11


Item 3:   Legal Proceedings                                           11


Item 4:   Submission of Matters to a Vote of Security Holders         12


Part II:
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Item 5:   Market for Registrant's Common Equity and Related
          Stockholder Matters                                         12


Item 6:   Selected Financial Data                                     14


Item 7:   Management's Discussion and Analysis of Financial
          Condition and Results of Operations                         15


Item 7A:  Quantitative and Qualitative Disclosures About 
          Market Risk                                                 20


Item 8:   Financial Statements and Supplementary Data                 21


Item 9:   Changes in and Disagreements with Accountants on
          Accounting and Financial Disclosure                         21


Part III:  (Incorporated by reference to Proxy Statement)
- --------

Item 10:  Directors and Executive Officers                            21


Item 11:  Executive Compensation                                      21


Item 12:  Security Ownership of Certain Beneficial Owners and
          Management                                                  21


Item 13:  Certain Relationships and Related Transactions              21


Part IV:
- -------

Item 14:  Exhibits, Financial Statement Schedules, and
          Reports on Form 8-K                                         21

Signatures                                                            23

Index to Exhibits                                                     24

Index to Consolidated Financial Statements and Consolidated
  Financial Statement Schedule                                        25


                                      2



<PAGE>

                           inTEST Corporation
                       Annual Report on Form 10-K


PART I:
- ------


Item 1:   BUSINESS

INTRODUCTION AND GENERAL DEVELOPMENT OF BUSINESS

     inTEST Corporation (the "Company") is a leading independent designer,
manufacturer and marketer of interface solutions products which are used with
automatic test equipment ("ATE") by semiconductor manufacturers during the
testing of wafers and packaged devices.  Its proprietary products include test
head manipulators, docking hardware and tester interfaces.  The Company also
designs and markets related ATE interface products including high performance
sockets, interface boards and probing assemblies.  The Company's products are
designed to improve the utilization and cost-effectiveness of ATE during the
testing of linear, digital and mixed signal integrated circuits ("ICs"). Since
its organization in 1981, the Company has developed and continues to support
over 4,600 products and has been granted over 13 U.S. patents for its
technology.

     The Company has grown its business and expanded its product lines
primarily through internal product development.  The development of the
Company's manipulator technology in early 1982, with its innovative floating
head design and six degrees of motion freedom, served as the foundation for the
growth of the Company's manipulator business.  The subsequent development of
the Company's docking hardware technology later in 1982, which provides plug-
compatibility for test heads with multiple brands of probers and handlers,
established what management believes has become the de facto standard for
docking hardware in the industry today.  The Company has also grown though the
strategic acquisition of TestDesign Corporation ("TestDesign")(now, inTEST
Sunnyvale Corp.) in August 1998, which enabled the Company to expand its
product line to include tester interfaces.

     The Company maintains design, manufacturing and service facilities in New
Jersey and California, as well as service and technical support offices in
Texas, Arizona and Oregon to serve U.S. markets for its products.  The Company
also maintains a design, manufacturing and service facility in the U.K. to
serve the European market and design, service and technical support offices in
Singapore and Japan to serve the Asia-Pacific market.  Most of the Company's
facilities are located in proximity to major semiconductor manufacturing
centers.  The Company's focus on high quality products and innovative
proprietary technologies has enabled it to establish strong relationships with
leading worldwide semiconductor manufacturers.  In 1998, the Company's top ten
customers included  Hewlett Packard, Lucent Technologies, Motorola, NEC, SGS
Thomson and Texas Instruments.

     The Company believes it is a leader in providing high quality
semiconductor testing interface products.  The Company's goal is to enhance its
leadership position and increase its domestic and international market share.
The Company's strategies to achieve its goal include (i) developing
technologically superior products for semiconductor interface solutions, (ii)
maintaining strong customer relationships, (iii) expanding its global presence,
and (iv) pursuing acquisitions of businesses, technologies or products that are
complementary to the Company's current product offerings.

INDUSTRY OVERVIEW

     The IC market is a high volume, high growth market characterized by rapid
technological change.  The testing of wafers and packaged devices is an
integral and necessary step during their design and manufacture.  Each IC is
tested at least twice during the manufacturing process to ensure the functional
and electrical performance of the ICs prior to shipment.  The increasing
complexity of wafers and packaged devices, as manifested by larger wafers,
higher speeds, growing pin counts, smaller packaged devices and greater levels
of integration has changed the design, architecture and complexity of ATE used
during the testing of such devices.  The combination of the long-term growth in
demand for ICs coupled with the rapid technological changes in their designs
and the required production capacity to meet this demand drives the market for
ATE and the Company's products.

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<PAGE>

     After wafer fabrication, each IC on a wafer is automatically positioned
under a probing assembly by a prober where the individual ICs on the wafer are
tested (the "front-end test").  During front-end testing, the tester transmits
electrical signals to the wafer and analyzes the signals upon their return.
The testing of ICs in wafer form is important to avoid incurring the
significant expense of assembling and packaging ICs that do not meet the
manufacturers' specifications.  After device packaging, devices are
individually fed by the handler to an environmentally controlled test socket
where the IC is again tested (the "back-end test").  After back-end testing,
the handler sorts the devices according to test performance.  Manipulators
facilitate the movement of a test head to a prober or handler, and "docking"
describes the function of connecting a test head to a prober or handler with
mechanically engineered hardware.

     Until the early 1970s, testers were designed with the interface circuits
(also referred to as the pin electronics) mounted inside the tester's mainframe
cabinet.  The pin electronics were connected to the prober's probing assembly
or to the handler's test socket via an electrical cable, typically five to ten
feet long.  As devices became faster, more complex and more precise, signal
distortion inherent with the use of such cables resulted in degraded test
results.  Although certain devices are still tested in this manner, such
devices tend to be used in older, less technologically advanced applications.

     During the 1970s, tester manufacturers responded by moving the pin
electronics from the tester's mainframe cabinet to an independent test head,
which could be directly mated with a prober or handler, thereby eliminating the
problems associated with using cables as the connection between the tester's
pin electronics and the prober or handler.  Direct mating of the test head pin
electronics to the prober's probing assembly or to the handler's test socket
was accomplished by mounting the test head directly to the prober or handler
with a pivot-mechanism manipulator resembling a waffle iron.  Such a
combination resulted in the test head being "dedicated" to only one prober or
one handler.

     Dedicated manipulators are of greatest value in ATE systems in which the
test head is infrequently disconnected and re-connected to and from one prober
or handler to another prober or handler.  Consequently, dedicated manipulators
are used (i) primarily at front-end test, where large, homogeneous lots of
wafers are tested for long, uninterrupted periods of time, and (ii) at back-end
test, where high volume, commodity devices such as DRAMs, are tested in large
lots.  However, back-end non-commodity devices, such as microcontrollers and
telecommunications devices, generally are tested in smaller lots due to varying
package types and test specifications, thereby requiring frequent handler
changes.

     In 1980, free-standing manipulators were introduced to minimize ATE
downtime and increase device testing throughput.  Such manipulators used hand-
ranked lead screws to position a test head to a prober or handler.  These early
manipulators were only marginally better than the waffle-iron design and did
not significantly improve ATE utilization due to the lack of motion freedom
necessary for successful docking.

     Users of these early manipulators attempted to precisely align fragile pin
electronics to test sockets and probing assemblies without docking hardware.
Lack of proper docking hardware often causes deterioration and damage to the
interface boards, test sockets or probing assemblies.  Such damage can lead to
compromised or inaccurate test results and the rejection of good wafers or
devices (yield loss), or, more costly, the acceptance of unsatisfactory wafers
or devices (quality error).  In addition, successfully connecting a test head
held by a free-standing manipulator to a prober or handler without docking
hardware is difficult and time-consuming.  The Company's docking hardware and
free-standing universal manipulators are designed to improve the utilization of
ATE, particularly ATE employed in back-end non-commodity flexible testing
environments, by facilitating the quick, easy and safe changeover of test heads
to probers and handlers.


                                     4


<PAGE>

     The Company's docking hardware products mechanically control the intimate
interface between the test head's interface board and the prober's probing
assembly or handler's test socket.  As a result, fragile interface boards, test
sockets or probing assemblies are protected from damage during docking.  The
Company's docking hardware allows semiconductor manufacturers to achieve cost
savings by (i) improving ATE utilization, (ii) improving the accuracy and
integrity of test results and (iii) reducing the need to repair or replace
expensive ATE interface products.  The Company's docking hardware can be
designed for use with substantially all makes and models of test heads, probers
and handlers, and can usually be designed to allow all the ATE on a test floor
to be mechanically plug-compatible.  Plug-compatibility simplifies the docking
procedures, allowing for increased flexibility and utilization of test heads,
probers and handlers on a test floor.

     The Company's free-standing universal manipulators are designed to be used
in either a dedicated or a flexible test environment.  In addition, the
Company's manipulators have been engineered to hold test heads in what seeks to
replicate a "zero gravity" free space.  As a result, an operator using no more
than 22 pounds of force can reposition the test head by grasping it in his or
her hands and gently moving the test head into position to dock with a prober
or handler.  Test heads currently in use weigh up to approximately 900 pounds
and measure up to a cubic yard in volume.  A test head held in the Company's
free-standing universal manipulator and equipped with the Company's docking
hardware can be easily, quickly and safely docked to any handler.  After
testing a particular production lot of devices, the test head can quickly and
easily be disconnected and docked to another handler for testing either a
subsequent lot of the same packaged device or to test a different device.

PRODUCTS

     Substantially all of the Company's products are customized for use with
particular ATE and, in the case of docking hardware, also to achieve plug-
compatibility among particular combinations of ATE.  The Company's docking
hardware, manipulators, tester interfaces and related ATE interface products
are designed for use with more than 175 test heads, 30 probers and 300
handlers, all of which are mechanically unique makes and models.  The Company
has designed and continues to support more than 4,600 products, any of which
can be manufactured upon request.

Manipulator Products

     in2 Test Head Positioner:  The in2 Test Head Positioner ("in2") is a
universal manipulator which can be designed to hold any test head.  A universal
manipulator enables the test head to be repositioned for alternate use with any
one of several probers or handlers on a test floor.  The in2 is distinguished
from universal manipulators manufactured by competitors by its innovative,
floating-head design.  The design of the in2 allows a test head to be held in
an effectively weightless state, moved up or down, right or left, forward or
backward and rotated around each axis (six degrees of motion freedom) by an
operator using no more than 22 pounds of force.  Consequently, an operator can
manually reposition the test head by grasping it in his or her hands and gently
moving the test head into position to dock with the prober or handler.  This
same design feature allows the operator to dock the test interface board (which
is used to connect the test head's pin electronics to the probing assembly on a
prober or to the test socket on a handler) with near zero electrical length
between the pin electronics and the probing assembly or the test socket, while
protecting the fragile electrical contacts from inadvertent damage during the
docking action.

     The Company manufactures six styles of the in2, all of which are available
in eight different load-rated sizes.  The styles include one tumble mode style
and five cable pivot style manipulators.  Each style provides a distinct
combination of performance characteristics suited to different customer
applications.  A tumble mode positioner might be specified for various reasons
including test head form factor, compatibility with in-line automation, cable
support simplicity or cost minimization.  Reasons for specifying a cable


                                     5



<PAGE>

pivot positioner could include providing improved handling characteristics
necessary for larger test heads, the ability to handle test heads with short
mainframe-to-test head cables or the necessity to position the test head close
to the floor.  In addition, the Company designs telescopic cable supports to be
used with its cable pivot manipulators; these cable supports minimize bending
and twisting stress to mainframe-to-test head cables, which can be delicate yet
weigh several hundred pounds.  The in2 ranges in price from approximately
$12,000 to $100,000 depending upon load capacity, manipulator style and the
type of cable management.

     Test Head Hoist:  In July 1996, the Company introduced a new, fully-
automatic, electrically-powered and microprocessor-controlled dedicated
manipulator called the Test Head Hoist ("THH").  The patented, overhead design
of the THH series manipulator uses a powered scissor mechanism to raise and
lower a test head to a prober or a top docking handler.  This design enables a
THH to dock very large test heads (weight tested to 1,000 pounds) within .005".
Although the Company has had no sales of the THH series manipulator to date,
the Company believes that the THH series of manipulators will be attractive to
semiconductor manufacturers for testing 300 mm wafers and packaged memory
devices.  The Company's THH is the only fully-automatic manipulator which
enables a test head to be automatically docked to a prober or handler with the
push of one button.  The Company believes that the THH enables semiconductor
manufacturers to increase floor space utilization of their ATE test systems by
25% to 40% over that achieved by waffle-iron style dedicated manipulators or
universal manipulators because a THH series manipulator has a virtually zero
"footprint."  During 1998, the Company completed a redesign of the THH which
included a simplification of its internal electronics which reduced its
manufacture cost.  The Company does not expect significant sales of the THH
manipulators until demand for 300mm wafers reach levels warranting significant
investment in new testing equipment by semiconductor manufacturers.  All costs
associated with the development of the THH have been expensed.

Docking Hardware and ATE Interface Products

     The Company's docking hardware is designed for use with floating-head
universal manipulators, which are used when maximum mobility and inter-
changeability of handlers between test heads is required.  The Company's
docking hardware provides the mechanical control to safely connect, with near
zero electrical length, the test interface board with either the probing
assembly on a prober or the test socket on a handler.  A simple cam action
docks and locks the test head to the prober or handler so that the two become a
single mechanism which prohibits motion of the test head relative to the prober
or handler.  This minimizes deterioration of the interface boards, test sockets
and probing assemblies caused by the constant vibration characteristic of the
operation of all probers and handlers.  The Company's docking hardware allows
an operator to manually align the probing assembly or test socket to within
 .005" with respect to the interface board on the test head.

     The Company offers six standard four-cam families and three standard
three-cam families with load ratings of 200, 400 and 600 pounds.  The Company's
docking families are primarily distinguished from one another by the number of
docking cams and guide pins, the load rating and the size of test head
interface boards that can be used with each particular family of docking
hardware.  The Company's docking hardware products range in price from
approximately $2,000 to $12,000.

     The Company's docking hardware products are distinguished from those
offered by ATE manufacturer competitors by the ability of the Company's
products to make multiple competing brands of test heads plug-compatible with
multiple brands of probers and handlers used by a semiconductor manufacturer by
only changing interface boards.  Creating such plug-compatibility requires
detailed information about competing ATE that would generally not be available
to a competing ATE manufacturer.  Plug-compatibility permits non-commodity
semiconductor manufacturers to reduce the changeover time required to undock a
test head from one handler and dock it to another handler between production
lots or when changing the device type being tested.


                                     6


<PAGE>

     In addition, the Company designs and sells a variety of related ATE
interface products including high performance test sockets, interface boards,
probing assemblies and other products.  The Company custom designs all docking
hardware and related ATE interface products for the specific combinations of
test heads and probers or handlers used by its customers.

Tester Interface Products

     The Company entered the tester interface business through the acquisition
of TestDesign in August 1998, a company engaged primarily in the design,
manufacture and sale of tester interface equipment.  A tester interface
securely connects the tester to the wafer prober or device handler and is used
to carry signals from the tester to the device under test.  A tester interface
typically consists of custom mechanical docking hardware such as a lock ring
and insert ring, as well as two intricate multi-layer printed circuit boards
connected by either a system of cables or spring loaded pogo contact pins.
Tester interfaces range from small, single board, cable type interfaces for
less complex systems to high speed, high frequency, digital or mixed signal
interfaces used in testing more complex IC's.  One end of the tester interface
connects to the tester and the other to either a probe card fixture mounted on
a prober or a test socket mounted to a handler for packaged device testing.  In
each case, the reliability of the test is highly dependent on maintaining the
integrity of the signal between the tester and the device being tested.

     Every tester interface is custom designed for its application.  The
Company's tester interface products carry signals from the tester to the probe
card or test socket and return signals to the tester from the device.  The
Company's tester interface products are designed to optimize the integrity of
the transmitted signal data through the reduction of channel cross-talk, and
the matching of delay times and impedance, thereby increasing the accuracy of
the test data.  Because the Company's tester interfaces enable the tester to
provide reliable yield data by allowing for clear signal transmission, its
interfaces can also be cost saving devices.  The Company's tester interface
products also feature ease of mechanical installation and ready access to the
probe card or test socket during device testing.  The Company offers over 200
different types of overhead and cable tester interfaces that range in price
from $6,000 to $46,000 depending upon the type of application and the
complexity of the device to be tested.

MARKETS AND CUSTOMERS

     The Company markets its products globally to semiconductor manufacturers
and, to a lesser extent, ATE manufacturers on an OEM basis.  The Company
believes that it sells to most major semiconductor manufacturers in the world.
The Company's universal manipulators and docking hardware are primarily used
during back-end testing of non-commodity packaged devices.  The Company's
tester interfaces are used in either front-end or back-end testing of non-
commodity packaged devices.  Such devices include linear, digital and mixed
signal ICs (such as microprocessors, digital signal processing chips, ASICs and
non-commodity memory devices) and primarily have applications in the
automotive, computer, consumer products and telecommunications industries.

     The Company believes its sales of manipulators, docking hardware and
tester interfaces are a function of the general level of capital expenditures
by semiconductor manufacturers.  In addition, the Company's sales of docking
hardware generally are driven by changes in device designs or test methods,
industry-wide volume of device testing, sales of new handlers and, to a lesser
extent, sales of new test heads.  In the past, sales of the Company's docking
hardware generally have been strong when spending for test heads was low.
During such times, the Company believes that semiconductor manufacturers seek
to improve the utilization, performance and efficiency of existing ATE by
purchasing docking hardware.  The Company's sales of manipulators generally
follow purchases of test heads by the Company's semiconductor manufacturer
customers.  The Company's sales of tester interfaces are driven both by new
tester sales and by upgrades of existing test fixturing to accommodate the
increased performance demands of new IC devices.  The Company believes its
sales of related ATE interface products primarily depend upon operating
expenditures of the Company's semiconductor manufacturer customers.


                                    7


<PAGE>

     Both North American and European semiconductor manufacturers have located
most of their back-end factories in Southeast Asia.  The front-end wafer
fabrication plants of U.S. semiconductor manufacturers are primarily in the
U.S.  Likewise, European, Taiwanese, South Korean and Japanese semiconductor
manufacturers primarily have located their wafer fabs in their respective
countries.  The Company's sales to Japanese semiconductor manufacturers
primarily consist of tester interfaces, test sockets and interface boards.
Sales of docking hardware and universal manipulators have been limited in Japan
and South Korea because manufacturers in these countries emphasize mass-
produced products such as memory devices and other commodity devices.  
Commodity devices are typically tested using dedicated manipulators rather than
universal manipulators with docking hardware.

     As part of the Company's strategy to be domiciled in its major markets,
the Company established inTEST LTD in the U.K. in 1985, inTEST KK in Japan in
1987 and inTEST PTE in Singapore in 1990.  inTEST LTD designs, manufactures and
markets the Company's products principally in the European market.  inTEST KK
was established to be a liaison office with Japanese ATE manufacturers and to
market inTEST products in Japan.  In addition, inTEST KK initiated the
Company's business of designing and marketing related ATE interface products.
inTEST PTE designs, markets and provides technical support to customers in
Southeast Asia, and it intends to commence manufacturing operations in
Singapore in the future.

     The Company has maintained long term relationships with substantially all
ATE manufacturers.  The Company believes its relations with such manufacturers
are good and have been additionally strengthened due to the fact that the
Company does not compete with such manufacturers for testers, probers and
handlers.  The Company believes that maintaining such relationships is
essential to its ability to provide plug-compatible ATE interface solutions.

     The Company's largest customers include Hewlett Packard, Lucent
Technologies, Motorola, NEC, SGS Thomson, and Texas Instruments among
semiconductor manufacturers, and Analog Devices, Credence Systems, LTX, and
Teradyne among ATE manufacturers.  Sales to the Company's top ten customers
accounted for 76%, 72% and 70% of the Company's revenues in 1998, 1997 and
1996, respectively.  Sales to Lucent Technologies accounted for 16%, 11% and
16%; sales to Motorola accounted for 13%, 5% and 7%; sales to Texas Instruments
accounted for 11%, 7% and 5% and sales to Analog Devices accounted for 7%, 11%
and 6% of the Company's revenues in 1998, 1997 and 1996, respectively.

MANUFACTURING AND SUPPLY

     The Company's principal manufacturing operations consist of assembly and
testing at its facilities in New Jersey, California and in the U.K.  By
maintaining manufacturing facilities and technical support in geographic
markets where its semiconductor manufacturer customers are located, the Company
believes that it is able to respond more quickly and accurately to its
customers needs.

     The Company assembles its manipulator products, docking hardware and
tester interfaces and certain of its probing assemblies from a combination of
standard components and fabricated custom parts which have been manufactured to
the Company's specifications by either third party manufacturers or the
Company's fabrication operation in California.  The Company's related ATE
interface products, such as test sockets, interface boards and other of its
probing assemblies, are also manufactured to the Company's specifications by
third party manufacturers.  The Company's policy is to use the highest quality
raw materials and components in its products.  The primary raw materials used
in fabricated parts are various grades of aluminum and steel, in interface
boards are fiberglass and copper, in tester interfaces are pogo pins and in
test sockets are plastic and copper, all of which are widely available.  
Substantially all components are purchased from multiple suppliers.  Certain
raw materials and components are purchased from single suppliers, however, the
Company believes that all materials and components are available in adequate
amounts from other sources.


                                    8


<PAGE>

     In New Jersey and California, the Company controls the quality of raw
materials, fabricated parts and components by conducting incoming inspections
using sophisticated measurement equipment, including a coordinate measuring
machine in New Jersey, to ensure that products with critical dimensions meet
the Company's specifications.  In the U.K., the Company relies on its suppliers
for inspecting the quality of fabricated parts.  The Company intends to buy a
coordinate measuring machine for inTEST LTD by the second quarter of 1999.
The Company's policy is to inspect all products at various stages prior to
shipment.  The Company's inspection standards have been designed to comply with
applicable MIL specifications and ANSI standards.  The Company is preparing a
quality manual to comply with such specifications and standards in anticipation
of applying for ISO 9001 certification.

SALES AND DISTRIBUTION

     In North America, the Company sells to semiconductor manufacturers
principally through independent, commissioned sales representatives and to ATE
manufacturers through Company account managers.  North American sales
representatives also coordinate product installation and support with the
Company's technical staff and participate in trade shows.  Technical support is
provided to the Company's North American customers and independent sales
representatives by Company employees based in Cherry Hill, New Jersey,
Sunnyvale, California, Austin, Texas, Chandler, Arizona and Beaverton, Oregon.

     In Europe, the Company sells to semiconductor and ATE manufacturers
through Company account managers.  In Japan, the Company sells to semiconductor
and ATE manufacturers through Company account managers.  In China, Hong Kong,
Malaysia, the Philippines, Singapore, South Korea, Taiwan and Thailand, the
Company sells through independent sales representatives.  International sales
representatives are responsible for sales, installation, support and trade show
participation in their geographic market areas.

     Company account managers are responsible for a portfolio of customer
accounts and for managing certain independent sales representatives.  In
addition, Company account managers are responsible for applications
engineering, custom product design, pricing, quotations, proposals and
transaction negotiations.

COMPETITION

     The Company's competitors include independent manufacturers of
manipulators, docking hardware, tester interfaces and related ATE interface
products, designers and manufacturers of ATE and, to a lesser extent,
semiconductor manufacturers' in-house ATE interface groups.  The Company
principally competes on the basis of product performance and functionality,
product reliability, customer service, applications support, price and timely
product delivery.

     The independent manufacturers of docking hardware and manipulators which
compete with the Company include Reid-Ashman Manufacturing of the U.S.,
Microhandling of Germany and Shang Sheng of Taiwan, each of which manufactures
docking hardware and manipulators.  The manufacturers of ATE which compete with
the Company in the sale of docking hardware and universal manipulators include
Credence Systems, LTX, Schlumberger and Teradyne.  Such manufacturers of ATE
may be both competitors and customers of the Company.  The independent
manufacturers of tester interfaces which compete with the Company include
Cerprobe Corporation, Synergetix, a division of IDI, and Xandex Corporation.
The manufacturers of ATE which compete with the Company in the sale of tester
interfaces include Credence Systems, Electroglas, LTX and Teradyne.  In
addition, in the sale of related ATE interface products there are approximately
20 manufacturers of interface boards, four manufacturers of high performance
test sockets and eight manufacturers of probing assemblies.

PATENTS AND OTHER PROPRIETARY RIGHTS

     The Company currently holds 13 U.S. patents and 66 foreign patents and
has pending four U.S. patent applications and more than 34 foreign
applications that cover various aspects of its technology.  The Company's
policy is to protect its technology by filing patent applications for the
technologies that the Company considers important to its business.  The Company
first filed for patent protection in the U.S. for its docking hardware and the

                                     9


<PAGE>

in2 test head manipulator in 1982, less than one year after the formation of
the Company.  The Company's U.S. issued patents will expire at various times
beginning in 2002 and extending through 2015.  There can be no assurance that
additional patents will be issued on the Company's pending and future
applications, or that any patents now or hereafter owned by the Company will
afford protection against competitors that develop similar technology or
products.  There are no pending lawsuits or claims against the Company
regarding infringement of any existing patents or other intellectual property
rights of others.

     The Company also relies on trade secrets and unpatentable know-how to
protect its proprietary rights.  It is the Company's policy to require, as a
condition of permanent employment, that all employees of the Company agree to
assign to the Company all rights to inventions or other discoveries relating
to the Company business made while employed by the Company.  In addition, all
employees agree not to disclose any information regarding the Company which is
private or confidential.

     On November 18, 1998, the Company and its subsidiary inTEST IP Corp.
(which holds title to all Company intellectual property) filed suit against a
competitor for infringement of a United States patent held by the Company (the
"815 Patent").  The invention disclosed and claimed in the 815 Patent is
directed to a system for positioning and docking a heavy electronic test head
of a test system with respect to an electronic device handler.  The system is
used in the automatic testing of ICs and other electronic devices.  The Company
sells products covered by the 815 Patent worldwide.

     As alleged in the complaint, the competitor began manufacturing, offering
to sell, and selling products as early as 1991 that, without license, infringe
claims of the 815 Patent.  The parties have been discussing possible settlement
of the dispute since the Company first became aware of the infringement in
1991.  Discussions were abated at the end of 1995 so that the United States
Patent and Trademark Office (the "PTO") could reexamine the 815 Patent.  On
April 7, 1998, the PTO completed the reexamination and affirmed the
patentability of the nine claims in the patent with minor, technical,
clarifying changes.  Thereafter, the parties resumed settlement negotiations,
however, to date such negotiations have been unsuccessful.

     The complaint asks the court to enjoin the competitor from further acts of
infringement, including the acts of manufacturing, using, offering for sale,
selling and importing positioner systems that embody the invention claimed in
the 815 Patent.  The complaint also asks the court to award the Company
damages, including the Company's lost profits.  Alleging that the competitor's
infringement is and has been deliberate, willful, and wanton, with knowledge of
the Company's patent rights, the complaint asks the court to award increased
damages up to three times the amount assessed.  The complaint also seeks an
award of interest, costs and reasonable attorney fees.  All legal fees incurred
in connection with this matter have been expensed.

BACKLOG

     At December 31, 1998, the Company's backlog of unfilled orders for all
products was approximately $3.4 million compared with approximately $6.2
million at December 31, 1997.  The Company's backlog includes customer purchase
orders which have been accepted by the Company, substantially all of which the
Company expects to deliver in the current fiscal year.  While backlog is
calculated on the basis of firm purchase orders, no assurance can be given that
customers will purchase the Company's products subject to such orders or that
customers will not accelerate or postpone currently scheduled delivery dates.
As a result, the Company's backlog at a particular date is not necessarily
indicative of sales for any future period.

SEASONALITY

     The Company's business is not seasonal, therefore year-over-year quarterly
comparisons of the Company's results of operations may not be as meaningful as
sequential quarterly comparisons which tend to reflect the cyclical activity of
the semiconductor industry as a whole.  Quarterly fluctuations in expenses are
either related directly to sales activity and volume or tend to be a function
of personnel costs and the timing of expenses incurred throughout a year.  See

                                    10


<PAGE>

Note 16 of  Notes to Consolidated Financial Statements for a presentation of
the Company's quarterly results for each of the last two years.

EMPLOYEES

     At December 31, 1998, the Company had 111 employees, including 48 in
customer operations, 46 in manufacturing operations and 17 in administration.
Substantially all of the Company's key employees are highly skilled and trained
technical personnel, and new technical employees are required to attend an in-
house training program.  None of the Company's employees are represented by a
labor union, and the Company has never experienced a work stoppage.  The
Company believes that its employee relations are excellent.

ADDITIONAL FACTORS

     The Company's operating results are substantially dependent on the level
of activity and capital expenditures of semiconductor manufacturers.  The
semiconductor industry is highly cyclical and, from time to time, has
experienced periods of excess capacity which have had severely detrimental
effects on the industry's demand for ATE.  There can be no assurance that the
Company's business and results of operations will not be materially adversely
affected by downturns in the semiconductor industry generally, or by downturns
or reductions in capital equipment investment in any one or more particular
market segments of the semiconductor industry in which the Company
participates.

     In addition to the factors described in this Report, the Company's
operating results could be affected in the future, by other factors, including,
without limitation: changes in business conditions and the economy, generally;
the ability of the Company to obtain patent protection and enforce its patent
rights for existing and developing proprietary technologies; the ability of the
Company to integrate successfully businesses, technologies or products which it
may acquire; the effect of the loss of, or reduction in orders from, a major
customer; and competition from other manufacturers of test head manipulators,
docking hardware, tester interfaces and related ATE interface products.



I
tem 2:   Properties

     The Company's headquarters are located in Cherry Hill, New Jersey in
28,630 square feet of office and manufacturing space leased pursuant to a
seven-year lease which expires in 2003.  In August 1997, the Company leased an
additional 11,082 square feet of warehouse and manufacturing space near its
headquarters in Cherry Hill pursuant to a lease which is coterminous with that
of its headquarters.  The Company's has three facilities in Sunnyvale,
California: the manufacturing and office space occupies approximately 8,000
square feet pursuant to a 17 month lease which expires in 1999; the machine
shop occupies 1,109 square feet pursuant to a two year lease which expires in
1999; and additional office and warehouse space which occupies 1,900 square
feet leased pursuant to a five year lease which expires in 2001.  The Company
has sublet 1,200 square feet of the additional office and warehouse space
pursuant to a lease which is coterminous with the Company's lease.  The
Company's facility in the U.K. is located in Thame in 4,600 square feet of
office and manufacturing space leased pursuant to an 8-year lease which expires
in December 2005.  In Singapore,  the Company occupies 3,077 square feet of
office and manufacturing space leased pursuant to a four-year lease which
expires in 2000 subject to a two-year renewal option.  In Kichijoji, Japan, the
Company occupies approximately 1,200 square feet of office space pursuant to an
agreement which is cancelable on reasonable notice by either party.  The
Company believes that its headquarters and other existing facilities are
adequate to meet its current and foreseeable future needs.



Item 3:   Legal Proceedings

     On November 18, 1998, the Company and its subsidiary inTEST IP Corp.
(which holds title to all Company intellectual property) filed suit in the
Federal District Court in Washington, D.C. against Reid-Ashman Manufacturing,
Inc. and its President and CEO, Mr. Steven J. Reid (the "Defendant") for
infringement of a United States patent held by the Company (the "815 Patent").
The invention disclosed and claimed in the 815 Patent is directed to a system
for positioning and docking a heavy electronic test head


                                    11


<PAGE>

of a test system with respect to an electronic device handler.  The system is
used in the automatic testing of IC's and other electronic devices.  The
Company sells products covered by the 815 Patent worldwide.

     As alleged in the complaint, the Defendant began manufacturing, offering
to sell, and selling products as early as 1991 that, without license, infringe
claims of the 815 Patent.  The parties have been discussing possible settlement
of the dispute since the Company first became aware of the Defendant's
infringement in 1991.  Discussions were abated at the end of 1995 so that the
United States Patent and Trademark Office (the "PTO") could reexamine the 815
Patent.  On April 7, 1998, the PTO completed the reexamination and affirmed the
patentability of the nine claims in the patent with minor, technical,
clarifying changes.  Thereafter, the parties resumed settlement negotiations,
however, to date such negotiations have been unsuccessful.

     The complaint asks the court to enjoin the competitor from further acts of
infringement, including the acts of manufacturing, using, offering for sale,
selling and importing positioner systems that embody the invention claimed in
the 815 Patent.  The complaint also asks the court to award the Company
damages, including the Company's lost profits.  Alleging that the Defendant's
infringement is and has been deliberate, willful, and wanton, with knowledge of
the Company's patent rights, the complaint asks the court to award increased
damages up to three times the amount assessed.  The complaint also seeks an
award of interest, costs and reasonable attorney fees.  All legal fees incurred
in connection with this matter have been expensed.



Item 4:   Submission of Matters to a Vote of Security Holders

          Not Applicable



Part II:
- -------


Item 5:   Market for Registrant's Common Equity and Related Stockholder
          Matters

(a)   The Company's common stock trades on the Nasdaq National Market
      system ("NNMS") under the symbol "INTT".  The common stock was
      first traded on the NNMS on June 17, 1997, concurrent with the initial
      public offering, (the "Offering") of the Company's common stock.

      The table below sets forth the high and low closing prices of the
      Company's common stock during the fiscal periods indicated:

      
<TABLE>
      <CAPTION>
                                                      High            Low
                                                     ------          -----
      <S>                                            <C>             <C>
      Fiscal Year Ended December 31, 1998:
          First Quarter                              $10.25          $6.25
          Second Quarter                               8.94           6.00
          Third Quarter                                6.00           4.00
          Fourth Quarter                               9.44           4.00

      Fiscal Year Ended December 31, 1997:
          First Quarter                                    Not Listed
          Second Quarter                               9.63           7.50
          Third Quarter                               18.75           8.00
          Fourth Quarter                              18.25           5.00

      </TABLE>


      As of March 22, 1999, there were approximately 1,000 holders of record
      of the Company's common stock.

      The Company has not paid any dividends on its common stock subsequent
      to the Offering, other than amounts representing the Company's

                                     12


<PAGE>

      previously taxed but undistributed S corporation earnings through the
      date of termination of the S corporation election in connection with
      the Offering.

      The Company does not anticipate paying cash dividends in the
      foreseeable future, but intends to retain any future earnings for
      reinvestment in the operation and expansion of the Company's business.
      Payment of future dividends, if any, will be at the discretion of the
      Company's Board of Directors after taking into account various
      factors, including the Company's financial condition, operating
      results, current and anticipated cash needs and plans for expansion.

(b)   Use of Proceeds from Offering:

      On June 17, 1997, the Company's Registration Statement on Form S-1
      covering the Offering of 2,275,000 shares of the Company's Common Stock,
      Commission file number 333-26457, was declared effective.  The Offering
      closed on June 20, 1997, managed by Janney Montgomery Scott Inc. and
      Needham & Company, Inc. as representatives of the several underwriters
      named in the Registration Statement (the "Underwriters").

      Of the 2,275,000 shares sold pursuant to the Offering, 1,820,000 shares
      were sold by the Company and 455,000 were sold by certain selling
      stockholders (the "Selling Stockholders").  In addition, the Underwriters
      exercised an over-allotment option to purchase an additional 341,250
      shares of the Company's Common Stock from the Selling Shareholders.  The
      total purchase price to the public for the shares offered and sold by the
      Company and the Selling Shareholders was $13,650,000 and $5,971,875,
      respectively.

      The amount of expenses incurred for the Company's account in connection
      with the Offering are as follows:

      
<TABLE>

      <S>                                                      <C>
      Underwriting discounts and commissions:                  $1,023,750
      Finders fees:                                               None
      Expenses paid to or for the Underwriters                     16,650
      Other expenses:                                             954,758
                                                               ----------
      Total expenses                                           $1,995,158
                                                               ==========

      </TABLE>


      All of the foregoing expenses were direct or indirect payments to persons
      other than (i) directors, officers or their associates; (ii) persons
      owning ten percent (10%) or more of the Company's Common Stock; or (iii)
      affiliates of the Company.

      The net proceeds of the Offering to the Company (after deducting the
      foregoing expenses) was $11,654,842.  From the effective date of the
      Registration Statement, the net proceeds have been used for the following
      purposes:

      
<TABLE>

      <S>                                                                        <C>
      Construction of plant, building and facilities                             $         -
      Purchase and installation of machinery and equipment                           298,346
      Purchase of real estate                                                              -
      Acquisition of businesses                                                    4,825,000
      Repayment of indebtedness                                                      388,098
      Working capital                                                                599,725
      Temporary investments, including cash & cash equivalents                     4,942,908
      Other purposes (for which at least $100,000 has been used) including:
         Payment of final S corporation distribution                                 600,765
                                                                                 -----------
      Total                                                                      $11,654,842
                                                                                 ===========
      </TABLE>


                                     13


<PAGE>

     In connection with the termination of the Company's status as an S
     corporation, the Company used $601,000 of the net proceeds to pay a
     portion of the $4.3 million final distribution of previously taxed but
     undistributed earnings of the Company.

     All of the foregoing payments with the exception of the final S
     corporation distribution were direct or indirect payments to persons other
     than (i) directors, officers or their associates; (ii) persons owning ten
     percent (10%) or more of the Company's Common Stock; or (iii) affiliates
     of the Company.



Item 6:   Selected Financial Data

     The following table contains certain selected consolidated financial
data of the Company and is qualified by the more detailed Consolidated
Financial Statements and Notes thereto included elsewhere in this Annual
Report on Form 10-K and should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
And the other financial information included in this Annual Report on
Form 10-K.


<TABLE>
<CAPTION>


                                                              Years Ended December 31,
                                                 --------------------------------------------------
                                                  1998       1997       1996       1995       1994
                                                 -------    -------    -------    -------    ------
                                                          (in thousands, except share data)
<S>                                             <C>        <C>         <C>       <C>        <C>
Consolidated Statement of Earnings Data:

Net revenues. . . . . . . . . . . . . . . .      $19,075    $20,746    $18,582    $14,442    $9,287
Gross margin. . . . . . . . . . . . . . . .       10,673     12,938     11,827      9,251     5,150
Operating income. . . . . . . . . . . . . .        2,518      6,187      5,616      4,037     1,289
Net earnings. . . . . . . . . . . . . . . .        1,927      4,332      4,646      3,252       817
Earnings per share (1997 and 1996 information
  is pro forma):
     Basic. . . . . . . . . . . . . . . . .          .31        .74        .83
     Diluted. . . . . . . . . . . . . . . .          .31        .73        .83
Weighted average shares outstanding (1997
  and 1996 information is pro forma):
     Basic. . . . . . . . . . . . . . . . .        6,170      5,068      4,091
     Diluted. . . . . . . . . . . . . . . .        6,186      5,092      4,091

</TABLE>



<TABLE>
<CAPTION>

                                                                 As of December 31,
                                                 --------------------------------------------------
                                                  1998       1997       1996       1995       1994
                                                 -------    -------    -------    -------    ------
                                                                    (in thousands)
<S>                                             <C>        <C>         <C>       <C>        <C>
Consolidated Balance Sheet Data:
Cash and cash equivalents . . . . . . . . .      $ 8,468    $12,035    $ 3,692    $ 1,919    $1,336
Working capital . . . . . . . . . . . . . .       13,312     14,655      4,377      4,201     2,944
Total assets. . . . . . . . . . . . . . . .       23,218     19,945      7,716      6,352     4,624
Long term debt. . . . . . . . . . . . . . .            -          -        155          -         -
Total stockholders' equity. . . . . . . . .       21,226     16,557      4,587      4,048     2,765

</TABLE>



                                    14


<PAGE>


Item 7:   Management's Discussion and Analysis of Financial Condition and
          Results of Operations

Results of Operations
- ---------------------

Overview
- --------

     The Company designs, manufactures and markets docking hardware, test head
manipulators and tester interfaces, which are used with automatic test
equipment ("ATE") by semiconductor manufacturers during the testing of wafers
and packaged devices.  The Company also designs and markets related ATE
interface products including high performance test sockets, interface boards
and probing assemblies.  The Company's products are designed to improve the
utilization and cost-effectiveness of ATE (including testers, wafer probers and
device handlers) during the testing of linear, digital and mixed signal
integrated circuits ("ICs").

     The Company's revenues are substantially dependent upon the demand for ATE
by semiconductor manufacturers and, therefore, fluctuate generally as a result
of the cyclicality in the semiconductor manufacturing industry.  The Company
believes that purchases of the Company's docking hardware, manipulators and
tester interfaces are typically made from its customers' capital expenditure
budgets, while related ATE interface products, which must be replaced
periodically, are typically made from its customers' operating budgets.

     During the last three years, the demand for ATE by the semiconductor
industry has exhibited a high degree of cyclicality.  1996 represented a year
of sequential quarterly declines in orders for and sales of the Company's
products due to a reduced level of semiconductor manufacturing activity which
caused cutbacks in semiconductor manufacturers' capital expenditure budgets.
1997 marked a turnaround in the semiconductor industry which was evidenced by
a renewal in demand for ATE and related equipment which resulted in sequential
quarterly increases in orders for and sales of the Company's products.

     1998, like 1996, represented a year of sequential quarterly declines in
orders for and sales of the Company's products, however, to a more significant
degree.  In early 1998 worldwide demand for ICs fell dramatically due to
excess inventory of older IC designs, and slower transition to new IC designs
resulting generally from softening worldwide demand for end user products.  In
addition, the economic downturns in many world economies, especially those in
Southeast Asia and Japan, exacerbated the semiconductor industry downturn.  The
combination of these conditions contributed to a reduced demand for products
manufactured by semiconductor manufacturers, which in turn significantly
reduced their need for new or additional ATE equipment.   The Company's
financial performance was negatively impacted by these industry conditions.
Net sales fell from $6.0 million in the fourth quarter of 1997 to $3.8 million
in the fourth quarter of 1998.  The reduced demand for ATE is reflected in the
Company's backlog, which was $3.4 million at December 31, 1998 compared to $6.2
million at December 31, 1997.  In early 1999, the Company has seen a
significant increase in the level of orders for its products over the last
quarter of 1998, however, the Company is cautious about the level of revenues
and net income for the first two quarters of 1999 due to the continued
uncertainty in the semiconductor industry.

     On June 20, 1997, the Company completed an initial public offering of
2.275 million common shares through which the Company issued 1.82 million new
shares of common stock (the "Offering").  Prior to the Offering the Company was
an S corporation, and the net earnings of the Company were taxed as income to
the Company's stockholders for Federal and certain New Jersey state income tax
purposes.  The Company terminated its status as an S corporation prior to the
closing of the Offering and is subject to Federal and additional state income
taxes for periods after such termination.


                                    15


<PAGE>

     On August 3, 1998, the Company acquired all of the outstanding capital
stock of TestDesign Corporation ("TestDesign"), a privately held California
corporation (the "Acquisition").  TestDesign is engaged in the design and
manufacture of tester interfaces used by the semiconductor industry.  The
purchase price was $4.4 million in cash and 625,000 shares of the Company's
common stock (subject to certain adjustments).

1998 Compared to 1997
- ---------------------

     Revenues.  Revenues were $19.1 million for 1998 compared to $20.7 million
for 1997, a decrease of $1.7 million or 8%. The decline in revenues from the
prior year is the result of the aforementioned severe downturn that the ATE
industry experienced during 1998 offset, in part, by the revenues of TestDesign
from its acquisition in August 1998 through year end.

     Gross Margin.  Gross margin declined to 56% for 1998 from 62% in 1997.
The reduction in gross margin was primarily the result of the additional fixed
costs of manufacturing of TestDesign which were impacted unfavorably by the
significantly reduced revenue levels during the year.  In addition, material
costs as a percentage of sales increased over the comparable prior period due
to an increase in the level of sales of certain products with a greater
component material cost in 1998 compared to 1997.

     Selling Expense.  Selling expense was $3.3 million for 1998 compared to
$2.8 for 1997, an increase of $557,000 or 20%.  The increase was attributable
to several factors including the additional salary and commission expenses of
TestDesign and increased  travel expenses incurred in connection with the
Company's sales activities, higher levels of warranty expenses and increased
advertising expenditures.

     Research and Development Expense.  Research and development expense was
$1.9 million for 1998 compared to $1.7 million for 1997, an increase of
$197,000 or 11%.  The increase was primarily attributable to the additional
salary expense of TestDesign coupled with a growth in the number of engineering
and technical staff offset in part by reductions in spending on research and
development materials and travel expenses in 1998 as compared to 1997.

     General and Administrative Expense.  General and administrative expense
was $2.9 million in 1998 compared to $2.2 million in 1997, an increase of
$650,000 or 29%.  The increase was primarily attributable to the additional
salary and other administrative costs of TestDesign.  Also contributing to the
increase in 1998 were the amortization of goodwill resulting from the
Acquisition, additional administrative staff, increases in professional fees,
and the increase in amortization of certain prepaid expenses.

     Income Tax Expense.  Income tax expense decreased to $1.1 million for 1998
from $2.1 million in 1997, a decrease of $991,000 or 47%.  The Company's
effective tax rate was 36% for 1998 compared to 32% in 1997.  The increase in
the effective tax rate was caused by the accrual of Federal income tax on the
Company's earnings due to the change of tax status from S corporation to C
corporation in June 1997, offset in part by the implementation of tax favorable
corporate structures and a lower percentage of earnings attributable to the
Company's Japanese subsidiary in 1998 as compared to 1997.

1997 Compared to 1996
- ---------------------

     Revenues.  Revenues were a record $20.7 million for 1997 compared to $18.6
million for 1996, an increase of $2.1 million or 11%.  The year-to-year
increase was primarily due to higher levels of shipments of the Company's
products during the fourth quarter of 1997 compared to the same period in 1996,
which reflects the higher level of manufacturing activity in the semiconductor
industry in 1997 as compared to 1996.  The Company did not increase sales
prices significantly in 1997. The Company believes that the increase in
revenues was from the sales of products used in the testing of mixed signal


                                    16


<PAGE>

devices and digital devices (such as microprocessors and microcontrollers) and
numerous other devices used in the automotive, computer, telecommunications and
other industries.

     Gross Margin.  Gross margin declined to 62% for 1997 from 64% in 1996.
The reduction in gross margin was primarily attributable to a significant
increase in the level of sales to ATE manufacturers, which increased from
approximately 21% of sales in 1996 to approximately 34% in 1997.  In addition,
the Company experienced an increase in its fixed operations costs in 1997, due
to higher occupancy costs associated with the larger New Jersey manufacturing
facility which was leased in August 1996.   The decline in gross margin was
partially offset by reduced incremental material costs due to volume discounts
received in the last two quarters of 1997.

     Selling Expense.  Selling expense was $2.8 million for 1997 compared to
$2.5 million for 1996, an increase of $318,000 or 13%.  The increase was
primarily attributable to higher salary and benefit expenses resulting from the
allocation of additional personnel costs to selling expense and, to a lesser
extent, salary increases for existing personnel.  The increase in selling
expense also reflects an increase in advertising and promotional expenses over
the comparable prior period.  In addition, commission expense increased in 1997
over the level incurred in 1996 due to an increase in the level of commissioned
sales to semiconductor manufacturers.  These increases were offset by a
reduction in travel and other expenses.

     Research and Development Expense.  Research and development expense was
$1.7 million for 1997 compared to $1.9 million for 1996, a decrease of $191,000
or 10%.  The decline was primarily attributable to reduced levels of spending
on research and development materials in 1997 compared to 1996, and, to a
lesser extent, to the aforementioned allocation of certain personnel costs to
selling expense.

     General and Administrative Expense.  General and administrative expense
was $2.2 million for 1997 compared to $1.8 million for 1996, an increase of
$413,000 or 23%.  The increase was primarily attributable to the additional
costs associated with shareholder and investor relations and increased
expenditures for outside directors' fees and professional fees incurred as a
public company.  Other factors contributing to the increase in 1997 were the
amortization of goodwill resulting from the acquisition of the minority
interests in the Company's three foreign subsidiaries in connection with the
offering and salary increases of administrative staff.

     Income Tax Expense.  Income tax expense increased to $2.1 million from
$858,000 for 1996, an increase of $1.2 million or 144%.  The Company's
effective tax rate was 32% for 1997 compared to 15% in 1996.  The increase in
the effective tax rate was caused by the accrual of Federal income tax on the
Company's earnings due to the change of tax status from S corporation to C
corporation in June 1997 and, to a lesser extent, a greater percentage of
earnings before income taxes and minority interest attributable to the
Company's Japanese subsidiary.

Liquidity and Capital Resources
- -------------------------------

     Net cash provided by operations for 1998 was $1.6 million.  The following
discussion of changes in working capital is exclusive of changes in working
capital resulting from the TestDesign acquisition.  Accounts receivable
decreased $1.7 million from December 31, 1997 to December 31, 1998 due to the
sequential quarterly reductions in sales levels during 1998.  Inventories
remained relatively constant during the year. Refundable domestic and foreign
income taxes increased $658,000 as a result of lower levels of earnings than
were originally forecasted at the time estimated tax payments were made.  Other
current assets decreased by $32,000 because of the amortization of prepaid
expenses.  Accounts payable decreased $315,000 due to lower production levels
resulting from the industry slowdown.  Accrued expenses decreased $244,000
primarily as a result of the timing of payments of previously accrued expenses.
Domestic and foreign income taxes payable decreased $1.3 million as a result of
the payment of previously accrued Federal, state and foreign income taxes on
earnings.


                                     17


<PAGE>

     Purchases of machinery, equipment and leasehold improvements were $261,000
for 1998.  The Company plans to spend approximately $300,000 during the second
quarter of 1999 to renovate and expand its UK manufacturing facility and
purchase a coordinate measuring machine for this facility.

     At December 31, 1998, the Company had no outstanding long or short-term
debt. During 1998, the Company repaid $215,000 on a non-interest bearing note
related to the acquisition of TestDesign.

     The Company realized net cash proceeds of $11.7 million (after payment of
direct expenses of the Offering) from the sale of 1.82 million newly issued
shares in the Offering in June 1997.  The proceeds from the Offering are being
used for working capital, general corporate purposes and possible acquisitions
of businesses, technologies or products complementary to the Company's
business.

     On August 3, 1998, the Company acquired all of the outstanding capital
stock of TestDesign Corporation ("TestDesign"), a privately held California
corporation (the "Acquisition").  The purchase price was $4.4 million in cash
and 625,000 shares of the Company's common stock (subject to certain
adjustments). The acquisition of TestDesign, which was accounted for using the
purchase method, resulted in goodwill of $5.8 million, which is being amortized
over a period of 15 years.  In addition, the Company incurred transactions
costs of approximately $425,000 in connection with the Acquisition.  The
Company funded the cash portion of the purchase price from its cash on hand.
At December 31, 1998, the Company's cash and cash equivalents included $4.9
million of temporary investments attributable to the Offering.

     The Company believes that existing cash and cash equivalents, its $1.5
million unused line of credit and the anticipated net cash provided from
operations in 1999 will be sufficient to satisfy the Company's cash
requirements including those of its new subsidiary for the foreseeable future.
However, additional acquisitions may require additional equity or debt
financing to meet working capital requirements or capital expenditure needs.
Although the Company, as an S corporation, historically paid cash dividends to
its stockholders, the Company does not anticipate that it will pay dividends in
the foreseeable future.

Year 2000
- ---------

     The Year 2000 issue is the result of computer programs being written using
two digits rather than four digits to define the applicable year.  Computer
programs that have time-sensitive software may recognize a date using "00" as
the year 1900 rather than the year 2000.  This could result in a system failure
or miscalculations causing disruptions of operations, a temporary inability to
process transactions, send invoices, or engage in normal business activities.

     Currently, the Company has a program in process to analyze potentially
affected business and process systems and replace or correct all non-compliant
critical business and process systems that it will require in the new
millennium.  Prior to the acquisition of TestDesign, the Company had completed
its review and testing of its then existing systems and determined that they
were Year 2000 compliant.  The Company has identified those systems of
TestDesign that are not yet Year 2000 compliant and has begun converting them
to systems which are Year 2000 compliant.  The Company has substantially
completed the system modifications at TestDesign and anticipates that all of
its systems will be Year 2000 compliant by mid-1999.

     The products that the Company has sold and currently sells are not date-
sensitive, and therefore the Company believes its product related Year 2000
exposures are low.

     In conjunction with the Company's Year 2000 effort, all suppliers that are
critical to the function of the Company are being surveyed to insure readiness
and non-disruption to the Company's supply chain. The Company relies on
subcontractors for fabrication and certain other processes performed on its


                                   18


<PAGE>

products and utilizes third-party network equipment and software products which
may or may not be Year 2000 compliant.  In addition, the Company relies on
utility and telecommunications suppliers to operate its businesses worldwide.
The Company has sent questionnaires to these critical suppliers to determine
the extent to which the Company's operations are exposed to failure from Year
2000 issues.  The Company has received responses from over 85% of its domestic
suppliers and is still awaiting responses from most of its foreign suppliers.
The Company intends to replace any critical raw materials and fabrication
suppliers which cannot demonstrate Year 2000 compliance before the end of the
third quarter of 1999. There can be no assurance that the Company will be
successful in its efforts to identify and resolve any Year 2000 issues
involving its suppliers or to continue receiving products and services from
these suppliers if Year 2000 problems were to materialize. The failure to
resolve these issues could result in the shut-down of some or all of the
Company's operations, which would have a material adverse effect on the
Company.

     The total expense of the Company's Year 2000 effort is currently estimated
at less than $100,000, for the identification and remediation of any Year 2000
problems related to the Company's internal systems.  If required modifications
to existing software and hardware are not made, or are not completed in a
timely manner, the Year 2000 could have a material impact on the operations of
the Company.  There can be no assurance that the costs to remediate any Year
2000 problems which may be identified in the future will not exceed the
Company's current estimate or that the Company will be able to resolve these
issues in a timely manner.  The expenses of the Year 2000 project are being
funded through operating cash flows.

     The Company does not currently have any information concerning Year 2000
compliance of its customers.  If any of the Company's significant customers and
suppliers do not successfully and in a timely manner achieve Year 2000
compliance, and as a result of such non-compliance such customers operations
are disrupted, shut-down or otherwise impacted, the Company's business or
operations could be adversely affected.  There can be no assurance that another
company's failure to ensure Year 2000 capability would not have an adverse
effect on the Company.

     The Company has not developed a comprehensive contingency plan to address
situations which it believes to be beyond its control (i.e. such as utilities
and telecommunications).  There can be no assurance that the Company will be
able to develop a contingency plan that will adequately address such issues
that may arise in the Year 2000.  The failure of the Company to successfully
resolve such issues could result in a shut-down of some or all of the Company's
operations, which could have a material adverse effect on the Company.

Exposure to International Operations
- ------------------------------------

     Revenues generated by the Company's foreign subsidiaries were 34%, 34% and
43% of consolidated revenues for the years ended December 31, 1998, 1997 and
1996, respectively.  The Company anticipates that revenues generated by the
Company's foreign subsidiaries will continue to account for a significant
portion of consolidated revenues in the foreseeable future.  These revenues
generated by the Company's foreign subsidiaries will continue to be subject to
certain risks, including changes in regulatory requirements, tariffs and other
barriers, political and economic instability, an outbreak of hostilities,
foreign currency exchange rate fluctuations, potentially adverse tax
consequences and the possibility of difficulty in accounts receivable
collection.  The Company cannot predict whether quotas, duties, taxes or other
charges or restrictions will be implemented by the United States or any other
country upon the importation or exportation of the Company's products in the
future.  Any of these factors or the adoption of restrictive policies could
have a material adverse effect on the Company business, financial condition or
results of operations.

     Revenues denominated in foreign currencies were 24%, 27% and 35% of
consolidated revenues for the years ended December 31, 1998, 1997 and 1996,
respectively.  Although the Company operates its business such that a
significant portion of its product costs are denominated in the same currency


                                    19


<PAGE>

that the associated sales are made in, there can be no assurance that the
Company will not be adversely impacted in the future due to its exposure to
foreign operations.   Revenues denominated in currencies other than U.S.
dollars expose the Company to currency fluctuations, which can adversely effect
results of operations.  During the year ended December 31, 1998, the Company
experienced foreign currency transaction gains of $47,000 while during the
years ended December 31, 1997 and 1996, the Company experienced foreign
exchange transaction losses of $63,000 and  $31,000, respectively.  The
currency exchange translation gain in 1998 is primarily the result of the
strengthening of the Japanese Yen against the U.S. dollar during 1998.

     The portion of the Company's consolidated revenues derived from sales to
the Asia Pacific region were 25%, 28% and 26% for the years ended December 31,
1998, 1997 and 1996, respectively.  Countries in the Asia Pacific region,
including Japan, have experienced economic instability resulting in weaknesses
in their currency, banking and equity markets.   Although the current economic
instability in the Asia Pacific region has not materially adversely affected
the Company's order backlog, balance sheet, or results of operations to date,
there can be no assurance that continued economic instability will not in the
future have a material adverse affect on demand for the Company's products and
its consolidated results of operations.


Cautionary Statement Regarding Forward Looking Statements
- ---------------------------------------------------------

     This Report contains certain statements of a forward-looking nature
relating to future events, such as statements regarding the Company's plans and
strategies or future financial performance.  Such statements can be identified
by the use of forward-looking terminology such as "believes," "expects,"
"may," "will," "should" or "anticipates" or the negative thereof or other
variations thereon or comparable terminology, or by discussions of strategy
that involve risks and uncertainties.  Investors and prospective investors are
cautioned that such statements are only projections and that actual events or
results may differ materially from those expressed in any such forward-looking
statements.  In addition to the factors described in this Report, the Company's
actual consolidated quarterly or annual operating results have been affected in
the past, or could be affected in the future, by additional factors, including,
without limitation: changes in business conditions and the economy, generally;
the ability of the Company to obtain patent protection, and enforce its patent
rights, for existing and developing proprietary technologies; the ability of
the Company to integrate successfully businesses, technologies or products
which it may acquire; the effect of the loss of, or reduction in orders from, a
major customer; and competition from other manufacturers of docking hardware,
test head manipulators, tester interfaces and related ATE interface products.



I
tem 7A:  Quantitative and Qualitative Disclosure About Market Risk

     The Company is exposed to currency exchange rate risk in the normal course
of its business.  The Company employs risk management strategies including the
use of forward exchange rate contracts to manage this exposure.  The Company's
objective in managing currency exchange risk is to minimize the impact of
significant currency exchange rate fluctuations primarily in the Japanese Yen.
The Company's Japanese operations expose its earnings to change in currency
exchange rates because it's Japanese subsidiary makes its sales in Japanese Yen
and purchases its sales inventory in U.S. dollars.  Forward exchange rate
contracts are used to establish a fixed conversion rate between the Japanese
Yen and the U.S. dollar so that the level of the Company's gross margin from
sales in Japan is not negatively impacted from significant movements in the
Japanese Yen to U.S. dollar exchange rate.  The Company purchases forward
exchange rate contracts on a monthly basis in the amounts necessary to pay the
U.S. dollar denominated obligations of its Japanese subsidiary.  As of December
31, 1998, there were no forward exchange rate contracts outstanding.

     It is the Company's policy to enter into forward exchange rate contracts
only to the extent necessary to achieve the desired objectives of management in
limiting the Company's exposure to significant fluctuations in currency
exchange rates.  The Company does not hedge all of its currency exchange rate
risk exposures in a manner that would completely eliminate the impact of

                                     20


<PAGE>

changes in currency exchange rates on its net income.  The Company does not
expect that its results of operations or liquidity will be materially affected
by these risk management activities.

     The notional amounts of the Company's forward exchange rate contracts are
used only to satisfy current payments to material vendors to be exchanged and
are not a measure of the Company's credit risk or its future cash requirements.
Exchange risk related to forward exchange rate contracts is limited to movement
in the exchange rates that would provide a more favorable exchange rate than
that locked in the forward contract and forward contract amounts purchased in
excess of the amount needed by the Company to satisfy its obligations.  The
Company manages that rate risk by limiting the size of the forward contracts
purchased to the known amount of obligations due and not purchasing forward
contracts with settlement dates beyond 30 days.  The Company believes that the
risk of loss due to exchange rate fluctuations is remote and that any losses
would not be material to its financial condition or results of operations.


Item 8:   Financial Statements and Supplementary Data

          Financial Statements are set forth in this report beginning
          at page F-1


Item 9:   Changes in and Disagreements with Accountants on Accounting
          and Financial Disclosure

          None



Part III:
- --------


Item 10:  Directors and Executive Officers

     The information called for by this item is incorporated by reference to
the Company's Proxy Statement for its 1999 annual meeting of stockholders which
will be filed prior to April 30, 1999.


Item 11:  Executive Compensation

     The information called for by this item is incorporated by reference to
the Company's Proxy Statement for its 1999 annual meeting of stockholders which
will be filed prior to April 30, 1999.


Item 12:  Security Ownership of Certain Beneficial Owners and Management

     The information called for by this item is incorporated by reference to
the Company's Proxy Statement for its 1999 annual meeting of stockholders which
will be filed prior to April 30, 1999.


Item 13:  Certain Relationships and Related Transactions

     The information called for by this item is incorporated by reference to
the Company's Proxy Statement for its 1999 annual meeting of stockholders which
will be filed prior to April 30, 1999.


Item 14:  Exhibits, Financial Statement Schedules

(a)   The documents filed as part of this Annual Report on Form 10-K are:

      (i)    The Company's consolidated financial statements and notes
             thereto as well as the applicable reports of the independent
             certified public accountants are included in Part II, Item 8
             of this Annual Report on Form 10-K.

      (ii)   The following consolidated financial statement schedule should
             be read in conjunction with the consolidated financial
             statements set forth in Part II, Item 8 of this Annual Report
             on Form 10-K:

                  Schedule II - Valuation and Qualifying Accounts


                                    21


<PAGE>

      (iii)  The exhibits required by Item 601 of Regulation S-K are
             included under Item 14(c) of this Annual Report on Form 10-K.

(b)   Reports on Form 8-K

      On October 2, 1998, the Company filed an amendment to its Form 8-K
      filed on August 5, 1998.  The Amended Form 8-K contained the
      financial statements required by Item 7 of Form 8-K relating to the
      Company's acquisition of TestDesign Corporation.

(c)   Exhibits required by Item 601 of Regulation S-K:

Exhibit Number         Description of Exhibit

     3.1               Certificate of Incorporation.

     3.2               Bylaws of the Company

    10.1               Amended and Restated Loan Agreement, dated June 30,
                       1996, between inTEST Corporation and PNC Bank,
                       National Association. (Amended effective as of June
                       30, 1998 pursuant to an Amendment to Loan Documents
                       dated October 5, 1998 which is filed as Exhibit 10.11
                       to this Report)

    10.2               Lease Agreement, dated February 11, 1996, between
                       First Industrial L.P. (formerly Cherry Hill Industrial
                       Sites, Inc.) and the Company.

    10.3               Lease, dated August 5, 1996, between KIP Properties
                       and the Company.

    10.4               Tenancy Agreement, dated April 18, 1996, between
                       Alambon Tools Private Limited and inTEST PTE.

    10.5               1997 Stock Plan.

    10.6               Consulting Agreement, dated April 1, 1997, between
                       the Company and Stuart F. Daniels, Ph.D.

    10.7               Lease Agreement, dated August 22, 1997, between First
                       Industrial L.P (formerly Cherry Hill Industrial Sites,
                       Inc.) and the Company.

    10.8               Lease Agreement between inTEST Limited and Alan
                       Breck Robertson and Mavis Robertson dated March 3,
                       1998.

    10.9               Lease, dated January 16, 1998 between Tasman Associates
                       and inTEST Sunnyvale (as successor by merger with
                       TestDesign Corporation) and First Amendment signed 
                       February 24, 1999.

    10.10              Lease, dated June 12, 1998, between A. Bogomilsky and
                       inTEST Sunnyvale (as successor by merger with
                       TestDesign Corporation.

    10.11              Amendment to Loan Documents dated October 5, 1998,
                       amending the loan agreement filed as Exhibit 10.1 to
                       this Report.

    21                 Subsidiaries of the Company.

    23                 Consent of KPMG LLP.

    24                 Financial Data Schedule.


                                     22


<PAGE>


Signatures:

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.


inTEST Corporation


By: /s/ Robert E. Matthiessen
    --------------------------------------
    Robert E. Matthiessen
    President and Chief Executive Officer

     Pursuant to the requirements of Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated.

/s/ Alyn R. Holt                                     March 26, 1999
- -------------------------------------------         ----------------
Alyn R. Holt, Chairman


/s/ Robert E. Matthiessen                            March 26, 1999
- -------------------------------------------         ----------------
Robert E. Matthiessen, President,
Chief Executive Officer and Director
(principal executive officer)


/s/ Douglas W. Smith                                 March 26, 1999
- -------------------------------------------         ----------------
Douglas W. Smith, Executive Vice President,
Chief Operating Officer and Director


/s/ Daniel J. Graham                                 March 26, 1999
- -------------------------------------------         ----------------
Daniel J. Graham, Vice Chairman, Senior
Vice President


/s/ Hugh T. Regan, Jr.                               March 26, 1999
- -------------------------------------------         ----------------
Hugh T. Regan, Jr., Treasurer and
Chief Financial Officer
(principal financial officer)


/s/ Hugh T. Regan, Sr.                               March 26, 1999
- -------------------------------------------         ----------------
Hugh T. Regan, Sr., Secretary


/s/ Richard O. Endres                                March 26, 1999
- -------------------------------------------         ----------------
Richard O. Endres, Director


/s/ Stuart F. Daniels                                March 26, 1999
- -------------------------------------------         ----------------
Stuart F. Daniels, Ph.D., Director


/s/ Gregory W. Slayton                               March 26, 1999
- -------------------------------------------         ----------------
Gregory W. Slayton, Director


                                    23



<PAGE>


                    Index to Exhibits

  3.1             Certificate of Incorporation.*

  3.2             Bylaws of the Company.*

 10.1             Amended and Restated Loan Agreement, dated June 30, 1996,
                  between inTEST Corporation and PNC Bank, National
                  Association. (Amended effective June 30, 1998 pursuant to
                  an Amendment to Loan Documents dated October 5, 1998 which
                  is filed as Exhibit 10.11 to this Report)*

 10.2             Lease, dated February 11, 1996, between First Industrial
                  L.P. (formerly Cherry Hill Industrial Sites, Inc.) and the
                  Company.*

 10.3             Lease, dated August 5, 1996, between KIP Properties and
                  the Company.*

 10.4             Tenancy Agreement, dated April 18, 1996, between Alambon
                  Tools Private Limited and inTEST PTE.*

 10.5             1997 Stock Plan.**

 10.6             Consulting Agreement, dated April 1, 1997, between the
                  Company and Stuart F. Daniels, Ph.D.*

 10.7             Lease Agreement dated August 22, 1997, between First
                  Industrial L.P. (formerly Cherry Hill Industrial Sites,
                  Inc.) and the Company.***

 10.8             Lease Agreement between inTEST Limited and Alan Breck
                  Robertson and Mavis Robertson dated March 3, 1998.****

 10.9             Lease, dated January 16, 1998, between Tasman Associates and
                  inTEST Sunnyvale (as successor by merger with TestDesign
                  Corporation) and First Amendment signed February 24, 1999.

 10.10            Lease, dated June 12, 1998, between A. Bogomilsky and
                  inTEST Sunnyvale (as successor by merger with TestDesign
                  Corporation).

 10.11            Amendment to Loan Documents dated October 5, 1998, amending
                  the loan agreement filed as Exhibit 10.1 to this Report.

 21               Subsidiaries of the Company.

 23               Consent of KPMG LLP.

 27               Financial Data Schedule.


*     Previously filed by the Company as an exhibit to the Company's
      Registration Statement on Form S-1, Registration Statement No.
      333-26457.

**    Previously filed by the Company as an exhibit to the Company's
      Registration Statement on Form S-8, Registration Statement No.
      333-44059.

***   Previously filed by the Company as an exhibit to the Company's
      Quarterly Report on Form 10-Q for the quarter ended September 30,
      1997.

****  Previously filed by the Company as an exhibit to the Company's
      Annual Report on Form 10-K for the fiscal year ended December 31,
      1997.



                                    24



<PAGE>

                         inTEST CORPORATION

              INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND
                       FINANCIAL STATEMENT SCHEDULE



<TABLE>
<CAPTION>

                                                                          Page
<S>                                                                       <C>
CONSOLIDATED FINANCIAL STATEMENTS:

   Independent Auditors' Report                                           F- 1

   Consolidated Balance Sheets as of December 31, 1998 and 1997           F- 2

   Consolidated Statements of Earnings for the years ended
      December 31, 1998, 1997 and 1996                                    F- 3

   Consolidated Statements of Comprehensive Earnings for the
      years ended December 31, 1998, 1997 and 1996                        F- 4

   Consolidated Statements of Stockholders' Equity for the
      years ended December 31, 1998, 1997 and 1996                        F- 5

   Consolidated Statements of Cash Flows for the years ended
      December 31, 1998, 1997 and 1996                                    F- 6

   Notes to Consolidated Financial Statements                             F- 7

CONSOLIDATED FINANCIAL STATEMENT SCHEDULE:

   Schedule II - Valuation and Qualifying Accounts                        F-27

</TABLE>



                                     25



<PAGE>



Independent Auditors' Report



The Board of Directors and Stockholders
inTEST Corporation


We have audited the accompanying consolidated balance sheets of inTEST
Corporation and subsidiaries as of December 31, 1998 and 1997, and the related
consolidated statements of earnings, comprehensive earnings, stockholders'
equity and cash flows for each of the years in the three-year period ended
December 31, 1998.  In connection with our audits of the consolidated financial
statements, we also have audited the consolidated financial statement schedule
of valuation and qualifying accounts as of and for the three years ended
December 31, 1998.  These consolidated financial statements and consolidated
financial statement schedule are the responsibility of the Company's
management.  Our responsibility is to express an opinion on these consolidated
financial statements and consolidated financial statement schedule based on our
audits.

We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement.  An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.  An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation.  We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of inTEST Corporation
and subsidiaries as of December 31, 1998 and 1997, and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 1998, in conformity with generally accepted accounting
principles.  Also in our opinion, the related consolidated financial statement
schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly, in all material respects, the
information set forth therein.



                                        KPMG LLP



Philadelphia, Pennsylvania
February 19, 1999




                                    F - 1



<PAGE>

                       inTEST CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                        (In thousands, except share data)


<TABLE>
<CAPTION>

                                                                                     December 31,
                                                                                ----------------------
                                                                                  1998          1997
                                                                                --------      --------

<S>                                                                             <C>           <C>
ASSETS
Current assets:
  Cash and cash equivalents                                                     $  8,468      $ 12,035
  Trade accounts and notes receivable, net of allowance for
    doubtful accounts of $168 and $144, respectively                               3,275         4,058
  Inventories                                                                      2,521         1,649
  Deferred tax asset                                                                 245           165
  Refundable domestic and foreign income taxes                                       658             -
  Other current assets                                                               137           136
                                                                                --------      --------
     Total current assets                                                         15,304        18,043
                                                                                --------      --------
Machinery and equipment:
  Machinery and equipment                                                          1,690         1,129
  Leasehold improvements                                                             223           179
                                                                                --------      --------
                                                                                   1,913         1,308
  Less:  accumulated depreciation                                                 (1,078)         (831)
                                                                                --------      --------
     Net machinery and equipment                                                     835           477
                                                                                --------      --------
Other assets                                                                         195           136
Goodwill                                                                           6,884         1,289
                                                                                --------      --------

     Total assets                                                               $ 23,218      $ 19,945
                                                                                ========      ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable                                                              $    969      $  1,142
  Accrued expenses                                                                 1,023           955
  Domestic and foreign income taxes payable                                            -         1,291
                                                                                --------      --------
     Total current liabilities                                                     1,992         3,388
                                                                                --------      --------
Commitments

Stockholders' equity:
  Preferred stock, $0.01 par value; 5,000,000 shares authorized;
   no shares issued or outstanding                                                     -             -
  Common stock, $0.01 par value; 20,000,000 shares authorized;
   6,536,034 and 5,911,034 shares issued and outstanding, respectively                65            59
  Additional paid-in capital                                                      16,647        13,981
  Retained earnings                                                                4,570         2,643
  Accumulated other comprehensive expense                                            (56)         (126) 
                                                                                --------      --------
     Total stockholders' equity                                                   21,226        16,557
                                                                                --------      --------

     Total liabilities and stockholders' equity                                 $ 23,218      $ 19,945
                                                                                ========      ========

</TABLE>


See accompanying Notes to Consolidated Financial Statements.


                                    F - 2


<PAGE>


                       inTEST CORPORATION AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF EARNINGS
                        (In thousands, except share data)


<TABLE>
<CAPTION>
                                                                             Years Ended December 31,
                                                                         -------------------------------
                                                                           1998        1997        1996
                                                                         -------     -------     -------
<S>                                                                      <C>         <C>         <C>
Net revenues                                                             $19,075     $20,746     $18,582
Cost of revenues                                                           8,402       7,808       6,755
                                                                         -------     -------     -------

       Gross margin                                                       10,673      12,938      11,827
                                                                         -------     -------     -------
Operating expenses:
  Selling expense                                                          3,346       2,789       2,471
  Research and development expense                                         1,934       1,737       1,928
  General and administrative expense                                       2,875       2,225       1,812
                                                                         -------     -------     -------

       Total operating expenses                                            8,155       6,751       6,211
                                                                         -------     -------     -------

Operating income                                                           2,518       6,187       5,616
                                                                         -------     -------     -------

Other income (expense):
  Interest income                                                            455         349         147
  Interest expense                                                            (3)        (15)        (11)
  Other                                                                       56         (74)        (35) 
                                                                         -------     -------     -------

       Total other income                                                    508         260         101
                                                                         -------     -------     -------

Earnings before income taxes and minority interest                         3,026       6,447       5,717
                                                                         -------     -------     -------

Income tax expense                                                         1,099       2,090         858
                                                                         -------     -------     -------

Earnings before minority interest                                          1,927       4,357       4,859
Minority interest                                                              -         (25)       (213) 
                                                                         -------     -------     -------

       Net earnings                                                      $ 1,927     $ 4,332     $ 4,646
                                                                         =======     =======     =======

Pro forma information (unaudited)(Note 3)
  Pro forma earnings before income taxes                                             $ 6,407     $ 5,627
  Pro forma income taxes                                                               2,680       2,251
  Pro forma net earnings                                                               3,726       3,376

  Earnings per share (1997 and 1996 information  is pro forma):
    Basic                                                                $  0.31     $  0.74     $  0.83
    Diluted                                                                 0.31        0.73        0.83

  Weighted average shares outstanding (1997 and 1996 information
   is pro forma):
    Basic                                                              6,169,596   5,068,349   4,091,034
    Diluted                                                            6,186,460   5,092,490   4,091,034

</TABLE>


See accompanying Notes to Consolidated Financial Statements.

                                   F - 3



<PAGE>

                inTEST CORPORATION AND SUBSIDIARIES

          CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
                 (In thousands, except share data)


<TABLE>
<CAPTION>
                                                    Years Ended December 31,
                                                 -------------------------------
                                                  1998        1997        1996
                                                 -------     -------     -------
<S>                                              <C>         <C>         <C>
Net earnings                                     $ 1,927     $ 4,332     $ 4,646

Foreign currency translation adjustments              70        (153)        (21) 
                                                 -------     -------     -------

Comprehensive earnings                           $ 1,997     $ 4,179     $ 4,625
                                                 =======     =======     =======

</TABLE>


See accompanying Notes to Consolidated Financial Statements.

                               F - 4



<PAGE>

                           inTEST CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                            (In thousands, except share data)


<TABLE>
<CAPTION>

                                                                              Accumulated
                                    Common Stock     Additional                  Other          Total
                                -------------------   Paid-In    Retained    Comprehensive   Stockholders'
                                 Shares     Amount    Capital    Earnings  Earnings(Expense)    Equity
                                ---------   -------  ----------  --------  ----------------  -------------
<S>                             <C>         <C>       <C>        <C>           <C>             <C>
Balance, January 1, 1996        3,790,591   $    38   $    689   $  3,273      $   48          $  4,048
Dividends-$1.08 per share               -         -          -     (4,086)          -            (4,086)
Net earnings                            -         -          -      4,646           -             4,646
Other comprehensive expense             -         -          -          -         (21)              (21)
                                ---------   -------   --------   --------      ------          --------

Balance, December 31, 1996      3,790,591        38        689      3,833          27             4,587



Dividends-$1.46 per share               -         -          -     (5,522)          -            (5,522)
Net earnings                            -         -          -      4,332           -             4,332
Acquisition of minority interest  300,443         3      1,655          -           -             1,658
Issuance of common stock in
 connection with Offering, net  1,820,000        18     11,637          -           -            11,655
Other comprehensive expense             -         -          -          -        (153)             (153)
                                ---------   -------   --------   --------      ------          --------

Balance, December 31, 1997      5,911,034        59     13,981      2,643        (126)           16,557




Net earnings                            -         -          -      1,927           -             1,927
Issuance of common stock in
 connection with Acquisition      625,000         6      2,666          -           -             2,672
Other comprehensive earnings            -         -          -          -          70                70
                                ---------   -------   --------   --------      ------          --------


Balance, December 31, 1998      6,536,034   $    65   $ 16,647   $  4,570      $  (56)         $ 21,226
                                =========   =======   ========   ========      ======          ========

</TABLE>


See accompanying Notes to Consolidated Financial Statements.


                                  F - 5



<PAGE>

                           inTEST CORPORATION AND SUBSIDIARIES
                          CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (In thousands, except share data)


<TABLE>
<CAPTION>

                                                                           Years Ended December 31,
                                                                        -----------------------------
                                                                          1998       1997       1996
                                                                        -------    -------    -------
<S>                                                                     <C>        <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net earnings                                                          $ 1,927    $ 4,332    $ 4,646
  Adjustments to reconcile net earnings to net cash:
    Depreciation and amortization                                           491        217        109
    Deferred taxes                                                          (79)      (165)         -
    Foreign exchange (gain) loss                                             17        (62)        31
    Allowance for bad debts                                                 (32)        49         51
    Minority interest                                                         -         25        213
    Changes in assets and liabilities, net of effects of Acquisition:
      Trade accounts and notes receivable, net                            1,747     (2,226)       925
      Inventories                                                            10       (352)       (66)
      Refundable domestic and state income taxes                           (658)         -          -
      Other current assets                                                   32        (71)       (61)
      Accounts payable                                                     (315)       659       (235)
      Domestic and foreign income tax payable                            (1,333)       845       (118)
      Dividends payable                                                       -       (973)         -
      Accrued expenses                                                     (244)       331         50
                                                                        -------    -------    -------
Net cash provided by operating activities                                 1,563      2,609      5,535
                                                                        -------    -------    -------
CASH FLOWS FROM INVESTING ACTIVITIES
  Acquisition of business, net of cash acquired                          (4,629)         -          -
  Purchase of machinery and equipment                                      (261)       (70)      (554)
  Other long-term asset                                                     (42)       (54)       (65)
                                                                        -------    -------    -------
Net cash used in investing activities                                    (4,932)      (124)      (619)
                                                                        -------    -------    -------
CASH FLOWS FROM FINANCING ACTIVITIES
  Dividends paid                                                              -     (5,541)    (3,339)
  Net principal debt borrowings (repayments)                               (215)      (189)       189
  Net proceeds from public offering                                           -     11,655          -
                                                                        -------    -------    -------
Net cash provided by (used in) financing activities                        (215)     5,925     (3,150)
                                                                        -------    -------    -------
Effects of exchange rates on cash                                            17        (67)         7
                                                                        -------    -------    -------
Net cash provided by (used in) all activities                            (3,567)     8,343      1,773

Cash and cash equivalents at beginning of period                         12,035      3,692      1,919
                                                                        -------    -------    -------
Cash and cash equivalents at end of period                              $ 8,468    $12,035    $ 3,692
                                                                        =======    =======    =======
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING ACTIVITIES
  Details of Acquisition:
    Fair value of assets acquired net of cash acquired                  $ 2,003
    Liabilities assumed                                                    (549)
    Common stock issued                                                  (2,672)
    Goodwill resulting from Acquisition                                   5,847
                                                                        -------
  Net cash paid for Acquisition                                         $ 4,629
                                                                        =======
Cash payments made for:
  Domestic and foreign income taxes                                     $ 3,210    $ 1,366    $   977
  Interest                                                                    3         14         11

</TABLE>


See accompanying Notes to Consolidated Financial Statements.


                                  F - 6


<PAGE>

                      inTEST CORPORATION AND SUBSIDIARIES


                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       (In thousands, except share data)



(1)   NATURE OF OPERATIONS

      inTEST Corporation (the "Company") designs, manufactures and markets
      docking hardware, test head manipulators and tester interfaces used by
      semiconductor manufacturers during the testing of wafers and packaged
      devices.  The Company also designs and markets related automatic test
      equipment interface products.

      The consolidated entity is comprised of inTEST Corporation (parent) and
      seven 100% owned subsidiaries: inTEST Limited (Thame, UK), inTEST
      Kabushiki Kaisha (Kichijoji, Japan), inTEST PTE, Limited (Singapore),
      inTEST Sunnyvale Corp. (Delaware) (acquired in the third quarter of 1998
      - see Note 4), inTEST Investments, Inc. (a Delaware holding company),
      inTEST IP Corp. (a Delaware holding company) and inTEST Licensing Corp.
      (a Delaware holding company).

      The Company manufactures its products in the U.S. and the U.K.  Marketing
      and support activities are conducted worldwide from the Company's
      facilities in the U.S., U.K., Japan and Singapore.

      On June 20, 1997, the Company completed an initial public offering of
      2.275 million common shares through which the Company issued 1.82 million
      new shares of common stock (the "Offering").   Simultaneous with the
      closing of the Offering, the Company acquired the 21% minority interests
      in each of its three foreign subsidiaries in exchange for an aggregate of
      300,443 shares of the Company's common stock (the "Exchange").  Prior to
      the Offering the Company owned 79% of each of the three foreign
      subsidiaries.



(2)   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      Basis of Presentation
      ---------------------

      The consolidated financial statements include the accounts of the Company
      and its wholly owned subsidiaries.  All significant intercompany accounts
      and transactions have been eliminated upon consolidation.  The
      preparation of financial statements in conformity with generally accepted
      accounting principles requires management to make estimates and
      assumptions that affect the reported amounts of assets and liabilities
      and disclosure of contingent assets and liabilities at the date of the
      financial statements and the reported amounts of revenues and expenses
      during the reporting period.  Actual results could differ from those
      estimates. 


      Reclassification
      ----------------

      Certain prior year amounts have been reclassified to conform with the
      current year presentation.


      Cash and Cash Equivalents
      -------------------------

      Short-term investments, which have maturities of three months or less
      when purchased, are considered to be cash equivalents and are carried at
      cost, which approximates market value.


                                  F - 7


<PAGE>

                      inTEST CORPORATION AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       (In thousands, except share data)



(2)   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)


      Notes Receivable
      ----------------

      Notes receivable are due from trade customers in Japan, and have original
      maturities of less than four months.  The notes are non-interest bearing.
      Notes receivable were $524 and $784 at December 31, 1998 and 1997,
      respectively.


      Bad Debts
      ---------

      The Company grants credit to customers and generally requires no
      collateral.  To minimize its risk, the Company performs ongoing credit
      evaluations of its customers financial condition.  Bad debt expense
      (recoveries) was $(5), $61 and $52 for the years ended December 31, 1998,
      1997 and 1996, respectively.


      Inventories
      -----------

      Inventories are stated at the lower of cost or market.  Cost is
      determined under the first-in first-out (FIFO) method.


      Machinery and Equipment
      -----------------------

      Machinery and equipment are stated at cost.  Depreciation is based upon
      the estimated useful life of the assets using the straight line method.
      The estimated useful lives range from three to seven years.  Leasehold
      improvements are recorded at cost and amortized over the shorter of the
      lease term or the estimated useful life of the asset.  Total depreciation
      expense was $238, $175 and $112 for the years ended December 31, 1998,
      1997 and 1996, respectively.  Expenditures for maintenance and repairs
      are charged to operations as incurred.

      Intangibles
      -----------

      Goodwill resulting from the acquisition of the minority interests in the
      Company's three foreign subsidiaries and the acquisition of TestDesign is
      amortized on a straight line basis over 15 years.  Total amortization
      expense for the years ended December 31, 1998, 1997 and 1996 was $252,
      $49 and $-0-, respectively.  The Company assesses the potential
      impairment of its intangible assets based on anticipated undiscounted
      cash flows from operations.  At December 31, 1998, no impairment was
      indicated.


                                    F - 8



<PAGE>

                      inTEST CORPORATION AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       (In thousands, except share data)


(2)   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)


      Income Taxes
      ------------

      Just prior to the closing of the Offering, the Company terminated its
      status as an S corporation for Federal tax purposes and in the State of
      New Jersey.  As an S corporation, any Federal and certain New Jersey
      state income tax liabilities were those of the former S corporation
      stockholders, not of the Company.  All tax liabilities on income earned
      subsequent to the revocation of the S corporation election are
      liabilities of the Company.  The Company is taxed in foreign countries
      and for activity in certain states.  The Company accounts for income
      taxes in accordance with the Statement of Financial Accounting Standard
      ("SFAS") No. 109, Accounting for Income Taxes.


      Net Earnings Per Common Share
      -----------------------------

      Net earnings per common share is computed in accordance with SFAS No.
      128, Earnings per Share.  Basic earnings per share is computed by
      dividing net earnings by the weighted average number of common shares
      outstanding during each year.  Diluted earnings per share is computed by
      dividing net earnings by the weighted average number of common and common
      share equivalents outstanding during each year.  Common share equivalents
      include stock options using the treasury stock method.

      A reconciliation of weighted average shares outstanding - basic to
      weighted average shares outstanding - diluted appears below:

      
<TABLE>
      <CAPTION>
                                                                Years Ended December 31,
                                                           -----------------------------------
                                                             1998         1997         1996
                                                           ---------    ---------    ---------
      <S>                                                  <C>          <C>          <C>
      Weighted average shares outstanding-basic            6,169,596    5,068,349    4,091,034
      Potentially dilutive securities:
        Employee stock options                                16,864       24,141            -
                                                           ---------    ---------    ---------
      Weighted average shares outstanding-diluted          6,186,460    5,092,490    4,091,034
                                                           =========    =========    =========
      </TABLE>


      As discussed in Note 3, pro forma earnings per share information for the
      years ended December 31, 1997 and 1996 includes certain adjustments to
      reflect results as if (i) the Company had been taxed as a C corporation
      for all of 1996 and 1997 and (ii) the acquisition of the minority
      interests in the Company's three foreign subsidiaries had occurred
      January 1, 1996.


                                   F - 9



<PAGE>

                      inTEST CORPORATION AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       (In thousands, except share data)



(2)   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)


      Revenue Recognition
      -------------------

      Revenue from sales of products are recognized upon shipment to customers.


      Research and Development
      ------------------------

      Research and development costs are expensed as incurred.


      Product Warranties
      ------------------

      The Company generally provides product warranties and records estimated
      warranty expense at the time of sale based upon historical claims
      experience.


      Stock Based Compensation
      ------------------------

      SFAS No. 123, Accounting for Stock-Based Compensation was adopted by the
      Company effective with adoption of its 1997 Stock Plan.  As permitted by
      SFAS No. 123, the Company has elected to continue to follow Accounting
      Principles Board Opinion No. 25, Accounting for Stock Issued to Employees
      ("APB 25") in accounting for its stock option plans.  Under APB 25, the
      Company does not recognize compensation expense on the issuance of its
      stock options because the option terms are fixed and the exercise price
      equals the market price of the underlying stock on the grant date.


      Foreign Currency
      ----------------

      The accounts of the foreign subsidiaries are translated in accordance
      with the SFAS No. 52, Foreign Currency Translation, which requires that
      assets and liabilities of international operations be translated using
      the exchange rate in effect at the balance sheet date.  The results of
      operations are translated using an average exchange rate for the period.
      The effects of rate fluctuations in translating assets and liabilities of
      international operations into U.S. dollars are accumulated and reflected
      as other comprehensive earnings or expense in the consolidated statements
      of stockholders' equity.  Transaction gains or losses are included in net
      earnings.


      Financial Instruments
      ---------------------

      The Company's financial instruments, principally accounts and notes
      receivable and accounts payable, are carried at cost which approximates
      fair value, due to the short maturities of the accounts.


                                  F - 10



<PAGE>

                      inTEST CORPORATION AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       (In thousands, except share data)


(2)   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

      New Accounting Pronouncements
      -----------------------------

      In June 1997, the Financial Accounting Standards Board issued SFAS No.
      131, Disclosures About Segments of an Enterprise and Related Information.
      This Statement established standards for reporting information about
      operating segments in annual financial statements and requires selected
      information about operating segments in interim financial reports issued
      to shareholders.  It also establishes standards for related disclosure
      about products and services, geographic areas and major customers.  The
      Company adopted this Statement for the year ended December 31, 1998, as
      required (see Note 5).

      In March 1998, the American Institute of Certified Public Accountants
      issued Statement of Position 98-1, Accounting for the Cost of Computer
      Software Developed or Obtained for Internal Use.  This Statement requires
      that certain costs related to the development or purchase of internal
      software be capitalized and amortized over the estimated useful life of
      the software.  This Statement also requires that costs related to the
      preliminary project stage and the post implementation/operation stage of
      an internal use computer software development project be expensed as
      incurred.  The Company plans to adopt this Statement in the first quarter
      of 1999, as required.  The adoption of this Statement is not expected to
      have a material affect on the results of operations, financial condition
      or long-term liquidity of the Company.



(3)   PRO FORMA STATEMENT OF EARNINGS INFORMATION (Unaudited)

      The Company terminated its status as an S corporation just prior to the
      closing of the Offering, described in Note 1, and is subject to Federal
      and additional state income taxes for periods after such termination.

      Accordingly, for informational purposes, the following pro forma
      information for the years ended December 31, 1997 and 1996, respectively,
      is presented to show pro forma earnings on an after-tax basis, assuming
      the Company had been taxed as a C corporation since January 1, 1996.  The
      difference between the Federal statutory income tax rate and the pro
      forma income tax rate is as follows:


      
<TABLE>
      <CAPTION>

                                                                  Years Ended
                                                                  December 31,
                                                             ----------------------
                                                             1997             1996
                                                             ----              ----
      <S>                                                     <C>               <C>
      Federal statutory tax rate                              34%               34%
      State income taxes, net of Federal benefit               4                 3
      Foreign income taxes                                     4                 3
      Non-deductible goodwill amortization                     1                 1
      Research credits                                        (1)               (1)
                                                              --                --
      Pro forma income tax rate                               42%               40%
                                                              ==                ==

      </TABLE>



                            F - 11



<PAGE>

                      inTEST CORPORATION AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       (In thousands, except share data)


(3)   PRO FORMA STATEMENT OF EARNINGS INFORMATION (Unaudited)(Continued)


      Set forth below are pro forma results of the Company's operations for the
      years ended December 31, 1997 and 1996.  These pro forma results reflect
      adjustments for:

      (i)   the aforementioned change in method of computing taxes; and

      (ii)  the amortization of goodwill resulting from the acquisition of
            minority interests in the Company's three foreign subsidiaries, net
            of the elimination of the minority interests charge reflected in
            the historical financial statements, as if the Exchange (as
            described in Note 1) had occurred on January 1, 1996.  The goodwill
            resulting from the Exchange, which totaled $1.3 million, is being
            amortized over 15 years.

            
<TABLE>
            <CAPTION>

                                                                           Years Ended December 31,
                                                                           ------------------------
                                                                             1997            1996
                                                                           --------        --------
            <S>                                                            <C>             <C>
            Pro forma earnings before income taxes                         $  6,407        $  5,627
            Pro forma income taxes                                            2,680           2,251
            Pro forma net earnings                                            3,726           3,376
            Pro forma net earnings per common share - basic                $   0.74        $   0.83
            Pro forma weighted average common shares outstanding -
              basic                                                       5,068,349       4,091,034
            Pro forma net earnings per common share - diluted              $   0.73        $   0.83
            Pro forma weighted average common and common share
              equivalents outstanding - diluted                           5,092,490       4,091,034

            </TABLE>



      Pro forma net earnings per common share - basic was calculated by
      dividing pro forma net earnings by the pro forma weighted average number
      of common shares outstanding during the period calculated as if the
      Exchange had occurred on January 1, 1996.

      Pro forma net earnings per common share - diluted was calculated by
      dividing pro forma net earnings by the pro forma weighted average number
      of shares of common and common share equivalents outstanding during the
      period calculated as if the Exchange had occurred on January 1, 1996.


                                     F - 12



<PAGE>

                      inTEST CORPORATION AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       (In thousands, except share data)



(4)   ACQUISITION

      On August 3, 1998, the Company acquired all of the outstanding capital
      stock of TestDesign Corporation ("TestDesign"), a privately held
      California corporation (the "Acquisition").  Subsequent to the
      Acquisition, the Company changed the name of TestDesign to inTEST
      Sunnyvale Corp.  TestDesign is engaged in the design and manufacture of
      tester interfaces used by the semiconductor industry.  The purchase price
      was $4.4 million in cash and 625,000 shares of the Company's Common Stock
      (subject to certain adjustments).  An escrow held by a third party escrow
      agent of $1.0 million of the cash portion of the purchase price was
      established at closing.  If the Company is entitled to indemnification
      pursuant to the terms of its agreement with the Seller, such claims will
      be paid first from any funds held in escrow.  The escrowed funds will
      remain in escrow until July 31, 2000, unless any indemnity claims are
      then pending, in which case an amount equal to the amount of such pending
      claims will be retained in escrow until resolution of the claims.  
      Although the Company's Common Stock had a market price of $4.75 per share
      on the closing date of the transaction, all of the 625,000 shares issued
      in connection with the Acquisition are subject to legal restrictions on
      transfer and have been valued at a 10% discount to the market price of
      the shares.  In addition, the Company incurred transaction costs of
      approximately $425,000 in completing the Acquisition.  The following is
      an allocation of the purchase price:

           
<TABLE>

           <S>                                               <C>
           Cash payment                                      $ 4,400
           Transaction costs                                     425
           625,000 common shares at $4.28                      2,672
                                                             -------
                                                               7,497
           Estimated fair value of identifiable assets
             acquired net of liabilities assumed               1,650
                                                             -------
           Goodwill to be amortized over 15 years            $ 5,847
                                                             =======

           </TABLE>


        The Acquisition has been accounted for as a purchase and the results
        of operations of the acquired business have been included in the
        Company's consolidated financial statements since the date of the
        Acquisition.  The following unaudited pro forma information presents


                                   F - 13



<PAGE>

                      inTEST CORPORATION AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       (In thousands, except share data)



(4)   ACQUISITION (Continued)

      a summary of consolidated results of operations for the Company and
      TestDesign as if the Acquisition had occurred on January 1, 1997 (the
      1997 amounts also reflect the pro forma adjustments described in Note 3):

      
<TABLE>
      <CAPTION>

                                                               Years Ended December 31,
                                                              -------------------------
                                                                1998             1997
                                                              --------         --------
      <S>                                                     <C>              <C>
      Pro forma net revenues                                  $ 23,335         $ 29,689
      Pro forma earnings before income taxes                     2,892            6,440
      Pro forma income taxes                                     1,081            2,698
      Pro forma net earnings                                     1,811            3,742

      Pro forma net earnings per common share - basic         $   0.28         $   0.66
      Pro forma weighted average common shares
        outstanding - basic                                  6,536,034        5,693,349

      Pro forma net earnings per common share - diluted       $   0.28         $   0.65
      Pro forma weighted average common and common
        share equivalents outstanding - diluted              6,548,519        5,717,490

      </TABLE>



(5)   SEGMENT INFORMATION

      The various products the Company designs, manufactures and markets, which
      include docking hardware, test head manipulators and tester interfaces,
      are considered by management to be a single product segment.  Included in
      this segment are products the Company designs and markets that are
      manufactured by third parties, which include high performance test
      sockets, interface boards and probing assemblies.  The Company operates
      its business worldwide and divides the world into three geographic
      segments:  North America, Asia-Pacific and Europe.  The North America
      segment includes the Company's manufacturing, design and service
      facilities in New Jersey, and California; the Asia-Pacific segment
      includes the Company's design and service facilities in Singapore and
      Japan; and the Europe segment includes the Company's manufacturing,


                                 F - 14



<PAGE>

                      inTEST CORPORATION AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       (In thousands, except share data)




(5)   SEGMENT INFORMATION (Continued)

      design and service facility in the UK.  Each segment sells Company
      designed and manufactured products, while products produced by third
      party manufacturers are primarily distributed by the Company's Asia-
      Pacific segment.  All three segments sell to semiconductor manufacturers
      and automatic test equipment manufacturers.  The North America segment
      sells through company account managers and independent sales
      representatives; the Asia-Pacific segment sells through company account
      managers and independent sales representatives; and the Europe segment
      sells through company account managers.

      Intercompany pricing between segments is either a multiple of cost for
      component parts used in manufacturing or a percentage discount from list
      price for finished goods sold to non-manufacturing segments.  The Company
      acquired TestDesign in August 1998 and has included it in the North
      America segment.

      
<TABLE>
      <CAPTION>

                                                               Years Ended December 31,
                                                           -------------------------------
                                                             1998        1997        1996
                                                           -------     -------     -------
      <S>                                                  <C>         <C>         <C>
      Revenues from unaffiliated customers:
        North America                                      $12,637     $13,608     $10,614
        Asia - Pacific                                       4,727       5,743       4,860
        Europe                                               1,711       1,395       3,108
                                                           -------     -------     -------
                                                           $19,075     $20,746     $18,582
                                                           =======     =======     =======

      Affiliate sales or transfer from:
        North America                                      $   943     $   768     $ 1,321
        Asia - Pacific                                           -           -           -
        Europe                                                 378         500          54
                                                           -------     -------     -------
                                                           $ 1,321     $ 1,268     $ 1,375
                                                           =======     =======     =======

      Depreciation/amortization: 
        North America                                      $   413     $   127     $    22
        Asia - Pacific                                          53          69          63
        Europe                                                  24          28          27
                                                           -------     -------     -------
                                                           $   490     $   224     $   112
                                                           =======     =======     =======

      Operating income: 
        North America                                      $ 1,705     $ 5,067     $ 3,815
        Asia - Pacific                                         299         651         432
        Europe                                                 514         469       1,369
                                                           -------     -------     -------
                                                           $ 2,518     $ 6,187     $ 5,616
                                                           =======     =======     =======

      </TABLE>



                                  F - 15



<PAGE>

                      inTEST CORPORATION AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       (In thousands, except share data)



(5)   SEGMENT INFORMATION (Continued)

      
<TABLE>
      <CAPTION>

                                                               Years Ended December 31,
                                                           -------------------------------
                                                            1998        1997        1996
                                                           -------     -------     -------
      <S>                                                  <C>         <C>         <C>
      Earnings before income taxes:
        North America                                      $ 2,100     $ 5,356     $ 3,916
        Asia - Pacific                                         379         606         415
        Europe                                                 547         485       1,386
                                                           -------     -------     -------
                                                           $ 3,026     $ 6,447     $ 5,717
                                                           =======     =======     =======

      Income tax expense:
        North America                                      $   747     $ 1,517     $   134
        Asia - Pacific                                         263         463         343
        Europe                                                  89         110         381
                                                           -------     -------     -------
                                                           $ 1,099     $ 2,090     $   858
                                                           =======     =======     =======

      Net earnings: 
        North America                                      $ 1,353     $ 3,839     $ 3,781
        Asia - Pacific                                         116         131          20
        Europe                                                 458         362         845
                                                           -------     -------     -------
                                                           $ 1,927     $ 4,332     $ 4,646
                                                           =======     =======     =======

      Identifiable assets:
        North America                                      $20,226     $16,177     $ 5,408
        Asia - Pacific                                       1,706       2,679       1,409
        Europe                                               1,286       1,089         899
                                                           -------     -------     -------
                                                           $23,218     $19,945     $ 7,716
                                                           =======     =======     =======

      </TABLE>


      Substantially all interest income is generated by the North America
      segment.  Export sales from the Company's domestic manufacturing
      facilities (New Jersey and California) totaled $4,380, $2,042 and $3,486
      during the years ended December 31, 1998, 1997 and 1996, respectively.
      During the years ended December 31, 1998, 1997 and 1996 the Company had
      sales to Japan of $2,932, $4,277 and $3,376, respectively.


(6)   MAJOR CUSTOMERS 

      The Company's customers are in the semiconductor industry.  During 1998,
      1997 and 1996 the Company had sales to certain customers which exceeded
      10% of the Company's consolidated revenues.  Those sales were as follows:


                                 F - 16



<PAGE>

                      inTEST CORPORATION AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       (In thousands, except share data)



(6)   MAJOR CUSTOMERS (Continued) 

      
<TABLE>
      <CAPTION>

      Customer                                           1998         1997         1996
      ---------------------------------------------------------------------------------
         <S>                                             <C>          <C>          <C>
         A (North America, Asia-Pacific)                  16%          11%          16%
         B (North America, Asia-Pacific)                  13            5            7
         C (North America, Asia-Pacific, Europe)          11            7            5
         D (North America, Asia-Pacific, Europe)           7           11            6
                                                          --           --           --
         Total                                            47%          34%          34%
                                                    ==           ==           ==

      </TABLE>


      Additionally, at December 31, 1998, these four customers accounted for
      36% of trade receivables.


(7)   INVENTORIES

      Inventories held at December 31, were comprised of the following:

      
<TABLE>
      <CAPTION>
                                                1998        1997
                                               ------      ------
      <S>                                      <C>         <C>
      Raw materials                            $1,097      $  364
      Work in process                           1,305       1,044
      Finished goods                              339         360
      Reserve for obsolete inventory             (220)       (119)
                                               ------      ------
                                               $2,521      $1,649
                                               ======      ======
      </TABLE>



(8)   LINE OF CREDIT

      The Company has a $1.5 million line of credit.  Borrowings under this
      line of credit are principally used for working capital purposes.
      Borrowings on the line of credit bear interest at prime rate, which is
      payable monthly on any outstanding balance.  The Company is required to
      maintain a $50 compensating balance at the bank which granted the line of
      credit.  The credit line expires on June 29, 1999.  At December 31, 1998,
      there were no borrowings outstanding.


(9)   STOCK OPTION PLAN

      The 1997 Stock Plan (the "Plan") provides for the granting of either
      incentive stock options or non-qualified stock options to purchase shares
      of the Company's common stock and for other stock-based awards to key
      employees and directors responsible for the direction and management of
      the Company and to non-employee consultants.  The Plan consists of two
      parts: the Non-Qualified Plan (administered by the Board of Directors


                                   F - 17



<PAGE>

                      inTEST CORPORATION AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       (In thousands, except share data)


(9)   STOCK OPTION PLAN (Continued)

      of the Company) and the Key Employee Plan (administered by the
      Compensation Committee of the Board of Directors of the Company).  The
      Company has reserved 500,000 shares of common stock for issuance upon
      exercise of options or stock awards under the Plan.

      No option may be granted with an exercise period in excess of ten years
      from date of grant.  Generally, incentive stock options will be granted
      with an exercise price equal to the fair market value on the date of
      grant; the exercise price of non-qualified stock options will be
      determined by either the Board of Directors or the Compensation Committee
      of the Board of Directors.

      Had compensation costs for the Company's stock-based compensation plans
      been determined consistent with FAS 123, the Company's net earnings and
      net earnings per share for the years ended December 31, 1998 and 1997,
      would have been reduced to the unaudited pro forma amounts indicated
      below:

      
<TABLE>
      <CAPTION>
                                                        1998        1997
                                                       -------     -------
      <S>                                              <C>         <C>
      Net earnings:
        As reported (pro forma for 1997)               $ 1,927     $ 3,726
        Pro forma                                      $ 1,790     $ 3,643

      Net earnings per share - basic:
        As reported (pro forma for 1997)               $  0.31     $  0.74
        Pro forma                                      $  0.29     $  0.72

      </TABLE>


      The fair value for stock options granted in 1998 and 1997 was estimated
      at the date of grant using the Black-Scholes option pricing model with
      the following weighted average assumptions for 1998 and 1997:

      
<TABLE>
      <CAPTION>
                                                        1998        1997
                                                       -------     -------
      <S>                                              <C>         <C>
      Risk-free interest rate                           5.65%       5.67%
      Dividend yield                                    0.00%       0.00%
      Expected common stock market price
        volatility factor                               0.82        0.65
      Weighted average expected life of
        stock options                                  5 years     5 years

      </TABLE>


      The per share weighted average fair value of stock options issued by
      the Company in 1998 and 1997 was $3.92 and $4.61, respectively.


                                    F - 18



<PAGE>

                      inTEST CORPORATION AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       (In thousands, except share data)


(9)   STOCK OPTION PLAN (Continued)

      The options which have been issued vest 20% one year from date of grant
      and 20% in each of the succeeding four years.

      The Black-Scholes option valuation model was developed for use in
      estimating the fair value of traded options which have no vesting
      restrictions and are fully transferable.  In addition, option valuation
      models require the input of highly subjective assumptions including the
      expected stock price volatility.  As the Company's stock options have
      characteristics significantly different from those of traded options, and
      as changes in the subjective input assumptions can materially affect the
      fair value estimate, in management's opinion, the existing models do not
      necessarily provide a reliable single measure of the fair value of its
      stock options.

      The following table summarizes the stock option activity for the periods
      ended December 31, 1998 and 1997:


      
<TABLE>
      <CAPTION>

                                                                    Weighted
                                                                     Average
                                                     Number         Exercise
                                                    of Shares         Price
                                                    ---------       --------
      <S>                                            <C>              <C>
      Options outstanding, January 1, 1997                 -            -
      Granted                                        160,000          $7.72
      Exercised                                            -            -
      Canceled                                        (9,000)          7.50
                                                     -------          -----
      Options outstanding, December 31, 1997         151,000          $7.73
        (none exercisable)                           =======          =====

      Granted                                        150,000          $4.25
      Exercised                                            -            -
      Canceled                                       (10,000)          6.00
                                                     -------          -----
      Options outstanding, December 31, 1998         291,000          $5.10
        (28,200 exercisable)                         =======          =====

      </TABLE>



      On June 30, 1998, the Company modified 131,000 options originally
      exercisable at $7.50 per share and 10,000 options originally exercisable
      at $11.00 per share to reduce the exercise price of such options to $6.00
      per share.


                                  F - 19



<PAGE>

                      inTEST CORPORATION AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       (In thousands, except share data)



(9)   STOCK OPTION PLAN (Continued)


      The following table summarizes information about stock options
      outstanding at December 31, 1998:

      
<TABLE>
      <CAPTION>

                                                     Weighted                  Weighted
                                                     Average                   Average
                                         Weighted    Exercise                  Exercise
      Range of     Number                 Average    Price of      Number      Price of
      Exercise   Outstanding   Maximum   Remaining  Outstanding  Exercisable  Exercisable
       Prices    at 12/31/98     Life      Life       Options    at 12/31/98    Options
      --------   -----------   --------  ---------  -----------  -----------  -----------
      <S>          <C>         <C>       <C>          <C>          <C>          <C>
      $ 6.00       141,000     10 years  8.5 years    $ 6.00       28,200       $ 6.00

      $ 4.25       150,000     10 years  9.6 years    $ 4.25            -         N/A

      </TABLE>



(10)  COMMITMENTS

      The Company leases its offices, warehouse facilities, automobiles and
      certain equipment under noncancellable operating leases which expire at
      various dates through 2005.  Total rental expense for the years ended
      December 31, 1998, 1997 and 1996 was $536, $442 and $422, respectively.
      The aggregate minimum rental commitments under the noncancellable
      operating leases in effect at December 31, 1998, are as follows:

                          1999                   $ 541
                          2000                   $ 318
                          2001                   $ 281
                          2002                   $ 262
                          2003                   $ 153
                          Thereafter             $  70


(11)  INCOME TAXES

      As discussed in Notes 2 and 3, prior to the Offering the Company had
      elected S corporation status for Federal and state of New Jersey tax
      purposes, and therefore, was not directly subject to Federal and certain
      New Jersey income taxes.  Immediately prior to the Offering, the Company
      terminated its status as an S corporation and is now subject to Federal
      and additional state income taxes.  In addition, the Company is taxed in
      foreign countries and for activity in certain states.  For Federal, state
      and foreign jurisdictions in which the Company is subject to taxation,
      the temporary differences that give rise to deferred tax assets and
      liabilities were not significant at December 31, 1996.  The cumulative
      amount of undistributed earnings of foreign subsidiaries for which U.S.
      income taxes have not been provided was approximately $1.9 million at
      December 31, 1998.  Management intends to repatriate a portion of the
      earnings of its foreign subsidiaries during 1999.  The estimated tax
      effect of distributing such earnings is expected to be offset by
      available foreign tax credits.


                                   F - 20



<PAGE>

                      inTEST CORPORATION AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       (In thousands, except share data)



(11)  INCOME TAXES (Continued)


      Earnings before income taxes were as follows:

      
<TABLE>
      <CAPTION>

                                             Years Ended December 31,
                                            --------------------------
                                             1998      1997      1996
                                            ------    ------    ------
      <S>                                   <C>       <C>       <C>
      Domestic                              $2,100    $5,356    $3,916
      Foreign                                  926     1,091     1,801
                                            ------    ------    ------
                                            $3,026    $6,447    $5,717
                                            ======    ======    ======

      </TABLE>



      Income tax expense was as follows:

      
<TABLE>
      <CAPTION>

                                             Years Ended December 31,
                                            --------------------------
                                             1998      1997      1996
                                            ------    ------    ------
      <S>                                   <C>       <C>       <C>
      Current:
        Domestic - Federal                  $  772    $1,379    $    -
        Domestic - state                        54       303       134
        Foreign                                352       573       724
                                            ------    ------    ------
                                             1,178     2,255       858
                                            ------    ------    ------
      Deferred:
        Domestic - Federal                     (54)     (147)        -
        Domestic - state                       (25)      (18)        -
                                            ------    ------    ------
                                               (79)     (165)        -
                                            ------    ------    ------
      Income tax expense                    $1,099    $2,090    $  858
                                            ======    ======    ======

      </TABLE>


      Deferred income taxes reflect the net tax effect of temporary differences
      between the carrying amount of assets and liabilities for financial
      reporting purposes and the amounts used for income tax purposes.  The
      following is a summary of the significant components of the Company's
      deferred tax assets and liabilities as of December 31, 1998 and 1997:


                                   F - 21



<PAGE>

                      inTEST CORPORATION AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       (In thousands, except share data)


(11)  INCOME TAXES (Continued)

      
<TABLE>
      <CAPTION>

                                                                 1998       1997
                                                                -----      -----
      <S>                                                       <C>        <C>
      Deferred Tax Assets:
        Accrued vacation pay                                    $  91      $  69
        Allowance for doubtful accounts                            60         47
        Inventories (principally due to obsolescence reserve)     107         42
        Accrued warranty                                           17          9
        Excess foreign tax credit carryforward                      -         17
        Capital loss carryforward                                  90          -
        Other                                                      (5)         5
                                                                -----      -----
                                                                  360        189
        Valuation allowance                                       (90)       (17)
                                                                -----      -----
            Deferred tax assets                                   270        172
                                                                -----      -----
      Deferred Tax Liabilities:
        Accrued royalty income                                    (25)        (7)
                                                                -----      -----
      Net deferred tax asset                                    $ 245      $ 165
                                                                =====      =====

      </TABLE>


      Based on the Company's history of prior operating earnings, and its
      expectation of the future, management believes that taxable income will
      more likely than not be sufficient to realize the net deferred tax assets
      of $245 at December 31, 1998.  A valuation allowance of $90 was
      established in 1998 to offset the domestic capital loss carryforward.  A
      valuation allowance of $17 was established in 1997 to offset the foreign
      tax credit carryforward, which was realized in 1998.

      An analysis of the effective tax rate on earnings and a reconciliation
      from the expected statutory rate are as follows:

      
<TABLE>
      <CAPTION>

                                                        Years Ended December 31,
                                                      ---------------------------
                                                       1998      1997       1996
                                                      ------    ------    -------
      <S>                                             <C>       <C>       <C>
      Expected income tax provision at U.S.
       Statutory rate                                 $1,029    $2,192    $ 1,944
      State taxes, net of Federal benefit                 19       188        134
      Increase (decrease) in tax from:
        Non-deductible goodwill                           86        17          -
        Foreign income tax rate differences               12       219        133
        Tax exempt interest                              (80)        -          -
        S corporation earnings not subject to
         Federal taxation                                  -      (549)    (1,353)
        Other                                             33        23          -
                                                      ------    ------    -------
      Income tax expense                              $1,099    $2,090    $   858
                                                      ======    ======    =======

      </TABLE>



                                  F - 22



<PAGE>


                      inTEST CORPORATION AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       (In thousands, except share data)



(12)  EMPLOYEE BENEFIT PLANS

      In 1996, the Company instituted a defined contribution 401(k) plan for
      its employees who work in the U.S.  All permanent employees of inTEST
      Corporation and inTEST Sunnyvale Corp. who are at least 18 years of age
      and have completed six months of service with the Company are eligible to
      participate in the plan.  Under the plan, the Company matches employee
      contributions dollar for dollar up to 10% of the employee's annual
      compensation up to $5.  In addition, the Company may match employee
      contributions dollar for dollar for amounts exceeding 10% up to 15% of
      the employee's annual compensation to a maximum of $5.  Employer
      contributions vest over a six-year period.  The Company contributed $157,
      $129 and $71 to the plan for the years ended December 31, 1998, 1997 and
      1996, respectively.

      TestDesign adopted a defined contribution 401(k) plan for its employees
      in July 1994.  All permanent employees who are at least 18 years of age
      and have completed six months of service with TestDesign are eligible to
      participate in the plan.  Under the plan, TestDesign matches employee
      contributions equal to 25% of an employee's contributions up to 5% of
      gross salary.  Matching contributions for the plan were $6 from the date
      of the Acquisition through December 31, 1998.  In addition, the plan
      allows TestDesign to make discretionary matching contributions up to 6.5%
      of an employee's gross salary for the year based upon TestDesign's
      profitability.  There were no discretionary matching contributions made
      from the date of the Acquisition through December 31, 1998.  Effective
      October 1, 1998, all TestDesign permanent employees who were at least 18
      years of age and had completed six months of service were offered
      enrollment in the Company's 401(k) plan, and employee contributions and
      employer matching contributions into the TestDesign plan ceased.  The
      Company is currently in the process of terminating the TestDesign plan at
      which time the former participants will have the option of rolling their
      assets into the Company's plan.

      The Company sponsored a noncontributory pension plan for an employee of
      its U.K. subsidiary until July 1998, when that employee retired from the
      Company.  The Company has no other defined contribution or defined
      benefit plans.


                                F - 23



<PAGE>

                      inTEST CORPORATION AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       (In thousands, except share data)



(13)  ACCRUED EXPENSES

      Accrued expenses consists of the following:

      
<TABLE>
      <CAPTION>

                                                      December 31,
                                                  --------------------
                                                   1998          1997
                                                  ------        ------
      <S>                                        <C>           <C>
      Accrued vacation                           $  236        $  181
      Accrued commissions                           206           285
      Accrued directors fees                        109             -
      Accrued wages                                 106            81
      Customer deposits                             100           200
      Accrued professional fees                      78            68
      Accrued warranty                               45            25
      Accrued shareholder relations                  42            50
      Accrued other                                 101            65
                                                 ------        ------
                                                 $1,023        $  955
                                                 ======        ======

      </TABLE>




(14)  RELATED PARTY TRANSACTIONS

      The Company paid consulting fees to one individual who is a member of the
      Board of Directors of the parent company which totaled $56 and $17 during
      the years ended December 31, 1998 and 1997,  respectively.  There were no
      consulting fees paid to related parties during the year ended December
      31, 1996.

      During 1998, in connection with the Acquisition of TestDesign, the
      Company repaid $215 on a note due to a firm ("PRIM") controlled by
      Douglas W. Smith, Executive Vice President and Chief Operating Officer of
      the Company.  This note, which did not bear interest or have a maturity
      date, evidenced borrowings that TestDesign had made from PRIM prior to
      the Acquisition.  In addition, subject to the terms of a consulting
      agreement between TestDesign and Gregory W. Slayton, a current board
      member of the Company, the Company paid directly to Mr. Slayton, on
      behalf of TestDesign, $170,000 in cash and 31,250 shares of the Company's
      common stock.  These payments are included in the merger consideration
      and are accounted for as described in Note 4.

      The Company's foreign subsidiaries paid directors' fees to several
      individuals who are members of management of the parent company which
      totaled $104, $177 and $192 during the years ended December 31, 1998,
      1997 and 1996, respectively.

      At December 31, 1998 and 1997 there were $49 and $75 of foreign
      directors' fees payable to members of management of the parent company.
      There were no amounts outstanding in prior years.


                                   F - 24



<PAGE>

                      inTEST CORPORATION AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       (In thousands, except share data)


(15)  LEGAL PROCEEDINGS

      On November 18, 1998, the Company and its subsidiary inTEST IP Corp.
      (which holds title to all Company intellectual property) filed suit
      against a competitor for infringement of a United States patent held by
      the Company (the "815 Patent").

      The invention disclosed and claimed in the 815 Patent is directed to a
      system for positioning and docking a heavy electronic test head of a test
      system with respect to an electronic device handler.  The system is used
      in the automatic testing of integrated circuits and other electronic
      devices.  The Company sells products covered by the 815 Patent worldwide.

      As alleged in the complaint, the competitor began manufacturing, offering
      to sell, and selling products as early as 1991 that, without license,
      infringe claims of the 815 Patent.  The parties have been discussing
      possible settlement of the dispute since the Company first became aware
      of the infringement in 1991.  Discussions were abated at the end of
      1995 so that the United States Patent and Trademark Office (the
      "PTO") could reexamine the 815 Patent.  On April 7, 1998, the PTO
      completed the reexamination and affirmed the patentability of the nine
      claims in the patent with minor, technical, clarifying changes.  
      Thereafter, the parties resumed settlement negotiations, however, to date
      such negotiations have been unsuccessful.

      The complaint asks the court to enjoin the competitor from further acts
      of infringement, including the acts of manufacturing, using, offering for
      sale, selling and importing positioner systems that embody the invention
      claimed in the 815 Patent.  The complaint also asks the court to award
      the Company damages, including the Company's lost profits.  Alleging that
      the competitor's infringement is and has been deliberate, willful, and
      wanton, with knowledge of the Company's patent rights, the complaint asks
      the court to award increased damages up to three times the amount
      assessed.  The complaint also seeks an award of interest, costs and
      reasonable attorney fees.

      All legal fees incurred in connection with this matter have been
      expensed.  In the opinion of management, the ultimate disposition of this
      matter will not have a material adverse effect on the Company's financial
      position, results of operations or liquidity.



(16)  QUARTERLY CONSOLIDATED FINANCIAL DATA (Unaudited)

      The following tables present certain unaudited consolidated quarterly
      financial information for each of the eight quarters ended December 31,
      1998.  In the opinion of the Company's management, this quarterly
      information has been prepared on the same basis as the Consolidated
      Financial Statements and includes all adjustments (consisting only of
      normal recurring adjustments) necessary to present fairly the information
      for the periods presented.  The results of operations for any quarter are
      not necessarily indicative of results for the full year or for any future
      period.


                                  F - 25



<PAGE>

                      inTEST CORPORATION AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       (In thousands, except share data)



(16)  QUARTERLY CONSOLIDATED FINANCIAL DATA (Unaudited)

      The Company's business is not seasonal, therefore year-over-year
      quarterly comparisons of the Company's results of operations may not be
      as meaningful as the sequential quarterly comparisons set forth below
      which tend to reflect the cyclical activity of the semiconductor industry
      as a whole.  Quarterly fluctuations in expenses either are related
      directly to sales activity and volume, or tend to be a function of
      personnel costs and the timing of expenses incurred throughout the year.

      
<TABLE>
      <CAPTION>

                                                               Quarters Ended
                                                ---------------------------------------------
                                                 3/31/98     6/30/98     9/30/98    12/31/98      Total
                                                ---------   ---------   ---------   ---------   ---------
      <S>                                       <C>         <C>         <C>         <C>         <C>
      Net revenues                              $   5,626   $   5,163   $   4,449   $   3,837   $  19,075
      Gross margin                                  3,426       3,029       2,331       1,887      10,673
      Earnings (loss) before income tax expense     1,822       1,458         360        (614)      3,026
      Income tax expense                              668         550         133        (252)      1,099
      Net earnings (loss)                           1,154         908         227        (362)      1,927
      Net earnings (loss) per share - basic        $ 0.20      $ 0.15      $ 0.04      $(0.06)     $ 0.31
      Weighted average shares outstanding -
        basic                                   5,911,034   5,911,034   6,311,849   6,536,034   6,169,596
      Net earnings (loss) per share - diluted      $ 0.19      $ 0.15      $ 0.04      $(0.06)     $ 0.31
      Weighted average common and common share
        equivalents outstanding - diluted       5,924,949   5,918,809   6,317,578   6,575,910   6,186,460
      Other comprehensive earnings (expense)    $     (42)  $     (19)  $      19   $     112   $      70

      </TABLE>


      
<TABLE>
      <CAPTION>

                                                              Quarters Ended
                                               ---------------------------------------------
                                                3/31/97     6/30/97     9/30/97    12/31/97      Total
                                               ---------   ---------   ---------   ---------   ---------
      <S>                                      <C>         <C>         <C>         <C>         <C>
      Net revenues                             $   3,887   $   4,619   $   6,212   $   6,028   $  20,746
      Gross margin                                 2,285       2,784       3,893       3,976      12,938
      Pro form earnings before income tax
        expense                                    1,000       1,321       2,190       1,896       6,407
      Pro forma income tax expense                   462         578         924         716       2,680
      Pro forma net earnings                         538         743       1,266       1,180       3,726
      Pro forma net earnings per share-basic      $ 0.13      $ 0.18      $ 0.21      $ 0.20      $ 0.74
      Pro forma weighted average shares
        outstanding - basic                    4,091,034   4,331,034   5,911,034   5,911,034   5,068,349
      Pro forma net earnings per share-diluted    $ 0.13      $ 0.17      $ 0.21      $ 0.20      $ 0.73
      Pro forma weighted average common and
        common share equivalents outstanding-
        diluted                                4,091,034   4,332,242   5,966,413   5,950,235   5,092,490
      Other comprehensive earnings (expense)   $     (61)  $      51   $     (65)  $     (78)  $    (153)

      </TABLE>



                                   F - 26



<PAGE>

                      inTEST CORPORATION AND SUBSIDIARIES
 
               SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS



<TABLE>
<CAPTION>

                                      Balance                       Additions
                                         at      Acquisition   --------------------   Balance at
                                     Beginning       of                    Other        End of
                                     of Period   TestDesign    Expense   Deductions     Period
                                     ---------   -----------   -------   ----------   ----------
<S>                                    <C>          <C>         <C>         <C>          <C>
Year Ended December 31, 1996
  Bad debt reserve                     $ 45         $  -        $ 52        $  1         $ 96
  Inventory obsolescence reserve          -            -          56          56            -
  Warranty reserve                        -            -         196         171           25

Year Ended December 31, 1997
  Bad debt reserve                       96            -          61          13          144
  Inventory obsolescence reserve          -            -         178          59          119
  Warranty reserve                       25            -         147         147           25

Year Ended December 31, 1998
  Bad debt reserve                      144           54          (5)         25          168
  Inventory obsolescence reserve        119           38         193         130          220
  Warranty reserve                       25           20         202         202           45

</TABLE>



                                   F - 27









<PAGE>

                                                            Exhibit 10.9

                       STANDARD LEASE AGREEMENT
                   Industrial Gross - Multi-Tenant

For and in consideration of the rental and of the covenants and agreements
hereinafter set forth to be kept and performed by the Tenant, Landlord hereby
leases to Tenant and Tenant hereby leases from Landlord the Premises described
below in Section 1.2 for the term, at the rental and subject to and upon all of
the terms, covenants and agreements hereinafter set forth.
1.   Basic Lease Provisions.
     1.1   Parties: This Lease, dated for reference purposes only, January 16,
1998 is made by and between Tasman Associates (hereinafter "Landlord") and
Test Design Corporation, a California corporation (hereinafter "Tenant").
     1.2   Premises: Those premises commonly known as 1157 Tasman Drive,
Sunnyvale, California deemed to be approximately 1109 square feet, more or
less, as defined in Paragraph 2 and as shown in Exhibit "A" attached hereto
and made a part hereof (hereinafter the "Premises").
     1.3   Building: Commonly described as being located at 1157-1191 in the
City of Sunnyvale, County of Santa Clara, State of California, as more
particularly shown in Exhibit "A" attached hereto and made a part hereof.
Tenant acknowledges that the sole purpose of any floor plan provided
 herein is
to identify the location of the Premises in the Building. Landlord makes no
representation or warranty in the attached floor plan as to the usable or
rentable square footage of the Premises.
     1.4   Use: Machine shop and related legal uses subject to Paragraph 7.
     1.5   Term: 2 Years, commencing on January 1, 1998 (hereinafter
"Commencement Date") and ending December 31, 1999.
     1.6   Base Rent: One Thousand One Hundred Sixty Four and 45/lOOths Dollars
($1,164.45) per month, payable on the first (1st) day of each month subject to
Paragraph 4 below.
     1.7   Base Rent Increase: On January 1, 1999 the monthly Base Rent payable
under Paragraph 1.6 above shall be adjusted to One Thousand Two Hundred
Nineteen and 90/lOOths Dollars ($1,219.90).
     1.8   Rent Paid Upon Execution: Upon execution of this Lease, Tenant shall
pay the sum of $1,164.45 for the first month's rent.
     1.9   Security Deposit: Upon execution of this Lease, Tenant shall pay to
Landlord the sum of Two Hundred Twenty One and 90/lOOths Dollars ($221.90) as
an increase to the existing security deposit to total One Thousand Two Hundred
Nineteen and 90/lOOths Dollars ($1,219.90), as defined in Paragraph 5 below.
     1.10   Tenant's Share of Operating Expenses: Eleven and fourteen hundreds
percent (11.14%) of the Building and Two and eighteen hundreds percent (2.18%)
of the Project, as defined in Paragraphs 2.2 and 4.2 below.
     1.11   Property Tax Base Year: The Real Property Taxes levied against the
Project, as further defined in Paragraph 6.1 below, for the fiscal year of 1993
- - 1994 shall be considered the "Property Tax Base Year" for calculations
defined in Paragraph 6.1 below.
     1.12   Property Insurance Base Year: The property insurance, as further
defined in Paragraph 13.2 below, paid for the period January 4, 1995 - January
3, 1996 shall be considered the "Property Insurance Base Year" for
calculations defined in Paragraph 13.2 below.
     1.13   Parking: Tenant shall have the non-exclusive use of Four (4)
parking spaces.
     1.14   Additional Lease Provisions: None
     1.15   Work of Improvement. Any obligations of Landlord and Tenant to
perform work and supply material and labor to prepare the Premises for
occupancy shall be set forth in detail in Exhibit B. Landlord and Tenant shall
expend all funds and do all acts required of them in Exhibit B and shall have
the work performed promptly and diligently in a first-class workmanlike manner.

2.   Premises, Parking ,Common Areas, Work of Improvement:
     2.1   Premises. The Premises are a portion of a building, herein sometimes
referred to as the "Building" identified in Paragraph 1.3. "Building" shall
include adjacent parking structures used in connection therewith.  The
Premises, the Building, the Common Areas (as defined below) and the land upon
which the same are located, along with all other buildings and improvements
thereon or thereunder, are herein collectively referred to as the "Project".
     2.2   Vehicle Parking. Tenant shall be entitled to the non-exclusive use
of unreserved and unassigned parking spaces the number of which is specified in
Paragraph 1.13 above, on those portions of the Common Area designed by Landlord
for parking. Tenant shall not use more parking spaces than the number
specified.  Said parking spaces shall be used only for parking by vehicles no
larger than full size passenger automobiles or pick-up trucks, herein called
"Permitted Size Vehicles". Vehicles other than Permitted Size Vehicles are

IG                                                                            1


<PAGE>

herein referred to as "Oversized Vehicles".  Tenant shall not at any time
park or permit the parking of Tenant's vehicles or trucks, or the vehicles or
trucks of Tenant, its employees, invitees, suppliers or others, in any portion
of the Common Area not designated by Landlord for such use by Tenant.  Tenant
shall not abandon any inoperative vehicles or equipment on any portion of the
Common Area, nor shall Tenant, its employees, invitees, suppliers or others
park or store any vehicle (Permitted Size or otherwise) on any portion of the
Common Area, including designated parking areas, unattended for any period
longer than twenty-four (24) hours. If Tenant commits, permits or allows any of
the prohibited activities described in the Lease or the rules then in effect,
then Landlord shall have the right, without notice, in addition to such other
rights and remedies that it may have, to remove or tow away the vehicle
involved and charge the cost to Tenant, which cost shall be immediately paid by
Tenant to Landlord upon demand from Landlord.
     2.3   Common Areas - Definition. The term "Common Areas" is defined as
all areas and facilities outside the Premises and within the exterior boundary
line of the Project that are provided and designated by Landlord from time to
time for the general non-exclusive use of Landlord, Tenant, and the other
tenant and other authorized users of the Project and their respective
employees, suppliers, shippers, customers and invitees. including, but not
limited to common entrances, lobbies, corridors, stairways and stairwells,
public restrooms, elevators, escalators, parking areas to the extent not
otherwise prohibited by this Lease, loading and unloading areas, trash areas,
roadways, sidewalk, walkways, parkways, ramps, driveways, landscaped areas and
decorative walls.
     2.4   Common Areas - Tenant's Rights. Landlord hereby grants to Tenant,
for the benefit of Tenant and its employees, suppliers, shippers. customers and
invitees, during the term of this Lease, the non-exclusive right to use, in
common with others entitled to such use, the Common Areas as they exist from
time to time, subject to any rights, powers, and privileges reserved by
Landlord under the terms hereof or under the terms of any rules and regulations
or restrictions governing the use of the Project. Under no circumstances shall
the right herein granted to use the Common Area be deemed to include the right
to store any property, temporarily or permanently, in the Common Areas or to
construct or install any improvements in the Common Area. Any such storage
shall be permitted only by the prior written consent of Landlord or Landlord's
designated agent, which consent may be revoked at any time. In the event that
any unauthorized storage shall occur, the Landlord shall have the right,
without notice, in addition to such other rights and remedies that it may have,
to remove the property and charge the cost to Tenant, which cost shall be
immediately payable by Tenant to Landlord upon demand by Landlord.  Landlord
shall have the right, without notice, in addition to such other rights and
remedies that it may have, to remove the property and charge the cost to
Tenant, which cost shall be immediately payable by Tenant to Landlord upon
demand by Landlord.
     2.5   Common Areas - Rules and Regulations/CC&R's. Landlord or such other
person(s) as Landlord may appoint, shall have the exclusive control and
management of the Common Areas and shall have the right, from time to time, to
establish, modify, amend and enforce reasonable rules and regulations with
respect thereto. Tenant agrees to abide by and conform to all such rules and
regulations, as well as any private conditions, covenants, and restrictions of
public record now or hereafter affecting the Premises and any amendment
thereof, and to cause its employees, suppliers, shippers, customers and
invitees to abide and conform. Landlord shall not be responsible to Tenant for
the non-compliance with said rules and regulations by other tenants or
authorized users of the Project. Any failure by Tenant or its agents, employees
or representatives to observe and comply with the rules and regulations
established by Landlord with respect to the Common Areas shall be a default by
Tenant hereunder.
     2.6   Common Areas - Changes. Landlord shall have the right at Landlord's
sole discretion, from time to time:
           (a)  To make changes to the Common Areas, including, without
limitation, changes in the location, size, shape and number of driveways
entrances, parking spaces, parking areas, loading and unloading areas, ingress,
egress, direction of traffic, landscaped areas and walkways; (b) To close
temporarily any of the Common Areas for maintenance purposes, so long as
reasonable access to the Premises remains available; (c) To designate other
land outside the boundaries of the Project to be a part of the Common Areas;
(d) To add additional buildings and improvements to the Common Areas; (e) To
use the Common Areas while engaged in making additional improvements, repairs

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or alterations to the Project, or any portion thereof, (f) To close, at
reasonable times, all or any portion of the parking areas for any reasonable
purpose, including without limitation, the prevention of a dedication thereof,
or the accrual of the rights of any person or public therein; and, (g) To do
and perform such other acts and make such other changes in, to or with respect
to the Common Areas and the Project as Landlord may, in the exercise of sound
business judgment, deem to be appropriate.
     Notwithstanding the foregoing, Lessor shall at all times provide the
parking spaces required by applicable law and except as provided immediately
below, in no event shall the number of parking spaces that Tenant is entitled
to under Paragraph 2.2 be reduced. The preceding sentence to the contrary
notwithstanding, in the event by reason of any rule, regulation, order, law,
statute or ordinance of any governmental or quasi-governmental authority
relating to or affecting parking on the Project, or any other cause beyond
Landlord's reasonable control, Landlord is required to have the right to
proportionately reduce the number of Tenant's parking spaces and the non-
exclusive parking spaces of the tenants of the Building.

3.   Term
     3.1   Term. The term (the "Lease Term") and Commencement Date of this
Lease shall be as specified in Paragraph 1.5 of the Basic Lease Provisions,
unless terminated earlier pursuant to this Lease.
     3.2   Delay in Commencement. Tenant agrees that in the event of the
inability of Landlord for any reason to deliver possession of the Premises to
Tenant on said Commencement Date set forth in Paragraph 1.5 of the Basic Lease
Provisions, Landlord shall not be liable for any damage thereby nor shall such
inability affect the validity of this Lease or the obligations of Tenant
hereunder, but in such case Tenant shall not be obligated to pay rent or other
monetary sums until possession of the Premises is tendered to Tenant; provided
that if the delay in delivery of possession exceeds thirty (30) days, then the
expiration date of the term of the Lease shall be extended by the period of
time computed from the scheduled commencement date to the date possession is
tendered. If Tenant occupies the Premises prior to said commencement date, such
occupancy shall be subject to all provisions hereof, such occupancy shall not
advance the termination date, and Tenant shall pay rent for such period at the
initial monthly rates as set forth below.
     3.3   Commencement After Construction. If Landlord is obligated under
Paragraph 1.15 of the Basic Lease Provisions and Exhibit B to perform
construction or remodeling work, then possession shall not be deemed tendered
and the term of this Lease shall not commence until the first to occur of the
following:
     (a)  The date on which all improvements to be constructed by Landlord have
been substantially completed except for punch list items which do not prevent
Tenant from using the Premises for its intended use; such work as Landlord is
required to perform but which is delayed because of fault or neglect of Tenant,
acts of Tenant or Tenant's agents (including, without limitation, delays caused
by work done on the Premises by Tenant or Tenant's agents or by acts of
Tenant's contractors or subcontractors) or delays caused by change orders
requested by Tenant or required because of errors or omissions in plans
submitted by Tenant; and such work as Landlord is required to perform but
cannot complete until Tenant performs necessary portions of construction work
it has elected or is required to do; or,
     (b)  After a Certificate of Occupancy, or its equivalent, is granted by
the proper governmental agency or, if no Certificate of Occupancy, or its
equivalent, is issued by any local agency, then after notification by
Landlord's architect or contractor that Landlord's construction work has been
completed; or
     (c)  Upon the occupancy of the Premises by any of Tenant's operating
personnel.
     3.4   If the term commences on a date other than as set forth in Paragraph
1.5 of the Basic Lease Provisions above, then Landlord and Tenant shall execute
a written acknowledgment stating the date of commencement.

4.   Rent
     4.1   Base Monthly Rent. Tenant shall pay to Landlord as base monthly rent
for the Premises in advance on the first day of each calendar month of the term
of this Lease without deduction, offset, prior notice or demand, in lawful
money of the United States, the sum as defined in Paragraphs 1.6 and 1.7 of the
Basic Lease Provisions (the "Base Rent"). If the Commencement Date is not the
first day of a month, or if the Lease expiration or termination date is not the

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last day of a month, a prorated monthly installment shall be paid at the then
current rate for the fractional month during which the Lease commences and/or
terminates.
     Concurrently with Tenant's execution of this Lease, Tenant shall pay to
Landlord in the form of a Cashier's Check or Certified Check the sum as defined
in Paragraph 1.8 of the Basic Lease Provisions as Base Rent for the period
defined in Paragraph 1.8 of the Basic Lease Provisions.
     4.2   Additional Rent. Commencing on the date set forth in Section 1.5 of
the Basic Lease Provisions above, and continuing throughout the Lease Term,
Tenant shall pay, as additional rent, Tenant's Share (as defined in Section
4.5(a)) of (i) Operating Expenses as required by Section 4.5, 8.1 and 9.2 and
as defined in Paragraph 4.5 below; (ii) Real Property Tax increases over and
above the base year as required by Section 6.1; and, (iii) the cost of any
increased premiums over and above the base year for property insurance,
pursuant to Section 13.2. All Operating Expenses, real property tax increases,
insurance cost increases, late charges, costs, expenses and other sums which
Tenant is required to pay under this Lease, together with all interest and
penalties that may accrue thereon in the event of Tenant's failure to pay such
amounts, and all reasonable damages, costs and attorneys' fees and expenses
which Landlord may incur by reason of any default of Tenant, or failure on
Tenant's part to comply with the terms of this Lease, shall be deemed to be
additional rent ("Additional Rent") and shall be paid in addition to the Base
Rent, and, in the event of non-payment by Tenant, Landlord shall have all the
rights and remedies with respect thereto as Landlord has for the non-payment of
the Base Rent.
     4.3   Late Charges. Tenant hereby acknowledges that late payment by Tenant
to Landlord of Base Monthly Rent, Additional Rent and other sums due hereunder
will cause Landlord to incur costs not contemplated by this Lease, the exact
amount of which will be extremely difficult to ascertain. Such costs include,
but are not limited to, processing, accounting charges and late payment fees
which may be imposed on Landlord by the terms of any mortgage or trust deed
covering the Premises. Accordingly, if any installment of Base Monthly Rent,
Additional Rent or any other sum due from Tenant shall not be received by
Landlord or Landlord's designee within Four (4) days after such amount shall be
due, Tenant shall pay to Landlord as Additional Rent a late charge equal to ten
percent (10%) of such overdue amount. The parties hereby agree that such late
charge represents a fair and reasonable estimate of the costs Landlord will
incur by reason of late payments by Tenant. Acceptance of such late charge by
Landlord shall in no event constitute a waiver of Tenant's default with respect
to such overdue amount, nor prevent Landlord from exercising any of the other
rights and remedies granted hereunder. In no event shall this provision for a
late charge be deemed to grant to Tenant a grace period or extension of time
within which to pay any installment of Base Monthly Rent or Additional Rent or
prevent Landlord from exercising any right or remedy available to Landlord upon
Tenant's failure to make such payment when due. In the event any payment of
Base Monthly Rent or Additional Rent is not received by Landlord by the
thirtieth (30th) day after the due date for such payment or installment, such
payment or installment shall bear interest at the Permitted Rate, as defined in
Paragraph 20.17 below, commencing on the thirty-first (31st) day after the due
date for such payment or installment and continuing until the same is paid.
     4.4   Returned Check Fee. A twenty-five dollar ($25.00) charge will be
paid by Tenant as Additional Rent to Landlord for each check returned unpaid by
the bank and Tenant shall replace the payment with a Cashier's Check or
Certified Check. If Tenant has two (2) or more checks returned for insufficient
funds at any time during its tenancy, Landlord, at its option, may request all
payments, current and future, be made by Cashier's Check or Certified Check.
     4.5   Operating Expenses. Tenant shall pay to Landlord during the term
hereof, in addition to the Base Rent, Tenant's Share, as hereinafter defined,
of all Operating Expenses, as hereinafter defined, during each calendar year of
the term of this Lease, in accordance with the following provisions:
     (a)  "Tenant's Share" is defined, for purposes of this Lease, as the
respective percentages set forth in Paragraph 1.10 of the Basic Lease
Provisions, which percentages have been determined by dividing the approximate
square footage of the Premises by the total approximate square footage of both
the space contained within the Building and all buildings located in the
Project. Tenant's Share used in calculating Tenant's Share of any Operating
Expense shall be determined by the specific charge and its relationship to the
Building versus the Project, which determination shall be made by Landlord in
its reasonable discretion. It is understood and agreed that the square footage
figures set forth in the Basic Lease Provisions are approximate, which Landlord


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and Tenant agree are reasonable and shall not be subject to revision except in
connection with an actual change in the size of the Premises, or a change in
the space available for lease in the Project.
     (b) "Operating Expenses" as defined, for purposes of this Lease, shall
include all costs and expenses incurred by Landlord in connection with the
ownership and operating of the Project, including but not limited to the
following:

        (i)    The operating, repair, maintenance, and replacement in neat,
clean, good order and condition of the following:
               (aa) the Common Areas, including parking areas, loading and
unloading areas, trash areas, roadways, sidewalks, walkways, parkways,
driveways, landscaped areas, striping, bumpers, irrigation systems, Common Area
lighting facilities, electric rooms, elevators, fences and gates;
               (bb) Common Area signage (i.e., address, directional, Project
identity and tenant directories);
               (cc) fire detection systems, including sprinkler systems; and,
               (dd) security services, if provided.
        (ii)   The cost of water, gas, electricity and other utilities to serve
the Common Areas or which are not separately metered to the Premises;
        (iii)  trash disposal services;
        (iv)   reserves set aside for maintenance, repair and/or replacement of
the Common Areas;
        (v)    Real Property Tax increases as provided in Paragraph 6.1;
        (vi)   property insurance increases as provided in Paragraph 13.2;
        (vii)  the cost of liability insurance carried by Landlord with respect
to the Common Areas;
        (viii) any deductible portion of an insured loss concerning the Project
or any portion thereto;
        (ix)   the cast of any capital improvements made to the Building or
Project by Landlord that have the effect of reducing Operating Expenses or
avoiding increases in Operating Expenses or, subject to the terms of Paragraph
9.3(b) below, the cost of any capital improvements that are required under any
governmental law or regulation that was not applicable to the Building at the
time it was constructed, which cost shall be amortized over such reasonable
period of time as Landlord shall determine with interest on the unamortized
balance at the rate often percent (10%) per annum or such higher rate as may
have been paid by Landlord on funds borrowed for the purpose of constructing
such capital improvements;
        (x)    fees for licenses and permits required for the operation of the
Building, Common Areas and Project;
        (xi)   the reasonable cost of contesting the validity or applicability
of any governmental enactment's or assessments, including without limitation
property tax assessments, which may affect Operating Expenses;
        (xii)  the repair, maintenance or patching, but not replacement, of the
roof membrane of the Building; and,
        (xiii) any other services to be provided by Landlord that are stated
elsewhere in this Lease to be an operating expense.
     (c) The inclusion of the improvements, facilities and services set forth
in Paragraph 4.5(b) shall not be deemed to impose an obligation by Landlord to
either have said improvements or facilities or to provide those services.
Without limiting the generality of the foregoing, nothing contained in
Paragraph 4.5(b) or elsewhere in this Lease shall create or imply an obligation
or duty on the part of Landlord to provide any security services or protection
for the Premises, the Building, Common Area and/or the Project.

     (d) Tenant's share of Operating Expenses shall be payable by Tenant within
Thirty (30) days after a reasonably detailed statement of actual expenses is
presented to Tenant by Landlord. At Landlord's option, however, an amount may
be estimated by Landlord from time to time of Tenant's share of annual
Operating Expenses and the same shall be payable monthly or quarterly, as
Landlord shall designate, during the Lease Term herein, on the same day as the
Base Rent is due hereunder. In the event that Tenant pays Landlord's estimate
of Tenant's Share of Operating Expenses as aforesaid, Landlord shall provide
Tenant with a reasonably detailed statement reconciling Tenant's Share of the
actual Operating Expenses. Said detailed statement shall be provided on an
annual basis, or within thirty (30) days of the expiration of this Lease or
Tenant's vacation of the Premises. If Tenant's payments under this Paragraph
4.5 (d) during the preceding year exceed Tenant's Share as indicated on said


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<PAGE>

statement, Tenant shall be entitled to credit the amount of such overpayment
against Tenant's Share of Operating Expenses next falling due. If Tenant's
payments under this Paragraph during said preceding year were less than
Tenant's Share, as indicated on said statement, Tenant shall pay to Landlord
the amount of the deficiency within thirty (30) days after delivery by Landlord
to Tenant of said statement. Tenant has the right to audit the books regarding
additional rent or operating expenses.

5.   Security Deposit. Concurrently with Tenant's execution of this Lease,
Tenant shall deposit with Landlord the sum, as defined in Paragraph 1.9 of the
Basic Lease Provisions outlined above, in the form of a Cashier's Check or
Certified Check payable to Landlord. Said sum shall be held by Landlord as a
security deposit for the faithful performance by Tenant of all of the terms,
covenants, and conditions of this Lease to be kept and performed by Tenant
during the term hereof, including any extension or renewal of the term. If
Tenant defaults with respect to any provisions of this Lease, including but not
limited to the provisions relating to the payment of rent, additional rent and
any of the monetary sums due herewith, Landlord may use, apply or retain all or
any part of this security deposit for the payment of any other amount which
Landlord may spend or become obligated to spend by reason of Tenant's default
or to compensate Landlord for any other loss or damage which Landlord may
suffer by reason of Tenant's default. If any portion of said deposit is so used
or applied, Tenant shall, within ten (10) days after written demand therefore,
deposit cash with Landlord in an amount sufficient to restore the security
deposit to its original amount; Tenant's failure to do so shall be a material
breach of this Lease. Landlord shall not be required to keep this security
deposit separate from its general funds, and Tenant shall not be entitled to
interest on such deposit. If Tenant shall fully and faithfully perform every
provision of this Lease to be performed by it, the security deposit or any
balance thereof shall be returned to Tenant (or, at Landlord's option, to the
last assignee of Tenant's interest hereunder) at the expiration of the Lease
Term and after Tenant has vacated the Premises. In the event of termination of
Landlord's interest in the Lease, Landlord shall transfer said deposit to
Landlord's successor in interest whereupon Landlord shall be automatically
released of all liability for return of such deposit or the accounting
therefore.
     Tenant hereby agrees not to look to the mortgages, as mortgagee, mortgagee
in possession, or successor in title to the property, for accountability for
any security deposit required by the Landlord hereunder, unless said sums have
actually been received by said mortgagee as security for the Tenant's
performance of this Lease. If at any time the Base Rent is increased, the
security deposit shall be increased by the same amount.

6.   Taxation
     6.1   Payment of Real Property Taxes as Additional Rent. Tenant shall pay,
as Additional Rent, Tenant's Share (as defined in Paragraph 4.5(a)) of the
amount, if any, by which Real Property Taxes levied against the Premises, the
Building and/or the Project for any year of the Lease Term exceeds the Real
Property Taxes levied against the Premises, the Building and/or the Project for
the fiscal tax year ended immediately prior to the execution of this Lease (or
if the Premises were not completely constructed as of the end of such fiscal
tax year, then the first fiscal tax year in which the Premises were assessed as
fully completed) (as further defined in Paragraph 1.11 of the Basic Lease
Provisions). Such payment shall be made by Tenant to Landlord within ten (10)
days after receipt of Landlord's written statement setting forth the amount of
such increase and the reasonable computation thereof Tenant's liability for
Real Property Tax Increases shall be prorated to reflect the commencement and
termination dates of this Lease.
     6.2   Definition of "Real Property Tax". For the purpose of this Lease,
"Real Property Taxes" means and includes all taxes, assessments (including,
but not limited to, assessments for public improvements or benefits), taxes
based on vehicles utilizing parking areas, taxes based or measured by the rent
paid, payable or received under this Lease, taxes on the value, use, or
occupancy of the Premises, the Buildings and/or the Parcel, Environmental
Surcharges, and all other governmental impositions, fees and charges of every
kind and nature whatsoever, whether or not customary or within the
contemplation of the parties hereto and regardless of whether the same shall be
extraordinary or ordinary, general or special, unforeseen or foreseen, similar
or dissimilar to any of the foregoing which, at any time during the Lease Term,


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<PAGE>

shall be applicable to the Premises, the Building and/or the Project, or
assessed, levied or imposed upon the Premises, the Building and/or the Project,
or become due and payable and a lien or charge upon the Premises, the Building
and/or the Project, or become due and payable and a lien or charge upon the
Premises, the Building and/or the Project, or any part thereof, under or by
virtue of any present or future laws, statutes, ordinances, regulations or the
term "Property Taxes" shall not include any federal, state or local net
 income, estate, or inheritance tax imposed on Landlord.
     6.3   Personal Property Taxes.
     (a)  Tenant shall pay prior to delinquency all taxes assessed against and
levied upon trade fixtures, furnishings, equipment and all other personal
property of Tenant contained in the Premises or elsewhere. When possible,
Tenant shall cause said trade fixtures, furnishings, equipment and all other
personal property to be assessed and billed separately from the real property
of Landlord.
     (b)  f any of Tenant's personal property shall be assessed with Landlord's
real property, Tenant shall pay to Landlord the taxes attributable to Tenant
within Thirty (30) days after receipt of a written statement setting forth the
taxes applicable to Tenant's property. Tenant has the right to review the tax
statement.
     6.4   Other Taxes. Tenant shall, as Additional Rent, pay or reimburse
Landlord for any tax based upon, allocable to, or measured by the area of the
Premises; or by the rent paid, payable or received under this Lease; any tax
upon or with respect to the possession, leasing, operation, management,
maintenance, alteration, repair, use or occupancy of the Premises or any
portion thereof, any privilege tax, excise tax, business and occupation tax,
gross receipts tax, sales and/or use tax, water tax, sewer tax, employee tax,
occupational license tax imposed upon Landlord or Tenant with respect to the
Premises; any tax upon this transaction or any document to which Tenant is a
party creating or transferring an interest or an estate in the Premises.

7.   Use
     7.1   Use. The Premises shall be used and occupied by Tenant only for the
purpose as set forth in Paragraph 1.4 of the Basic Lease Provisions above and
for no other purpose whatsoever.
     7.2   Suitability. If the Premises are completed as of the date of
execution hereof, then Tenant, by execution of this Lease, shall be deemed to
have accepted the Premises in the condition existing as of the date of
execution and in any event this Lease shall be subject to all applicable zoning
ordinances and to any municipal, county and state laws and regulations
governing and regulating the use of the Premises, and further to have accepted
tenant improvements to be constructed by Landlord, if any, as being completed
in accordance with the plans and specifications for such improvements.  Tenant
acknowledges that neither Landlord nor Landlord's agent has made any
representation, warranty, estimation or promise of any kind as to the
suitability of the Premises for the conduct of Tenant's business, the condition
of the Building or Premises or the use or occupancy which may be made thereof.
Tenant hereby warrants to Landlord that Tenant (i) has made its own
investigation and examination of all the relevant data relating to or affecting
the Premises; (ii) is relying solely on its own judgment in entering into this
Lease; and, (iii) is satisfied that the Premises are suitable for Tenant's
intended use and that the Building and Premises meet all governmental
requirements for such intended use.
     7.3   Uses Prohibited.
     (a)  Tenant shall not do or permit anything to be done in or about the
Premises which will increase the existing rate of insurance upon the Premises
(unless Tenant shall pay any increased premium as a result of such use or acts)
or cause the cancellation of any insurance policy covering said Premises or any
building of which the Premises may be a part, nor shall Tenant sell or permit
to be kept, used or sold in or about said Premises any articles which may be
prohibited by a standard form policy of fire insurance.
     (b)  Tenant shall not do or permit anything to be done in or about the
Premises which will in any way obstruct or interfere with the rights of other
tenants or occupants of any building of which the Premises may be a part or
injure or annoy them or use or allow the Premises to be used for any unlawful
or objectionable purpose, nor shall Tenant cause, maintain or permit any
nuisance in, on or about the Premises. Tenant shall not commit or suffer to be
committed any waste in or upon the Premises and Tenant shall keep the Premises
in a clean, attractive condition, free of any objectionable noises, odors, dust
or debris.


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     (c)  Tenant shall not use the Premises or permit anything to be in or
about the Premises which will in any way conflict with or violate any law,
statute, zoning restriction, ordinance, governmental rule, regulation,
requirements now in force or which may hereafter be enacted or promulgated.  
Tenant shall, at its sole cost and expense, promptly comply with all laws,
statutes, ordinances and governmental rules, regulations or requirements now in
force or which may hereafter be in force and with requirements of any board of
fire underwriters or other similar body now or hereafter constituted relating
to or affecting the condition, use or occupancy of the Premises. Tenant shall
also comply, at its sole cost, with the provisions of all recorded documents
affecting the Premises insofaras the same relate to or affect the condition,
use or occupancy of the Premises. Tenant shall obtain, prior to taking
possession of the Premises, any permits, licenses or other authorizations
required for the lawful operation of its business at the Premises. The judgment
of any court of competent jurisdiction or the admission of Tenant in any action
against Tenant, whether Landlord be a party thereto or not, that Tenant has
violated any law, statute, ordinance or governmental rule, regulation, recorded
document, or requirement, shall be conclusive of that fact as between Landlord
and Tenant. Tenant shall indemnify and hold Landlord harmless from and against
any and all loss, expense, cost, damage, reasonable attorney's fees, penalties
or liability arising out of the failure of Tenant or Tenant's agents or
employees to comply with any applicable law, statute, ordinance, rule,
regulation, order, requirement or recorded document.
     (d)  Tenant shall not store, park or operate any vehicles inside the
Building, other than those operated by electricity.

8.   Utilities And Waste Disposal
     8.1   Utilities. Tenant shall pay as Additional Rent prior to delinquency
for all water, gas, heat, light, power, telephone, sewage, air conditioning and
ventilating, scavenger, trash disposal, janitorial, landscaping and all other
materials and utilities supplied to the Premises and all taxes and surcharges
thereon. If any such services are not separately metered to Tenant, Tenant
shall pay a reasonable proportion of all charges which are jointly metered or
maintained by Landlord as an Operating Expense, the determination to be made by
Landlord, and payment shall be made by Tenant within ten (10) days of receipt
of a statement for such charges. The lack or shortage of any utilities or
services described above due to any cause whatsoever shall not affect any
obligation of Tenant hereunder, and Tenant shall faithfully keep and observe
all the terms, conditions and covenants of this Lease and pay all rentals due
hereunder, all without diminution, credit or deduction.

     8.2   Waste Disposal. Tenant shall store its waste either inside the
Premises or in its own dumpsters located within outside trash enclosures.  
Tenant shall not store, place or maintain any garbage, trash, rubbish, other
refuse or Tenant's personal property in any area of the Common Area or exterior
of the Premises at any time. Tenant, at its sole expense, shall be responsible
to maintain and keep the designated trash enclosures and Common Area free of
garbage, trash, rubbish, other refuse or Tenant's personal property.

9.   Maintenance and Repairs, Alterations and Additions
     9.1   Landlord's Obligations. Subject to the provisions of Section 14 and
except for damage caused by a negligent or intentional act or omission of
Tenant and Tenant's agents, employees or invitees, Landlord, at Landlord's
expense, shall keep in good order, condition and repair the foundations,
exterior walls and the exterior roof of the Premises. Landlord shall not,
however, be obligated to paint such exterior, nor shall Landlord be required to
maintain the interior surface of exterior walls, ceiling or doors, nor shall
Landlord be required to maintain, repair or replace windows, doors, skylights
or plate glass. Landlord shall have no obligation to make repairs under this
Paragraph 9.1 until a reasonable time after receipt of written notice of the
need for such repairs. Landlord shall maintain, repair or patch the roof
membrane (as an Operating Expense), and Tenant shall pay Tenant's Share of the
cost thereof, pursuant to Paragraph 4.5 above. Tenant expressly waives the
benefits of any statute (including, without limitation, the provisions of
subsection I of Section 1932, Section 1941 and Section 1942 of the California
Civil Code and any similar law, statute or ordinance now or hereafter in
effect) which would otherwise afford Tenant the right to make repairs at
Landlord's expense (or to deduct the cost of such repairs from rent due
hereunder) or to terminate this Lease because of Landlord's failure to keep the
Premises in good order, condition and repair.


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     9.2   Tenant's Obligations.
     (a)  Subject to the provisions of Sections 9.1 and 14, Tenant, at Tenant's
expense, shall maintain in good order, condition and repair the Premises and
every part thereof, regardless of whether the damaged portion of the Premises
or the means of repairing the same are accessible to Tenant, including, but not
limited to floors, ceilings, windows, doors, skylights, interior walls, and the
interior surfaces of the exterior walls, plumbing, heating, air conditioning
and ventilating equipment, telecommunications equipment and intrabuilding
network cabling, electrical and lighting facilities and equipment including
circuit breakers and exterior lighting attached to the Premises. In addition,
Landlord shall, at Tenant's expense, maintain in good order, condition and
repair any sidewalks, landscaping (including but not limited to irrigation
systems and backflow prevention devices), driveways, parking lots, fences and
signs located in the areas which are adjacent to and included with the
Premises, unless such items are to be maintained by Landlord as an Operating
Expense, pursuant to Paragraphs 4.5, 8.1 and 9.1 above. Where there is any
rooftop mounted heating and/or air conditioning equipment, said maintenance
shall include, without limitation, a periodic agreement with a reputable and
licensed heating and air conditioning service company. If Tenant's use of the
Premises is limited to normal business hours (8:00 am to 6:00 pm), such
agreement shall provide for service at least as often as every ninety (90)
days. If Tenant's use extends beyond normal business hours, this service shall
be as often as may be required by Landlord. If Tenant does not provide Landlord
with a copy of said maintenance contract within sixty (60) days from
commencement date set forth in Paragraph 1.5 of the Basic Lease Provisions and
Section 3.1 above, Landlord may elect, at its option, to keep and maintain the
heating and air conditioning systems of the Premises and in such event, Tenant
shall pay to Landlord upon demand the full cost of such maintenance and repairs
to such systems.
     (b)  All glass in or around the building, 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
according to the current local code.
     (c)  In the event the Premises is damaged due to an attempted burglary or
forcible entry into Premises, Tenant shall be responsible for any ensuing
damage to the Premises or that larger building of which Premises is part
thereof.
     (d)  In the event Tenant fails to perform Tenant's obligations under this
Section 9, Landlord shall give Tenant notice to do such acts as are reasonably
required to so maintain the Premises. If Tenant, within ten (10) days after
notice from Landlord, fails to commence to do the work and diligently prosecute
it to completion, then Landlord shall have the right (but not the obligation)
to do such acts and expend such funds at the expense of Tenant as are
reasonably required to perform such work. Any amount so expended by Landlord
shall be paid by Tenant promptly after demand with interest at the Permitted
Rate from the date of such work until paid. Landlord shall have no liability to
Tenant for any damage, inconvenience or interference with the use of the
Premises by Tenant as a result of performing any such work.
     (e)  Upon the expiration or earlier termination of this Lease, Tenant
shall surrender the Premises in the same condition as received, broom clean,
ordinary wear and tear and damage by fire, earthquake, act of God or the
elements alone excepted. On the last day of the Lease Term or upon the sooner
termination of the Lease, Tenant shall, to the reasonable satisfaction of
Landlord surrender the Premises in good condition (and free of all Hazardous
Materials used, generated or stored by Tenant and its agents, employees and
contractors) the HVAC equipment inspected and in good working order, Tenant
further agrees to remove all Tenant's personal property and trade fixtures from
the Premises and repair any damage to the Premises caused by or in connection
with the removal of any articles of personal property, business or trade
fixtures, machinery, equipment or furniture, including without limitation
thereto, repairing the floor and patching and painting the walls where required
by Landlord to Landlord's reasonable satisfaction. Tenant agrees that all
Tenant's personal property and trade fixtures not removed shall be deemed to be
abandoned by Tenant and may be removed by Landlord at Tenant's expense. Tenant
shall continue to pay rent at the rate paid by Tenant prior to the termination
of the Lease until such time that the Premises are returned in a condition as
required above; however, said payment of rent does not constitute an extension
or renewal of lease nor does it constitute a month-to-month tenancy, it shall


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<PAGE>

constitute immediate compensation for Tenant's detention of the Premises and
does not preclude Landlord from obtaining additional monetary damages for
Tenant's delay in surrendering the Premises, as set forth below. Tenant shall
indemnify the Landlord against any loss or liability resulting from delay by
Tenant in so surrendering the Premises, including without limitation, any
claims made by any succeeding tenant founded on such delay.
     9.3   Alterations.
     (a)  Tenant shall not construct any improvements or additions or otherwise
alter, change or improve the Premises without Landlord's prior written
approval, and not until Landlord shall have first approved the plans and
specifications therefor, which approvals shall not be unreasonably withheld.
Landlord's approval of the plans, specifications and working drawings for
Tenant's alterations shall create no responsibility or liability on the part of
Landlord for their completeness, design sufficiency, or compliance with all
laws, rules and regulations of governmental agencies or authorities. All such
approved alterations, or improvements shall be installed by Tenant at Tenant's
expense using a licensed contractor first approved by Landlord in compliance
with the approved plans and specifications therefor and in strict accordance
with all laws. All such construction shall be done in a good and workmanlike
manner using new materials of good quality. As a condition to consenting to any
leasehold improvement or alteration or change requested by Tenant, the cost of
which may exceed Twenty-five Thousand Dollars ($25,000), Landlord shall have
the right to require Tenant to post a completion bond in an amount and in a
form satisfactory to Landlord. In no event shall Tenant make any structural
changes to the Premises or make any changes to the Premises which would weaken
or impair the structural integrity of the Building or the roof membrane
integrity of the Building. Tenant shall not commence construction of any
alterations, additions, or 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, and (iii) Tenant shall
have given Landlord at least five (5) days prior written notice of its
intention to commence such construction. All alterations, additions and
improvements constructed by Tenant shall remain the property of Tenant during
the Lease Term but shall not be damaged, altered, or removed from the Premises.
At the expiration or sooner termination of the Lease Term, all alterations,
additions, or improvements shall be surrendered to Landlord as a part of the
realty and shall then become Landlord's property, and Landlord shall have no
obligation to reimburse Tenant for all or any portion of the value or cost
thereof, however, Landlord may, at its option, require Tenant to remove any
alterations, additions, or improvements in which case Tenant shall so remove
such alterations, additions or improvements prior to the expiration or sooner
termination of the Lease Term.
     (b)  Alterations Required by Law. If during the term of this Lease, any
alteration, addition or change of any sort, whether structural or otherwise to
all or any portion of the Premises is required by law (including, but not
limited to, alterations required by the Americans with Disabilities Act of 1990
or any amendments thereto or any regulations prorogated thereunder
(collectively the "ADA") because of (i) Tenant's use or occupancy of the
Premises or change of use or occupancy of the Premises, (ii) Tenant's
application for any permit or governmental approval, (iii) Tenant's
construction or installation of any leasehold improvements or trade fixtures,
(iv) any violation by Tenant of any Law (including any requirement of the ADA),
(v) any special use of the Premises or any part thereof by Tenant or any
subtenant or assignee of Tenant (including, but not limited to any use for a
facility which constitutes, or if open to the public would generally constitute
a "place of public accommodation" under the ADA requirements), or (vi) any
special needs of the employees of Tenant or any assignee or subtenant of
Tenant, then Tenant shall promptly make the same at its sole cost and expense.
Within ten (10) days after receipt, Tenant shall notify Landlord in writing and
provide Landlord with copies of (i) any notices alleging any violation of any
Law relating to the Premises or Tenant's occupancy or use of the Premises,
including any notices alleging violation-of the relating ADA to any portion of
the Project or the Premises; (ii) any claims made or threatened in writing
regarding non-compliance with the ADA or any Law relating to the Project or the
Premises; or (iii) any governmental or regulatory actions or investigations
instituted or threatened regarding non-compliance with the ADA or any Law
relating to any portion of the Project or the Premises.


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10.  Entry by Landlord
     Landlord and Landlord's agents shall have the right at reasonable times to
enter the Premises to inspect the same or to maintain or repair, make
alterations or additions to the Premises or any portion thereof or to show the
Premises to prospective purchasers, tenants or lenders. Landlord may, at any
time, place on or about the Premises any ordinary "for sale" signs; Landlord
may at any time during the last one hundred eighty (180) days of the term of
the Lease place on or about the Premises any ordinary "for lease" signs.  
Tenant hereby waives claim for abatement of rent or for damages for any injury
or inconvenience to or interference with Tenant's business, any loss of
occupancy or quiet enjoyment of the Premises, and any other loss occasioned
thereby.

11.  Liens
     Tenant shall keep the Premises and any building of which the Premises are
a part free from any liens arising out of work performed, materials furnished
or obligations incurred by Tenant and shall indemnify, hold harmless and defend
Landlord from any liens and encumbrances arising out of any work performed or
materials furnished to or at the direction of Tenant. In the event that Tenant
shall not, within twenty (20) days following the imposition of any such liens,
cause such lien to be released of record by payment or posting of a proper
bond, Landlord shall have, in addition to all other remedies provided herein
and by law, the right, but not the obligation, to cause the same to be released
by such means as it shall deem proper, including payment of the claim giving
rise to such lien. All such sums paid by Landlord and all expenses incurred by
it in connection therewith including attorneys' fees and costs shall be payable
to Landlord by Tenant on demand with interest at the Permitted Rate (as defined
in Paragraph 20.17 below). Landlord shall have the right at all times to post
and keep posted on the Premises any notices permitted or required by law, or
which Landlord shall deem proper, for the protection of Landlord and the
Premises, and any other party having an interest therein, from mechanics' and
material person's liens and Tenant shall give to Landlord at least ten (10)
business days prior written notice of the expected date of commencement of any
work relating to alterations, improvements or additions to the Premises.

12.  Indemnity
     12.1  Indemnity. Tenant agrees to indemnify, protect and defend Landlord
and Landlord's Agents and Lenders against and hold Landlord and Landlord's
Agents and Lenders harmless from any and all claims, causes of action,
judgments, obligations or liabilities and all reasonable expenses incurred in
investigating or resisting the same (including reasonable attorneys' fees), on
account of, or arising out of (i) the operation, condition, maintenance, use or
occupancy of the Premises, (ii) any bodily injury, death or property damage
occurring in or about the Premises, (iii) any act, omission or neglect of
Tenant or its Agents, or (iv) any breach or default in the performance in a
timely manner of any obligation on Tenant's part to be performed under this
Lease. In the event any action or proceeding is brought against Landlord by
reason of any such claim, Tenant upon notice from Landlord shall defend same at
Tenant's expense by counsel satisfactory to Landlord. Tenant, as a material
part of the consideration to Landlord, hereby assumes all risk of damage to
property or injury to persons, in, upon or about the Premises arising from any
cause and Tenant hereby waives all claims in respect thereof against Landlord.
The provisions of this Paragraph 12.1. shall survive termination of the Lease
with respect to any damage, injury or death occurring or accruing prior to such
termination.
     12.2  Exemption of Landlord from Liability. Landlord shall not be liable
for injury and Tenant waives all claims against Landlord to Tenant's business
or loss of income therefrom or for damage which may be sustained by the person,
goods, wares, merchandise or property of Tenant, its employees, invitees,
customers, agents or contractors or any other person in or about the Premises,
caused by or resulting from fire, steam, electricity, gas, water or rain, which
may leak or flow from or into any part of the Premises, or from the breakage,
leakage, obstruction or other defects of the pipes, sprinklers, wires,
appliances, plumbing, air conditioning or lighting fixtures of the same,
whether the said damage or injury results from conditions arising upon the
Premises or upon other portions of the building of which the Premises are a
part, or from other sources or places and regardless of whether the cause of
such damage or injury or the means of repairing the same is inaccessible to
Tenant. Landlord shall not be liable for any damages arising from any act or
neglect of any other tenant, if any, of the Building in which the Premises are
located, or of the Project.

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13.  Insurance
     13.1  Tenant's Insurance. Tenant shall, at its own expense, maintain in
full force and effect during the Lease Term the following insurance:
     (a)  Tenant shall maintain a policy or policies of comprehensive general
liability insurance, including fire and property damage carried with a company
or companies satisfactory to Landlord, which will insure Tenant and Landlord
(and such others as are designated by Landlord) against liability for personal
injury, bodily injury, death, and damage to property (including but not limited
to, Tenant's personal property, inventory, trade fixtures and improvements
constructed by Tenant within the Premises with coverage for the full actual
replacement cost thereof), occurring in or about, or resulting from any
occurrence in or about, the Premises or use or occupancy of the Premises (and
Tenant's operations on the Premises) or arising out of Tenant's or its agents',
employees', or representatives' use of the building, Common Areas or Project
with combined single limit coverage of not less than one million dollars
($l,000,000.00). Such comprehensive general liability insurance shall be
extended to include a "blanket contractual liability" endorsement insuring
Tenant's performance of Tenant's obligation to indemnify Landlord contained in
Section 12.1 and all of the other broadened liability features normally
contained in an extended liability endorsement. If Landlord's lender, insurance
advisor or counsel reasonably determines at any time that the amount of such
coverage is not adequate, Tenant shall increase such coverage to such amount as
Landlord's lender, insurance advisor or counsel reasonably deems adequate.  The
limits of such insurance shall not limit the liability of Tenant. Tenant shall
deliver to Landlord, prior to possession, and at least thirty (30) days prior
to the expiration of any policy, a certificate of insurance evidencing the
existence of the policy required hereunder and such certificate shall certify
that the policy (i) names Landlord as additional insured, (ii) shall not be
canceled or reduced in coverage without thirty (30) days prior written notice
to Landlord, (iii) insures performance in the indemnity set forth in Paragraphs
12.1 and 19.5 above (including, provided Tenant uses Hazardous Materials
pursuant to Paragraph 19 above, without limitation, "Pollution Liability" );
(iv) provides coverage which is primary and not contributing with and not in
excess of coverage which Landlord may carry; and (v) contains a cross-liability
endorsement. In the event Tenant fails to procure and maintain such insurance,
Landlord may (but shall not be required to) procure same at Tenant's expense
after ten (10) days prior written notice. No such policy shall be cancelable or
subject to reduction of coverage or other modification except after thirty (30)
days prior written notice to Landlord by the insurer. All such policies shall
be written as primary policies, not contributing with and not in excess of
coverage which Landlord may carry. Tenant shall have the right to provide such
insurance coverage pursuant to blanket policies obtained by Tenant provided
such blanket policies expressly afford coverage to the Premises and to Tenant
as required by this Lease.
     (b)  Tenant, at its sole cost, shall procure and maintain in force during
the Lease term, "all-risk" property insurance, including vandalism, boiler
and machinery, sprinkler damage, and malicious mischief on all leasehold
improvements installed in the Premises by Tenant at its expense and all
equipment, trade fixtures, inventory fixtures and personal property located on,
in or about the Premises. Such insurance shall be an amount equal to the full
replacement cost of the aggregate of the foregoing.
     (c)  The policies required to be maintained by Tenant pursuant to
subparagraphs (a) and (b) above shall be with companies, on forms, with
deductible amounts (if any) and loss payable clauses satisfactory to Landlord
and shall include Landlord and the beneficiary of any deed of trust encumbering
the Premises as additional insureds, and shall provide that such parties may,
although additional insureds, recover for any loss suffered by Tenant's
neglect.
     13.2  Property Insurance. Landlord shall obtain and keep in force during
the term of this Lease a policy or policies of insurance covering loss or
damage to the Premises, the Building and all other buildings located in the
Project, in the amount of full replacement cost thereof, including protection
against those perils included within the classification of "all risk"
insurance plus a policy of rental income insurance in the amount of 100% of 12
months rent (including, without limitation, sums payable as Additional Rent)
plus, at Landlord's option, flood insurance and earthquake insurance and any
other coverages which may be required from time to time by Landlord's Lender.
Tenant shall have no interest in nor any right to the proceeds of any insurance
procured by Landlord on the Premises, the Building or the project.  Landlord
shall not be required to cause such insurance to cover any of Tenant's personal


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<PAGE>

property, inventory, trade fixtures or any modifications, alterations or
improvements made or constructed by Tenant to or within the Premises. During
the term of this Lease, Tenant shall pay to Landlord, as Additional Rent,
Tenant's Share (as defined in Paragraph 4.5(a) above) of the amount of any
increase in premium for the insurance maintained by Landlord under this
Paragraph 13.2 over and above the premium paid for such insurance by Landlord
during the first full year of the term of this Lease ("Property Insurance Base
Year", as further defined in Paragraph 1.12 of the Basic Lease Provisions)
including, without limitation, any increase in premium due to Lender's
requirements or increase in insured value . Tenant shall pay such increases to
Landlord within ten (10) days after receipt by Tenant of a copy of the premium
statement or other reasonably satisfactory evidence of the amount due, which
shall include the method of calculation of Tenant's share thereof if the
insurance covers other improvements than the Premises. If the term of this
Lease does not expire concurrently with the expiration of the period covered by
the insurance, Tenant's liability for premium increases shall be prorated on an
annual basis.
     13.3  Mutual Waiver of Subrogation. Tenant and Landlord hereby mutually
waive their respective rights of recovery against each other of any loss of or
damage to the property of either party, to the extent such loss or damage is
covered by any insurance policy required to be maintained by this Lease or
otherwise in force at the time of such loss or damage. Each party shall obtain
any special endorsements, if required by the insurer, whereby the insurer
waives its right of subrogation against the other party hereto.  The provisions
of this Subparagraph 13.3 shall not apply in those instances in which the
waiver of subrogation would cause either party's insurance coverage to be
voided or otherwise made uncollectible; or, if any such insurance policy cannot
be obtained with such a waiver of subrogation, then the party obtaining such
insurance shall notify the other party of that fact and thereon shall be
relieved of the obligation to obtain such a waiver of subrogation rights from
the insurer with respect to the particular insurance involved.

14.  Damage or Destruction
     14.1  Partial Damage-Insured. Subject to the provisions of Paragraphs 12
and 13 above, and if at any time during the term of this Lease there is partial
damage to the Premises that is not caused by the fault, omission, or negligence
of Tenant, its agents, employees, contractors, or invitees, which is covered
under an insurance policy required to be maintained pursuant to Section 13.2,
then Landlord shall repair such damage as soon as reasonably possible and this
Lease shall continue in lull force and effect. If there is a monetary
deductible applicable to the aforementioned insurance policy coverage which is
required to be paid prior to coverage of such casualty or damage, it shall be
the sole responsibility for Tenant to reimburse Landlord for said monetary
deductible. Tenant shall reimburse Landlord within thirty (30) days of receipt
by Tenant of a copy of the monetary deductible statement. In the event of
damage to the Premises or the Building by fire or other causes resulting from
fault, omission or negligence of Tenant, its agents, employees, contractors, or
invitees, such damage shall be promptly reported to Landlord and shall be
repaired by and at expense of Tenant under direction and supervision of
Landlord and there shall be no abatement of rent during the period of repair.
Tenant shall indemnify and hold harmless Landlord from and against any damages,
injuries, losses, claims, liabilities or causes of action arising out of or
relating to the repair or restoration of the Premises or Building.
     14.2  Partial Damage--Uninsured. In the event the improvements on the
Premises are damaged, except by a negligent or willful act or omission of
Tenant or from an attempted burglary or forcible entry pursuant to Section 9.2
(c), by any casualty not covered under an insurance policy required to be
maintained pursuant to Section 13.2, then Landlord may, at Landlord's option,
either (a) repair such damage as soon as reasonably possible at Landlord's
expense, in which event this Lease shall continue in full force and effect or
(b) give written notice to Tenant within thirty (30) days after the date of
occurrence of such damage of Landlord's intention to cancel and terminate this
Lease as of the date of the occurrence of the damage. In the event Landlord
elects to terminate this Lease pursuant to this Section 14.2, Tenant shall have
the right within ten (10) days of receipt of the required notice to notify
Landlord, in which event this Lease shall continue in full force and effect,
and Tenant shall proceed to make such repairs as soon as reasonably possible
(or Landlord may elect, in its sole discretion, to require Tenant to pay to
Landlord within ten (10) days following written request therefor, or furnish



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evidence reasonably satisfactory to Landlord of Tenant's ability to fund that
portion of the cost of such repair or restoration which is not covered by
insurance proceeds, in which event Landlord shall proceed to make such
repairs). If Tenant does not give such notice within the ten (10) day period,
this Lease shall be canceled and terminated as of the date of the occurrence of
such damage. All insurance proceeds available from the fire and property damage
insurance carried by Landlord pursuant to Section 13.2 shall be paid to and
become the property of Landlord. If this Lease is not so terminated, then upon
receipt of the insurance proceeds (if the loss is covered by insurance) and the
issuance of all necessary governmental permits, Landlord shall commence and
diligently prosecute to completion the restoration of the leased Premises, to
the extent then allowed by law, to substantially the same condition in which
the leased Premises was immediately prior to such damage. Landlord's obligation
to restore shall be limited to the building and interior improvements
constructed by Landlord as they existed as of the commencement date. Landlord's
obligation to repair or restore the Premises shall not include restoration of
Tenant's trade fixtures, equipment, merchandise, or any improvements
alterations or additions made by Tenant to the Premises.
     14.3  Total Destruction. If the Premises are totally destroyed during the
term of this Lease from any cause whether or not covered by the insurance
required under Section 13.2 (including any destruction required by any
authorized public authority), this Lease, at Landlord's option, may
automatically terminate as of the date of such total destruction.  If Lease is
not terminated pursuant to this Section, Landlord shall immediately begin the
process of reconstructing the Premises and all rent for the Premises shall be
abated during the period of reconstruction.
     14.4  Damage Near End of the Term. If the Premises are partially destroyed
or damaged during the last six (6) months of the term of this Lease, Landlord
may at Landlord's option cancel and terminate this Lease as of the date of
occurrence of such damage by giving written notice to Tenant of Landlord's
election to do so within thirty (30) days after the date of occurrence of such
damage. Tenant's obligation to pay rent shall cease on effective cancellation
date.
     14.5  Landlord's Obligations. The Landlord shall not be required to repair
any injury or damage by fire or other cause, or to make any restoration or
replacement of any paneling, decorations, office fixtures, partitions,
railings, ceilings, floor covering, equipment, machinery or fixtures or any
other improvements or property installed in the Premises by Tenant or at the
direct or indirect expense of Tenant. Tenant shall be required to restore or
replace same in the event of damage.
     14.6  Abatement of Rent; Tenant's Remedies.
          (a) If the Premises are partially destroyed or damaged and Landlord
or Tenant repairs them pursuant to this Lease, the rent payable hereunder for
the period during which such damage and repair continues shall be abated in
proportion to the extent to which Tenant's use of the Premises is impaired;
provided, however there shall be no abatement of rent if the damage or
destruction was caused by the fault, omission, negligence or willful misconduct
of Tenant or any of its agents, employees or representatives. Except for
abatement of rent, if any, Tenant shall have no claim against Landlord for any
damage suffered by reason of any such damage, destruction or restoration.
          (b) If Landlord shall be obligated to repair or restore the Premises
under this Section 14 and shall not commence such repair or restoration within
ninety (90) days after such obligation shall accrue, Tenant, at Tenant's
option, may cancel and terminate this Lease by written notice to Landlord at
any time prior to the commencement of such repair or restoration.  In such
event, the Lease shall terminate as of the date of such notice.
     14.7  Termination--Advance Payments. Upon termination of this Lease
pursuant to Section 14, an equitable adjustment shall be made concerning
advance rent and any advance payments made by Tenant to Landlord. Landlord
shall, in addition, return to Tenant so much of Tenant's security deposit as
has not therefore been applied by Landlord.

15.  Condemnation
     15.1  Definition of Terms. For the purposes of this Lease, the term (1)
"Taking" means a taking of the Premises or damage to the Premises related to
the exercise of the power to eminent domain and includes a voluntary conveyance
in lieu of court proceedings, to any agency, authority, public utility, person
or corporate entity empowered to condemn property; (2) "Total Taking" means
the taking of the entire Premises or so much of the Premises as to prevent or
substantially impair the use thereof by Tenant for the uses herein specified;


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<PAGE>

(3) "Partial Taking" means the taking of only a portion of the Premises which
does not constitute a Total Taking; (4) "Date of Taking" means the date upon
which the title to the Premises, or a portion thereof, passes to and vests in
the condemnor or the effective date of any order for possession if issued prior
to the date title vests in the condemnor, and (5) "Award" means the amount of
any award made, consideration paid, or damages ordered as a result of a Taking.
     15.2  Rights. The parties agree that in the event of a Taking all rights
between them or in and to an Award shall be as set forth herein and Tenant
shall have no right to any Award except as set forth herein.
     15.3  Total Taking. In the event of a Total Taking during the term hereof;
(1) the rights of Tenant under the Lease and the leasehold estate of Tenant in
and to the Premises shall cease and be terminated as of the date of Taking; (2)
Landlord shall refund to Tenant any prepaid rent; (3) Tenant shall pay to
Landlord any rent or charges due Landlord under the Lease, each prorated as of
the Date of Taking; (4) To the extent the Award is not payable to the
beneficiary of any mortgage affecting the Premises, Tenant shall receive from
the Award those portions of the Award attributable to trade fixtures of Tenant;
and (5) the remainder of the Award shall be paid to and be the property of
Landlord.
     15.4  Partial Taking. In the event of a Partial Taking during the term
hereof, (1) the rights of Tenant under the Lease and the leasehold estate of
Tenant in and to the portion of the Premises taken shall cease and terminate as
of the Date of Taking; (2) from and after the Date of Taking the monthly
installment of rent shall be an amount equal to the product obtained by
multiplying the monthly installment of rent immediately prior to the Taking by
the quotient obtained by dividing the number of square feet of floor area
contained in the Premises after the Taking by the number of square feet of
floor area contained in the Premises prior to the Taking; (3) To the extent the
Award is not payable to the beneficiary of any mortgage affecting the Premises,
Tenant shall receive from the Award the portions of the Award attributable to
trade fixtures of Tenant, and (4) the remainder of the Award shall be paid to
and be the property of Landlord. Each party waives the provisions of California
Code of Civil Procedure Section 1265.130 allowing either party to petition the
Superior Court to terminate this Lease in the event of a Partial Taking.

16.  Assignment & Subletting
     16.1  Landlord's Consent Required. Tenant's interest in this Lease is not
assignable, by operation of law or otherwise, nor shall Tenant have the right
to sublet the Premises, transfer any interest of Tenant therein or permit any
use of the Premises by another party, without the prior written consent of
Landlord to each such assignment, subletting, transfer or use, which consent
Landlord agrees not to withhold unreasonably subject to the provisions of
Subparagraph 16.3 below. A consent to one assignment, subletting, occupancy or
use by another party shall not be deemed to be a consent to any subsequent
assignment, subletting, occupancy or use by another party. Any assignment or
subletting without such consent shall be void and shall, at the option of
Landlord, terminate this Lease.
     Landlord's waiver or consent to any assignment or subletting hereunder
shall not relieve Tenant from any obligation under this Lease unless the
consent shall so provide.
     16.2  Transferee Information Required. If Tenant desires to assign its
interest in this Lease or sublet the Premises, or transfer any interest of
Tenant therein, or permit the use of the Premises by another party (hereinafter
collectively referred to as a "Transfer"), Tenant shall give Landlord at
least fifteen (15) business days prior written notice of the proposed Transfer
and of the name and legal composition of the proposed transferee, a financial
statement of the proposed transferee, the nature of the (including a list of
the type and quantities of all Hazardous Materials to be used by the transferee
on the Premises), the payment to be made or other consideration to be given to
Tenant on account of the Transfer, and such other pertinent information as may
be requested by Landlord, all in sufficient detail to enable Landlord to
evaluate the proposed Transfer and the prospective transferee.
     16.3  Landlord's Rights. It is the intent of the parties hereto that this
Lease shall confer upon Tenant only the right to use and occupy the Premises,
and to exercise such other rights as are conferred upon Tenant by this Lease.
The parties agree that this Lease is not intended to have a bonus value nor to
serve as a vehicle whereby Tenant may profit by a future Transfer of this Lease
or the right to use or occupy the Premises as a result of any favorable terms
contained herein, or future changes in the market for leased space.  It is the
intent of the parties that any such bonus value that may attach to this Lease


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<PAGE>

shall be and remain the exclusive property of Landlord, except as provided in
Paragraph 16.3(b) below. In the event Tenant seeks to Transfer its interest in
this Lease or the Premises, Landlord shall have the following options, which
may be exercised at its sole choice without limiting Landlord in the exercise
of any other right or remedy which Landlord may have by reason of such proposed
Transfer.
     (a)  In the event of a Transfer constituting either an assignment of the
entire Lease or a sublease of substantially all of the Premises for the balance
of the Lease Term, Landlord may elect to terminate this Lease effective as of
the proposed effective date of the proposed Transfer and release Tenant from
any further liability hereunder accruing after such termination date by giving
Tenant written notice of such termination within fifteen (15) days after
receipt by Landlord of Tenant's notice of intent to Transfer as provided above.
If Landlord makes such election to terminate this Lease, Tenant shall surrender
the Premises, in accordance with Paragraph 9.2(e), on or before the effective
termination date; or
     (b)  Landlord may consent to the proposed Transfer on the condition that
Tenant agrees to pay to Landlord, as additional rent, seventy-five percent
(75%) of any and all rents or other consideration (including key money)
received by Tenant from the transferee by reason of such Transfer in excess of
the rent payable by Tenant to Landlord under this Lease (less any brokerage
commissions, attorneys' fees and advertising expenses incurred by Tenant in
connection with the Transfer). Tenant expressly agrees that the foregoing is a
reasonable condition for obtaining Landlord consent to any Transfer: or
     (c)  Landlord may reasonably withhold its consent to the proposed
transfer.
     16.4  Attorneys' Fees. In the event Landlord shall consent to a sublease
or assignment under this Section 16, Tenant shall pay Landlord's reasonable
attorneys' fees not to exceed $500.00 incurred in connection with giving such
consent.

17.  Subordination. The following provisions shall govern the relationship of
this Lease to any underlying lease, mortgage or deed of trust which now or
hereafter affects the Premises or Landlord's interest or estate therein and any
renewal, modification, consolidation, replacement, or extension thereof (a
"Security Instrument").
     17.1  Priority. This Lease is subject and subordinate to all Security
Instruments existing as of the Commencement Date. However, if any Lender so
requires, this Lease shall become prior and superior to any such Security
Instrument.
     17.2  Subsequent Security Instruments. At Landlord's election, this Lease
shall become subject and subordinate to any Security Instrument created after
the Commencement Date. Notwithstanding such subordination, Tenant's right to
quiet possession of the Premises shall not be disturbed so long as Tenant is
not in default and performs all of its obligations under this Lease, unless
this Lease is otherwise terminated pursuant to its terms.
     17.3  Documents. Tenant shall execute any reasonable document or
instrument required by Landlord or any Lender to make this Lease either prior
or subordinate to a Security Instrument, which may include such other matters
as the Lender customarily requires in connection with such agreements,
including provisions that the Lender, if it succeeds to the interest of
Landlord under this Lease, shall not be (i) liable for any act or omission of
any prior landlord (including Landlord), (ii) subject to any offsets or
difference which Tenant may have against any prior landlord (including
Landlord), (iii) bound by any rent or additional rent paid more than one (1)
month in advance of the date due under this Lease, (iv) liable for any defaults
on the part of Landlord occurring prior to the time that Lender takes
possession of the Premises in connection with enforcement of its Security
Instrument, (v) liable for the return of any security deposit unless such
deposit has been delivered to Lender, and (vi) bound by any agreement or
modification of the Lease made without the prior written consent of the Lender.
     17.4  Tenant's Attornment. Tenant shall attorn (1) to any purchase of the
Premises at any foreclosure sale or private sale conducted pursuant to any
Security Instrument encumbering the Premises; (2) to any grantee or transferee
designated in any deed given in lieu of foreclosure; or (3) to the lessor under
any underlying ground lease should such ground lease be terminated.

18.  Default; Remedies
     18.1  Default. The occurrence of any of the following shall constitute a
material default and breach of this Lease by Tenant:


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<PAGE>

     (a)  Default in payment when due of any installment of rent or other
payment required to be made by Tenant hereunder, where such default shall not
have been cured within ten (10) days after written notice of such default is
given to Tenant;
     (b)  The abandonment or vacation of the Premises by Tenant;
     (c)  A failure by Tenant to observe and perform any other provision of the
Lease to be observed or performed by Tenant, where such failure shall have
continued for thirty (30) days after written notice thereof by Landlord to
Tenant; provided, however, that if the nature of such default is such that the
same cannot reasonably be cured within such thirty (30) day period, Tenant
shall not be deemed to be in default if Tenant shall within such period
commence such cure and thereafter diligently prosecute the same to completion;
     (d)  Tenant or any guarantor of Tenant's obligations hereunder shall
commence any case, proceeding or other action seeking reorganization,
arrangement, adjustment, liquidation, dissolution or composition of it or its
debts under any law relating to bankruptcy, insolvency, reorganization, or
relief of debtors, or seek appointment of a receiver, trustee, custodian, or
other similar official for it or for all or any substantial part of its
property;
     (e)  Tenant or any such guarantor shall take any corporate action to
authorize any of the actions set forth in Clause (d) above; or,
     (f)  Any case, proceeding or other action against Tenant or any guarantor
of Tenant's obligations hereunder shall be commenced seeking to have an order
for relief entered against it as debtor, or seeking reorganization,
arrangement, adjustment, liquidation, dissolution or composition of it or its
debts under any law relating to bankruptcy, insolvency, reorganization or
relief of debtors, or seeking appointment of a receiver, trustee, custodian or
other similar official for it or for all or any substantial part of its
property, and such case, proceeding or other action (i) results in the entry of
an order for relief against it which is not fully stayed within seven (7)
business days after the entry thereof or (ii) is not dismissed within forty-
five (45) days of filing such case, action or proceeding.
     (g)  Levy of a writ of attachment or execution of Tenant's interest under
this Lease where such writ continues for a period often (10) days;
     (h)  an assignment, sublease or other transfer of this Lease or Tenant's
interest in the Premises or portion thereof contrary to the provisions of
Section 16; or
     (i)  execution of an assignment for the benefit of creditors of
substantially all assets of Tenant available by law for the satisfaction of
judgment creditor.
     18.2  Remedies. In the event of any such material default or breach by
Tenant, Landlord may at any time thereafter, with or without notice and demand
and without limiting Landlord in the exercise of any right or remedy at law or
in equity which Landlord may have by reason of such default or breach:
     (a)  Maintain this Lease in full force and effect and recover the rent and
other monetary charges as they become due, without terminating Tenant's right
to possession, irrespective or whether Tenant shall have abandoned the
Premises. In the event Landlord elects to not terminate the Lease, Landlord
shall have the right to attempt to re-let the Premises at such rent and upon
such conditions and for such a term, and to do all acts necessary to maintain
or preserve the Premises as Landlord deems reasonable and necessary without
being deemed to have elected to terminate the Lease including removal of all
persons and property from the Premises; such property may be removed and stored
in a public warehouse or elsewhere at the cost of and for the account of
Tenant.  In the event any such re-letting occurs, this Lease shall terminate
automatically upon the new tenant taking possession of the Premises.  
Notwithstanding that Landlord fails to elect to terminate the Lease initially,
Landlord at any time during the Term of this Lease may elect to terminate this
Lease by virtue of such previous default of Tenant.
     (b)  Terminate this Lease by giving Tenant written notice of termination
or other lawful means. On the giving of the notice all of tenant's rights in
the Premises and the Building and Project shall terminate.  Upon the giving of
the notice of termination, Tenant shall surrender and vacate the Premises in
the condition required by Paragraph 9.2(e), and Landlord may re-enter and take
possession of the Premises and all the remaining improvement or property and
eject Tenant or any of Tenant's subtenants, assignees or the person or persons
claiming any right under or through Tenant or eject some and not others or
eject none. This Lease may also be terminated by a judgment specifically
providing for termination. Any termination under this paragraph shall not


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<PAGE>

release Tenant from the payment of any sum then due Landlord or from any claim
for damages or rent previously accrued or then accruing against Tenant. In no
event shall any one or more of the following actions by Landlord constitute a
termination of this Lease:
          (i)    maintenance and preservation of the Premises;
          (ii)   efforts to relet the Premises;
          (iii)  appointment of a receiver in order to protect Landlord's
interest hereunder;
          (iv)   consent to any subletting of the Premises or assignment of
this Lease by Tenant, whether pursuant to provisions hereof concerning
subletting and assignment or otherwise; or
          (v)    any other action by Landlord or Landlord's agents intended to
mitigate the adverse effects from any breach of this Lease by Tenant.
     (c)  In the event this Lease terminated pursuant to Subparagraph 18.2(b)
above, or otherwise, Landlord shall be entitled to damages in the following
sums:
          (i)    the worth at the time of award of the unpaid rent which has
been earned at the time of termination; plus
          (ii)   the worth at the time of award of the amount by which the
unpaid rent which would have been earned after termination until the time of
award exceeds the amount of such rental loss that Tenant proves could have been
reasonably avoided; plus
          (iii)  the worth at the time of award of the amount by which the
unpaid rent for the balance of the term after the time of award exceeds the
amount of such rental loss that Tenant proves could be reasonably avoided; and
          (iv)   any other amount necessary to compensate Landlord for all
detriment proximately caused by Tenant's failure to perform Tenant's
obligations under the Lease, or which in ordinary course of things would be
likely to result therefrom including, without limitation, the following: (A)
expenses for cleaning, repairing or restoring the Premises; (B) expenses for
altering, remodeling or otherwise improving the Premises for the purpose of
reletting, including installation of leasehold improvements (whether such
installation be funded by a reduction of rent, direct payment or allowance to
the succeeding lessee, or otherwise); (C) real estate broker's fees,
advertising costs and other expenses of reletting the Premises; (D) costs of
carrying the Premises such as taxes and insurance premiums thereon, utilities
and security precautions; (E) expenses in retaking possession of the Premises;
(F) attorneys' fees and court costs; and (G) any unamortized real estate
brokerage commission paid in connection with this Lease.
          (v)    The "worth at the time of award" of the amounts referred to
in Subparagraphs (i) and (ii) of this paragraph 18.2(c) is computed by allowing
interest at the Permitted Rate. The "worth at the time of award" of the
amounts referred to in Subparagraph (iii) of this Paragraph 18.2(c) is computed
by discounting such amount at the discount rate of the Federal Reserve Board of
San Francisco at the time of award plus one percent (1%). The term "rent" as
used in this Paragraph 18 shall include all sums required to be paid by Tenant
to Landlord pursuant to the terms of this Lease, including, without limitation,
Base Rent, Additional Rent and Operating Expenses.
     18.3  Default by Landlord. Landlord shall not be in default unless
Landlord fails to perform obligations required of Landlord hereunder within a
reasonable time, but in no event later than thirty (30) days after written
notice by Tenant to Landlord and to the holder of any first mortgage or deed of
trust covering the Premises whose name and address shall have theretofore been
furnished to Tenant in writing, specifying wherein Landlord has failed to
perform such obligation, provided, however, that if the nature of Landlord's
obligation is such that more than thirty (30) days are required for
performance, then Landlord shall not be in default if Landlord commences
performance within such thirty-day period and thereafter diligently prosecutes
the same to completion. Any money judgment obtained by Tenant based upon
Landlord's breach of this Lease shall be satisfied only Out of the proceeds of
the sale or disposition of Landlord's interest in the Premises (whether by
Landlord or by execution of judgment).

19.  Hazardous Materials.
     19.1  Definitions. As used herein, the term "Hazardous Material" shall
mean any substance: (i) the presence of which requires investigation or
remediation under any federal, state or local statute, regulation, ordinance,
order, action, policy or waste, "hazardous substance", pollutant or
contaminant under any federal, state or local statute, regulation, rule or
ordinance or amendments thereto including, without limitation, the


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<PAGE>

Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C.
Section 9601 et seq.) and/or the Resource Conservation and Recover Act (42
U.S.C. Section 6901 et seq.); (iii) which is toxic, explosive, corrosive,
flammable, infectious, radioactive, carcinogenic, mutagenic, or otherwise
hazardous and is or becomes regulated by any governmental authority, agency,
department, commission, board, agency or instrumentality of the United States,
the State of California or any political subdivision thereof; (iv) the presence
of which on the Premises causes or threatens to cause a nuisance upon the
Premises or to the adjacent properties or poses or threatens to pose a hazard
to the health or safety of persons on or about the Premises; (v) the presence
of which on adjacent properties could constitute a trespass by Landlord or
Tenant; (vi) without limitation which contains gasoline, diesel fuel or other
petroleum hydrocarbons; (vii) without limitation which contains polychlorinated
biphenyl's (PCBs), asbestos or urea formaldehyde foam insulation; or (viii)
without limitation radon gas.
     19.2  Permitted Use. Subject to the compliance by Tenant with the
provisions of Paragraphs 19.3, 19.4, 19.5, 19.6, 19.7, 19.8 and 19.9 below,
Tenant shall be permitted to use and store on the Premises those Hazardous
Materials listed in Paragraph 19.11 attached hereto, in the quantities set
forth in Paragraph 19.11.
     19.3  Hazardous Materials Management Plan.
     (a)  Prior to Tenant using, handling, transporting or storing any
Hazardous Material at or about the Premises (including, without limitation,
those listed in Paragraph 19.11), Tenant shall submit to Landlord a Hazardous
Materials Management Plan ("HMMP") for Landlord's review and approval, which
approval shall not be unreasonably withheld. The l-LMMP shall describe: (aa)
the quantities of each material to be used, (bb) the purpose for which each
material is to be used, (cc) the method of storage of each material, (dd) the
method of transporting each material to and from the Premises and within the
Premises (ee) the methods Tenant will employ to monitor the use of the material
and to detect any leaks or potential hazards, and (ff) any other information
any department of any governmental entity (city, state or federal) requires
prior to the issuance of any required permit for the Premises or during
Tenant's occupancy of the Premises. Landlord may, but shall have no obligation
to review and approve the foregoing information and HMMP, and such review and
approval or failure to review and approve shall not act as an estoppel or
otherwise waive Landlord's rights under this Lease or relieve Tenant of its
obligations under this Lease. If Landlord determines in good faith by
inspection of the Premises or review of the HMMP that the methods in use or
described by Tenant are not adequate in Landlord's good faith judgment to
prevent or eliminate the existence of environmental hazards, then Tenant shall
not use, handle, transport, or store such Hazardous Materials at or about the
Premises unless and until such methods are approved by Landlord in good faith
and added to an approved HMMP. Once approved by Landlord, Tenant shall strictly
comply with the HMMP and shall not change its use, operations or procedures
with respect to Hazardous Materials without submitting an amended HMMP for
Landlord's review and approval as provided above.
     (b)  Tenant shall pay to Landlord when Tenant submits an HMMP (or amended
HMMP) the amount reasonably determined by Landlord to cover all Landlord's
costs and expenses reasonably incurred in connection with Landlord's review of
the HMMP which costs and expenses shall include, among other things, all
reasonable out-of-pocket fees of attorneys, architects, or other consultants
incurred by Landlord in connection with Landlord's review of the HMMP. Landlord
shall have no obligation to consider a request for consent to a proposed HMMP
unless and until Tenant has paid all such costs and expenses to Landlord,
irrespective of whether Landlord consents to such proposed HMMP. Tenant shall
pay to Landlord on demand the excess, if any, of such costs and expenses
actually incurred by Landlord over the amount of such costs and expenses
actually paid by Tenant, and Landlord shall promptly refund to Tenant the
excess, if any, of such costs and expenses actually paid by Tenant over the
amount of such costs and expenses actually incurred by Landlord.
     19.4  Use Restriction. Except as specifically allowed in Paragraph 19.2
above, Tenant shall not cause or permit any Hazardous Material to be used,
stored, generated, discharged, transported to or from, or disposed of in or
about the Premises, or any other land or improvements in the vicinity of the
Premises. Without limiting the generality of the foregoing, Tenant, at its sole
cost, shall comply with all Laws relating to the storage, use, generation,
transport, discharge and disposal by Tenant or its Agents of any Hazardous
Material. If the presence of any Hazardous Agents results in contamination of
the Premises or any soil, air, ground or surface waters under, through, over,


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<PAGE>

on, in or about the Premises, Tenant, at its expense, shall promptly take all
actions necessary to return the Premises and/or the surrounding real property
to the condition existing prior to the appearance of such Hazardous Material.
In the event there is a release, discharge or disposal of or contamination of
the Premises by a Hazardous Material which is of the type that has been stored,
handled, transported or otherwise used or permitted by Tenant or its Agents on
or about the Premises, Tenant shall have the burden of proving that such
release, discharge, disposal of contamination is not the result of the acts or
omissions of Tenant or its Agents.
     19.5  Tenant Indemnity. Tenant shall defend, protect, hold harmless and
indemnify Landlord and its Agents and Lenders with respect to all actions,
claims, losses (including, diminution in value of the Premises), fines,
penalties, fees (including, but not limited to, attorneys' and consultants'
fees) costs, damages, liabilities, remediation costs, investigation costs,
response costs and other expenses arising out of resulting from, or caused by
any Hazardous Material used, generated, discharged, transported to or from,
stored, or disposed of by Tenant or its Agents in, on, under, over through or
about the Premises and/or the surrounding real property. Tenant shall not
suffer any lien to be recorded against the Premises as a consequence of the
disposal of any Hazardous Material on the Premises by Tenant or its Agents,
including any so called state, federal or local "super fund" lien related to
the "clean up" of any Hazardous Material in, over, on, under, through or
about the Premises.
     19.6  Compliance. Tenant shall immediately notify Landlord of any inquiry,
test, investigation, enforcement proceeding by or against Tenant or the
Premises concerning any Hazardous Material. Any remediation plan prepared by or
on behalf of Tenant must be submitted to Landlord prior to conducting any work
pursuant to such plan and prior to submittal to any applicable government
authority and shall be subject to Landlord's consent. Tenant acknowledges that
Landlord, as the owner of the Property, at its election, shall have the sole
right to negotiate, defend, approve and appeal any action taken or order issued
with regard to any Hazardous Material by any applicable governmental authority.
     19.7  Assignment and Subletting. It shall not be unreasonable for Landlord
to withhold its consent to any proposed assignment or subletting if (i) the
proposed assignee's or subtenant's anticipated use of the Premises involves the
storage, generation, discharge, transport, use or disposal of any Hazardous
Material; (ii) if the proposed assignee or subtenant has been required by any
prior landlord, lender or governmental authority to "clean up" or remediate
any Hazardous Material; (iii) if the proposed assignee or subtenant is subject
to investigation or enforcement order or proceeding by any governmental
authority in connection with the use, generation, discharge, transport,
disposal of storage of any Hazardous Material.
     19.8  Surrender. Upon the expiration or earlier termination of the Lease,
Tenant, at its sole cost, shall remove all Hazardous Materials from the
Premises that Tenant or its Agents introduced to the Premises. If Tenant fails
to so surrender the Premises, Tenant shall indemnify, protect, defend and hold
Landlord harmless from and against all damages resulting from Tenant's failure
to surrender the Premises as required by this Paragraph, including without
limitation, any actions, claims, losses, liabilities, fees, (including but not
limited to attorneys' and consultants' fees), fines costs, penalties, or
damages in connection with the condition of the Premises including, without
limitation, damages occasioned by the inability to relet the Premises or a
reduction in the fair market and/or rental value of the Premises by reason of
the existence of any Hazardous Material in, on, over, under, through or around
the Premises.
     19.9  Right to Appoint Consultant. Landlord shall have the right to
appoint a consultant to conduct an investigation to determine whether any
Hazardous Material is being used, generated, discharged, transported to or
from, stored or disposed of in, on, over, through, or about the Premises, in an
appropriate and lawful manner and in compliance with the requirements of this
Lease. If Tenant has violated any Law or covenant in this Lease regarding the
use, storage or disposal of Hazardous Materials on or about the Premises,
Tenant shall reimburse Landlord for the cost of such investigation. Tenant, at
its expense, shall comply with all reasonable recommendations of the consultant
required to conform Tenant's use, storage or disposal of Hazardous Materials to
the requirements of applicable Law or to fulfill the obligations of Tenant
hereunder.


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<PAGE>

     Tenant shall defend, protect, hold harmless and indemnify Landlord and its
agents and employees with respect to all actions, claims, losses, fines,
penalties, fees, costs, damages and liabilities (including but not limited to
attorneys' and consultants' fees) arising out of or in connection with any
Hazardous Material used, generated, discharged, transported to or from, stored,
or disposed of in, on, under, through or about the Premises and/or the
surrounding real and personal property. Tenant shall not suffer any lien to be
recorded against the Premises as a consequence of a Hazardous Material,
including any so called state, federal or local "super fund" lien related to
the "clean up" of a Hazardous Material in, over, on, under, through, or about
the Premises.
     19.10  Holding Over. If any action of any kind is required or requested to
be taken by any governmental authority to clean-up, remove, remediate or
monitor any Hazardous Materials (the presence of which is the result of the
acts or omissions of Tenant or its Agents) and such action is not completed
prior to the expiration or earlier termination of the Lease, Tenant shall be
deemed to have impermissibly held over until such time as such required action
is completed, and Landlord shall be entitled to all damages directly or
indirectly incurred in connection with such holding over, including, without
limitation, damages occasioned by the inability to re-let the Premises or a
reduction of the fair market and/or rental value of the Premises.
     19.11  Materials. Tenant shall provide the list of its Hazardous Chemicals
to be legally used during its tenancy in the following section provided below
in this Paragraph 19.11, or attach a separate list and so indicate below or
indicate "NONE" and initial below to indicate if no Hazardous Materials will
be used:

Materials:               Quantities:      Location   and   Method of Storage:
Cleaning Solvent         10 gallons         Shop           Sealed Steel Drum
Way Oil                  20 gallons         Shop           Sealed Steel Drum
Hydrolic Oil             15 gallons         Shop           Sealed Steel Drum
Spindle Oil              15 gallons         Shop           Sealed Steel Drum
Water Immersable Oil     20 gallons         Shop           Sealed Plastic Pail
     19.12  Provisions Survive Termination. The provisions of this Paragraph
19.0 shall survive the expiration or termination of this Lease.
     19.13  Controlling Provisions. The provisions of this Paragraph 19.0 are
intended to govern the rights and liabilities of the Landlord and Tenant
hereunder respecting Hazardous Materials to the exclusion of any other
provisions in this Lease that might otherwise be deemed applicable. The
provisions of this Paragraph 19.0 shall be controlling with respect to any
provisions in this Lease that are inconsistent with this Paragraph 19.0.

20.  Miscellaneous
     20.1  Estoppel Certificate.
     (a)  Tenant shall at any time, upon not less than ten (10) days prior
written notice from Landlord, execute, acknowledge and deliver to Landlord a
statement in writing (i) certifying that this Lease is unmodified and in full
force and effect (or, if modified, stating the nature of such modification and
certifying that this Lease, as so modified, is in full force and effect) and
the date to which the rent and other charges are paid in advance, if any, (ii)
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; (iii) evidence the status of this Lease as may be required by a lender
making a loan to Landlord to be secured by a deed of trust covering the
Premises, Building or Project or a purchaser of the same from Landlord, (iv)
certify that all improvements to be constructed on or in the Premises by
Landlord have been substantially completed except for punch list items which do
not prevent Tenant from using the Premises for its intended use; and (v)
certify such other matters relating to the Lease and/or the Premises as may be
requested by a lender making a loan to Landlord or a purchaser of the Premises,
Building or Project from Landlord. Any such statement may be conclusively
relied upon by any prospective purchaser or encumbrancer of the Premises.
     (b)  Tenant's failure to deliver such statement within such time shall be
conclusive upon Tenant (i) that this Lease is in full force and effect without
modification except as may be represented by Landlord, (ii) that there are no
uncured defaults in Landlord's performance, and (iii) that not more than one
month's rent has been paid in advance; and, (iv) the improvements to be
constructed on the Premises by Landlord have been substantially completed
except for punch list items which do not prevent Tenant from using the Premises
for its intended use.


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<PAGE>

     (c)  If Landlord desires to finance, refinance or sell said Premises, or
any part hereof, Tenant hereby agrees to deliver to Landlord, its agent or any
prospective purchaser or lender designated by Landlord such financial
statements of Tenant as may be reasonably required by such lender or
prospective purchaser. Such statements shall include the past three years
financial statements of Tenant. All such financial statements shall be received
by Landlord in confidence and shall be used only for the purposes herein set
forth. Tenant's financial statements shall be held strictly confidential.
     20.2  Transfer of Landlord's Interest. In the event of a sale or
conveyance by Landlord of Landlord's interest in the Premises other than a
transfer for security purposes only, Landlord shall be relieved from and alter
the date specified in such notice of transfer of all obligations and
liabilities accruing thereafter on the part of the Landlord, provided that any
funds in the hands of Landlord at the time of transfer in which Tenant has an
interest, shall be delivered to the successor of Landlord. This Lease shall not
be affected by any such sale and Tenant agrees to attorn to the purchaser or
assignee provided all Landlord's obligations hereunder are assumed in writing
by the transferee.
     20.3  Captions; Attachments; Defined Terms.
     (a)  The captions of the paragraphs of this Lease are for convenience only
and shall not be deemed to be relevant in resolving any question of
interpretation or construction of any section of this Lease.
     (b)  Exhibits attached hereto, and addendums and schedules initialed by
the parties, are deemed by attachment to constitute part of this Lease and are
incorporated herein.
     (c)  The words "Landlord" and "Tenant" as used herein shall include the
plural as well as the singular. Words used in neuter gender include the
masculine and feminine and words in the masculine or feminine gender include
the neuter. If there be more than one Landlord or Tenant, the obligations
hereunder imposed upon Landlord or Tenant shall be joint and several. If the
Tenants are husband and wife, the obligations shall extend individually to
their sole and separate property as well as to their community property. The
term "Landlord" shall mean only the owner or owners at the time in question
of the fee title or a tenant's interest in a ground lease of the Premises. The
obligations contained in this Lease to be performed by Landlord shall be
binding on Landlord's successors and assigns only during their respective
periods of ownership.
     (d)  Law. As used in this Lease, the term "Law" or "Laws" shall mean
any judicial decision, statute, constitution, ordinance, resolution,
regulation, rule, administrative order, or other requirement of any government
agency or authority having jurisdiction over the parties to this Lease or the
Premises or both, in effect at the Commencement Date of this Lease or any time
during the Lease Term, including, without limitation, any regulation, order, or
policy of any quasi-official entity or body (e.g. board of fire examiners,
public utility or special district).
     (e)  Agent. As used in this Lease, the term "Agent" shall mean, with
respect to either Landlord or Tenant, its respective agents, employees,
contractors (and their subcontractors), and invitees (and in the case of
Tenant, its subtenants).
     (f)  Lender. As used in this Lease, the term "Lender" shall mean any
beneficiary, mortgagee, secured party or other holder of any deed of trust,
mortgage or other written security device or agreement affecting Landlord's
interest in the Premises.
     20.4  Entire Agreement. This instrument along with any exhibits and
attachments hereto constitutes the entire agreement between Landlord and Tenant
relative to the Premises and this Agreement and the exhibits and attachments
may be altered, amended or revoked only by an instrument in writing signed by
both Landlord and Tenant. Landlord and Tenant agree hereby that all prior or
contemporaneous oral agreements between and among themselves and their agents
or representatives relative to the leasing of the Premises are merged in or
revoked by this Agreement.
     20.5  Severability. If any term or provision of this Lease shall, to any
extent, be determined by a court of competent jurisdiction to be invalid or
unenforceable, the remainder of this Lease shall not be affected thereby, and
each term and provision of this Lease shall be valid and enforceable to the
fullest extent permitted by law.
     20.6  Costs of Suit.
     (a)  If Tenant or Landlord shall bring any action for any relief against
the other, declaratory or otherwise, arising out of this Lease, including any
suit by Landlord for the recovery of rent or possession of the Premises, the


IG                                                                        22


<PAGE>

losing party shall pay the successful party a reasonable sum for attorneys'
fees which shall be deemed to have accrued on the commencement of such action
and shall be paid whether or not such action is prosecuted to judgment.
     The attorney's fee award shall not be computed in accordance with any
court fee schedule, but shall be such as to fully reimburse attorneys' fees
reasonably incurred in good faith.
     20.7  Landlord as Party Defendant.. Should Landlord, without fault on
Landlord's part, be made a party to any litigation instituted by Tenant or by
any third party against Tenant, or by or against any person holding under or
using the Premises by license of Tenant, or for the foreclosure of any lien for
labor or material furnished to or for Tenant or any such other person or
otherwise arising out of or resulting from any act or transaction of Tenant or
of any such other person, Tenant covenants to save and hold Landlord harmless
from any judgment rendered against Landlord or the Premises or any part
thereof, and all costs and expenses, including reasonable attorneys fees,
incurred by Landlord in or in connection with such litigation. Such indemnity
obligation shall survive termination of this Lease.
     20.8  Waiver of Jury Trial. Landlord and Tenant hereby waive their
respective right to trial by jury of any cause of action, claim, counterclaim,
cross-complaint in any action, proceeding and/or hearing brought by either
Landlord against Tenant or Tenant against Landlord on any matter whatsoever
arising out of, or in any way connected with, this Lease, the relationship of
Landlord and Tenant, Tenant's use or occupancy of the Premises, or any claim or
injury or damage, or the enforcement of any remedy under any law, statute or
regulation, emergency or otherwise, now or hereafter in effect.
     20.9  Time; Joint and Several Liability. Time is of the essence of this
Lease and each and every provision hereof, except as to the conditions relating
to the delivery of possession of the Premises to Tenant. All the terms,
covenants and conditions contained in this Lease to be performed by either
party, if such party shall consist of more than one person or organization,
shall be deemed to be joint and several, and all rights and remedies of the
parties shall be cumulative and non-exclusive of any other remedy at law or in
equity.
     20.10  Binding Effect: Choice of Law. Each provision of this Lease to be
performed by Tenant shall be construed as both a covenant and condition.  
Subject to any provisions hereof restricting assignment or subletting any
Tenant and subject to Section 18.2, all of the provisions hereof shall bind and
inure to the benefit of the parties hereto and their respective heirs, legal
representatives, successors and assigns. This Lease shall be governed by the
laws of the State of California
     20.11  Waiver. No covenant term or condition or the breach thereof shall
be deemed waived, except by written consent of the party against whom the
waiver is claimed, and any waiver or the breach of any covenant, term or
condition shall not be deemed to be a waiver of any preceding or succeeding
breach of the same of any other covenant, term or condition. Acceptance by
Landlord of the performance by Tenant after the time the same shall have become
due shall not constitute a waiver by Landlord of the breach or default of any
covenant, term or condition unless otherwise expressly agreed to by Landlord in
writing.
     Landlord's failure to enforce against Tenant or any other tenant of the
Building or the Project any of the rules or regulations made by Landlord shall
not be deemed a waiver of such rules or regulations. No act or thing done by
Landlord, its agents or employees during this Lease Term shall be deemed an
acceptance of a surrender of the Premises and no agreement to accept a
surrender of the Premises shall be valid unless it is in writing and is signed
by Landlord. The delivery of keys to any of Landlord's agents or employees
shall not serve to terminate this Lease or surrender the Premises. No payment
by Tenant, or receipt and acceptance by Landlord, of a lesser amount than the
rent due shall be deemed to be other than on account of the earliest stipulated
rent or additional rent, nor shall any endorsement or statement on any check or
any letter accompanying a payment as rent be deemed an accord and satisfaction.
The receipt and acceptance by Landlord of any delinquent rent shall not
constitute a waiver of any other default; it shall only be a waiver of timely
payment for the particular rent payment involved. Landlord may accept such
check or payment without prejudice to Landlord's right to recover the balance
of such rent or pursue any other remedy available to Landlord.
     20.12  Surrender of Premises. The voluntary or other surrender of this
Lease by Tenant, or a mutual cancellation thereof, shall not work a merger, and
shall, at the option of the Landlord, terminate all or any existing subleases
or subtenancies, or may, at the option of Landlord, operate as an assignment to
it or any or all such subleases or subtenancies.

IG                                                                        23


<PAGE>

     20.13  Holding Over.
     (a)  Surrender of Possession. Tenant shall surrender possession of the
Premises immediately upon the expiration or earlier termination of the Lease.
If Tenant shall continue to occupy or possess the Premises after such
expiration or termination without the consent of Landlord, then Tenant shall be
a tenant at will. If Landlord has consented to such holdover in writing, Tenant
shall be a tenant from month-to-month. All the terms, provisions and conditions
of the Lease shall apply to the month-to-month tenancy except those terms,
provisions and conditions pertaining to the Lease Term, and except that the
rental shall be immediately adjusted upward upon the expiration or earlier
termination of the Lease to equal the greater of (i) one hundred fifty percent
(150%) of the then prevailing monthly rental rate for similar commercial space,
as determined by Landlord; or (ii) one hundred fifty percent (150%) of the
Rental for the Premises in effect under this Lease on the day immediately prior
to the date of the expiration or earlier termination of the Lease.
     The month-to-month tenancy may be terminated by Landlord or Tenant upon
thirty (30) days prior notice to the non-terminating party. In the event that
Tenant fails to surrender the Premises upon such expiration or earlier
termination, then Tenant shall indemnify and hold Landlord harmless against all
losses or liability resulting from or arising out of Tenant's failure to
surrender the Premises. This includes, but is not limited to any amounts
required to be paid or damages incurred due to the loss of any tenant or
prospective tenant who was to have occupied the Premises after said termination
or expiration and any related attorneys' fees and brokerage commissions.
     20.14  Payment of Money After Termination. No payment of money by Tenant
to Landlord after the termination of the Lease by Landlord or after the giving
of any notice of termination to Tenant by Landlord, which Landlord is entitled
to give Tenant under the Lease, shall reinstate, continue or extend the Term of
the Lease or shall affect any such notice given to Tenant prior to the payment
of such money. It is agreed that after the service of such notice or the
commencement of any suit by Landlord to obtain possession of the Premises,
Landlord may receive and collect when due any and all payments owed by Tenant
under the Lease and otherwise exercise its rights and remedies. The making of
any such payments by Tenant shall not waive such notice or in any manner affect
any pending suit or judgment obtained.
     20.15  Signs and Auctions.
     (a)  Tenant shall not place any sign upon the Premises or conduct any
auction thereon without Landlord's prior written consent. All such signs placed
on the Premises by Tenant and consented to by Landlord shall comply with all
recorded documents affecting the Premises and applicable statutes, ordinances,
rules and regulations of governmental agencies having jurisdiction thereof. At
Landlord's option, Tenant shall, at the expiration or earlier termination of
the Lease, remove any sign which it has placed on the Premises and shall at its
sole cost, repair any damage caused by the installation or removal of such
sign.
     (b)  Obtaining permits for Tenant signs as may be required by any
governmental agency shall be the responsibility of Tenant.
     20.16  Reasonable Consent. Except as limited elsewhere in this Lease,
wherever in this Lease Landlord or Tenant is required to give consent or
approval to any action on the part of the other, such consent or approval shall
not be unreasonably withheld. In the event of failure to give any such consent,
the other party shall be entitled to specific performance at law and shall have
such other remedies to it under this Lease, but in no event shall Landlord or
Tenant be responsible in monetary damages for failure to give consent unless
said failure is withheld maliciously or in bad faith.
     20.17  Interest on Past Due Obligations. Any installment of Base Rent or
Additional Rent due from Tenant, or any other sum due under this Lease from
Tenant, which is not received by Landlord when due, shall bear interest from
said due date until paid, at an annual rate equal to the lower of (the
"Permitted Rate"): (a) twelve percent (12%); or (b) five percent (5%) plus
the rate established by the Federal Reserve Bank of San Francisco, as of the
twenty-fifth (25th) day of the month immediately preceding the due date, on
advances to member banks under Sections 13 and 13(a) of the Federal Reserve
Act, as now in effect or hereafter from time to time amended. Payment of such
interest shall not excuse or cure any default by Tenant. In addition, Tenant
shall pay all costs and attorneys' fees incurred by Landlord in collection of
such amounts.
     20.18  Recording. Tenant shall not record this Lease without Landlord's
prior written consent (which may be given or withheld in Landlord's sole and
absolute discretion), and such recordation shall, at the option of Landlord,
constitute a non-curable default of Tenant hereunder.

IG                                                                        24


<PAGE>

     20.19  Notices. All notices or demands of any kind required or desired to
be given by Landlord or Tenant hereunder shall be in writing and shall be
deemed delivered on the date received if personally delivered to Landlord or
Tenant, as the case may be, or if mailed, then forty-eight (48) hours after
depositing the notice or demand in the United States mail, certified or
registered, postage prepaid, addressed to the Landlord or Tenant respectively
at the addresses set forth after their signatures at the end of this Lease.
     20.20  Corporate Authority. If Tenant is a corporation, each individual
executing this Lease on behalf of said corporation represents and warrants that
he is duly authorized to execute and deliver this Lease on behalf of said
corporation in accordance with a duly adopted resolution of the Board of
Directors of said corporation or in accordance with the Bylaws of said
corporation, and that this Lease is binding upon said corporation in accordance
with its terms. If Tenant is a corporation Tenant shall, within thirty (30)
days after execution of this Lease, deliver to Landlord a certified copy of a
resolution of the Board of Directors of said corporation authorizing or
ratifying the execution of this Lease.
     20.21  Limitation on Landlord's Liability. Tenant, for itself and its
successors and assigns (to the extent this Lease is assignable), hereby agrees
that in the event of any actual or alleged, breach or default by Landlord under
this Lease that:
     (a)  Tenant's sole and exclusive remedy and recourse against Landlord
shall be as against Landlord's interest in the Project;
     (b)  No partner or Landlord shall be sued or named as a party in a suit or
action (except as may be necessary to secure jurisdiction of the partnership);
     (c)  No service of process shall be made against any partner of Landlord
(except as may be necessary to secure jurisdiction of the partnership);
     (d)  No partner of Landlord shall be required to answer or otherwise plead
to any service of process;
     (e)  No judgment will be taken against any partner of Landlord;
     (f)  Any judgment taken against any partner of Landlord may be vacated and
set aside at any time nunc pro tunc;
     (g)  No writ of execution will ever be levied against the assets of any
partner of Landlord; and,
     (h)  The covenants and agreements of Tenant set forth in this Paragraph
20.21 shall be enforceable by Landlord and any partner of Landlord.
     20.22  Construction of Lease Provisions. Although printed provisions of
this Lease were prepared by Landlord, the doctrine or rule that ambiguities in
an agreement or document are to be construed against the drafting party, shall
not be utilized in interpreting this Lease and this Lease shall instead be
construed or interpreted in accordance with the general tenor of the language
to reach a fair and equitable result.
     20.23  Confidentiality. Tenant hereby agrees not to disclose the terms of
this lease (specifically including, without limitation, the rent or rental rate
to be paid by Tenant hereunder and/or any tenant improvement allowance to be
furnished by Landlord to Tenant) to any existing or prospective tenant of the
Building or other third party; provided, however, Tenant may disclose the terms
of this Lease to its accountant, bookkeeper or tax advisor or any employee of
Tenant who has a need to know such information for a legitimate business
purpose, or if Tenant is otherwise required to disclose such confidential
information as permitted hereunder of the requirements of this Paragraph and
shall require each such person to comply with such confidentiality
requirements. In the event Tenant or any person to whom it discloses such
confidential information fails in any respect to comply with its obligations
under this Paragraph, Tenant shall be liable to Landlord for breach of this
Paragraph 20.23 and Landlord may bring an action against Tenant for damages as
a result of such breach. In addition, nothing stated herein shall preclude or
prohibit Landlord from seeking an injunction to prevent disclosure of such
confidential information or an order compelling specific protection of such
confidential information. The provisions of this Paragraph 20.23 shall survive
the termination of this Lease.

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


IG                                                                        25


<PAGE>

IF THIS LEASE HAS BEEN FILLED IN, IT HAS BEEN PREPARED FOR SUBMISSION TO LEGAL
COUNSEL FOR APPROVAL.  NO REPRESENTATION OR RECOMMENDATION IS MADE BY LANDLORD
OR BY SOUTH BAY DEVELOPMENT COMPANY, ITS AGENTS OR EMPLOYEES AS TO THE LEGAL
SUFFICIENCY, LEGAL EFFECT OR THE CONSEQUENCES OF THIS LEASE OR THE TRANSACTION
RELATING THERETO.  THE PARTIES SHALL RELY SOLELY UPON THE ADVICE OF THEIR OWN
LEGAL COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.

In Witness Whereof, Landlord and Tenant have executed this Lease the date and
year first above written.



LANDLORD:                                     TENANT:

TASMAN ASSOCIATES,                            TESTDESIGN CORPORATION,
a California general partnership              a California corporation


By: /s/ James D. Mair                         By: /s/ Douglas W. Smith
   -------------------------------               ------------------------------
   James D. Mair                                 Douglas W. Smith
Its:  General Partner                         Its: President

Dated:   2/2/98                               Dated:   1/26/98
      ----------------------------                  ---------------------------

Address: 511 Division Street                  Address:  1157 Tasman Drive
         Campbell, CA 95008                             Sunnyvale, CA 94089

IG                                                                        26



<PAGE>

                            FIRST ADDENDUM


This First Addendum ("First Addendum") is made by and between Test Design
Corporation, a California corporation ("Tenant") and Tasman Associates, a
California general partnership ("Landlord"), for the property located at 1157
Tasman Drive, Sunnyvale, California (the "Lease") as of the date set forth
below with reference to the following facts:

     A.   By Lease Agreement dated January 16, 1998 (the "Lease"), Landlord
has leased to Tenant certain property commonly known as 1157 Tasman Drive,
Sunnyvale, California (the "Premises").

NOW THEREFORE, for good and valuable consideration, receipt of which is hereby
acknowledged, Landlord and Tenant hereby agree as follows:

     1.   The tenant shall lease 1159 Tasman Drive, Sunnyvale, California on a
month to month tenancy. However, Tenant may terminate the Lease of 1159 Tasman
Drive only, by providing Landlord with written notice that Tenant desires to
cancel the Lease, with such cancellation date being not less than 30 days from
the date said written notice is received by Landlord from Tenant. Landlord may
terminate the lease by providing Tenant with notice that the Landlord desires
to cancel the Lease, with such cancellation date being not less than 15 days
from the date said notice is received by Tenant from Landlord.

     2.   Tenant's monthly rent at 1159 Tasman Drive shall be One Thousand One
Hundred Sixty Four and 45/lOOths Dollars ($1,164.45) commencing February 1,
1998.

     3.   Concurrently with Tenant's execution hereof, Tenant shall increase
the existing Security Deposit by $1,164.45 , for a total of $2,384.35.

     4.   Landlord will actively market the above referenced premises for lease
to a third party and Tenant shall cooperate with Landlord in allowing access to
the premises for showing to third parties without prior notification.

All other terms and conditions of the Lease shall remain the same in full force
and effect.


As entered into this 26th day of January, 1998.
                     ----        -------


LANDLORD:                                  TENANT:

TASMAN ASSOCIATES,                         TESTDESIGN CORPORATION,
A California general partnership           a California corporation




By: /s/ James D. Mair                      By: /s/ Douglas W. Smith
   --------------------------------           ----------------------
   James D. Mair                              Douglas W. Smith
Its: General Partner                       Its: President

Dated:   2/2/98                            Dated:   1/26/98



<PAGE>

                              FIRST AMENDMENT

This First Amendment to Lease ("First Amendment") is made by and between
TestDesign Corporation, a California corporation ("Tenant") and Tasman
Associates, a California general partnership ("Landlord"), as of the date set
forth below with reference to the following facts:

     A.   By Lease Agreement dated January 16, 1998 (the "Lease"), Landlord
has leased to Tenant certain property commonly known as 1157 Taxman Drive,
Sunnyvale, California.

     B.   Landlord and Tenant desire to amend the Lease to acknowledge their
mutual understanding of the Lease as provided below.

NOW THEREFORE, for good and valuable consideration, receipt of which is hereby
acknowledged, Landlord and Tenant hereby agree as follows:

     1.   Landlord and Tenant mutually agree that the name of Tenant, as
defined in the first paragraph of the Lease, shall be changed to inTEST
Sunnyvale, a Delaware corporation.

All other terms and conditions of the Lease shall remain the same and in full
force and effect.


LANDLORD:                                  TENANT:

Tasman Associates,                         inTEST Sunnyvale Corporation,
a California general partnership           a Delaware corporation


By:  /s/ James D. Mair                     By:  /s/ Douglas W. Smith
   --------------------------------           ------------------------------
Printed:  James D. Mair                    Printed:  Douglas W. Smith

Its: General Partner                       Its: Executive Vice President,
                                                Chief Operating Officer

Dated:  2/24/99                            Dated:  2/11/99

                                           By:  /s/ Hugh T. Regan, Jr.
                                              ------------------------------
                                           Printed:  Hugh T. Regan, Jr.

                                           Its: Chief Financial Officer

                                           Dated:  2/16/99






<PAGE>

                                                            Exhibit 10.10

                                   LEASE

                       (NONRESIDENTIAL - SHORT FORM)
             CALIFORNIA REAL ESTATE ASSOCIATION STANDARD FORM
            THIS IS INTENDED TO BE A LEGALLY BINDING AGREEMENT
                          - READ IT CAREFULLY -


                                                     Sunnyvale, California
                                                     June 12, 1998


A.   Bogomilsky Lessor, and TestDesign Corporation Lessee, agree as follows:

     1.   Lessor leases to lessee and lessee hires from Lessor those premises
     described as: 542 Lakeside Drive, Suites #l,2c,4,5,6,7,8 and 550
     Lakeside Drive, Suite #7 together with the following furniture and
     fixtures: None.

     2.   It is by mutual agreement between Lessor and Lessee that the
     above referenced lease shall be for a period of seventeen (17)
     months, to commence August 1, 1998 and expire December 31, 1999.

     3.   Lessee is to pay rent as follows: $11,958.00 per month. (Eleven
     Thousand Nine Hundred And Fifty-Eight Dollars.) The rent shall be paid at
     542 Lakeside Drive, #2A, Sunnyvale, or at any address designated by the
     lessor in writing.

     4.   Lessor shall retain Lessee's existing security deposit of $1,008.00.
     Said deposit will be returned to to Lessee by Lessor or his successors
     upon full performance of the terms of this lease.

     5.   Lessee agrees to pay for all utilities except for water and garbage
     removal which shall be paid by Lessor.

     6.   Lessee and Lessor shall provide
 each other with at least ninety (90)
     days written notice prior to the end of the lease term of its intention to
     vacate the above described premises or not renew the lease beyond the end
     of the lease extension, as the case may be.

     7.   Lessee has examined the premises and all furniture and fixtures
     contained therein, and accepts the same as being clean and in good order,
     condition and repair.

     8.   The premises are rented for use only as minor electronic parts
     assembly and offices.

     9.   Lessee shall not disturb, annoy, endanger or inconvenience other
     tenants of the building or neighbors, nor use the premises for any immoral
     or unlawful purposes, nor violate any law or ordinance, nor commit waste
     or nuisance upon or about the premises.

     10.   Lessee shall keep the premises rented for his exclusive use in good
     order and condition and pay for any repairs caused by his negligence or
     misuse or that of his invitees. Lessor shall maintain any other parts of
     the property and pay for repairs not caused by negligence or misuse by
     Lessee or Lessee's invitees.



<PAGE>

     11.   Lessee intends to install an exhaust system in the premises, which
     will require alterations to the roof membrane to install an exhaust vent.
     Lessee shall submit plans and the name of its proposed contractor to
     lessor for approval prior to commencement of the installation and roof
     alterations. Lessee shall be responsible for any damages caused by making
     such alterations to the roof. At the end of the lease term, at Lessor's
     request, Lessee shall, at Lessee's expense, remove the exhaust system from
     the premises and repair and return the roof to its condition when the
     alterations were made, reasonable wear and tear since then excepted.

     12.   Lessee shall not paint or make alterations of the premises without
     Lessor's prior written consent, except suites 1,2c,4,5,6 may be painted
     and carpeted at Lessee's expense at any time during Lessee's occupancy.

     13.   This lease will terminate if the premises become uninhabitable
     because of dilapidation, condemnation, fire or other casualty for more
     than 30 days. Rent will be reduced proportionately if the premises are
     uninhabitable for any shorter period.

     14.   With Lessee's permission, which shall not be unreasonably withheld,
     Lessor or his agent shall be permitted to enter to inspect, to make
     repairs, and to show the premises to prospective tenants or purchasers. In
     an emergency, Landlord or his agent may enter the premises without
     securing prior permission from Tenant, but shall give Tenant notice of
     such entry immediately thereafter.

     15.   Lessee shall not let or sublet all or any part of the premises nor
     assign this lease or any interest in it without the prior written consent
     of Lessor. Lessor's consent thereto shall not be unreasonably withheld.

     16.   If Lessee abandons or vacates the premises, Lessor may at his option
     terminate this lease, re-enter the premises and remove all property.

     17.   The prevailing party may recover from the other party his costs and
     attorney fees of any action brought by either party to enforce any terms
     of this lease or recover possession of the premises.

     18.   Either party may terminate this lease in the event of a violation of
     any provision of this lease by the other party.

     19.   Time is of the essence.  The waiver by either party of any breach
     shall be construed to be a continuing waiver of any subsequent breach.


Lessor:                                     Lessee:

A. BOGOMILSKY                               TESTDESIGN CORPORATION
BY:                                         BY:


/s/ A. Bogomilsky                           /s/ Douglas Smith
- ----------------------------------------    ----------------------------------
A. Bogomilsky, Owner                        Douglas Smith, President 






<PAGE>

                                                              Exhibit 10.11

                       AMENDMENT TO LOAN DOCUMENTS

     THIS AMENDMENT TO LOAN DOCUMENTS (this "Amendment") is made as of
October 5, 1998 (but is to be made effective as of June 30, 1998), by and
between INTEST CORPORATION, a Delaware corporation (the "Borrower"), and PNC
BANK, NATIONAL ASSOCIATION (the "Bank").

                               WITNESSETH:


     WHEREAS, the Borrower has executed and delivered to the Bank a promissory
note, loan agreement, security agreements and other agreements, instruments,
certificates and documents more fully described on Exhibit A attached hereto
and made a part hereof (collectively, the "Loan Documents") which evidence or
secure some or all of the Borrower's obligations to the Bank for one or more
loans or other extension of credit (the "Obligations"); and

     WHEREAS, the Borrower and the Bank desire to (i) extend the maturity date
of the Obligations, (ii) amend the financial covenants contained in the Loan
Documents, (iii) release the collateral which secures the Obligations, and (iv)
make certain other amendments to the Loan Documents, all as provided for below;

     NOW, THEREFORE, in consideration of the mutual covenants herein contained
and intending to be legally bound hereby, the parties hereto agree as follows:

     1.   Each of the Loan Documents
 is amended as set forth in Exhibit A
attached hereto and made a part hereof.  Any and all references to any Loan
Document in any other Loan Document shall be deemed to refer to such Loan
Document as amended hereby.  Any initially capitalized terms used in this
Amendment without definition shall have the meanings assigned to those terms in
the applicable Loan Documents.

     2.   This Amendment is deemed incorporated into each of the Loan
Documents.  To the extent that any term or provision of this Amendment is or
may be deemed expressly inconsistent with any term or provision in any Loan
Document, the terms and provisions hereof shall control.

     3.   The Borrower hereby represents and warrants that (a) all of its
representations and warranties in the Loan Documents, as amended hereby, are
true and correct as of the date of this Amendment, (b) no default or Event of
Default exists under any Loan Document as of the date of this Amendment, and
(c) this Amendment has been duly authorized, executed and delivered by the
Borrower and constitutes its legal, valid and binding obligation, enforceable
against Borrower in accordance with its respective terms.

     4.   The Bank hereby confirms that the collateral for the Obligations, is
hereby released.

     5.   This Amendment may be signed in any number of counterpart copies and
by the parties hereto on separate counterparts, but all such copies shall
constitute one and the same instrument.

     6.   This Amendment will be binding upon and inure to the benefit of the
Borrower and the Bank and their respective heirs, executors, administrators,
successors and assigns.

     7.   Except as amended hereby, the terms and provisions of the Loan
Documents remain unchanged and in full force and effect and are hereby ratified
and confirmed.  Except as expressly provided herein, this Amendment shall not
constitute an amendment, waiver, consent or release with respect to any
provision of any Loan Document, a waiver of any default or Event of Default
thereunder, or a waiver or release of any of the Bank's rights and remedies
(all of which are hereby reserved).  The Borrower expressly ratifies and
confirms the confession of judgment and waiver of jury trial provisions
contained in the Loan Documents.



<PAGE>

     WITNESS the due execution hereof as a document under seal, as of the date
first written above.

[CORPORATE SEAL]                             INTEST CORPORATION


Attest:  /s/ Hugh T. Regan, Sr.              By:  /s/ Hugh T. Regan, Jr.
       ---------------------------------        ------------------------------

Print Name:  Hugh T. Regan, Sr.              Print Name:  Hugh T. Regan, Jr.

Title:  Secretary                            Title:  Treasurer & CFO


                                             PNC BANK, NATIONAL ASSOCIATION




                                             By:  /s/ Denise Viola Monahan
                                                ------------------------------
                                                Denise Viola Monahan



<PAGE>

                                  EXHIBIT A

                          AMENDMENT TO LOAN DOCUMENTS


A.   The "Loan Documents" that are the subject of this Amendment include
     the following (as any of the foregoing have previously been amended,
     modified or otherwise supplemented):

     1.   Amended and Restated Loan Agreement dated as of June 30, 1996 (the
          "Agreement")

     2.   Extension Letter dated May 31, 1997

     3.   Amended and Restated Committed Line of Credit Note dated June 30,
          1996 (the "Note")

     4.   Amended and Restated Security Agreement dated as of June 30, 1996
          (the "Security Agreement")

     5.   Equipment Security Agreement dated August 15, 1996 (the "Equipment
          Security Agreement")

     6.   Assumption Agreement dated as of April 30, 1997.


B.   The Loan Documents are hereby amended as follows:

     1.   The Expiration Date, as set forth in the Note, is hereby extended
          from June 30, 1998 to June 29, 1999, or such later date as may be
          designated by the Bank by written notice from the Bank to the
          Borrower, effective on July 1, 1998.

     2.   A new Section 3.15 is added to the Agreement to read as follows:

          "Section 3.15. Year 2000.  The Borrower has reviewed the areas
          within its business and operations which could be adversely affected
          by, and has developed or is developing a program to address on a
          timely basis the risk that certain computer applications used by the
          Borrower may be unable to recognize and perform properly date-
          sensitive functions involving dates prior to and after December 31,
          1999 (the "Year 2000 Problem").  The Year 2000 Problem will not
          result, and is not reasonably expected to result, in any material
          adverse effect on the business, properties, assets, financial
          condition, results of operations or prospects of the Borrower, or the
          ability of the Borrower to duly and punctually pay or perform its
          obligations hereunder and under the other Loan Documents."

     3.   The financial and other covenants contained in the Addendum to the
          Agreement are hereby amended and restated in their entirety as set
          forth in Schedule I attached hereto and made a part hereof.

     4.   The Security Agreement and the Equipment Security Agreement are
          hereby cancelled and of no further force or effect. The Bank agrees
          to deliver to the Borrower (for filing by the Borrower), UCC-3
          termination statements for all security interests filed by the Bank
          against the assets of the Borrower as security for the Obligations.







<PAGE>

                                                               Exhibit 21

Subsidiaries of the Registrant



  Name of Subsidiaries and Names
Under Which Subsidiaries Do Business          Jurisdiction of Incorporation
- ------------------------------------          -----------------------------

inTEST Limited                                England
inTEST Kabushiki Kaisha                       Japan
inTEST PTE, Ltd.                              Singapore
inTEST Investments, Inc.                      Delaware
inTEST IP Corp.                               Delaware
inTEST Licensing Corp.                        Delaware
inTEST Sunnyvale Corp.                        Delaware









<PAGE>


                                                            EXHIBIT 23


Consent of Independent Auditors




The Board of Directors and Stockholders
inTEST Corporation




We consent to incorporation by reference in the registration statement
(No. 333-44059) on Form S-8 of inTEST Corporation of our report dated 
February 19, 1999, relating to the consolidated balance sheets of inTEST
Corporation and subsidiaries as of December 31, 1998 and 1997, and the
related consolidated statements of earnings, comprehensive earnings,
stockholders' equity and cash flows for each of the years in the three-
year period ended December 31, 1998, and the related schedule, which 
report appears in the December 31, 1998, annual report on Form 10-K of
inTEST Corporation.






                                             KPMG LLP


Philadelphia, Pennsylvania
March 25, 1999








<TABLE> <S> <C>


<ARTICLE>     5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM THE 1997 ANNUAL
REPORT ON FORM 10-K AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS
</LEGEND>
<CIK>         0001036262
<NAME>        INTEST CORPORATION
<MULTIPLIER>  1,000
<CURRENCY>    USD

       

<S>                                   <C>
<PERIOD-TYPE>                         12-MOS
<FISCAL-YEAR-END>                                            DEC-31-1998
<PERIOD-START>                                               JAN-01-1998
<PERIOD-END>                                                 DEC-31-1998
<EXCHANGE-RATE>                                                        1
<CASH>                                                             8,468
<SECURITIES>                                                           0
<RECEIVABLES>                                                      3,275
<ALLOWANCES>                                                         168
<INVENTORY>                                                        2,521
<CURRENT-ASSETS>                                                  15,304
<PP&E>                                                             1,913
<DEPRECIATION>                                                     1,078
<TOTAL-ASSETS>                                                    23,218
<CURRENT-LIABILITIES>                                              1,992
<BONDS>                                                                0
<PREFERRED-MANDATORY>                                                  0
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<COMMON>                                                              65
<OTHER-SE>                                                        21,161
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<SALES>                                                           19,075
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<CGS>                                                              8,402
<TOTAL-COSTS>                                                      8,155
<OTHER-EXPENSES>                                                       3
<LOSS-PROVISION>                                                      (5)
<INTEREST-EXPENSE>                                                     3
<INCOME-PRETAX>                                                    3,026
<INCOME-TAX>                                                       1,099
<INCOME-CONTINUING>                                                1,927
<DISCONTINUED>                                                         0
<EXTRAORDINARY>                                                        0
<CHANGES>                                                              0
<NET-INCOME>                                                       1,927
<EPS-PRIMARY>                                                        .31
<EPS-DILUTED>                                                        .31


        

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