<SUBMISSION>
<ACCESSION-NUMBER>0000897101-00-000823
<TYPE>10-Q
<PUBLIC-DOCUMENT-COUNT>5
<PERIOD>20000630
<FILING-DATE>20000814
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>APPLIED BIOMETRICS INC
<CIK>0000816568
<ASSIGNED-SIC>3845
<IRS-NUMBER>411508112
<STATE-OF-INCORPORATION>MN
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>10-Q
<ACT>34
<FILE-NUMBER>000-22146
<FILM-NUMBER>700337
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>501 E HGWY 13 STE 108
<CITY>BURNSVILLE
<STATE>MN
<ZIP>55337
<PHONE>6128901123
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>501 EAST HWY 13
<CITY>BURNSVILLE
<STATE>MN
<ZIP>55337
</MAIL-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>0001.txt
<TEXT>



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

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
--------------------------------------------------------------------------------


                                    FORM 10-Q

[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

                    For quarterly period ended June 30, 2000

                                       OR

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

                   For the transition period from ___ to ____

                         Commission File Number 0-22146

                                   ----------

                            APPLIED BIOMETRICS, INC.
             (Exact name of Registrant as specified in its charter)

                        State of Incorporation: Minnesota
                 I.R.S. Employer Identification No.: 41-1508112

        Principal Executive Offices: 501 East Highway Thirteen, Suite 108
                           Burnsville, Minnesota 55337
                        Telephone Number: (952) 890-1123

                                   ----------

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 ______

On July 31, 2000, there were 5,883,404 shares of the Registrant's common stock,
par value $.01 per share, outstanding.


<PAGE>


ITEM 1.  FINANCIAL STATEMENTS

APPLIED BIOMETRICS, INC.
CONDENSED BALANCE SHEETS
AS OF JUNE 30, 2000 AND DECEMBER 31, 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                             June 30,       December 31,
                                                                               2000             1999
                                                                          ------------      ------------
                                                                           (Unaudited)
<S>                                                                       <C>               <C>
ASSETS
Current assets:
Cash and cash equivalents ...........................................     $  2,021,655      $  1,910,356
Inventories, net ....................................................               --           167,109
Prepaid expenses and other current assets ...........................           49,347            90,577
                                                                          ------------      ------------
   Total current assets .............................................        2,071,002         2,168,042

Equipment and leasehold improvements, net ...........................          478,955           550,675
Patents and other intangibles, net ..................................           94,639            99,437
Other assets ........................................................           13,764             9,585
                                                                          ------------      ------------
   Total assets .....................................................     $  2,658,360      $  2,827,739
                                                                          ============      ============

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable ....................................................     $     28,129      $     95,255
Accrued expenses and short-term debt obligations ....................          168,873           195,849
Current maturities of capital lease obligations .....................           41,282             8,333
                                                                          ------------      ------------
   Total current liabilities ........................................          238,284           299,437

Non-current liabilities:
Capital lease obligation ............................................           49,724            11,677
                                                                          ------------      ------------
   Total liabilities ................................................          288,008           311,114
                                                                          ------------      ------------
Shareholders' equity:
Undesignated stock: authorized 5,000,000 shares of $.01 par value;
   None issued or outstanding at June 30, 2000 and December 31, 1999                --                --
Common stock: authorized 20,000,000 shares of $.01 par value;
   5,883,404 issued and outstanding at June 30, 2000 and 5,229,004 at
   December 31, 1999 ................................................           58,834            52,990
Additional paid-in capital ..........................................       25,038,419        23,362,233
Accumulated deficit .................................................      (22,726,901)      (20,898,598)
                                                                          ------------      ------------
   Total shareholders' equity .......................................        2,370,352         2,516,625
                                                                          ------------      ------------
   Total liabilities and shareholders' equity .......................     $  2,658,360      $  2,827,739
                                                                          ============      ============
</TABLE>


          The accompanying notes are an intregral part of the interim
                        unaudited financial statements.




                                       2
<PAGE>


APPLIED BIOMETRICS, INC.
CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX-MONTH PERIODS ENDED JUNE 30, 2000 AND 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                      Three Months Ended                  Six Months Ended
                                                           June 30,                           June 30,
                                                    2000              1999              2000             1999
                                                -----------       -----------     -------------     ------------
                                                          (Unaudited)                        (Unaudited)
<S>                                             <C>               <C>             <C>               <C>
Operating expenses:
Selling, general and administrative.........    $   213,338       $   313,432     $     671,079     $    491,324
Research and development....................        685,456           349,834         1,206,941          555,018
                                                -----------       -----------     -------------     ------------

Operating loss..............................      (898,794)         (662,166)        (1,878,020)      (1,046,342)

Other income, net...........................        29,406            21,914             49,717           46,157
                                                ----------        ----------       ------------      -----------

Net loss....................................    $ (869,388)       $ (640,252)     $  (1,828,303)    $ (1,000,185)
                                                ==========        ==========      =============     ============

Basic and diluted net loss per share........    $    (0.15)       $    (0.14)     $       (0.34)    $      (0.23)
                                                ==========        ==========      =============     ============

Weighted-average common shares outstanding..     5,821,455         4,468,619         5,299,599         4,414,895
                                                ==========        ==========      =============     ============
</TABLE>



           The Accompanying notes are an intregal part of the interim
                        unaudited financial statements.








                                       3
<PAGE>

APPLIED BIOMETRICS, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2000 AND
THE YEARS ENDED DECEMBER 31, 1999 AND 1998
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                          Additional
                                                    Common Stock            Paid in       Accumulated
                                                Shares        Amount        Capital         Deficit
                                                -------------------------------------------------------
<S>                                             <C>           <C>         <C>             <C>
December 31, 1997 ...........................   4,276,117     $ 42,761    $ 20,278,959    $(15,050,518)

Exercise of stock options ...................      61,000          610         281,890

1998 Net loss ...............................                                               (3,402,138)
                                               --------------------------------------------------------
December 31, 1998 ...........................   4,337,117       43,371      20,560,849     (18,452,656)

Exercise of stock options ...................     146,887        1,469       1,076,143

Issuance of stock, net of offering costs ....     815,000        8,150       2,059,412

Distribution of the net assets of
   Cardia, Inc. .............................                                 (334,171)

1999 Net loss ...............................                                               (2,445,942)
                                               --------------------------------------------------------
December 31, 1999 ...........................   5,299,004     $ 52,990    $ 23,362,233    $(20,898,598)

Stock option activity .......................       9,400           94          33,440

Non-employee stock awards ...................      50,000          500         152,650

Warrant issued in capital lease transaction .                                    4,506

Issuance of stock, net of offering costs ....     525,000        5,250       1,485,590

Net loss for the six-month period ended
   June 30, 2000 ............................                                               (1,828,303)
                                               --------------------------------------------------------
June 30, 2000 (unaudited) ...................   5,883,404     $ 58,834    $ 25,038,419    $(22,726,901)
                                               ========================================================
</TABLE>



          The accompanying notes are an intregral part of the interim
                        unaudited financial statements.




                                       4
<PAGE>


APPLIED BIOMETRICS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2000 AND 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                               Six Months Ended
                                                                                   June 30,
                                                                             2000                1999
                                                                         -----------         -----------
                                                                        (Unaudited)
<S>                                                                       <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ........................................................         (1,828,303)        $(1,000,185)

Adjustments to reconcile net loss from continuing
  operations to net cash used by operating activities:
Depreciation and amortization of capital leases .................            114,359              88,585
Amortization of patents and other intangible assets .............             24,561               8,553
Value of common stock issued in lieu of cash compensation .......            153,150                  --
Value of stock options and warrants issued in lieu of cash ......             11,901                  --
Gain on disposal of assets ......................................             (1,857)                 --

Changes in operating assets and liabilities:
Inventories .....................................................            167,109              75,480
Prepaid expenses, other current assets and other assets .........             37,051             (20,871)
Accounts payable and accrued expenses ...........................            (94,102)            (25,571)
                                                                         -----------         -----------
Net cash used in continuing operations ..........................         (1,416,131)           (874,009)
Net cash used in discontinued operations ........................                 --            (120,548)
                                                                         -----------         -----------
Net cash used in operating activities ...........................         (1,416,131)           (994,557)
                                                                         -----------         -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Maturity of marketable securities ...............................                 --             500,000
Purchase of equipment and improvements ..........................            (40,782)            (31,280)
Investments in patents and trademarks ...........................            (19,763)                 --
Discontinued operations, net ....................................                 --             (10,981)
                                                                         -----------         -----------
Net cash provided by (used in) investing activities .............            (60,545)            457,739
                                                                         -----------         -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of common stock, net of expenses .....          1,490,840                  --
Proceeds from exercise of stock options .........................             26,139              75,001
Proceeds from capital lease obligations, net of repayments
                                                                              70,996                (266)
                                                                         -----------         -----------
Net cash provided by financing activities .......................          1,587,975              74,735
                                                                         -----------         -----------
Net increase (decrease) in cash and cash equivalents ............            111,299            (462,083)
Cash and cash equivalents at beginning of year ..................          1,910,356           1,869,413
                                                                         -----------         -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ......................        $ 2,021,655         $ 1,407,330
                                                                         ===========         ===========
</TABLE>


          The accompanying notes are an intregral part of the interim
                         unaudited financial statements


                                       5
<PAGE>


APPLIED BIOMETRICS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

(1) BASIS OF PRESENTATION:

The accompanying unaudited condensed financial statements of Applied Biometrics,
Inc. ("Applied Biometrics" or the "Company") have been prepared by the Company
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. For further information, refer to the financial statements
and footnotes thereto included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1999.

In the opinion of management all adjustments considered necessary, consisting
only of items of a normal recurring nature, for a fair presentation of the
financial position, results of operations and cash flows of the Company as of
and for the interim periods presented have been included. Operating results and
cash flows for the six months ended June 30, 2000 are not necessarily indicative
of the results of operations and cash flows of the Company that may be expected
for the year ending December 31, 2000.


(2) EQUITY FINANCINGS:

During April 2000, the Company completed two private placements of 525,000 units
at an aggregate price of $1,706,250, or $3.25 per unit, resulting in net
proceeds of approximately $1,500,000 after deducting agents' commissions of
$170,625 and other estimated expenses. Each unit consisted of one share of our
common stock and one five-year warrant to purchase one share of common stock at
an exercise price of $3.625. In connection with the private placement the
Company also issued the placement agent five-year warrants to purchase 52,500
shares of Common Stock at an exercise price of $3.25 per share.




                                       6
<PAGE>


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
--------------------------------------------------------------------------------

FORWARD-LOOKING STATEMENTS

CERTAIN STATEMENTS CONTAINED IN THIS FORM 10-Q INCLUDE "FORWARD LOOKING
STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995. ALL FORWARD-LOOKING STATEMENTS IN THIS REPORT ARE BASED ON INFORMATION
AVAILABLE TO THE COMPANY AS OF THE DATE HEREOF AND THE COMPANY ASSUMES NO
OBLIGATION TO UPDATE ANY FORWARD-LOOKING STATEMENT. SUCH STATEMENTS INVOLVE
KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE THE
ACTUAL RESULT TO DIFFER MATERIALLY FROM ANY FUTURE RESULTS, PERFORMANCE OR
ACHIEVEMENTS EXPRESS OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS.


OVERVIEW

Applied Biometrics, Inc. ("Applied Biometrics" or the "Company") is a
development stage medical device company in advanced cardio-vascular and
hemodynamic diagnostic and monitoring systems.

In July 2000, the Company announced due to significant technical issues facing
the Company's Basis (TM) Cardiac Output Monitoring System (the "Basis System" or
the "System") that commercialization of the System was unlikely in the near
term.

The Company determined that upon analysis of a number of recent procedures with
its Basis System, two significant technical issues were identified. The first
issue is the System's ability to work successfully in the event of considerable
variability or turbulence in a patient's blood flow. As the System's central
purpose is to sense and interpret blood flow, the Company has been working
steadily throughout the development process to resolve a number of issues
relating to blood flow dynamics. Previously, the Company believed that it had
made sufficient progress with the System's signal processing to satisfy its
quality and performance objectives.

The second issue involves errors arising from the positioning of the
RealFlow(TM) probe during and after the surgical procedure. Degradation of the
probe's attachment or position on the patient's aorta will introduce data errors
into the System and result in inaccurate cardiac output. The Company has
determined that further investigation is warranted to resolve this issue and may
require design changes to the probe.

Both of these problems impact the System's performance, reliability and
ultimately, market potential. The Company's initial investigation has concluded
that both of these issues require significantly more research and design time.
The Company believes that the ultimate commercialization of the Basis System is
beyond the Company's current financial resources. Accordingly, the Company has
taken steps to reduce its operating costs and focus the majority of its
resources and efforts on pursuing strategic and financing alternatives. As of
the date of this report, this process is still underway.



                                       7
<PAGE>


MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED
--------------------------------------------------------------------------------


RESULTS OF CONTINUING OPERATIONS

COMPARISON OF THE THREE MONTHS ENDED JUNE 30, 2000 WITH THE
THREE MONTHS ENDED JUNE 30, 1999

Selling, general and administrative expenses decreased $100,000 in the second
quarter, from $313,000 during the 1999 period, to $213,000 during the 2000
period. The difference between periods is primarily due to expenses in the 1999
period relating to employee severance cost, hiring costs, increased legal
activity and corporate logo and image costs.

Research and development expenses increased $337,000, from $349,000 in 1999, to
$685,000 in 2000. $210,000 of the increase is due to the write-off of monitor
and probe component inventory, consistent with the determination that near-term
commercialization of the Company's Basis System is unlikely. The Company also
incurred $50,000 of consulting costs in the current quarter related to the
analysis of its probe design related to a mechanical weakness. The balance of
the quarter-to-quarter increase is due to increased costs for engineering,
operations and quality assurance personnel over the prior year three-month
period.

As discussed above, the Company is taking steps to reduce its operating costs as
it pursues strategic and financing alternatives. In the short-term, costs will
increase as the Company incurs expenses related to the termination of its
workforce and settles other operating contracts, commitments and obligations.
This forward-looking statement will be influenced primarily by the Company's
estimate of the costs to settle its outstanding operating commitments and
obligations.

Other income, primarily interest income, increased $7,000 from $22,000 in the
1999 quarter to $29,000 in the 2000 quarter. The increase is due to higher
average investment balances in the 2000 quarter than in the 1999 quarter. The
2000 first quarter net loss was $869,000, or $0.15 per share, compared to a net
loss of $640,000, or $0.14 per share in 1999.

COMPARISON OF THE SIX MONTHS ENDED JUNE 30, 2000 WITH THE
SIX MONTHS ENDED JUNE 30, 1999

Selling, general and administrative expenses increased $180,000 in the first
six-months, from $491,000 during the 1999 period, to $671,000 during the 2000
period. The Company incurred a non-cash compensation charge of $153,000 during
the current period related to stock granted to the Company's three non-employee
directors for prior and current board service. Non-employee directors of the
Company serve without cash compensation.

Research and development expenses increased $652,000, from $555,000 in 1999, to
$1,207,000 in 2000, due to increased spending on engineering, operations and
quality assurance personnel, animal testing, manufacturing pilot costs and
product evaluations. The Company hired a significant number of additional
personnel during the second half of 1999 in order to complete development, begin
manufacturing and conduct market product evaluations on the Basis System. As
discussed above, the Company wrote-off $210,000 of its monitor and probe
component inventory in the current period.

Other income, primarily interest income, increased $4,000 from $46,000 in the
1999 six-month period to $50,000 in the 2000 period. The 2000 six-month net loss
was $1,828,000, or $0.34 per share, compared to a net loss of $1,000,000, or
$0.23 per share in 1999.

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents were $2,022,000 at June 30, 2000 as compared to
$1,910,000 of cash and cash equivalents at December 31, 1999, an increase of
$112,000. Operating activities during the period used cash of




                                       8
<PAGE>


MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED
--------------------------------------------------------------------------------

$1,416,000, consisting primarily of the net loss for the six-month period offset
by approximately $304,000 of non-cash expenses and a decrease in inventory and
accounts payable. Investing activities used $60,000 for the purchase of
equipment and legal costs related to the preparation of patent applications.
Financing activities provided $1,588,000 of cash primarily from two private
equity financings in April, 2000.

The Company has determined that the current technical issues facing its sole
product, the Basis System, are beyond its current financial resources. The
Company is taking steps to reduce its operating costs and focus its remaining
resources on investigating strategic and financing alternatives, including
locating another party with greater resources to further development of its core
technology and maximize its commercial potential.


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.






                                       9
<PAGE>


APPLIED BIOMETRICS, INC.
PART II.  OTHER INFORMATION
--------------------------------------------------------------------------------

ITEM 1.  LEGAL PROCEEDINGS

None.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

During April 2000, the Company issued an aggregate of 525,000 units in two
private placement financings, with each unit consisting of one share of the
Company's common stock, $.01 par value, and one five-year warrant to purchase a
share of common stock at an exercise price of $3.625. The units were sold at a
price of $3.25 per unit, resulting in gross proceeds of $1,706,250 and net
proceeds of approximately $1,500,000 after deducting agent's commissions of
$170,625 and other estimated expenses. Miller Johnson & Kuehn, Inc. of
Minneapolis, Minnesota acted as the Company's agent in the private placement.

The units were offered and sold solely to "accredited investors" as defined in
Rule 501(a) and were issued without registration in reliance on Regulation D and
Section 4(2) under the Securities Act of 1933, as amended. In relying upon these
exemptions the Company made certain inquiries and received certain assurances to
establish that the exemptions were available for the issuance. In particular,
the Company confirmed that: (i) the offers of sales and sales were made without
general solicitation; (ii) each investor made representations that he or she was
"accredited," was sophisticated in relation to the investment, and had reviewed
certain information made available by the Company; (iii) each purchaser gave
assurance of investment intent and the certificates for the shares and the
warrants bear an appropriate legend restricting transfer; and (iv) offers and
sales were made to a limited number of persons.

In consideration of its services in connection with the April 2000 private
placements, the Company also issued the agent five-year warrants to purchase an
aggregate of 52,500 shares of its common stock at an exercise price of $3.25 per
share.

In consideration of a $425,000 capital lease commitment by Dexxon Capital
Corporation in April 2000, the Company issued a five-year warrant to Dexxon to
purchase up to 13,500 shares of its common stock at an exercise price of $3.00
per share, with the exact number of shares issuable under the warrant determined
by the Company's aggregate borrowings under the capital lease.

All of the foregoing warrants were also issued without registration in reliance
on Regulation D and Section 4(2), based, among other things, upon the fact that:
(i) the warrants were issued without general solicitation; (ii) each recipient
was determined to be sophisticated in relation to the investment; (iii) each
recipient gave assurance of investment intent and the warrants bear an
appropriate legend restricting transfer; and (iv) offers and sales were made to
a limited number of persons.

ITEM 3.  DEFAULT UPON SENIOR SECURITIES

None.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS


                                       10
<PAGE>

APPLIED BIOMETRICS, INC.
PART II.  OTHER INFORMATION - CONTINUED
--------------------------------------------------------------------------------
The following is a report of the voting results of the Company's annual
shareholders meeting held on May 9, 2000.

1.       The proposal to elect four directors was approved. Andrew M. Weiss,
         Demetre Nicoloff, Norman Dann and Jeffrey W. Green were elected until
         the next annual meeting of shareholders or until their successors are
         duly elected and qualified. The tabulation is as follows:

               Director                 Votes For              Votes Against
               --------                 ---------              -------------
            Andrew M. Weiss             4,699,666                 29,502
            Demetre Nicoloff            4,699,666                 29,502
            Normann Dann                4,699,666                 29,502
            Jeffrey W. Green            4,699,666                 29,502

2.       The proposal to amend the Company's 1998 Stock Plan to (i) increase the
         number of shares of the Company's common stock, $.01 par value per
         share, specifically reserved for issuance under the 1998 Plan by
         750,000 shares, (ii) to additionally increase the number of shares of
         the Company Common Stock available for issuance under the 1998 Plan to
         include the number of shares remaining available under the Company's
         1994 and 1996 Stock Plans or later becoming available under the 1994 or
         1996 Plans as a result of forfeiture or cancellation, (iii) to include
         non-employee directors as eligible participants under the 1998 Plan and
         (iv) to increase the number of options that my be granted in any one
         year to any one person under the 1998 Plan from 150,000, 200,000 was
         approved. There were 2,586,412 votes cast in favor and 239,002 votes
         cast against the proposal, with 63,280 shares abstaining.

3.       The proposal to approve the appointment of Ernst & Young LLP as
         independent accountants of the Company was approved. There were
         4,695,428 votes cast in favor and 600 votes cash against the proposal,
         with 33,140 shares abstaining.


ITEM 5.  OTHER INFORMATION

None.


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits. The exhibits to this quarterly report on Form 10-Q are listed
         in the exhibit index beginning on page 13.

(b)      Form 8-K. On April 17, 2000 the Company filed a report on Form 8-K
         reporting its issuance of 375,000 units, with each unit consisting of
         one share of the Company's common stock, $.01 par value, and one
         five-year warrant to purchase a share of common stock at an exercise
         price of $3.625 under item 5, other information.




                                       11
<PAGE>


SIGNATURES
--------------------------------------------------------------------------------



Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report signed on its behalf by the undersigned
hereunto duly authorized.


                             APPLIED BIOMETRICS, INC.



Dated:  August 14, 2000
                            /s/ Camille M. Meyer
                            ----------------------------------------------------
                            Camille M. Meyer
                            Vice President, Finance and Chief Financial Officer
                            (Principal Financial Officer)



                                       12
<PAGE>


APPLIED BIOMETRICS, INC.
INDEX TO EXHIBITS
--------------------------------------------------------------------------------

10.1     Applied Biometrics Amended 1998 Stock Plan, amended January 1, 2000
         (filed herewith electronically).

10.2     Master Lease dated October 18, 1999 by and between the Company and
         Dexxon Capital Corporation (filed herewith electronically).

10.3     Amendment to Master Lease dated April 10, 2000 by and between the
         Company and Dexxon Capital Corporation (filed herewith electronically).

27.1     Financial Data Schedule for the six-month period ended June 30, 2000
         (filed herewith electronically).



                                       13

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>0002.txt
<DESCRIPTION>1998 STOCK PLAN
<TEXT>


                                                                    Exhibit 10.1

                            APPLIED BIOMETRICS, INC.
                                 1998 STOCK PLAN
                       as amended through January 1, 2000






<PAGE>



                                TABLE OF CONTENTS


SECTION  1. General Purpose of Plan; Definitions..............................3

SECTION  2. Administration....................................................5

SECTION  3. Stock Subject to Plan.............................................6

SECTION  4. Eligibility.......................................................7

SECTION  5. Stock Options.....................................................7

SECTION  6. Stock Appreciation Rights........................................10

SECTION  7. Restricted Stock.................................................12

SECTION  8. Deferred Stock Awards............................................13

SECTION  9. Other Awards.....................................................14

SECTION 10.  Transfer, Leave of Absence, etc.................................14

SECTION 11.  Amendments and Termination......................................15

SECTION 12.  Unfunded Status of Plan.........................................15

SECTION 13.  General Provisions..............................................15





                                       2
<PAGE>



                            APPLIED BIOMETRICS, INC.
                                 1998 STOCK PLAN


                  SECTION 1.  General Purpose of Plan; Definitions

The name of this plan is the Applied Biometrics, Inc. 1998 Stock Plan (the
"Plan"). The purpose of the Plan is to enable Applied Biometrics, Inc. (the
"Company") and its Subsidiaries to retain and attract executives and other key
employees, non-employee directors and consultants who contribute to the
Company's success by their ability, ingenuity and industry, and to enable such
individuals to participate in the long-term success and growth of the Company by
giving them a proprietary interest in the Company.

         For purposes of the Plan, the following terms shall be defined as set
forth below:

         a.       "Agreement" means an agreement by and between the Company and
                  an optionee or recipient of an award under the Plan setting
                  forth the terms and conditions of the option or award.

         b.       "Board" means the Board of Directors of the Company.

         c.       "Cause" means a felony conviction of a participant or the
                  failure of a participant to contest prosecution for a felony,
                  or a participant's willful misconduct or dishonesty, any of
                  which is directly and materially harmful to the business or
                  reputation of the Company.

         d.       "Code" means the Internal Revenue Code of 1986, as amended.

         e.       "Committee" means the Committee referred to in Section 2 of
                  the Plan. If at any time no Committee shall be in office, then
                  the functions of the Committee specified in the Plan shall be
                  exercised by the Board, unless the Plan specifically states
                  otherwise.

         f.       "Company" means Applied Biometrics, Inc., a corporation
                  organized under the laws of the State of Minnesota (or any
                  successor corporation).

         g.       "Consultant" means any person, including an advisor, engaged
                  by the Company or a Parent Corporation of Subsidiary of the
                  Company to render services, who is compensated for such
                  services and who is not an employee of the Company or any
                  Parent Corporation or Subsidiary of the Company.


                                       3
<PAGE>


         h.       "Deferred Stock" means an award made pursuant to Section 8
                  below of the right to receive Stock at the end of a specified
                  deferral period.

         i.       "Disability" means permanent and total disability as
                  determined by the Committee.

         j.       "Fair Market Value" means the value of Stock on any given date
                  which shall be determined by the Committee as follows: (a) if
                  the Stock is listed for trading on one or more national
                  securities exchanges, or is traded on the Nasdaq Stock Market
                  or the Nasdaq Small Cap Market, the last reported sales price
                  on the principal such exchange, the Nasdaq Stock Market or the
                  Nasdaq Small Cap Market on the date in question, or if such
                  Stock shall not have been traded on any principal exchange or
                  market on such date, the last reported sales price on such
                  principal exchange, the Nasdaq Stock Market or the Nasdaq
                  Small Cap Market, on the first day prior thereto on which such
                  Stock was so traded; or (b) if the Stock is not listed for
                  trading on a national securities exchange, the Nasdaq Stock
                  Market or the Nasdaq Small Cap Market, but is traded in the
                  over-the-counter market, the closing bid price for such Stock
                  on the day prior to the date in question, or if there is no
                  closing bid price for such Stock on such day, the closing bid
                  price on the first day prior thereto on which such price
                  existed; or (c) if neither (a) nor (b) is applicable, by any
                  means fair and reasonable by the Committee, which
                  determination shall be final and binding on all parties."

         k.       "Incentive Stock Option" means any Stock Option intended to be
                  and designated as an "Incentive Stock Option" within the
                  meaning of Section 422 of the Code.

         l.       "Non-Employee Director" means a "Non-Employee Director" within
                  the meaning of Rule 16b-3(b)(3) under the Securities Exchange
                  Act of 1934.

         m.       "Non-Qualified Stock Option" means any Stock Option that is
                  not an Incentive Stock Option, and is intended to be and is
                  designated as a "Non-Qualified Stock Option."

         n.       "Other Awards" means those awards granted pursuant to Section
                  9 hereof.

         o.       "Outside Director" means a Director who: (a) is not a current
                  employee of the Company or any member of an affiliated group
                  which includes the Company; (b) is not a former employee of
                  the Company who receives compensation for prior services
                  (other than benefits under a tax-qualified retirement plan)
                  during the taxable year; (c) has not been an officer of the
                  Company; (d) does not receive remuneration from the Company,
                  either directly or indirectly, in any capacity other than as a
                  director, except as otherwise permitted under Code Section
                  162(m) and regulations thereunder. For this purpose,
                  remuneration includes any payment in exchange for good or
                  services. This definition shall be further governed by the
                  provisions of Code Section 162(m) and regulations promulgated
                  thereunder.


                                       4
<PAGE>


         p.       "Parent Corporation" means any corporation (other than the
                  Company) in an unbroken chain of corporations ending with the
                  Company if each of the corporations (other than the Company)
                  owns stock possessing 50% or more of the total combined voting
                  power of all classes of stock in one of the other corporations
                  in the chain.

         q.       "Restricted Stock" means an award of shares of Stock that are
                  subject to restrictions under Section 7 below.

         r.       "Retirement" means retirement from active employment or
                  engagement with the Company and any Subsidiary or Parent
                  Corporation of the Company on or after age 55.

         s.       "Stock" means the Common Stock, $.01 par value per share, of
                  the Company.

         t.       "Stock Appreciation Right" means the right pursuant to an
                  award granted under Section 6 below to surrender to the
                  Company all or a portion of a Stock Option in exchange for an
                  amount equal to the difference between (i) the Fair Market
                  Value, as of the date such Stock Option or such portion
                  thereof is surrendered, of the shares of Stock covered by such
                  Stock Option or such portion thereof, and (ii) the aggregate
                  exercise price of such Stock Option or such portion thereof.

         u.       "Stock Option" means any option to purchase shares of Stock
                  granted pursuant to Section 5 below.

         v.       "Subsidiary" means any corporation (other than the Company) in
                  an unbroken chain of corporations beginning with the Company
                  if each of the corporations (other than the last corporation
                  in the unbroken chain) owns stock possessing 50% or more of
                  the total combined voting power of all classes of stock in one
                  of the other corporations in the chain.

         SECTION 2.  Administration.

         The Plan shall be administered by the Board of Directors or by a
Committee appointed by the Board of Directors of the Company consisting of at
least two Directors, all of whom shall be Non-Employee Directors and Outside
Directors, who shall serve at the pleasure of the Board.

         The Committee shall have the power and authority to grant to eligible
optionees and participants, pursuant to the terms of the Plan: (i) Stock
Options, (ii) Stock Appreciation Rights, (iii) Restricted Stock, (iv) Deferred
Stock awards, or (v) Other Awards.

         In particular, the Committee shall have the authority:

         (i)      to select the optionees and participants to whom Stock
                  Options, Stock Appreciation Rights, Restricted Stock, Deferred
                  Stock awards and/or Other Awards may from time to time be
                  granted hereunder;


                                       5
<PAGE>


         (ii)     to determine whether and to what extent Incentive Stock
                  Options, Non-Qualified Stock Options, Stock Appreciation
                  Rights, Restricted Stock, Deferred Stock awards and/or Other
                  Awards, or a combination of the foregoing, are to be granted
                  hereunder;

         (iii)    to determine the number of shares to be covered by each such
                  award granted hereunder;

         (iv)     to determine the terms and conditions, not inconsistent with
                  the terms of the Plan, of any award granted hereunder
                  (including, but not limited to, any restriction on any Stock
                  Option or other award and/or the shares of Stock relating
                  thereto), provided, however, that in the event of a merger or
                  asset sale, the applicable provisions of Section 5(c) of the
                  Plan shall govern the acceleration of the vesting of any Stock
                  Option; and

         (v)      to determine whether, to what extent and under what
                  circumstances Stock and other amounts payable with respect to
                  an award under this Plan shall be deferred either
                  automatically or at the election of the participant.

         The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable; to interpret the terms and provisions of the
Plan and any award issued under the Plan (and any agreements relating thereto);
and to otherwise supervise the administration of the Plan. The Committee may
delegate to officers of the Company the authority to exercise the powers
specified in (i), (ii), (iii), (iv) and (v) above with respect to persons who
are not either the chief executive officer of the Company or the four highest
paid officers of the Company other than the chief executive officer.

         All decisions made by the Committee pursuant to the provisions of the
Plan shall be final and binding on all persons, including the Company and Plan
participants.

         SECTION 3.  Stock Subject to Plan.

         The total number of shares of Stock reserved and available for
distribution under the Plan shall be 1,250,000 shares, plus any shares of Common
Stock which, as of the date that this Plan (as amended through January 1, 2000)
is approved by the Company's shareholders, are reserved for issuance under the
Company's 1994 Amended Stock Plan and 1996 Stock Plan and which are not
thereafter issued or which have been issued but are subsequently forfeited or
cancelled and which would otherwise have been available for further issuance
under such plans. Such shares may consist, in whole or in part, of authorized
and unissued shares.

         Subject to paragraph (b)(iv) of Section 6 below, if any shares that
have been optioned ceased to be subject to Options, or if any shares subject to
any Restricted Stock or Deferred Stock award or Other Award granted hereunder
are forfeited or such award otherwise terminates without a payment being made to
the participant, such shares shall again be available for distribution in
connection with future awards under the Plan. Upon a Stock-for-Stock exercise of
a Stock Option or upon the withholding of Stock for the payment of the option
price or taxes, only the net number


                                       6
<PAGE>


of shares issued to the optionee shall be used to calculate the number of shares
remaining available for distribution under the Plan.

         In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, stock split, other change in corporate
structure affecting the Stock, or spin-off or other distribution of assets to
shareholders, such substitution or adjustment shall be made in the aggregate
number of shares reserved for issuance under the Plan, in the number and option
price of shares subject to outstanding options granted under the Plan, and in
the number of shares subject to Restricted Stock or Deferred Stock awards
granted under the Plan as may be determined to be appropriate by the Committee,
in its sole discretion, provided that the number of shares subject to any award
shall always be a whole number. Such adjusted option price shall also be used to
determine the amount payable by the Company upon the exercise of any Stock
Appreciation Right associated with any Option.


         SECTION 4.  Eligibility.

         Officers, other key employees of the Company and Subsidiaries,
non-employee directors and Consultants who are responsible for or contribute to
the management, growth and/or profitability of the business of the Company and
its Subsidiaries are eligible to be granted Stock Options, Stock Appreciation
Rights, Restricted Stock or Deferred Stock awards or Other Awards under the
Plan. The optionees and participants under the Plan shall be selected from time
to time by the Committee, in its sole discretion, from among those eligible, and
the Committee shall determine, in its sole discretion, the number of shares
covered by each award.

         Notwithstanding the foregoing, no person shall receive grants of Stock
Options, Restricted and Deferred Stock under this Plan which exceed 200,000
shares during any fiscal year of the Company.

         SECTION 5.  Stock Options.

         Any Stock Option granted under the Plan shall be in such form as the
Committee may from time to time approve.

         The Stock Options granted under the Plan may be of two types: (i)
Incentive Stock Options and (ii) Non-Qualified Stock Options. No Incentive Stock
Options shall be granted under the Plan after June 1, 2008.

         The Committee shall have the authority to grant any optionee Incentive
Stock Options, Non-Qualified Stock Options, or both types of options (in each
case with or without Stock Appreciation Rights). To the extent that any option
does not qualify as an Incentive Stock Option, it shall constitute a separate
Non-Qualified Stock Option.

         Anything in the Plan to the contrary notwithstanding, no term of this
Plan relating to Incentive Stock Options shall be interpreted, amended or
altered, nor shall any discretion or authority granted under the Plan be so
exercised, so as to disqualify either the Plan or any Incentive Stock


                                       7
<PAGE>


Option under Section 422 of the Code. The preceding sentence shall not preclude
any modification or amendment to an outstanding Incentive Stock Option, whether
or not such modification or amendment results in disqualification of such Option
as an Incentive Stock Option, provided the optionee consents in writing to the
modification or amendment.

         Options granted under the Plan shall be subject to the following terms
and conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem desirable.

         (a) Option Price. The option price per share of Stock purchasable under
a Stock Option shall be determined by the Committee at the time of grant. In no
event shall the option price per share of Stock purchasable under an Incentive
Stock Option or a Non-Qualified Stock Option be less than 100% of the Fair
Market Value of the Stock on the date of the grant of the option. If an employee
owns or is deemed to own (by reason of the attribution rules applicable under
Section 424(d) of the Code) more than 10% of the combined voting power of all
classes of stock of the Company or any Parent Corporation or Subsidiary and an
Incentive Stock Option is granted to such employee, the option price shall be no
less than 110% of the Fair Market Value of the Stock on the date the option is
granted.

         (b) Option Term. The term of each Stock Option shall be fixed by the
Committee, but no Incentive Stock Option shall be exercisable more than ten
years after the date the option is granted. If an employee owns or is deemed to
own (by reason of the attribution rules of Section 424(d) of the Code) more than
10% of the combined voting power of all classes of stock of the Company or any
Parent Corporation or Subsidiary and an Incentive Stock Option is granted to
such employee, the term of such option shall be no more than five years from the
date of grant.

         (c) Exercisability. Stock Options shall be exercisable at such time or
times as determined by the Committee at or after grant. If the Committee
provides, in its discretion, that any option is exercisable only in
installments, the Committee may waive such installment exercise provisions at
any time. Notwithstanding the foregoing, unless the Stock Option Agreement
provides otherwise, any Stock Option granted under this Plan shall be
exercisable in full, without regard to any installment exercise provisions, for
a period specified by the Company, but not to exceed sixty (60) days prior to or
subsequent to the occurrence of any of the following events: (i) dissolution or
liquidation of the Company other than in conjunction with a bankruptcy of the
Company or any similar occurrence, (ii) any merger, consolidation, acquisition,
separation, reorganization, or similar occurrence, where the Company will not be
the surviving entity or (iii) the transfer of substantially all of the assets of
the Company or the acquisition of beneficial ownership of more than 50% of any
class of equity security of the Company.

         (d) Method of Exercise. Stock Options may be exercised in whole or in
part at any time during the option period by giving written notice of exercise
to the Company specifying the number of shares to be purchased. Such notice
shall be accompanied by payment in full of the purchase price, either by
certified or bank check, or by any other form of legal consideration deemed
sufficient by the Committee and consistent with the Plan's purpose and
applicable law, including promissory notes or a properly executed exercise
notice together with irrevocable instructions to a broker acceptable to the
Company to promptly deliver to the Company the amount of sale or loan proceeds


                                       8
<PAGE>


to pay the exercise price. As determined by the Committee at the time of grant
or exercise, in its sole discretion, payment in full or in part may also be made
in the form of unrestricted Stock already owned by the optionee (which in the
case of Stock acquired upon exercise of an option have been owned for more than
six months on the date of surrender)(based on the Fair Market Value of the Stock
on the date immediately preceding the date the option is exercised, as
determined by the Committee), provided, however, that, in the case of an
Incentive Stock Option, the right to make a payment in the form of already owned
shares may be authorized only at the time the option is granted. No shares of
Stock shall be issued until full payment therefor has been made. An optionee
shall generally have the rights to dividends and other rights of a shareholder
with respect to shares subject to the option when the optionee has given written
notice of exercise, has paid in full for such shares and, if requested, has
given the representation described in paragraph (a) of Section 13.

         (e)      Non-transferability of Options.

                  (i) Subject to Section 5(e)(ii) below, no Stock Option shall
         be transferable by the optionee otherwise than by will or by the laws
         of descent and distribution, and all Stock Options shall be
         exercisable, during the optionee's lifetime, only by the optionee.

                  (ii) The Committee may, in its discretion, authorize all or a
         portion of the options to be granted to an optionee to be on terms
         which permit transfer by such optionee to (A) the spouse, children or
         grandchildren of the optionees ("Immediate Family Members"), (B) a
         trust or trusts for the exclusive benefit of such Immediate Family
         Members, or (C) a partnership or partnerships in which such Immediate
         Family Members are the only partners, provided that (1) there may be no
         consideration for any such transfer, (2) the stock option agreement
         pursuant to which such options are granted must be approved by the
         Committee, and must expressly provide for transferability in a manner
         consistent with this Section 5(e)(ii), and (3) subsequent transfers of
         transferred options shall be prohibited except those in accordance with
         Section 5(e)(i). Following transfer, any such options shall continue to
         be subject to the same terms and conditions as were applicable
         immediately prior to transfer, provided that the term "optionee" herein
         shall in such event be deemed to refer to the transferee, except that
         the events of termination of employment of Sections 5(f), 5(g), 5(h)
         and 5(i) hereof shall continue to be applied with respect to the
         original optionee, following which the options shall be exercisable by
         the transferee only to the extent, and for the periods specified in
         such Sections.

         (f) Termination by Death. If an optionee's employment by the Company
and any Subsidiary or Parent Corporation terminates by reason of death, the
Stock Option may thereafter be immediately exercised, to the extent then
exercisable (or on such accelerated basis as the Committee shall determine at or
after grant), by the legal representative of the estate or by the legatee of the
optionee under the will of the optionee, for a period of three years (or such
shorter period as the Committee shall specify at grant) from the date of such
death or until the expiration of the stated term of the option, whichever period
is shorter. In the event of termination of employment by reason of death, if an
Incentive Stock Option is exercised after the expiration of the exercise periods
that apply for purposes of Section 422 of the Code, the option will thereafter
be treated as a Non-Qualified Stock Option.


                                       9
<PAGE>


         (g) Termination by Reason of Disability. If an optionee's employment by
the Company and any Subsidiary or Parent Corporation terminates by reason of
Disability, any Stock Option held by such optionee may thereafter be exercised,
to the extent it was exercisable at the time of termination due to Disability
(or on such accelerated basis as the Committee shall determine at or after
grant), but may not be exercised after three years (or such shorter period as
the Committee shall specify at grant) from the date of such termination of
employment or the expiration of the stated term of the option, whichever period
is the shorter. In the event of termination of employment by reason of
Disability, if an Incentive Stock Option is exercised after the expiration of
the exercise periods that apply for purposes of Section 422 of the Code, the
option will thereafter be treated as a Non-Qualified Stock Option.

         (h) Termination by Reason of Retirement. If an optionee's employment by
the Company and any Subsidiary or Parent Corporation terminates by reason of
Retirement, any Stock Option held by such optionee may thereafter be exercised
to the extent it was exercisable at the time of such Retirement, but may not be
exercised after three years (or such shorter period as Committee shall specify
at grant) from the date of such termination of employment or the expiration of
the stated term of the option, whichever period is the shorter. In the event of
termination of employment by reason of Retirement, if an Incentive Stock Option
is exercised after the expiration of the exercise periods that apply for
purposes of Section 422 of the Code, the option will thereafter be treated as a
Non-Qualified Stock Option.

         (i) Other Termination. Unless otherwise determined by the Committee, if
an optionee's employment by the Company and any Subsidiary or Parent Corporation
terminates for any reason other than death, Disability or Retirement, the Stock
Option may be exercised to the extent it was exercisable at such termination for
the lesser of three months or the balance of the option's term. In the event of
a termination of employment other than for death, Disability or Retirement and
if pursuant to its terms any Incentive Stock Option is exercised after the
expiration of the exercise periods that apply for purposes of Section 422 of the
Code, the option will thereafter be treated as a Non-Qualified Stock Option. In
the event the optionee is terminated for Cause by the Company or any Subsidiary
or Parent Corporation, the Stock Option shall thereupon terminate.

         (j) Annual Limit on Incentive Stock Options. The aggregate Fair Market
Value (determined as of the time the Option is granted) of the Common Stock with
respect to which an Incentive Stock Option under this Plan or any other plan of
the Company and any Subsidiary or Parent Corporation is exercisable for the
first time by an optionee during any calendar year shall not exceed $100,000.

         SECTION 6.  Stock Appreciation Rights.

         (a) Grant and Exercise. Stock Appreciation Rights may be granted in
conjunction with all or part of any Stock Option granted under the Plan. In the
case of a Non-Qualified Stock Option, such rights may be granted either at or
after the time of the grant of such Option. In the case of an Incentive Stock
Option, such rights may be granted only at the time of the grant of the option.

         A Stock Appreciation Right or applicable portion thereof granted with
respect to a given Stock Option shall terminate and no longer be exercisable
upon the termination or exercise of the


                                       10
<PAGE>


related Stock Option, except that a Stock Appreciation Right granted with
respect to less than the full number of shares covered by a related Stock Option
shall not be reduced until the exercise or termination of the related Stock
Option exceeds the number of shares not covered by the Stock Appreciation Right.

         A Stock Appreciation Right may be exercised by an optionee, in
accordance with paragraph (b) of this Section 6, by surrendering the applicable
portion of the related Stock Option. Upon such exercise and surrender, the
optionee shall be entitled to receive an amount determined in the manner
prescribed in paragraph (b) of this Section 6. Stock Options which have been so
surrendered, in whole or in part, shall no longer be exercisable to the extent
the related Stock Appreciation Rights have been exercised.

         (b) Terms and Conditions. Stock Appreciation Rights shall be subject to
such terms and conditions, not inconsistent with the provisions of the Plan, as
shall be determined from time to time by the Committee, including the following:

                  (i) Stock Appreciation Rights shall be exercisable only at
         such time or times and to the extent that the Stock Options to which
         they relate shall be exercisable in accordance with the provisions of
         Section 5 and this Section 6 of the Plan.

                  (ii) Upon the exercise of a Stock Appreciation Right, an
         optionee shall be entitled to receive up to, but not more than, an
         amount in cash or shares of Stock equal in value to the excess of the
         Fair Market Value of one share of Stock over the option price per share
         specified in the related option multiplied by the number of shares in
         respect of which the Stock Appreciation Right shall have been
         exercised, with the Committee having the right to determine the form of
         payment; provided the Committee may not require the optionee to receive
         more than 50% of the aggregate value of such Stock Appreciation Rights
         in shares of Stock.

                  (iii) Stock Appreciation Rights shall be transferable only
         when and to the extent that the underlying Stock Option would be
         transferable under Section 5 of the Plan.

                  (iv) Upon the exercise of a Stock Appreciation Right, the
         Stock Option or part thereof to which such Stock Appreciation Right is
         related shall be deemed to have been exercised for the purpose of the
         limitation set forth in Section 3 of the Plan on the number of shares
         of Stock to be issued under the Plan, but only to the extent of the
         number of shares issued or issuable under the Stock Appreciation Right
         at the time of exercise based on the value of the Stock Appreciation
         Right at such time.

                  (v) A Stock Appreciation Right granted in connection with an
         Incentive Stock Option may be exercised only if and when the market
         price of the Stock subject to the Incentive Stock Option exceeds the
         exercise price of such Option.

                  (vi) Each award shall be confirmed by, and subject to the
         terms of, a Stock Appreciation Rights Agreement executed by the Company
         and the participant.


                                       11
<PAGE>


         SECTION 7.  Restricted Stock.

         (a) Administration. Shares of Restricted Stock may be issued either
alone or in addition to other awards granted under the Plan. The Committee shall
determine the officers and key employees of the Company and Subsidiaries to
whom, and the time or times at which, grants of Restricted Stock will be made,
the number of shares to be awarded, the time or times within which such awards
may be subject to forfeiture, and all other conditions of the awards. The
Committee may also condition the grant of Restricted Stock upon the attainment
of specified performance goals. The provisions of Restricted Stock awards need
not be the same with respect to each recipient.

         (b) Awards and Certificates. The prospective recipient of an award of
shares of Restricted Stock shall not have any rights with respect to such award,
unless and until such recipient has executed an Agreement evidencing the award
and has delivered a fully executed copy thereof to the Company, and has
otherwise complied with the then applicable terms and conditions.

                  (i) Each participant shall be issued a stock certificate in
         respect of shares of Restricted Stock awarded under the Plan. Such
         certificate shall be registered in the name of the participant, and
         shall bear an appropriate legend referring to the terms, conditions,
         and restrictions applicable to such award, substantially in the
         following form:

                  "The transferability of this certificate and the shares of
                  stock represented hereby are subject to the terms and
                  conditions (including forfeiture) of the Applied Biometrics,
                  Inc. 1998 Stock Plan and an Agreement entered into between the
                  registered owner and Applied Biometrics, Inc. Copies of such
                  Plan and Agreement are on file in the offices of Applied
                  Biometrics, Inc., 501 East Highway 13, Suite 108, Burnsville,
                  MN 55337.

                  (ii) The Committee shall require that the stock certificates
         evidencing such shares be held in custody by the Company until the
         restrictions thereon shall have lapsed, and that, as a condition of any
         Restricted Stock award, the participant shall have delivered a stock
         power, endorsed in blank, relating to the Stock covered by such award.

         (c) Restrictions and Conditions. The shares of Restricted Stock awarded
pursuant to the Plan shall be subject to the following restrictions and
conditions:

                  (i) Subject to the provisions of this Plan and the award
         Agreement, during a period set by the Committee commencing with the
         date of such award (the "Restriction Period"), the participant shall
         not be permitted to sell, transfer, pledge or assign shares of
         Restricted Stock awarded under the Plan. In no event shall the
         Restriction Period be less than one (1) year. Within these limits, the
         Committee may provide for the lapse of such restrictions in
         installments where deemed appropriate.

                  (ii) Except as provided in paragraph (c)(i) of this Section 7,
         the participant shall have, with respect to the shares of Restricted
         Stock, all of the rights of a shareholder of the Company, including the
         right to vote the shares and the right to receive any cash dividends.


                                       12
<PAGE>


         The Committee, in its sole discretion, may permit or require the
         payment of cash dividends to be deferred and, if the Committee so
         determines, reinvested in additional shares of Restricted Stock (to the
         extent shares are available under Section 3 and subject to paragraph
         (g) of Section 13). Certificates for shares of unrestricted Stock shall
         be delivered to the grantee promptly after, and only after, the period
         of forfeiture shall have expired without forfeiture in respect of such
         shares of Restricted Stock.

                  (iii) Subject to the provisions of the award Agreement and
         paragraph (c)(iv) of this Section 7, upon termination of employment for
         any reason during the Restriction Period, all shares still subject to
         restriction shall be forfeited by the participant.

                  (iv) In the event of special hardship circumstances of a
         participant whose employment is terminated (other than for Cause),
         including death, Disability or Retirement, or in the event of an
         unforeseeable emergency of a participant still in service, the
         Committee may, in its sole discretion, when it finds that a waiver
         would be in the best interest of the Company, waive in whole or in part
         any or all remaining restrictions with respect to such participant's
         shares of Restricted Stock.

                  (v) Notwithstanding the foregoing, all restrictions with
         respect to any participant's shares of Restricted Stock shall lapse on
         the date determined by the Committee, but in no event more than sixty
         (60) days prior to or subsequent to the occurrence of any of the
         following events: (i) dissolution or liquidation of the Company other
         than in conjunction with a bankruptcy of the Company or any similar
         occurrence, (ii) any merger, consolidation, acquisition, separation,
         reorganization, or similar occurrence, where the Company will not be
         the surviving entity or (iii) the transfer of substantially all of the
         assets of the Company or the acquisition of beneficial ownership of
         more than 50% of any class of equity security of the Company.

         SECTION 8.  Deferred Stock Awards.

         (a) Administration. Deferred Stock may be awarded either alone or in
addition to other awards granted under the Plan. The Committee shall determine
the officers and key employees of the Company and Subsidiaries to whom and the
time or times at which Deferred Stock shall be awarded, the number of Shares of
Deferred Stock to be awarded to any participant or group of participants, the
duration of the period (the "Deferral Period") during which, and the conditions
under which, receipt of the Stock will be deferred, and the terms and conditions
of the award in addition to those contained in paragraph (b) of this Section 8.
The Committee may also condition the grant of Deferred Stock upon the attainment
of specified performance goals. The provisions of Deferred Stock awards need not
be the same with respect to each recipient.

         (b)      Terms and Conditions.

                  (i) Subject to the provisions of this Plan and the award
         agreement, Deferred Stock awards may not be sold, assigned,
         transferred, pledged or otherwise encumbered during the Deferral
         Period. In no event shall the Deferral Period be less than one (1)
         year. At the expiration of the Deferral Period (or Elective Deferral
         Period, where applicable),


                                       13
<PAGE>


         share certificates shall be delivered to the participant, or his legal
         representative, in a number equal to the shares covered by the Deferred
         Stock award.

                  (ii) Amounts equal to any dividends declared during the
         Deferral Period with respect to the number of shares covered by a
         Deferred Stock award will be paid to the participant currently or
         deferred and deemed to be reinvested in additional Deferred Stock or
         otherwise reinvested, all as determined at the time of the award by the
         Committee, in its sole discretion.

                  (iii) Subject to the provisions of the award Agreement and
         paragraph (b)(iv) of this Section 8, upon termination of employment for
         any reason during the Deferral Period for a given award, the Deferred
         Stock in question shall be forfeited by the participant.

                  (iv) In the event of special hardship circumstances of a
         participant whose employment is terminated (other than for Cause)
         including death, Disability or Retirement, or in the event of an
         unforeseeable emergency of a participant still in service, the
         Committee may, in its sole discretion, when it finds that a waiver
         would be in the best interest of the Company, waive in whole or in part
         any or all of the remaining deferral limitations imposed hereunder with
         respect to any or all of the participant's Deferred Stock.

                  (v) A participant may elect to further defer receipt of the
         award for a specified period or until a specified event (the "Elective
         Deferral Period"), subject in each case to the Committee's approval and
         to such terms as are determined by the Committee, all in its sole
         discretion. Subject to any exceptions adopted by the Committee, such
         election must generally be made prior to completion of one half of the
         Deferral Period for a Deferred Stock award (or for an installment of
         such an award).

                  (vi) Each award shall be confirmed by, and subject to the
         terms of, a Deferred Stock Agreement executed by the Company and the
         participant.

         SECTION 9.  Other Awards.

         The Committee may from time to time grant Stock, other Stock based and
non-Stock based awards under this Plan including without limitations those
awards pursuant to which shares of Stock are or in the future may be acquired,
awards denominated in Stock units, securities convertible into Stock, phantom
securities and dividend equivalents. The Committee shall determine the terms and
conditions of such Stock, Stock based and non-Stock based awards provided that
such awards shall not be inconsistent with the terms of this Plan.

         SECTION 10.  Transfer, Leave of Absence, etc

         For purposes of the Plan, the following events shall not be deemed a
termination of employment:

         (a) a transfer of an employee from the Company to a Parent Corporation
or Subsidiary, or from a Parent Corporation or Subsidiary to the Company, or
from one Subsidiary to another;


                                       14
<PAGE>


         (b) a leave of absence, approved in writing by the Committee, for
military service or sickness, or for any other purpose approved by the Company
if the period of such leave does not exceed ninety (90) days (or such longer
period as the Committee may approve, in its sole discretion); and

         (c) a leave of absence in excess of ninety (90) days, approved in
writing by the Committee, but only if the employee's right to reemployment is
guaranteed either by a statute or by contract, and provided that, in the case of
any leave of absence, the employee returns to work within 30 days after the end
of such leave.

         SECTION 11.  Amendments and Termination

         The Board may amend, alter, or discontinue the Plan, but no amendment,
alteration, or discontinuation shall be made (i) which would impair the rights
of an optionee or participant under a Stock Option, Stock Appreciation Right,
Restricted Stock, Deferred Stock or other Stock-based award theretofore granted,
without the optionee's or participant's consent, or (ii) which without the
approval of the stockholders of the Company would cause the Plan to no longer
comply with Section 422 of the Code or any other regulatory requirements.

         The Committee may amend the terms of any award or option theretofore
granted, prospectively or retroactively, but, subject to Section 3 above, no
such amendment shall impair the rights of any holder without his consent. The
Committee may also substitute new Stock Options for previously granted options,
including previously granted options having higher option prices.

         SECTION 12.  Unfunded Status of Plan.

         The Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payments not yet made to a
participant or optionee by the Company, nothing contained herein shall give any
such participant or optionee any rights that are greater than those of a general
creditor of the Company. In its sole discretion, the Committee may authorize the
creation of trusts or other arrangements to meet the obligations created under
the Plan to deliver Stock or payments in lieu of or with respect to awards
hereunder, provided, however, that the existence of such trusts or other
arrangements is consistent with the unfunded status of the Plan.

         SECTION 13.  General Provisions.

         (a) All certificates for shares of Stock delivered under the Plan
pursuant to any Restricted Stock, Deferred Stock or other Stock-based awards
shall be subject to such stock-transfer orders and other restrictions as the
Committee may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock exchange upon
which the Stock is then listed, and any applicable Federal or state securities
laws, and the Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions. The Committee
may require each person purchasing shares pursuant to a Stock Option under the
Plan to represent to and agree with the Company in writing that the optionee is
acquiring


                                       15
<PAGE>


the shares without a view to distribution thereof. The certificates
for such shares may include any legend which the Committee deems appropriate to
reflect any restrictions on transfer.

         (b) Subject to paragraph (d) below, recipients of Restricted Stock,
Deferred Stock and other Stock-based awards under the Plan (other than Stock
Options) are not required to make any payment or provide consideration other
than the rendering of services.

         (c) Nothing contained in this Plan shall prevent the Board of Directors
from adopting other or additional compensation arrangements, subject to
stockholder approval if such approval is required; and such arrangements may be
either generally applicable or applicable only in specific cases. The adoption
of the Plan shall not confer upon any employee of the Company or any Subsidiary
any right to continued employment with the Company or a Subsidiary, as the case
may be, nor shall it interfere in any way with the right of the Company or a
Subsidiary to terminate the employment of any of its employees at any time.

         (d) Each participant shall, no later than the date as of which any part
of the value of an award first becomes includible as compensation in the gross
income of the participant for Federal income tax purposes, pay to the Company,
or make arrangements satisfactory to the Committee regarding payment of, any
Federal, state, or local taxes of any kind required by law to be withheld with
respect to the award. The obligations of the Company under the Plan shall be
conditional on such payment or arrangements and the Company and Subsidiaries
shall, to the extent permitted by law, have the right to deduct any such taxes
from any payment of any kind otherwise due to the participant. With respect to
any award under the Plan, if the terms of such award so permit, a participant
may elect by written notice to the Company to satisfy part or all of the
withholding tax requirements associated with the award by (i) authorizing the
Company to retain from the number of shares of Stock that would otherwise be
deliverable to the participant, or (ii) delivering to the Company from shares of
Stock already owned by the participant, that number of shares having an
aggregate Fair Market Value equal to part or all of the tax payable by the
participant under this Section 13(d). Any such election shall be in accordance
with, and subject to, applicable tax and securities laws, regulations and
rulings and in the event shares are withheld, the amount withheld may not exceed
the minimum required federal, state and FICA withholding amount.

         (e) At the time of grant, the Committee may provide in connection with
any grant made under this Plan that the shares of Stock received as a result of
such grant shall be subject to a repurchase right in favor of the Company
pursuant to which any participant who, at any time within a specified period
after termination of employment with the Company, directly or indirectly
competes with, or is employed by a competitor of, the Company, shall be required
to offer to the Company any shares that the participant acquired under the Plan,
with the price being the then Fair Market Value of the Stock, subject to such
other terms and conditions as the Committee may specify at the time of grant.

         (f) The Committee may, at the time of the grant of an award under the
Plan, provide the Company with the right to repurchase, or require the
forfeiture of, shares of Stock acquired pursuant to the Plan by any participant
who, at any time within two years after termination of employment with the
Company or any Subsidiary or Parent Corporation, directly or indirectly competes
with, or is employed by a competitor of, the Company or any Subsidiary or Parent
Corporation.


                                       16
<PAGE>


         (g) The reinvestment of dividends in additional Restricted Stock (or in
Deferred Stock or other types of Plan awards) at the time of any dividend
payment shall only be permissible if the Committee (or the Company's chief
financial officer) certifies in writing that under Section 3 sufficient shares
are available for such reinvestment (taking into account then outstanding Stock
Options and other Plan awards).

         SECTION 14.  Effective Date of Plan.

         The Plan shall be effective on the date it is adopted by the Board of
Directors.

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


Adopted by the Board of Directors -- June 1, 1998.
Approved by the Shareholders -- June 12, 1998.
Amended by the Board of Directors January 1, 2000.








                                       17

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>3
<FILENAME>0003.txt
<DESCRIPTION>MASTER LEASE AGREEMENT
<TEXT>


                                                                    Exhibit 10.2
-------------------------------------------------
DEXXON CAPITAL CORPORATION

                             MASTER LEASE AGREEMENT
                                    NO. 22250
                             Dated October 18, 1999


LESSEE:           APPLIED BIOMETRICS, INC.
ADDRESS:          501 East Highway 13
                  Burnsville, MN  55337


This Master Lease Agreement is entered into as of the date set forth below by
and between DEXXON CAPITAL CORPORATION ("Lessor") and Lessee with reference to
the following facts:

A.       From time to time Lessee desires to lease various items of personal
         property from Lessor; and

B.       Lessor and Lessee desire to set forth the terms and conditions under
         which such lease(s) shall be governed.

C.       "Master Lease" shall mean this agreement; "Lease" shall mean each
         Schedule entered into between Lessor and Lessee pursuant to this Master
         Lease.

NOW THEREFORE, Lessor and Lessee agree as follows:

                          TERMS AND CONDITIONS OF LEASE

1. LEASE. Lessor shall lease to Lessee and Lessee shall lease from Lessor the
items of equipment and other personal property (hereinafter, together with all
replacements, repairs, substitutions, additions, accessions and accessories
therefor and/ or thereto, called the "Equipment") described in the lease
Schedule(s) (hereinafter individually called a "Schedule" and collectively
called "Schedules") now or hereafter from time to time executed by Lessor and
Lessee and made a part hereof, all upon the terms and conditions hereinafter set
forth as supplemented with respect to each item of Equipment by the terms and
conditions set forth in each Schedule.

2. TERM. Each Schedule shall become effective upon acceptance by Lessor by
signing and dating each Schedule and the term for any Schedule(s) shall commence
on the day that the leased property has been delivered to and is usable by
Lessee ("Commencement Date"). Lessee shall at its sole discretion select the
type, quantity and supplier of each item of Equipment. Lessor shall not be
liable to Lessee for any failure or delay in obtaining delivery of any
Equipment. Upon delivery of any Equipment to Lessee, Lessee shall forthwith
inspect such Equipment and, within ten( 10) days of delivery of the Equipment,
Lessee shall execute and deliver to Lessor a Delivery and Acceptance
Certificate, in form and substance satisfactory to Lessor. Lessee's execution
and delivery of a Delivery and Acceptance Certificate covering any Equipment
shall conclusively establish, as between Lessor and Lessee, that such Equipment
has been unconditionally accepted by Lessee for all purposes of this Lease.

With respect to each Lease, if for any reason the Equipment has not been
delivered, installed and accepted by Lessee within sixty(60) days after it is
ordered by Lessor, or if Lessee fails to accept the Equipment and execute a
Delivery and Acceptance Certificate within (10) days following delivery of the
Equipment, Lessor may at Lessor's option, terminate Lessor's obligations under
such Lease and Lessee shall, on demand of Lessor, pay Lessor all amounts paid or
owing by Lessor in respect to the purchase of such Equipment and indemnify and
hold Lessor harmless from any and all liabilities, claims, costs and expenses to
the manufacturer or supplier/ vendor of the Equipment or any other party,
arising out of or relating to the Equipment or the Lease. Upon payment of such
amounts, Lessor shall release, remise and quit claim such Equipment to Lessee,
AS IS, WHERE IS, AND WITHOUT WARRANTY EXPRESSED OR IMPLIED BY LESSOR AS TO ANY
MATTER WHATSOEVER. Lessee shall upon such payment be subrogated to Lessor's
claim, if any, against the manufacturer or supplier/ vendor of such Equipment.

Lessee agrees that its remedies should it find fault with any of the Equipment
shall be and are solely against the manufacturer and/or supplier/vendor of such
Equipment. The base term of each Lease shall commence on the first day of the
month following the Commencement Date and terminate upon the expiration of the
number of months specified in each Schedule. Each Lease may be terminated by
Lessee at the end of the base term if one hundred eighty (180) days prior to the
end of the base term, written notice of such termination is delivered to Lessor
(by certified mail). If Lessee does not exercise option to purchase as stated in
Lease Schedule (s) , Lease may be terminated by Lessor at the end of the base
term if at least thirty (30) days prior to the end of the base term, written
notice of such termination is delivered to Lessee (by certified mail). If Lessee
does not exercise option to purchase, the term of each Lease automatically shall
be extended for a successive one year period following the end of the initial
base term at the rent stated on the respective Schedule (s). During this
extension period, Lessor, at its sole option, may terminate each Lease upon
sixty (60) days prior written notice to Lessee (by certified mail), After the
extension period, each Lease may be terminated by either Lessor or Lessee at the
end of any calendar month, provided one hundred twenty (120) days prior written
notice of such termination is delivered to the other party (by certified mail).

3. RENT. The monthly rent payable with respect to any Schedule(s) shall be the
amount shown on such Schedules). Lessee shall pay to Lessor the monthly rent for
each Schedule, in advance, for each month or any part thereof that each Lease is
in effect. The first such payment, with respect to any schedule shall be made on
the first day of the month following the Commencement Date. A prorata portion of
the rental charges based on a daily rental of one-thirtieth (1/30) of the
monthly rental calculated from the Commencement Date to the end of the month
shall be due and payable at the Commencement Date. Installments of rent which
are not paid within ten (10) days of their due date shall be subject to a late
charge equal to up to ten (10) percent of each installment of rent. All rent
shall be paid at the place of business of Lessor shown above or such other place
as Lessor may designate by written notice to Lessee. Lessee agrees to pay all
taxes and fees, including, but not limited to, property taxes, sales taxes,
business taxes,documentation and filing fees.

4. DISCLAIMER OF LESSOR WARRANTIES. LESSEE ACKNOWLEDGES THAT THE EQUIPMENT TO BE
LEASED HEREUNDER WlLL BE OF A TYPE, DESIGN, SIZE, CAPACITY AND MANUFACTURER
SELECTED BY LESSEE; THAT LESSOR IS NOT A MANUFACTURER OF, OR DEALER IN, THE
EQUIPMENT; THAT NEITHER THE VENDOR, THE MANUFACTURER NOR ANY AGENT THEREOF IS AN
AGENT OF LESSOR; THAT LESSOR HAS NOT, WlLL NOT, AND HAS NO OBLIGATION TO,
INSPECT THE EQUIPMENT PRIOR TO DELIVERY TO LESSEE; THAT LESSOR IS NOT
RESPONSIBLE FOR REPAIRS, SERVICE OR DEFECTS IN EQUIPMENT OR OPERATION THEREOF;
AND THAT LESSOR HAS NOT MADE, WILL NOT MAKE AND HEREBY DISCLAIMS ANY
REPRESENTATION, WARRANTY OR COVENANT, EXPRESS OR IMPLIED, OF ANY KIND OR


<PAGE>


ANY MATTER WHATSOEVER ON WHICH LESSEE MAY RELY, INCLUDING WITHOUT LIMITATION THE
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, COMPLIANCE WITH LAWS,
GOVERNMENTAL REGULATIONS OR RULES, ORDERS, SPECIFICATIONS OR CONTRACT,
CONDITION, TITLE, QUALITY, DESIGN, DURABILITY OR SUITABILITY FOR LESSEE'S
PURPOSES OF THE EQUIPMENT IN ANY RESPECT, OR ANY PATENT INFRINGEMENT, OR LATENT
OR PATENT DEFECTS. LESSOR WILL, HOWEVER, UPON LESSEE'S REQUEST AND IF LESSEE IS
NOT IN DEFAULT, TAKE ANY STEPS REASONABLY WITHIN ITS POWER TO MAKE AVAILABLE TO
LESSEE ANY MANUFACTURER'S OR SIMILAR WARRANTY APPLICABLE TO THE EQUIPMENT.
LESSOR SHALL NOT BE LIABLE TO LESSEE FOR ANY ABILITY, LOSS OR DAMAGE CAUSED OR
ALLEGED TO BE CAUSED DIRECTLY OR INDIRECTLY BY THE EQUIPMENT OR ANY INADEQUACY
THEREOF OR DEFICIENCY OR DEFECT THEREIN OR BY ANY INCIDENT WHATSOEVER IN
CONNECTION THEREWITH, AND LESSEE HEREBY ACKNOWLEDGES THE FOREGOING DISCLAIMER BY
LESSOR.

5. NET LEASE; NO OFFSET. THIS IS A NET LEASE, AND ALL RENT AND ALL OTHER SUMS
PAYABLE BY LESSEE HEREUNDER SHALL BE PAID UNCONDITIONALLY WHEN DUE, WITHOUT
ABATEMENT, DEDUCTION, COUNTERCLAIM OR SETOFF OF ANY NATURE, INCLUDING WITHOUT
LIMITATION ANY COUNTERCLAIM OR SETOFF ARISING OUT OF ANY PRESENT OR FUTURE CLAIM
LESSEE MAY HAVE AGAINST LESSOR, OR ANY ASSIGNEE OF LESSOR OR THE MANUFACTURER OR
SUPPLIER OF THE EQUIPMENT, OR ANY OTHER PARTY. In no event, except as otherwise
expressly provided herein, shall this Lease terminate or shall any of the
Lessee's obligations be affected by reason of' any detect in or damage to or
loss or destruction of all or any part of the Equipment, from any cause
whatsoever, or any interference with Lessee's use of the Equipment by any person
or for any other cause whatsoever.

6. COMMERCIAL RISK. Lessee bears all risk that the Equipment may become unusable
for any reason, including without limitation, loss, theft, damage, destruction,
defect, GOVERNMENTAL REGULATION, PROHIBITION, IMPRACTICABILITY OF USE,
OBSOLESCENCE OR COMMERCIAL FRUSTRATION. No inability to use the Equipment shall
result in the termination of any Lease or relieve Lessee from any of its
obligations under any Lease.

7. USE AND LOCATION. Lessee shall use the Equipment in a careful and proper
manner and in compliance with all laws, ordinances, regulations and insurance
policy conditions in any way relating to the possession, use or maintenance of
the Equipment. Unless the Equipment is of a type normally used at more than one
location (such as vehicular equipment, construction machinery or the like),
Lessee shall not remove the Equipment from the location designated in the
applicable Schedule(s) without the prior written consent of Lessor. If an item
of Equipment is of a type normally used at more than one location, Lessee shall
not use the Equipment outside of the area designated in the applicable
Schedule(s) without the prior written approval of Lessor. Lessee shall comply
with any and all applicable environmental laws and will not use any hazardous
substances with the Equipment. Lessee represents and warrants to Lessor that the
Equipment is being leased and will be used solely for commercial or business
purposes and will not be used for personal, family or household purposes.

8. OWNERSHIP. The Equipment is, and shall at all times be and remain, the sole
and exclusive property of Lessor, and Lessee shall have no right, title or
interest therein or thereto except as expressly set forth in this Lease. Plates,
labels or other markings stating that the Equipment is owned by Lessor shall be
affixed to or placed on the Equipment by Lessor or, at Lessor's request or if
required by law, by Lessee at Lessee's expense, and Lessee shall keep the same
in a prominent position thereon.

9. PERSONAL PROPERTY. The Equipment is, and shall at all times be and remain,
personal property notwithstanding that it or any part thereof may now be or
hereafter become, in any manner affixed or attached to, or embedded in, real
property or any building thereon. Lessee agrees that it will furnish and record,
at its own expense, such owners; mortgagees', landlords', or other disclaimers,
waivers, or consents as may be necessary or reasonably requested by Lessor in
order to give full effect to the intent and provisions of the preceding
sentence.

10. MAINTENANCE AND REPAIRS. Lessee, at its own cost and expense, shall keep the
Equipment in good repair, condition and working order and shall furnish any and
all parts, mechanisms and devices required for such purpose. All such parts,
mechanisms and devices affixed to any Equipment shall thereupon become the
property of Lessor and subject to the terms and conditions of this Lease. Lessee
shall modify Equipment if required by any governmental authority or law and will
make such modification known to Lessor by written notice to be delivered by
certified mail.

11. ALTERATIONS, Without the prior written consent of Lessor, Lessee shall not
make any alterations, additions or improvements to the Equipment. All additions
and improvements of whatsoever kind or nature made to the Equipment shall be
made at Lessee's cost and expense and when made become the property of Lessor
and subject to the terms and conditions of this Lease.

12. LESSOR'S INSPECTION. Lessor shall during normal business hours have the
right to enter into and upon any premises where any Equipment may be located for
the purpose of inspecting such Equipment or observing its use. Lessee shall,
whenever requested by Lessor, advise Lessor of the exact location of any and all
items of Equipment.

13. LOSS, THEFT AND DAMAGE. Lessee hereby assumes and shall bear the entire risk
of loss, theft, damage or destruction of the Equipment from any and every cause
whatsoever, whether or not insured. No loss, theft, damage or destruction of the
Equipment or any part thereof shall impair any obligation of Lessee under this
Lease which shall continue in full force and effect except as hereinafter
provided in this Paragraph 13. In the event of loss, theft, damage or
destruction of any kind to any Equipment, Lessee shall promptly notify Lessor
thereof and, at Lessor's option and request, Lessee shall forthwith:
  a. place such Equipment in good repair, condition and working order, or
  b. replace such Equipment with like equipment having a market value at least
  equal to the market value of such Equipment immediately prior to such loss,
  theft, damage or destruction, and in good repair, condition and working order,
  and furnish to Lessor all necessary documents vesting good and marketable
  title thereto in Lessor unencumbered by any lien or security interest, which
  replacement Equipment shall thereupon become the property of Lessor and be
  subject to the terms and conditions of this Lease; or
  c. if Lessor determines that such Equipment is lost, stolen, destroyed or
  damaged beyond repair, pay Lessor therefor in cash the "Stipulated Loss Value"
  of such Equipment, defined as all rent and other amounts due and to become due
  under the Lease with respect to such Equipment.

  Upon replacement of any such lost, stolen, or damaged Equipment pursuant to
  subparagraph (b) above or payment pursuant to subparagraph (c) abaove, this
  lease shall terminate with respect to such loss, stolen or damaged Equipment
  so replaced or paid for and Lessee shall thereupon become entitled to such
  Equipment AS-IS and WHERE-IS and without warranty, expressed or implied, with
  respect to any matter whatsoever.

14. INSURANCE. Lessee shall at its own cost and expense (a) keep the Equipment
insured at all times during the Lease term against all risks of loss or damage
(including so-called extended coverage), theft, collision (where applicable) and
such other risks as Lessor may reasonably require in an


<PAGE>


amount not less than the greater of the Stipulated Loss Value of the Equipment
or replacement value of the Equipment, and (b) maintain comprehensive public
liability and property damage insurance covering the Equipment in such amount as
Lessor shall approve, in each case upon such terms and written by such companies
as Lessor shall approve. All such insurance policies shall name Lessor, Lessee
and any assignee of Lessor pursuant to Paragraph 19 as insured and loss payees,
shall provide at least thirty (30) days prior written notice to Lessor and any
assignee of any cancellation or alteration thereof,

and shall provide that all amounts payable by reason of loss, theft or damage to
Equipment shall be payable only to Lessor or any assignee. Any proceeds of such
insurance resulting from loss, theft, or damage to Equipment shall be paid to
Lessor and applied at Lessor's sole discretion towards (I ) the repair and
replacement of such Equipment, (2) the payment of the obligations of Lessee
under such Lease, or (3) towards each in any proportion. Lessee shall have no
right to receive any excess insurance proceeds until or unless Lessee cures all
defaults under any Lease between Lessee and Lessor. Upon execution of each Lease
and at least thirty (30) days prior to expiration of any applicable insurance
policy, Lessee shall deliver to Lessor certificates of insurance or other
evidence satisfactory to Lessor showing the existence, continuation or
replacement of the insurance coverage required by this Paragraph 14, but Lessor
shall be under no duty to examine such certificate or other evidence of
insurance or to advise Lessee in the event its insurance is not in compliance
with the requirements hereof. Lessee hereby irrevocably appoints Lessor as
Lessee's attorney-in-fact to file, settle or adjust, and receive payment of,
claims under any such insurance policy and to endorse Lessee's name on any
checks, drafts or other instruments in payment of such claims. Lessor and any
assignee shall have a property interest in all insurance to be procured by
Lessee pursuant to any Lease, and any failure of Lessee to procure and keep
required insurance effective at all times shall be deemed a breach of a
fiduciary duty owed by Lessee to Lessor and any assignee. In the event that
Lessee fails to deliver to Lessor a certificate of insurance, Lessor or assignee
at its option, may, but shall not be required to obtain insurance on its own
behalf and Lessee shall pay Lessor a charge for such, or because of increased
credit risks to Lessor when not insured by Lessee, Lessee agrees to pay Lessor
each month a risk-charge in the amount of .025% of original equipment cost until
Lessee provides proof of compliance with insurance requirements.

15. ENCUMBRANCES AND TAXES. Lessee shall keep the Equipment free and clear of
all levies, liens and encumbrances, and shall pay promptly when due, and shall
indemnify and hold Lessor harmless from, all license fees, registration fees,
import duties, assessments, charges and taxes (municipal, state, federal or
other) which may now or hereafter be imposed upon the ownership, leasing,
renting, sale, possession or use of the Equipment (whether the same be assessed
to Lessor or Lessee), together with any penalties or interest in connection
therewith, excluding, however, all taxes on or measured by Lessor's net income.
If any such fee, assessment, duty, charge or tax is, or is to be, assessed or
billed to Lessor, Lessee upon the request of Lessor and at the expense of Lessee
shall do any and all things required to be done by Lessor in connection with the
levy, assessment, billing and payment thereof. Upon Lessor's request, Lessee
shall, on any property tax returns required to be filed with respect to the
Equipment, including the property covered by this Lease and any substitutions or
additions thereto as property owned by Lessee for purposes of tax assessments,
shall cause all billings of such fees, assessments, duties, charges or taxes to
be addressed to Lessor in care of Lessee, and shall submit to Lessor written
evidence of payment of the same. Alternatively, Lessee shall at the request of
Lessor, forthwith pay Lessor the amount (estimated or otherwise) of any such
fees, assessments, duties, charges and taxes, and Lessor shall apply the same to
the payment thereof. Lessee shall also pay all taxes arising out of Lessee's
exercise of any purchase option relating to any Lease (including sales tax).

16. LESSOR'S PAYMENT. In case of failure of Lessee to procure or maintain proper
insurance or to pay such fees, assessments, duties, charges and taxes or to keep
any item of Equipment free and clear of all levies, liens and encumbrances or in
good repair, condition and working order, all as herein before provided, Lessor
shall have the right, but not the obligation, without notice to or demand upon
Lessee, and without releasing Lessee from any obligation herein before
specified, to effect and pay for such insurance or to pay such fees,
assessments, duties, charges and taxes or to keep such Equipment in good repair,
condition and working order, as the case may be, and to pay, purchase, contest
or compromise any encumbrance, charge or lien which in the sole judgment of
Lessor appears to affect such Equipment, and in exercising any such right, to
incur any liability and expend whatever amounts in its absolute discretion it
may deem necessary therefor. All sums so incurred or expended by Lessor shall
immediately become due and payable by Lessee upon payment by Lessor and shall
thereafter bear interest at the rate of 18% per annum, but not greater than the
highest rate permitted by any applicable usury law.

17. RETURN OF EQUIPMENT. Upon expiration of the term of any Lease,(unless Lessee
shall have duly exercised any purchase option with respect to such Lease), or
after default, on demand by Lessor, Lessee will at its sole cost and expense
deliver the Equipment (in the same condition as when delivered to Lessee,
reasonable wear and tear resulting from authorized use thereof alone excepted)
to Lessor's premises set forth above or any place designated by Lessor in
writing, for such disposition as Lessor may determine. No such return shall
constitute termination of this Lease unless Lessor shall agree so in writing.

18. COMMITMENT FEE. Unless otherwise delineated on the respective Schedule(s),
the amount, if any, which Lessee has deposited with Lessor as set forth in any
Schedule shall constitute partial security for Lessee's obligations under this
Lease. This commitment fee shall not be refunded, but upon Lessor's acceptance
of Lessee's offer to enter into any Lease, may, at Lessor's option, be applied
at any time in partial satisfaction of any obligation of Lessee which may be in
default, although the making of such deposit shall not excuse Lessee from any
such obligation and such application of the amount shall only release Lessee
from the obligation pro tanto. Lessee acknowledges that Lessor shall deposit
this commitment fee and that the deposit of this commitment fee shall not be
construed as an approval and/ or acceptance of any Lease and shall not become
binding upon Lessor until approval and acceptance by Lessor's Finance Committee.
Lessor will apply commitment received from Lessee to advance lease payments,
prorata, as long as Lessee is not in default of it's obligations to Lessor.

19. ASSIGNMENT BY LESSOR. Lessor may, at any time, with or without notice to
Lessee, mortgage, grant a security interest in, or otherwise transfer, sell or
assign this Lease or any Equipment or any rentals or other amounts due or to
become due hereunder. Lessee agrees with Lessor and any such assignee (including
any assignee to which such rights have been assigned by a prior assignee) that,
upon receipt by Lessee from Lessor or such assignee of notice in writing of any
such assignment, Lessee will make all further payments due or to become due
hereunder directly to such assignee at the address specified in such notice of
assignment and will recognize such assignee as the person entitled to exercise
all other rights of Lessor hereunder. Lessee acknowledges that any assignment of
Lessor's interest would neither materially change Lessee's duties or materially
increase the burden or risk imposed on Lessee under any Lease. Lessee further
agrees with Lessor and any such assignee that in any action brought by such
assignee against Lessee to enforce Lessor's rights hereunder Lessee will not
assert against such assignee and expressly waives as against any assignee, any
breach or default on the part of Lessor hereunder or any other defense, claim or
set-off which Lessee may have against Lessor either hereunder or otherwise. No
such assignee shall be obligated to perform any obligation, term or condition
required to be performed by Lessor hereunder.

20. DEFAULT. Any of the following events or conditions shall constitute an event
of default hereunder. (a) nonpayment of any rental payment or other amount
provided for in any Lease; (b) default by Lessee


<PAGE>


in the performance of any other obligation, term or condition of any Lease; (c)
default by Lessee in the payment or performance of any other indebtedness or
obligation now or hereafter owed by Lessee to Lessor under any other agreement
or instrument, which default has not been waived;(d) the issuance of any writ or
order of attachment or execution or other legal process against any Equipment
which is not discharged or satisfied within ten(1O) days; (e) death or judicial
declaration of incompetency of Lessee, if an individual; (f) the commencement of
any bankruptcy, insolvency, arrangement, reorganization, receivership,
liquidation or other similar proceedings by or against Lessee; (g) the making by
Lessee of a general assignment or deed of trust for the benefit of creditors;
(h) the occurrence of any event or condition described in clause (e), (f) or (g)
of this Paragraph 20 with respect to any guarantor or any other party liable for
payment or performance of each Lease; (i) if any certificate, statement,
representation, warranty or audit heretofore or hereafter furnished by or on
behalf of Lessee or any guarantor or other party liable for payment or
performance of this Lease, pursuant to or in connection with this Lease, proves
to have been false in any material respect at the time as

of which the facts therein set forth were stated or certified, or to have
omitted any substantial contingent or unliquidated liability or claim against
Lessee or any such guarantor or other party; (j) if the condition of Lessee's
affairs shall change so as in the reasonable opinion of Lessor to impair
Lessor's title to the Equipment or increase the risk of Lessee's
non-performance; (k) if Lessee is a corporation and eighty percent (80%) or more
of the then issued and outstanding voting capital stock of Lessee shall be
acquired by any person, entity or group who are not such owners on the date of
execution of each Lease; (l) any default occurs under any agreement now or
hereafter securing any Lease; (m) breach of any negative covenant in any Lease;
or (n) if Lessee voluntarily or involuntarily permits any Equipment to become
subject to a lien.

21. REMEDIES OF LESSOR. Upon the occurrence of any Event of Default and at any
time thereafter, Lessor may without demand or notice to Lessee and without
terminating or otherwise affecting Lessee's obligations hereunder exercise one
or more of the following remedies, as Lessor in its sole discretion shall elect:
(a) Lessor may sue for and recover from Lessee the sum of all unpaid rents and
other payments due under each Lease then accrued, all accelerated future
payments due under each Lease, discounted to their present value at a discount
rate equal to current rate as of the date of default, plus Lessor's estimate at
the time each Lease was entered into of Lessor's residual interest in the
Equipment, reduced to present value at a discount rate equal to current rate as
of the date of default, less the net proceeds of disposition, if any, of the
Equipment; (b) require Lessee to assemble the Equipment and make it available to
Lessor at a place designated by Lessor as provided in Paragraph 17 above; (c)
take and hold possession of the Equipment and render the Equipment unusable, and
for this purpose enter and remove the Equipment from any premises where the same
may be located without liability to Lessee for any damage caused thereby; (d)
sell or lease the Equipment or any part thereof at public or private sale (and
Lessor may be a purchaser at such sale) for cash, on credit or otherwise,
without representations or warranties, and upon such other terms as shall be
acceptable to Lessor, and for such purposes of sale or lease, Lessor may use
Lessee's name, voice, signature, photograph or likeness, in any manner and for
any purpose, including but not limited to, advertising or selling, or soliciting
purchases of, any or all of the Equipment, products, merchandise, goods or
services; (e) use and occupy the premises of Lessee for the purpose of taking,
holding, reconditioning, displaying, selling or leasing the Equipment, without
cost to Lessor or liability to Lessee; (f) proceed by appropriate action either
at law or in equity to enforce either performance by Lessee of the covenants of
this Lease or to recover damages for the breach of such covenants; or (g)
exercise any and all rights accruing to a lessor under any applicable law upon a
default by a lessee. If notice is required by law, any written notice to Lessee
of any such sale or lease, given not less than five (5) days prior to the date
thereof, shall constitute reasonable notice to Lessee. Any sale or lease of the
Equipment by Lessor after default shall be free and clear of any rights or
interests of Lessee. Without limiting any of the foregoing remedies, Lessor may
immediately recover the following from Lessee. (A) all unpaid rentals, late
charges and other sums due as of the date of default; (B) all unpaid rentals to
become due from the date of default through the last day of the term of each
Lease; (C) any and all costs or expenses paid or incurred by Lessor in
connection with the repossession, holding, repair, reconditioning and subsequent
sale, lease or other disposition of the Equipment, including but not limited to,
attorneys' fees and costs, whether or not litigation is commenced; (D) the
residual value of any item of Equipment which Lessee fails to return to Lessor
as provided above or converts or destroys, or which Lessor does not or is unable
to repossess;(E) all other costs or expenses paid or incurred by Lessor at any
time in connection with the execution, delivery, administration, amendment and
enforcement or exercise of any of the Lessor's rights and remedies under each
Lease, including but not limited to, attorneys' fees and costs, whether or not
litigation is commenced, and taxes imposed by any governmental agency; (F) any
actual or anticipated loss of federal or state tax benefits to Lessor (as
determined by Lessor) resulting from Lessee's default or Lessor's repossession
or disposition of the Equipment; and (G) any and all other damages proximately
caused by Lessee's default. If Lessor obtains possession of any Equipment after
default, the amount Lessor shall be entitled to recover shall be reduced by the
lesser of(I ) the rent due for the portion of the term of each Lease remaining
at the point in time the Equipment is re-sold or re-leased, or (2) either (a)
the proceeds received by Lessor on the re-sale of the Equipment, less the
re-sold Equipment's residual value or (b) the invoice value used for the
re-lease of the Equipment less the re-leased Equipment's residual value. Lessor
shall not be obligated to sell, lease, or otherwise dispose of any item of
repossessed Equipment under each Lease if it would impair the sale, lease or
other disposition by Lessor of similar equipment. Lessee shall be liable for any
deficiency suffered by Lessor, and unless otherwise required by law, Lessor
shall not be required to account to Lessee for any surplus or profit.

All rights and remedies of Lessor under each Lease are in addition to all rights
and remedies contained in any other agreement, instrument or document or
available to Lessor at law or in equity. All such rights and remedies are
cumulative and not exclusive and may be exercised successively, concurrently and
repeatedly. No default by Lessee or action by Lessor, including repossession,
sale or re-leasing of Equipment, shall result in or constitute a termination of
each Lease unless Lessor so notifies Lessee in writing, and no termination
hereof shall release or impair any of Lessee's obligations hereunder. No
exercise of any right or remedy shall constitute an election of remedies and
preclude exercise of any other right or remedy. LESSEE WAIVES ANY AND ALL RIGHTS
TO NOTICE AND TO A JUDICIAL HEARING WITH RESPECT TO THE REPOSSESSION OF THE
EQUIPMENT BY LESSOR IN THE EVENT OF DEFAULT HEREUNDER BY LESSEE.

22. WAIVER, ETC. No delay or omission on the part of Lessor in exercising any
right hereunder shall operate as a waiver of any such right or of any other
right hereunder, and a waiver of any such right on any one occasion shall not be
construed as a bar to or waiver of any such right on any future occasion. Any
waiver, permit, consent or approval of any kind or character on the part of
Lessor of any breach or default under this Lease, or any waiver on the part of
Lessor of any provision or condition of this Lease, must be in writing and shall
be effective only to the extent specifically set forth in such writing.
Acceptance by Lessor of a rental or other payment at a time when Lessee is in
default hereunder shall not constitute a waiver of such default or defaults or
of Lessor's right to terminate Lessee's rights hereunder pursuant to Paragraph 2
I hereof. If Lessee, whether with or without permission of Lessor, retains
possession of any items of Equipment beyond the expiration of the applicable
Lease term without such Lease term having been formally extended, Lessee shall
be responsible to pay rent at the rate heretofore in effect and shall also
remain obligated to perform and observe all other covenants and agreements of
Lessee hereunder, but no such retention of possession shall be construed as an
extension of said Lease term or as a waiver of Lessor's right to repossess said
items of Equipment unless expressly agreed to in writing by Lessor.

23. INDEMNIFICATION. Lessee assumes liability for, and shall and does hereby
indemnify and hold harmless Lessor, its agents, employees, officers, directors,
successors and assigns from and against any and all liabilities, claims, costs,
and expenses, including reasonable attorneys' fees, of every kind and nature
(including, without limitation, for property damage, wrongful death or personal
injury and for trademark, patent or copyright infringement) arising out of or
relating to the use, condition(including latent and other defects whether or not
discoverable by Lessee or Lessor), operation, ownership, selection, delivery,
leasing or return of any item of Equipment, regardless of where, how and by whom
operated, any failure on the part of Lessee to perform or comply with any
conditions of this Lease or any loss by Lessor of the benefit of any accelerated
depreciation or Investment Tax Credit, or the right to claim the same, with
respect to the Equipment. Without limiting the foregoing, this indemnification
shall extend to claims made by any person,


<PAGE>


including Lessee, its agents and employees, and shall apply whether liabilities,
claims, etc. are based on negligence (passive or active) of Lessor or another,
breach of warranty, strict liability, products liability or otherwise. The
indemnities and assumptions of liabilities and obligations provided for in this
Paragraph and Lessee's indemnities elsewhere in each Lease shall continue in
full force and effect notwithstanding the expiration or other termination of
each Lease. Lessee is an independent contractor. Nothing contained in each Lease
shall authorize Lessee or any other person to operate any item of Equipment so
as to incur or impose any liability or obligation for or on behalf of Lessor.

24. ASSIGNMENT BY LESSEE. WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR, LESSEE
SHALL NOT VOLUNTARILY OR INVOLUNTARILY (A) SELL, ASSIGN, TRANSFER, PLEDGE, GRANT
A SECURITY INTEREST IN, HYPOTHECATE OR OTHERWISE DISPOSE OF EACH LEASE, THE
EQUIPMENT, OR ANY INTEREST IN EACH LEASE OR THE EQUIPMENT;(B) SUBLET OR LEND ANY
ITEM OF EQUIPMENT OR ANY PART THEREOF; OR (C) PERMIT ANY ITEM OF EQUIPMENT OR
ANY PART THEREOF TO BE USED BY ANYONE OTHER THAN LESSEE OR LESSEE'S

EMPLOYEES.

25. FURTHER ASSURANCE. Lessor and Lessee each hereby agrees to execute, deliver,
and file or record at Lessee's expense such further instruments, certificates
and other documents, including without limitation financing statements under the
Uniform Commercial Code, and to do such further acts and things as may be
reasonably requested by the other in order to assure to such other the rights
conferred or intended to be conferred by this Lease or to protect Lessor's
rights, title and interest in the Equipment. Lessee agrees to furnish audited
financial statements, including a balance sheet and income statement for
Lessee's two most current fiscal years and for each subsequent fiscal year that
this Lease is in effect, and its most recent quarterly interim financial
statement.

26. ATTORNEY FEES. In the event of any legal action with respect to this Lease,
the prevailing party in any such action shall be entitled to reasonable attorney
fees, including attorney fees incurred at the trial level, including action and
bankruptcy court, on appeal or review or incurred without action, suits, or
proceedings, together with all costs and expenses incurred in pursuit thereof.

27. NO AGENCY. LESSEE ACKNOWLEDGES THAT NEITHER THE SUPPLIER NOR ANY SALESMAN,
EMPLOYEE, REPRESENTATIVE OR AGENT OF THE SUPPLIER OR ANY FINDER, BROKER, OR
EMPLOYEE OR AGENT OF ANY FINDER OR BROKER IS AN AGENT OR REPRESENTATIVE OF
LESSOR, AND THAT NONE OF THE ABOVE IS AUTHORIZED TO WAIVE, ALTER OR ADD TO ANY
TERM, PROVISION OR CONDITION OF THIS MASTER LEASE OR ANY SCHEDULE HERETO, OR
MAKE ANY REPRESENTATION WITH RESPECT TO THIS MASTER LEASE OR ANY SCHEDULE
HERETO. Lessee further acknowledges that Lessee, in executing this Lease, has
relied solely upon the terms, provisions and conditions contained herein, and
any other statements, warranties, or representations, if any, by the supplier,
or any salesman, employee, representative or agent of the supplier or any
finder, broker, or employee or agent of any finder or broker have not been
relied upon by Lessee and shall not in any way effect Lessee's obligation to pay
the rent and otherwise perform as set forth in this Lease.

28. MISCELLANEOUS. Time is of the essence of each Lease and of each and all of
its provisions. Lessor and Lessee agree that any amount which Lessor may recover
from Lessee under subparagraph (13) or Paragraph 21 of this Lease represents
liquidated damages for the loss of Lessor's bargain and not a penalty. If there
be more than one Lessee to this Lease, the liability of each shall be joint and
several and any release of or forbearance with respect to one Lessee shall not
release any other Lessee. Lessor shall be entitled to specific performance of
any and all of its rights under this Lease whether or not an adequate remedy at
law exists. LESSEE HEREBY WAIVES TRIAL BY JURY AND THE RIGHT TO INTERPOSE ANY
COUNTERCLAIM OR OFFSET OF ANY NATURE OR DESCRIPTION IN ANY LITIGATION BETWEEN
LESSEE AND LESSOR WITH RESPECT TO THIS LEASE, THE EQUIPMENT OR THE REPOSSESSION
THEREOF. Any action, proceeding, or appeal on any matter related to or arising
out of each Lease, Lessor, Lessee and any guarantor or subscriber (1) SHALL BE
SUBJECT TO THE PERSONAL JURISDICTION OF THE STATE OF LESSOR'S OR ASSIGNEE'S
PRINCIPAL PLACE OF BUSINESS OR ANY STATE SELECTED BY LESSOR OR ITS ASSIGNEE
WHERE THEY DO BUSINESS including any state or federal court sitting therein, and
all courts thereof; (2) SHALL ACCEPT VENUE IN AN Y FEDERAL OR STATE COURT
SELECTED BY LESSOR OR ITS ASSIGNEE; and (3) EXPRESSLY WAIVE ANY RIGHT TO A TRIAL
BY JURY so that trial shall be by and only to the court selected by Lessor or
its assignee. THIS LEASE IS SUBJECT TO APPROVAL AND ACCEPTANCE BY LESSOR'S
FINANCE COMMITTEE AND SHALL NOT BECOME BINDING UPON LESSOR UNTIL EXECUTED BY AN
OFFICER OF LESSOR. Such officer shall be the President, Executive Vice
President, or Vice President. No other officer, employee, or agent of Lessor has
the authority to waive, alter, or add to any term, provision or condition of
this Master Lease and/ or each Schedule. Notice thereof is hereby waived by
Lessee. By execution hereof, the signer hereby certifies that he has read each
Lease, and that he is duly authorized to execute each Lease on behalf of Lessee.
ANY AMENDMENT TO THIS MASTER LEASE AND/OR SCHEDULE TO BE EFFECTIVE MUST BE IN
WRITING SIGNED BY LESSOR AND LESSEE. This Lease constitutes the entire agreement
between the parties hereto with respect to the leasing of the Equipment.

IN WITNESS WHEREOF, the parties have caused this Lease to be duly executed by
their respective officers thereunto duly authorized as of the day and year first
above written.
                                          ACCEPTED BY:
LESSEE:                                   LESSOR:
APPLIED BIOMETRICS, INC.                  DEXXON CAPITAL CORPORATION


By:___________________________            By: _________________________________

Title: _______________________            Title:_______________________________

Date:                                     6133 Blue Circle Drive
                                          Minnetonka, MN   55343


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>4
<FILENAME>0004.txt
<DESCRIPTION>AMENDMENT TO MASTER LEASE AGREEMENT
<TEXT>


                                                                    Exhibit 10.3

                       AMENDMENT TO MASTER LEASE AGREEMENT

29. SECURITY INTEREST. As security for Lessee's obligations hereunder, Lessee
hereby grants Lessor a security interest in all equipment (as defined in Article
9 of the Uniform Commercial Code in effect in the State of Minnesota on the date
hereof and as may be amended from time to time) of Lessee, whether now owned or
hereafter acquired (collectively, "Equipment"), and Lessee shall execute and
consents to filing of appropriate UCC-1 financing statements with respect to
such interest. Notwithstanding the foregoing, Lessor agrees that:

                  (i) such interest in any future Equipment will automatically
         be subordinated to a purchase money security interest of any party
         providing financing for such future Equipment and the Lessor shall
         execute any release or subordination agreement as required by the
         purchase money lender; and

                  (ii) in connection with any subsequent secured financing by
         the Lessee, Lessor will, upon request, release or subordinate all of
         its interests in any Equipment not subject to any Lease, and that such
         release or subordination will not be unreasonably withheld or delayed
         as long as Lessee is not in default of the obligations under the Lease
         or has not been in default of the obligations under the Lease for the
         past eight (8) months.



         Accepted and agreed this 10th day of April, 2000



         Applied Biometrics, Inc., Lessee

         By: /s/ Camille M. Meyer

         Title: Vice-President, Finance & Chief Financial Officer



         Dexxon Capital Corporation, Lessor

         By: /s/ Chris Duncan

         Title: President







</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-27.1
<SEQUENCE>5
<FILENAME>0005.txt
<DESCRIPTION>FINANCIAL DATA SCHEDULE
<TEXT>

<TABLE> <S> <C>


<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS FINANCIAL INFORMATION FROM FINANCIAL STATEMENTS AND
RELATED NOTES FOR THE PERIOD ENDED JUNE 30, 2000
</LEGEND>

<S>                             <C>
<PERIOD-TYPE>                   6-MOS
<FISCAL-YEAR-END>                          DEC-31-2000
<PERIOD-END>                               JUN-30-2000
<CASH>                                       2,021,655
<SECURITIES>                                         0
<RECEIVABLES>                                        0
<ALLOWANCES>                                         0
<INVENTORY>                                          0
<CURRENT-ASSETS>                             2,071,002
<PP&E>                                       1,358,447
<DEPRECIATION>                                 879,492
<TOTAL-ASSETS>                               2,658,360
<CURRENT-LIABILITIES>                          238,284
<BONDS>                                              0
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                        58,834
<OTHER-SE>                                   2,311,518
<TOTAL-LIABILITY-AND-EQUITY>                 2,370,360
<SALES>                                              0
<TOTAL-REVENUES>                                     0
<CGS>                                                0
<TOTAL-COSTS>                                1,878,020
<OTHER-EXPENSES>                                     0
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                                   0
<INCOME-PRETAX>                                      0
<INCOME-TAX>                                         0
<INCOME-CONTINUING>                                  0
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                               (1,828,303)
<EPS-BASIC>                                      (.34)
<EPS-DILUTED>                                    (.34)



</TABLE>
</TEXT>
</DOCUMENT>
</SUBMISSION>
