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Exhibit 10.8

INDUSTRIAL LEASE AGREEMENT

Between

Landlord:        VEF III FUNDING, LLC,
                a Delaware limited liability company

And

Tenant:        ALTIGEN COMMUNICATIONS, INC.,
                a Delaware corporation

Dated: October 1, 2003

For Premises Located At:

4555 CUSHING PARKWAY
FREMONT, CALIFORNIA

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TABLE OF CONTENTS

LEASE AGREEMENT

 
   
   
  Page

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A.   PREMISES/TERM/POSSESSION   1     1.   Premises   1     2.   Lease Term   2
    3.   Landlord's Failure to Give Possession   5     4.   Quiet Enjoyment   5
B.   RENT/PAYMENT/SECURITY DEPOSIT   5     5.   Base Rent   5     6.   Rent
Payment   6     7.   Operating Expenses/Taxes/Impositions   6     8.   Late
Charge   10     9.   Partial Payment   10     10.   Security Deposit   10 C.  
USE/LAWS/RULES   11     11.   Use of Premises/Environmental Matters   11     12.
  Compliance with Laws   15     13.   Waste Disposal   15     14.   Rules and
Regulations   15 D.   UTILITIES/SIGNAGE/TENANT BUILDOUT   15     15.   Utilities
  15     16.   Signs   16     17.   Buildout Allowance and Tenant Finishes   16
    18.   Force Majeure   18 E.   REPAIRS/ALTERATIONS/CASUALTY/CONDEMNATION   18
    19.   Repairs By Landlord   18     20.   Repairs By Tenant   19     21.  
Alterations and Improvements   19     22.   Liens   20     23.   Destruction or
Damage   21     24.   Eminent Domain   22     25.   Damage or Theft of Personal
Property   22 F.   INSURANCE/INDEMNITIES/WAIVER/ESTOPPEL   22     26.  
Insurance; Waivers   22     27.   Indemnities   25     28.   Acceptance and
Waiver   25     29.   Estoppel   25 G.   DEFAULT/REMEDIES/SURRENDER/HOLDING OVER
  26     30.   Notices   26     31.   Abandonment of Premises   26     32.  
Default   26     33.   Landlord's Remedies   27     34.   Service of Notice   28
    35.   Advertising   28     36.   Surrender of Premises   28     37.  
Cleaning Premises   29     38.   Removal of Fixtures   29     39.   Holding Over
  29     40.   Attorney's Fees   29     41.   Mortgagee's Rights   29          
   

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H.   LANDLORD ENTRY/RELOCATION/ASSIGNMENT AND SUBLETTING   31     42.   Entering
Premises   31     43.   Relocation   31     44.   Assignment and Subletting   31
I.   SALE OF BUILDING; LIMITATION OF LIABILITY   35     45.   Sale   35     46.
  Limitation of Liability   35 J.   BROKERS/CONSTRUCTION/AUTHORITY   35     47.
  Broker Disclosure   35     48.   Definitions   35     49.   Construction of
this Agreement   36     50.   No Estate In Land   36     51.   Paragraph Titles;
Severability   36     52.   Cumulative Rights   36     53.   Waiver of Jury
Trial   36     54.   Entire Agreement   37     55.   Submission of Agreement  
37     56.   Authority   37     57.   Intentionally deleted   37     58.   Joint
and Several Obligations   37     59.   Name of Building   37     60.   Governing
Law   37     61   Obligations Independent   37     62.   Exhibits   38     63.  
Security Measures   38     64.   Reservations   38     65.   Interruption of
Services   38     66.   Furniture   38

LIST OF EXHIBITS

A   Legal Description of Property A-1   Plan of Premises B   Work Letter C  
Substantial Completion/Acceptance Letter D   Hazardous Materials Questionnaire E
  Rules and Regulations F   Furniture G   Space Plan G-1   Budget

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BASIC LEASE PROVISIONS

        The following sets forth some of the Basic Provisions of the Lease. In
the event of any conflict between the terms of these Basic Lease Provisions and
the referenced Sections of the Lease, the referenced Sections of the Lease shall
control. In addition to the following Basic Lease Provisions, all of the other
terms and conditions and sections of the Industrial Lease Agreement hereinafter
set forth are hereby incorporated as an integral part of this Summary.

1.
 
A.  Building (See Section 1):
 
4555 Cushing Parkway
Fremont, California
 
 
B.  Industrial Center (See Section 1):
 
Multi Building complex known as:
Northport Business Center
Fremont, California, consisting of 45635, 45645, 45655, 45865 and
45875 Northport Loop East and 4555 Cushing Parkway
2.
 
Rentable Square Feet of Premises:
 
31,925
 
 
Rentable Square Feet of Building:
 
58,130
 
 
Rentable Square Feet of Industrial Center: (See Section 1)
 
144,624
3.
 
Term (See Section 2):
 
62 full calendar months
 
 
Target Commencement Date:
 
December 22, 2003, subject to Section 2
 
 
Target Ready Date
 
November 22, 2003, subject to Section 2
 
 
Target Expiration Date:
 
February 21, 2009, subject to Section 2
 
 
Option Term:
 
Five (5) years following Expiration Date, subject to Section 2
4.
 
Base Rent (See Section 5):
 
 

Period

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  Rate Per Rentable
Square Foot of Premises

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  Monthly
Installment

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Months 1-5   $0.00   $ 0.00 Months 6-17   $0.64   $ 20,432.00 Months 18-29  
$0.66   $ 21,070.50 Months 30-41   $0.68   $ 21,709.00 Months 42-53   $0.70   $
22,347.50 Months 54-62   $0.72   $ 22,986.00 Option Term:   95% of FMV, to be
determined      

5.
 
Rent Payment Address
(See Section 5)
Lend Lease AAF VEF III Northport
File # 1425900944
P.O. Box 73860
San Francisco, California 94160-3860
 
 
6.
 
Use of Premises:
 
Office, research and development, manufacturing/assembly, warehouse and related
uses, all in conformance with applicable zoning requirements.          

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7.
 
Tenant's Share (See Section 7):
 
54.92%
8.
 
Security Deposit (See Section 10):
 
$50,000.00
9.
 
Unreserved Parking Spaces (See Section 1):
 
115
10.
 
Tenant Improvement Allowance
(See Section 17):
 
$1.08 per rentable square foot or $34,479.00; and, at Tenant's option, up to
$5.00 per rentable square foot or $159,625.00 as a "Supplemental Allowance," and
$50,000.00 as a "Moving Allowance."
11.
 
Tenant's Liability Insurance
(See Section 26):
 
Combined Single Limit: $1,000,000
Annual Aggregate Limit: $4,000,000
Umbrella Limit: $4,000,000
12.
 
Landlord's Broker (See Section 47):
 
Commercial Property Services
 
 
Tenant's Broker (See Section 47):
 
Cornish & Carey Commercial
13.
 
Notice Address (See Section 30)
 
 
 
 
Landlord

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Tenant

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    VEF III Funding, LLC
C/O Lend Lease Real Estate
Investments, Inc.
One Front Street, Suite 1100
San Francisco, CA 94111
Attn: Peggy Toppin,
        Investment Manager
Fax No.: (415) 733-9219   Altigen Communications, Inc.
47427 Fremont Boulevard
Fremont, CA 94538
Attn: Mr. Phil McDermott
Fax No.: (510) 252-9738         With a copy of Tenant's notices to:        
Silicon Valley Law Group
152 N. Third Street, Suite 900
San Jose, CA 95112
Attn: Lucy A. Lofrumento
Fax No.: (408) 286-1430
14.
 
Guarantor (See Section 57):
 
None

        [Signatures on next page]

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        IN WITNESS WHEREOF, Landlord and Tenant have executed this instrument as
of the date set forth on the first page hereof.

Landlord:   Tenant: VEF III FUNDING, LLC, a
Delaware limited liability company   ALTIGEN COMMUNICATIONS, INC., a
Delaware corporation
By:
 
/s/  PEGGY A. TOPPIN      

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By:
 
/s/  PHILLIP MCDERMOTT      

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Name:
 
Peggy A. Toppin

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Name:
 
Phillip McDermott

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Its:
 
Vice President

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Its:
 
CFO

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ATTEST/WITNESS:
 
ATTEST/WITNESS:
By:
 

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By:
 

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Its:
 

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Its:
 

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ATTEST/WITNESS:
 
ATTEST/WITNESS:
By:
 

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By:
 

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Its:
 

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Its:
 

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INDUSTRIAL LEASE AGREEMENT

        THIS INDUSTRIAL LEASE AGREEMENT (hereinafter called the "Lease") is made
and entered into as of the date appearing on the first page hereof by and
between the Landlord and Tenant identified above.

A. Premises/Term/Possession

        1.    Premises.    

        (a)   Landlord does hereby rent and lease to Tenant and Tenant does
hereby rent and lease from Landlord the Premises located in the Building and in
the Industrial Center identified in the Basic Lease Provisions, situated on the
real property described in Exhibit "A" attached hereto (the "Property"), such
Premises as all further shown by diagonal lines on the drawing attached hereto
as Exhibit "A-1" and made a part hereof by reference. Tenant has inspected the
Premises and agrees to accept the same "AS IS," without representation or
warranty on the part of Landlord to perform any improvements therein, except as
expressly set forth in Exhibit "B" attached hereto and made a part of hereof,
subject to all other representations and warranties of Landlord expressly set
forth in this Lease. Landlord and Tenant agree that the number of rentable
square feet described in Paragraph 2 of the Basic Lease Provisions has been
confirmed and conclusively agreed upon by the parties. No easement for light,
air or view is granted hereunder or included within or appurtenant to the
Premises.

        (b)   Tenant shall be entitled to use the number of unreserved parking
spaces specified in Paragraph 9 of the Basic Lease Provisions on those portions
of the Common Areas designated from time to time by Landlord for parking, which
shall include fifteen (15) general "visitor"-designated parking spaces near the
front entrance of the Premises (marked on the ground as such and identified by
signage erected by Landlord). Tenant shall not use more parking spaces than said
number. Said parking spaces shall be used for parking by vehicles no larger than
full-size passenger automobiles or pick-up trucks, herein called "Permitted Size
Vehicles." Vehicles other than Permitted Size Vehicles shall be parked and
loaded or unloaded as directed by Landlord in the Rules and Regulations as
defined in Paragraph 14 issued by Landlord. Tenant shall not permit or allow any
vehicles that belong to or are controlled by Tenant or Tenant's employees,
suppliers, shippers, customers, contractors or invitees to be loaded, unloaded,
or parked in areas other than those designated by Landlord for such activities.
If Tenant permits or allows any of the prohibited activities described in this
Paragraph 1, then Landlord shall have the right, upon reasonable notice (which
may take the form of a general notice in the parking areas), in addition to such
other rights and remedies that it may have, to remove or tow away the vehicle
involved and charge the cost to Tenant, which cost shall be immediately payable
upon demand by Landlord.

(c)  (i) The term "common areas" is defined as all areas and facilities outside
the Premises and within the exterior boundary line of the Industrial Center and
interior utility raceways within the Premises that are provided and designated
by the Landlord from time to time for the general non-exclusive use of Landlord,
Tenant and other Tenants of the Industrial Center and their respective
employees, suppliers, shippers, customers, contractors and invitees, including
parking areas, loading and unloading areas, trash areas, roadways, sidewalks,
walkways, parkways, driveways and landscaped areas. Within such common areas,
Landlord shall provide Tenant with a loading area for Tenant's exclusive access.

        (ii)   Landlord hereby grants to Tenant, for the benefit of Tenant and
its employees, suppliers, shippers, contractors, customers and invitees, during
the term of this Lease, the non-exclusive right to use, in common with others
entitled to such use, the common areas as they exist from time to time, subject
to any rights, powers, and privileges reserved by Landlord under the terms
hereof or under the terms of any rules and regulations or restrictions governing
the use of the Industrial Center; provided, however that Tenant shall have no
right to use the common areas of buildings in

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the Industrial Center other than the common areas within the Building. Under no
circumstances shall the right herein granted to use the common areas be deemed
to included the right to store any property, temporarily or permanently, in the
common areas. Any such storage shall be permitted only by the prior written
consent of Landlord or Landlord's designated agent, which consent may be revoked
at any time. In the event that any unauthorized storage shall occur then
Landlord shall have the right, without notice, in addition to such other rights
and remedies that it may have, to remove the property and charge the cost of
Tenant, which cost shall be immediately payable upon demand by Landlord.

        (iii)  Landlord or such other person(s) as Landlord may appoint shall
have the exclusive control and management of the common areas and shall have the
right, from time to time, to establish, modify, amend and enforce reasonable,
non-discriminatory Rules and Regulations with respect thereto in accordance with
Paragraph 14. Tenant agrees to abide by and conform to all such Rules and
Regulations, and to cause its employees, suppliers, shippers, customers,
contractors and invitees to so abide and conform; provided, however, that Tenant
shall only be bound by Rules and Regulations and changes thereto if Landlord has
provided such Rules and Regulations (or changes thereto) to Tenant and in the
case of changes to the Rules and Regulations, Tenant has received thirty
(30) days prior written notice of such changes. Landlord shall not be
responsible to Tenant for the non-compliance with said rules and regulations by
other tenants of the Industrial Center, but, upon receipt of written notice from
Tenant, landlord shall use commercially reasonable efforts to enforce such rules
and regulations as to other tenants not in compliance therewith.

        (iv)  Tenant shall not succeed to any of Landlord's easement rights over
and relating to the Property, nor shall Tenant obtain any rights to common
areas, as designated by Landlord, other than those rights specifically granted
to Tenant in this Lease. Landlord shall have the sole right of control over the
use, maintenance, configuration, repair and improvement of the common areas,
which Landlord shall keep neat and clean and in good condition and repair.
Landlord may make such changes to the use or configuration of, or improvements
comprising, the common areas as Landlord may elect without liability to Tenant,
provided that Landlord shall not have the right to make any changes that
materially adversely affect Tenant's vehicular parking rights or areas, Tenant's
path of ingress and egress, Tenant's signage, the common area lighting, or
Tenant's use and enjoyment of the Premises and common areas.

        2.    Lease Term.    

        (a)   Tenant shall have and hold the Premises for the term ("Term")
identified in the Basic Lease Provisions commencing on the date (the
"Commencement Date") which is thirty (30) days after the date on which Landlord
notifies Tenant that the Work in the Premises is substantially complete (or is
deemed substantially complete pursuant to Paragraph 4(b) of Exhibit "B") and the
Building Systems are in good working order as required by Section 19 of this
Lease (the "Ready Date"), and shall terminate at midnight on the last day of the
Term (the "Expiration Date"), unless sooner terminated or extended as
hereinafter provided. Promptly following the Commencement Date, Landlord and
Tenant shall enter into a letter agreement in the form attached hereto as
Exhibit "C", specifying and/or confirming the Commencement Date and the
Expiration Date (and the number of rentable square feet contained within the
Premises and the amount of Base Rent payable hereunder, if such numbers as
finally determined differ from those set forth in the Basic Lease Provisions).

        (b)   Landlord shall permit Tenant and Tenant's agents and contractors
to enter the Premises on and after the Ready Date, in order to permit Tenant to
prepare the Premises for Tenant's occupancy (such entry prior to the
Commencement Date referred to herein as the "Early Entry Period". If Landlord
permits such entry prior to completion of the Work, then such permission is
conditioned upon Tenant and Tenant's agents, contractors, workmen, mechanics,
suppliers, and invitees working in

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harmony and not interfering with Landlord and Landlord's contractors in doing
the Work. If at any time such entry shall cause or threaten to cause such
interference, Landlord shall have the right to withdraw such permission upon
twenty-four (24) hours' oral or written notice to Tenant. Tenant agrees that any
such entry into the Premises shall be deemed to be under all of the terms,
covenants, conditions, and provisions of this Lease (including, without
limitation, all insurance requirements), except as to the covenant to pay Rent
hereunder, and further agrees that Landlord shall not be liable in any way for
any injury, loss, or damage which may occur to any items of work constructed by
Tenant or to other property of Tenant that may be placed in the Premises prior
to completion of the Work, the same being at Tenant's sole risk, except and only
to the extent caused by Landlord's own negligence or willful misconduct.

(c)(i)  Landlord grants to Tenant one option to extend the Term (the "Extension
Option") for a period of five (5) years (the "Extension Period"). Tenant's
privilege to exercise the Extension Option is expressly conditioned upon Tenant
not being in default (following the expiration of all applicable notice and cure
provisions) at the time the Extension Option is exercised and not being in
default (following the expiration of all applicable notice and cure provisions)
between the time the Extension Option is exercised and the start of the
Extension Period.

        (ii)   Tenant shall have the right to exercise the Extension Option by
giving written notice (the "Extension Notice") to Landlord no later than nine
(9) months and no earlier than twelve (12) months prior to the Expiration Date
of the Term. All terms and conditions of this Lease shall continue during the
Extension Period, provided that during each Extension Period, the Base Rent
shall be ninety-five percent (95%) of the Fair Market Rent as of the date (the
"Rent Determination Date") that is nine (9) months preceding the Expiration Date
(such Base Rent for the Extension Period being deemed "Renewal Rent").

        (iii)  As used in this Lease, Fair Market Rent shall mean the effective
rental rates then being obtained by tenants in the marketplace for comparable
buildings and premises. The effective rental rates shall include consideration
of the presence or absence of tenant improvements or allowances existing or to
be provided under the lease for such premises, rental abatements, lease
takeovers/assumptions, moving expenses and other forms of rental concessions,
real estate brokerage commissions, proposed term of lease, extent of service
provided or to be provided under the lease for such premises, the time the
particular rate under consideration became or is to become effective and any
other relevant terms or conditions.

        (iv)  In the event of an exercise of an option by Tenant, Landlord shall
notify Tenant of Landlord's determination of the Renewal Rent within thirty
(30) days of the Rent Determination Date and if Landlord and Tenant cannot agree
on the Renewal Rent within thirty (30) days thereafter, the Renewal Rent payable
during the Extension Period shall be conclusively determined as follows:

        (A)  Within ten (10) days after the expiration of the thirty (30) day
period, each party, at its cost and by giving notice to the other party, shall
appoint an unaffiliated MAI designated real estate appraiser with at least five
(5) years' full-time commercial appraisal experience in the general vicinity of
the Premises (an "Appraiser"), to appraise and determine the then Fair Market
Rent as described in this Section.

        (B)  If one party does not appoint an Appraiser within the time period
in Section 2(c)(iv)(A) above, the Appraiser appointed by the other party shall
be the sole Appraiser and shall determine the Fair Market Rent.

        (C)  If neither party appoints an Appraiser within the time period set
forth in Section 2(c)(iv)(A), the Base Rent during the Extension Period shall be
the Base Rent payable in the last full month immediately preceding the
Expiration Date.

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        (D)  If the two (2) Appraisers are so appointed by the parties, they
shall meet promptly and attempt to appraise and determine the Fair Market Rent.
If they are unable to agree within thirty (30) days after the second Appraiser
has been appointed, they shall attempt to select a third Appraiser who meets the
qualifications stated in Section 2(c)(iv)(A) within ten (10) days after the last
day the two Appraisers are given to determine the Fair Market Rent. If they are
unable to agree on a third Appraiser, either of the parties to this Lease, by
giving ten (10) days' notice to the other party, can apply to the President of
the Alameda County Real Estate Board or the presiding judge of the Superior
Court for Alameda County for the selection of a third Appraiser who meets the
qualifications stated in Section 2(c)(iv)(A). Each of the parties shall bear
one-half (1/2) of the cost of appointing the third Appraiser and of the third
Appraiser's fees. The third Appraiser, however selected, shall be a person who
has not previously acted in any capacity for either party or is not or has not
been affiliated with the other appointed Appraisers.

        (E)  Within thirty (30) days after the selection of the third Appraiser,
a majority of the Appraisers shall appraise and determine the Fair Market Rent.
If a majority of the Appraisers are unable to so set the Fair Market Rent within
the required period of time, the appraisals of the three Appraisers shall be
added together and their total divided by three. The resulting quotient shall be
the Fair Market Rent.

        (F)  If, however, the low appraisal or the high appraisal are more than
ten percent (10%) lower or higher than the middle appraisal, the low appraisal
or the high appraisal shall be disregarded. If only one appraisal is
disregarded, the remaining two appraisals shall be added together and their
total divided by two. The resulting quotient shall be the Fair Market Rent. If
two appraisals are disregarded, the remaining appraisal shall be the Fair Market
Rent.

        (d)   Except in connection with an assignment which is to an Altigen
Affiliate (as that term is hereinafter defined), the Extension Option is not
assignable by Tenant, and any attempted assignment shall be void. Additionally,
if subleases (excluding Permitted Transfers) covering more than twenty-five
percent (25%) of the Premises exist at the time of exercise of the Extension
Option, such exercise shall be of no force and effect.

        3.    Landlord's Failure to Give Possession.    Landlord shall not be
liable for damages to Tenant for failure to deliver possession of the Premises
to Tenant for any reason whatsoever, nor shall this Lease be void or voidable as
a result of such delay, except that the commencement of the Term shall be
delayed until Landlord delivers possession of the Premises to Tenant (so long as
Tenant is not responsible for such failure or delay). Landlord will use all
commercially reasonable efforts to deliver possession of the Premises to Tenant,
with the Work substantially completed, on or prior to the Target Ready Date
identified in the Basic Lease Provisions (all such entry into the Premises by
Tenant prior to the Commencement Date shall be deemed to be a part of the Early
Entry Period). Notwithstanding the foregoing to the contrary, if the Ready Date
does not occur on or before January 1, 2004, then Tenant shall receive a credit
against the Base Rent first payable under Section 5 below in the amount of
$20,432.00 per month, prorated on a daily basis, for each day between January 1,
2004 and the date the Premises is delivered to Tenant in the condition required
by this Lease. Notwithstanding the foregoing, in no event shall the total rent
credit provided pursuant to this Section 3 exceed $40,864.00. Further, if the
Commencement Date does not occur on or before June 1, 2004, then, Tenant may
terminate this Lease upon written notice ("Termination Notice") to Landlord
given prior to the Commencement Date, but in all events on or before June 10,
2004.

        4.    Quiet Enjoyment.    Tenant, upon payment in full of the required
Rent and full performance of the terms, conditions, covenants and agreements
contained in this Lease, shall peaceably and quietly have, hold and enjoy the
Premises during the Term hereof. Landlord shall not be responsible for the

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acts or omissions of Tenant, any other tenant, or any third party that may
interfere with Tenant's use and enjoyment of the Premises.

B.    Rent/Payment/Security Deposit.

        5.    Base Rent.    Tenant shall pay to Landlord, at the address stated
in the Basic Lease Provisions or at such other place as Landlord shall designate
in writing to Tenant, monthly base rent ("Base Rent") in the amounts set forth
in the Basic Lease Provisions.

        6.    Rent Payment.    The Base Rent for each month during the Term
shall be due on the first (1st) day of each calendar month, in advance, in legal
tender of the United States of America, without abatement, demand, deduction or
offset whatsoever. One full monthly installment of Base Rent shall be due and
payable on the date of execution of this Lease by Tenant and shall be applied to
the sixth (6th) month's Base Rent; provided, that if the Commencement Date
should be a date other than the first day of a calendar month, the monthly Base
Rent installment paid on the date of execution of this Lease by Tenant shall be
prorated to that sixth (6th) partial calendar month in which non-zero Base Rent
is required to be paid, and the excess shall be applied as a credit against the
next monthly Base Rent installment. Tenant shall pay, as Additional Rent, all
other sums due from Tenant under this Lease (the term "Rent", as used herein,
means all Base Rent, Additional Rent and all other amounts payable hereunder
from Tenant to Landlord).

        7.    Operating Expenses/Taxes/Impositions.    

        (a)   Tenant agrees to reimburse Landlord throughout the Term, as
"Additional Rent" hereunder, for Tenant's Share (as defined below) of: (i) the
annual Operating Expenses (as defined below) for each calendar year, or portion
thereof, during the Term; and (ii) the annual Taxes (as defined below) for each
calendar year, or portion thereof, during the Term. The term "Tenant's Share" as
used in this Lease shall mean the percentage determined by dividing the rentable
square footage of the Premises by the rentable square footage of the Building or
the Industrial Center, consistent with the manner by which Landlord aggregates
Operating Expenses and Taxes to the Building or to the Industrial Center.
Landlord and Tenant hereby agree that Tenant's Share for the Building with
respect to the Premises initially demised by this Lease is the percentage amount
set forth in Paragraph 7 of the Basic Lease Provisions. "Tenant's Share" may
change during the Term of this Lease in the event that the rentable area of the
Industrial Center changes as a result of additions or subtractions of land or
buildings to the Industrial Center. Tenant's Share of Operating Expenses and
Taxes for any calendar year shall be appropriately prorated for any partial year
occurring during the Term.

        (b)   "Operating Expenses" shall mean all costs and expenses incurred by
Landlord with respect to the ownership, maintenance and operation of the
Building and the Property including, but not limited to: maintenance, repair and
replacement of the heating, ventilation, air conditioning, plumbing, electrical,
mechanical, utility and safety systems, paving and parking areas, roads and
driveways; maintenance of exterior areas such as gardening and landscaping, snow
removal and signage; maintenance and repair of roof membrane, flashings,
gutters, downspouts, roof drains, skylights and waterproofing; painting;
lighting; cleaning; refuse removal; security; utility services attributable to
the common areas; Building personnel costs; personal property taxes; rentals or
lease payments paid by Landlord for rented or leased personal property used in
the operation or maintenance of the Property; fees for required licenses and
permits; and a property management fee. The management fee charged to Tenant
shall not exceed two percent (2%) of the gross Rents payable under this Lease
for the applicable calendar year.

        Operating Expenses do not include: (a) the cost of any structural
repairs or maintenance to Building foundations and external walls; (b) the cost
of other capital repairs, replacements or improvements, except to the extent of
annual depreciation (based on the useful life of the item under generally
accepted accounting principles) on any such other capital repair, replacement or

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improvement; (c) debt service under mortgages or ground rent under ground
leases; (d) costs of restoration following a casualty except for insurance
deductibles applicable thereto (provided, however, that any earthquake
deductibles or other deductibles applied to the structural repairs shall be
treated the same as a capital repair, replacement or improvement described
above); (e) depreciation other than as set forth above; (f) leasing commissions
and tenant improvement costs; (g) litigation expenses relating to disputes with
tenants; (h) any cost or expenditure (or portion thereof) for which Landlord is
reimbursed, whether by insurance proceeds, pursuant to the terms of a lease of
another tenant in the Building or otherwise, (i) the cost of any service or
improvements furnished to any other occupant of the Building which is not
available to Tenant under this Lease, (j) advertising and promotional expenses,
(k) compensation paid to any employee of Landlord for management of the Property
other than the management fee allowed hereunder, (l) any cost for which Landlord
is entitled to be reimbursed by any tenant of the Building other than Tenant,
(m) the investigation, clean-up, remediation, and other costs associated with
any Contamination by Hazardous Substances (as defined in Section 11), unless
caused or permitted by Tenant, and (n) Taxes, as defined below.

        (c)   "Taxes" shall mean all taxes and assessments of every kind and
nature which Landlord shall become obligated to pay with respect to each
calendar year of the Term or portion thereof because of or in any way connected
with the ownership, leasing, and operation of the Building and the Property,
subject to the following: (i) the amount of ad valorem real and personal
property taxes against Landlord's real and personal property to be included in
Taxes shall be the amount required to be paid for any calendar year,
notwithstanding that such Taxes are assessed for a different calendar year (the
amount of any tax refunds received by Landlord during the Term of this Lease
shall be deducted from Taxes for the calendar year to which such refunds are
attributable); (ii) the amount of special taxes and special assessments to be
included shall be limited to the amount of the installments (plus any interest,
other than penalty interest, payable thereon) of such special tax or special
assessment payable for the calendar year in respect of which Taxes are being
determined; (iii) the amount of any tax or excise levied by the State or the
City where the Building is located; any political subdivision of either, or any
other taxing body, on rents or other income from the Property (or the value of
the leases thereon) to be included shall not be greater than the amount which
would have been payable on account of such tax or excise by Landlord during the
calendar year in respect of which Taxes are being determined had the income
received by Landlord from the Building [excluding amounts payable under this
subparagraph (iii)] been the sole taxable income of Landlord for such calendar
year; (iv) there shall be excluded from Taxes all income taxes [except those
which may be included pursuant to the preceding subparagraph (iii) above],
excess profits taxes, franchise, capital stock, and inheritance or estate taxes;
and (v) Taxes shall also include Landlord's reasonable costs and expenses
(including reasonable attorneys' fees) in contesting or attempting to reduce any
Taxes assessed for a different calendar year.

        (d)   Landlord shall, on or before the Commencement Date and as soon as
reasonably possible after the commencement of each calendar year thereafter,
provide Tenant with a reasonably detailed, line item statement of the estimated
monthly installments of Tenant's Share of Operating Expenses and Taxes which
will be due for the remainder of the calendar year in which the Commencement
Date occurs or for the next ensuing calendar year, as the case may be. Landlord
agrees to keep books and records showing the Operating Expenses in accordance
with generally accepted accounting principles (as modified for industrial
buildings in a manner comparable to other similar buildings in the commercial
area where the Building is located) and practices consistently maintained on a
year-to-year basis, in compliance with such provisions of this Lease as may
affect such accounts, and Landlord shall deliver to Tenant after the close of
each calendar year (including the calendar year in which this Lease terminates),
a reasonably detailed, line item statement ("Landlord's Statement") containing
the following: (1) a statement that the books and records covering the operation
of the Building have been maintained in accordance with the requirements in this
subparagraph (d); (2) the amount of Operating Expenses for such calendar year;
and (3) the amount of Taxes for such calendar year.

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        Upon reasonable prior written request given not later than ninety
(90) days following the date Landlord's Statement is delivered to Tenant,
Landlord will provide Tenant detailed documentation to support such Landlord's
Statement or provide Tenant with the opportunity to review such supporting
information. If Tenant does not notify Landlord of any objection to Landlord's
Statement within ninety (90) days after the later of delivery of Landlord's
Statement or such requested supporting documentation, Tenant shall be deemed to
have accepted Landlord's Statement as true and correct and shall be deemed to
have waived any right to dispute the Operating Expenses and/or Taxes due
pursuant to that Landlord's Statement. Tenant acknowledges that Landlord
maintains its records for the Property at Landlord's main office, currently One
Front Street, Suite 1100, San Francisco, California, and Tenant agrees that any
review of records under this Paragraph shall be at the sole expense of Tenant
and shall be conducted by an accountant or other person experienced in
accounting for income and expenses of industrial projects engaged solely by
Tenant on terms which do not entail any compensation based or measured in any
way upon any savings in Additional Rent or reduction in Operating Expenses
achieved through the inspection process. Tenant acknowledges and agrees that any
records reviewed under this Paragraph constitute confidential information of
Landlord, which shall not be disclosed to anyone other than the person
performing the review, the principals or officers of Tenant or the reviewer who
receive the results of the review, Tenant's or the reviewer's accounting or
administrative employees, and Tenant's legal counsel. The disclosure of such
information to any other person by Tenant or its employees or agents, whether or
not caused by the conduct of Tenant, shall constitute a material breach of this
Lease unless such disclosure is required by law or in connection with a legal
proceeding.

        (i)    Tenant shall pay to Landlord, together with its monthly payment
of Base Rent as provided in Section 5 above, as Additional Rent hereunder, the
estimated monthly installment of Tenant's Share of Operating Expenses and Taxes
for the calendar year in question. At the end of any calendar year, if Tenant
has paid to Landlord an amount in excess of Tenant's Share of Operating Expenses
and Taxes for such calendar year, Landlord shall reimburse to Tenant any such
excess amount (or shall apply any such excess amount to any amount then owing to
Landlord hereunder, and if none, to the next due installment or installments of
Additional Rent due hereunder, at the option of Landlord). At the end of any
calendar year if Tenant has paid to Landlord less than Tenant's Share of
Operating Expenses and Taxes for such calendar year, Tenant shall pay to
Landlord any such deficiency within thirty (30) days after Tenant receives the
annual statement.

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        (ii)   For the calendar year in which this Lease terminates and is not
extended or renewed, the provisions of this Section shall apply, but Tenant's
Share for such calendar year shall be subject to a pro rata adjustment based
upon the number of days prior to the expiration of the Term of this Lease.
Tenant shall make monthly estimated payments of the pro rata portion of Tenant's
Share for such calendar year (in the manner provided above) and when the actual
prorated Tenant's Share for such calendar year is determined, Landlord shall
send Landlord's Statement to Tenant for such year and if such Statement reveals
that Tenant's estimated payments for the prorated Tenant's Share for such
calendar year exceeded the actual prorated Tenant's Share for such calendar
year, Landlord shall include a refund for that amount along with the Statement
(subject to offset in the event Tenant is in default hereunder). If Landlord's
Statement reveals that Tenant's estimated payments for the prorated Tenant's
Share for such calendar year were less than the actual prorated Tenant's Share
for such calendar year, Tenant shall pay the shortfall to Landlord within thirty
(30) days after the date of receipt of Landlord's Statement.

        (iii)  If the Building or the Industrial Center, as appropriate, is less
than completely occupied throughout any calendar year of the Term, then the
actual Operating Expenses for the calendar year in question which vary with
occupancy levels in the Building or the Industrial Center shall be increased to
the amount of Operating Expenses which Landlord reasonably determines would have
been incurred during that calendar year if the Building or the Industrial Center
had been completely occupied throughout such calendar year.

        (e)   In addition to the monthly rental and other charges to be paid by
Tenant under this Lease, Tenant shall pay Landlord for all of the following
items (collectively, "Impositions"): (i) taxes, other than local, state, and
federal personal or corporate income taxes measured by the net income of
Landlord; (ii) monthly installments of assessments, including without
limitation, all assessments for public improvements, services, or benefits,
irrespective of when commenced or completed; (iii) excises; (iv) levies;
(v) business taxes; (vi) license, permit, inspection, and other authorization
fees other than in connection with the Work; (vii) transit development fees;
(viii) assessments or charges for housing funds; (ix) service payments in lieu
of taxes and; (x) any other fees or charges that are levied, assessed,
confirmed, or imposed by a public authority; provided, however, that Impositions
shall not include amounts otherwise included in Operating Expenses or Taxes.
Tenant is obligated to pay only to the extent that the Impositions are (a) on,
measured by, or reasonably attributable to, the cost or value of Tenant's
equipment, furniture, fixtures, and other personal property located in the
Premises, or the cost or value of any leasehold improvements made to the
Premises by or for Tenant, regardless of whether title to the improvements shall
be in Tenant or Landlord; (b) based on or measured by the monthly rental or
other charges payable under this Lease, including without limitation, any gross
receipts tax levied by a municipality, the State of California, the Federal
Government, or any other governmental body with respect to the receipt of the
rental; (c) based on the development, possession, leasing, operation,
management, maintenance, alteration, repair, use, or occupancy by Tenant of the
Premises or any portion of the Premises; or (d) on this transaction or any
document to which Tenant is a party creating or transferring an interest or an
estate in the Premises. If it is unlawful for Tenant to reimburse Landlord for
the Impositions, but lawful to increase the monthly rental to take into account
Landlord's payment of the Impositions, the monthly rental payable to Landlord
shall be revised to net Landlord the same net return without reimbursement of
the Impositions as would have been received by Landlord with reimbursement of
the Impositions.

        8.    Late Charge.    Other remedies for non-payment of Rent
notwithstanding, if any monthly installment of Base Rent or Additional Rent is
not received by Landlord on or before the date due, or if any payment due
Landlord by Tenant which does not have a scheduled due date is not received by
Landlord on or before the tenth (10th) day following the date Tenant was
invoiced, a late charge of five percent (5%) of such past due amount shall be
immediately due and payable as Additional Rent hereunder, provided however, that
before imposition of the first late charge that accrues in any

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calendar year of the Term, such first late charge shall not be imposed unless
Tenant fails to make such late payment within five (5) calendar days following a
written notice from Landlord of the impending imposition of such late charge,
and interest shall accrue on all delinquent amounts from the date past due until
paid at the lower of a rate of one (1.0%) percent per month or fraction thereof
from the date such payment is due until paid (Annual Percentage Rate = 12%), or
the highest rate permitted by applicable law.

        9.    Partial Payment.    No payment by Tenant or acceptance by Landlord
of an amount less than the Rent herein stipulated shall be deemed a waiver of
any other Rent due. No partial payment or endorsement on any check or any letter
accompanying such payment of Rent shall be deemed an accord and satisfaction,
but Landlord may accept such payment without prejudice to Landlord's right to
collect the balance of any Rent due under the terms of this Lease or any late
charge assessed against Tenant hereunder.

        10.    Security Deposit.    Tenant shall pay Landlord the amount
identified as the Security Deposit in Paragraph 8 of the Basic Lease Provisions
(hereinafter referred to as "Security Deposit") as evidence of good faith on the
part of Tenant in the fulfillment of the terms of this Lease, which shall be
held by the Landlord during the Term of this Lease, or any renewal thereof.
Under no circumstances will Tenant be entitled to any interest on the Security
Deposit. The Security Deposit may be used by Landlord, at its sole discretion,
to apply to any amount owing to Landlord hereunder, or to pay the expenses of
repairing any damage to the Premises caused by Tenant, except natural wear and
tear occurring from normal use of the Premises, but this right shall not be
construed to limit Landlord's right to recover additional sums from Tenant for
damages to the Premises. If there are no payments to be made from the Security
Deposit as set out in this paragraph, or if there is any balance of the Security
Deposit remaining after all payments have been made, the Security Deposit, or
such balance thereof remaining, will be refunded to Tenant within the time
periods required pursuant to California Civil Code Section 1950.7. In no event
shall Tenant be entitled to apply the Security Deposit to any Rent due
hereunder. In the event of an act of bankruptcy by or insolvency of Tenant, or
the appointment of a receiver for Tenant or a general assignment for the benefit
of Tenant's creditors, then the Security Deposit shall be deemed immediately
assigned to Landlord. The right to retain the Security Deposit shall be in
addition and not alternative to Landlord's other remedies under this Lease or as
may be provided by law and shall not be affected by summary proceedings or other
proceedings to recover possession of the Premises. Upon sale or conveyance of
the Building, Landlord shall transfer or assign the Security Deposit to any new
owner of the Premises, and upon such transfer all liability of Landlord for the
Security Deposit shall terminate. Landlord shall be entitled to commingle the
Security Deposit with its other funds.

C.    Use/Laws/Rules.

        11.    Use of Premises/Environmental Matters.    

        (a)    Use.    Tenant shall use and occupy the Premises solely for the
purposes set forth in the Basic Lease Provisions and for no other purpose. The
Premises shall not be used for any illegal purpose, nor in violation of any
valid law, ordinance or regulation of any governmental body, nor in any manner
to create any nuisance or trespass, nor in any manner which will void the
insurance or increase the rate of insurance on the Premises or the Building, nor
in any manner inconsistent with the quality of the Building. Tenant acknowledges
that Landlord has made no representations or warranties with respect to the
suitability of the Premises for Tenant's proposed use.

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        (b)    Environmental Matters.    

        (1)   For purposes of this Lease:

        "Contamination" means the presence of or release, spillage, leakage,
migration, disposal, burial, or placement of Hazardous Substances (as
hereinafter defined) upon, within, below, or into any surface water, ground
water, land surface, subsurface soil or strata, building, or improvement at any
portion of the Demised Premises, the Building, the Common Area or the Project.

        "Environmental Laws" means all codes, laws (including, without
limitation, common law), ordinances, regulations, reporting or licensing
requirements, rules, or statutes relating to pollution or protection of human
health or the environment (including ambient air, surface water, ground water,
land surface, or subsurface soil or strata), including, without limitation
(i) the Comprehensive Environmental Response Compensation and Liability Act, 42
U.S.C. §§9601 et seq. ("CERCLA"); (ii) the Solid Waste Disposal Act, as amended
by the Resource Conservation and Recovery Act, as amended, 42 U.S.C. §§6901 et
seq., ("RCRA"); (iii) the Emergency Planning and Community Right to Know Act (42
U.S.C. §§11001 et seq.); (iv) the Clean Air Act (42 U.S.C. §§7401 et seq.)
(v) the Clean Water Act (33 U.S.C. §§1251 et seq.); (vi) the Toxic Substances
Control Act (15 U.S.C. §§2601 et seq.) (vii) the Hazardous Materials
Transportation Act (49 U.S.C. §§5101 et seq.) (viii) the Safe Drinking Water Act
(41 U.S.C. §§300f et seq.); (ix) any state, county, municipal or local statutes,
laws or ordinances similar or analogous to the federal statutes listed in parts
(i) – (viii) of this subparagraph; (x) any amendments to the statutes, laws or
ordinances listed in parts (i) – (ix) of this subparagraph, regardless of
whether in existence on the date hereof; (xi) any rules, regulations,
guidelines, directives, orders or the like adopted pursuant to or implementing
the statutes, laws, ordinances and amendments listed in parts (i) – (x) of this
subparagraph; and (xii) any other law, statute, ordinance, amendment, rule,
regulation, guideline, directive, order or the like in effect now or in the
future relating to environmental, health or safety matters.

        "Hazardous Substances" means any chemical, waste, by-product, pollutant,
contaminant, compound, product, substance, equipment or fixture defined as or
deemed hazardous or toxic or otherwise regulated under any Environmental Law,
including, without limitation, (i) RCRA hazardous wastes, (ii) CERCLA hazardous
substances, (iii) gasoline, diesel fuel, fuel oil, motor oil, waste oil, and any
other petroleum hydrocarbon, including any additives or other by-products or
constituents associated therewith, (iv) pesticides and other agricultural
chemicals, (v) asbestos and asbestos containing materials in any form,
(vi) polychlorinated biphenyls, (vii) radioactive materials and radon, and
(viii) urea formaldehyde foam insulation.

        (2)   Tenant covenants that all its activities, and the activities of
any entity affiliated with Tenant ("Tenant's Affiliates"), on the Premises and
in the Building and on the Property, during the Term will be conducted in
compliance with Environmental Laws. Tenant represents and warrants to Landlord
that Tenant is currently in compliance with all applicable Environmental Laws
and that there are no pending or threatened notices of deficiency, notices of
violation, orders, or judicial or administrative actions involving alleged
violations by Tenant of any Environmental Laws. Tenant, at Tenant's sole cost
and expense, shall be responsible for obtaining all permits or licenses or
approvals under Environmental Laws necessary for Tenant's operation of its
business on the Premises ("Environmental Permits") and shall make all
notifications and registrations required by any applicable Environmental Laws.
Tenant, at Tenant's sole cost and expense, shall at all times comply with the
terms and

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conditions of all such Environmental Permits notifications and registrations and
with any other applicable Environmental Laws. Tenant represents and warrants
that it has obtained all such Environmental Permits and made all such
notifications and registrations required by any applicable Environmental Laws
necessary for Tenant's operation of its business on the Premises.

        (3)   Tenant shall not cause or permit any Hazardous Substances to be
brought upon, kept or used in or about the Premises, on the Building, or the
Property without the prior written consent of Landlord, which consent shall not
be unreasonably withheld; provided, however, that the consent of Landlord shall
not be required for the use at the Premises of cleaning supplies, toner for
photocopying machines and other similar materials, as well as small amounts of
solder, in containers and quantities reasonably necessary for and consistent
with normal and ordinary use by Tenant in the routine operation of Tenant's
business or in the routine janitorial service, cleaning and maintenance for the
Premises. For purposes of the foregoing, Landlord shall be deemed to have
reasonably withheld consent if Landlord determines that the presence of such
Hazardous Substance within the Premises could result in a risk of harm to person
or property or otherwise negatively affect the value or marketability of the
Building or the Property.

        (4)   Regardless of any consents granted by Landlord pursuant to the
foregoing allowing Hazardous Substances upon the Premises, Tenant shall under no
circumstances whatsoever cause or permit any Contamination by Tenant or Tenant's
Affiliates. If such Contamination by Tenant shall occur, Tenant shall promptly
at its expense (i) contain and control, investigate, and clean up, remove, or
remedy such Contamination to the extent required by, and take any and all other
actions required under, applicable Environmental Laws, (ii) restore the
Premises, the Building and the Property to the condition existing prior to the
Contamination, and (iii) notify and keep Landlord reasonably informed of such
containment, control, investigation, cleanup, removal, remediation and
restoration activities. All such activities shall be conducted by Tenant or
Tenant's Affiliates in accordance with any and all Environmental Laws and other
applicable federal, state and local laws and regulations. Landlord shall have
the right, but not the obligation, after providing Tenant with notice and a
reasonable opportunity to cure, to enter onto the Premises or to take such other
actions as Landlord deems necessary or advisable so to contain, control,
investigate, clean up, remove, remediate, restore, resolve or minimize the
impact of, or otherwise deal with, any such contamination. All costs and
expenses incurred by Landlord in the exercise of any such rights shall be
payable by Tenant upon demand.

        (5)   Regardless of any consents granted by Landlord pursuant to
Paragraph 11(b)(3) above allowing Hazardous Substances upon the Premises, Tenant
shall under no circumstances whatsoever cause or permit (i) any activity on the
Premises which would cause the Premises to become subject to regulation as a
hazardous waste treatment, storage or disposal facility under RCRA or the
regulations promulgated thereunder, (ii) any activity on the Premises which
would cause the Premises, the Building, or the Property to become subject to any
lien imposed under or as a result of any Environmental Law, (iii) the discharge
of Hazardous Substances into the storm sewer system serving the Property, or
(iv) the installation of any underground tank, oil/water separator, sump pump,
or underground piping on or under the Premises.

        (6)   Landlord shall also have the right prior to the expiration of the
Term of this Lease, if Tenant has caused any Contamination previously or if
there are other reasonable grounds, to require Tenant to cause a qualified
environmental consultant to perform, at Tenant's sole cost and expense, an
environmental audit of the Premises satisfactory to Landlord in its reasonable
discretion. Should Tenant fail to undertake and seek diligently to perform said
environmental

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audit within thirty (30) days of the Landlord's request, Landlord shall have the
right, but not the obligation, to retain a qualified environmental consultant to
perform such environmental audit. All costs and expenses incurred by Landlord in
the exercise of such rights shall be payable by Tenant upon demand.

        (7)   Without limiting in any way Tenant's obligations under any other
provision of this Lease, Tenant and its successors and assigns shall indemnify,
protect, defend (with counsel approved by Landlord) and hold Landlord, its
partners, officers, directors, shareholders, employees, agents, lenders,
contractors and each of their respective successors and assigns (the
"Indemnified Parties") harmless from any and all claims, damages, liabilities,
losses, costs and expenses of any nature whatsoever, known or unknown,
contingent or otherwise (including, without limitation, attorneys' fees,
litigation, arbitration and administrative proceedings costs, expert and
consultant fees and laboratory costs, as well as damages arising out of the
diminution in the value of the Premises or any portion thereof, damages for the
loss of the Premises, damages arising from any adverse impact on the marketing
of space in the Premises, and sums paid in settlement of claims), which arise
during or after the Term in whole or in part as a result of the storage,
generation, release, spillage, leakage, burial, placement, handling, treatment,
transportation, disposal, or arrangement for transportation or disposal, of any
Hazardous Substances (whether accidental, intentional, or negligent) by Tenant
or Tenant's Affiliates or by reason of Tenant's breach of any of the provisions
of this Paragraph 11(b). Such expenses, losses and liabilities shall include,
without limitation, any and all expenses that Landlord may incur (i) to comply
with any Environmental Laws, (ii) in studying, removing, disposing or otherwise
addressing any Hazardous Substances and contamination at, on, under, or from the
Premises, the Building, or the Property, (iii) with respect to fines, penalties
or other sanctions assessed upon Landlord, and (iv) with respect to legal and
professional fees and costs incurred by Landlord in connection with the
foregoing. The indemnity contained herein shall survive the expiration or
earlier termination of this Lease.

        (8)   Tenant has completed and delivered to Landlord prior to execution
and delivery of this Lease by Tenant a Hazardous Materials Questionnaire in the
form attached hereto as Exhibit "D", and Tenant represents and warrants to
Landlord that the information set forth therein is true and accurate in all
material respects.

        (9)   California law requires landlords to disclose to tenants the
existence of certain hazardous substances. Accordingly, the existence of tobacco
smoke must be disclosed. Although smoking is prohibited in the public areas of
the Building, these areas may, from time to time, be exposed to tobacco smoke.
Landlord covenants to comply during the Lease term with all local, state and
federal laws and regulations requiring disclosure to tenants regarding the
existence of Hazardous Substances within the Building. Landlord shall have
available at the Building office for inspection by Tenant, during normal
business hours, all reports in Landlord's possession relating to Hazardous
Substances existing at that Property, including that certain Phase I
Environmental Site Assessment, Northport Business Park, dated September 17,
1999, prepared for Lend Lease Real Estate Investments, Inc. by Dames & Moore,
with D&M Job No. 40676-081-042. Except as otherwise set forth in such report
referenced immediately above, Landlord has no actual knowledge of the presence
of Hazardous Substances in, on or about the Property in violation of any
applicable Environmental Laws or Environmental Permits.

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        12.    Compliance with Laws.    Tenant shall operate within the
Premises, the Building and the Industrial Center in compliance with all
applicable federal, state, and municipal laws, ordinances and regulations
(including, without limitation, the Americans with Disabilities Act) and shall
not knowingly, directly or indirectly, make any use of the Premises, the
Building or the Industrial Center which is prohibited by any such laws,
ordinances or regulations. Further, Tenant, at its sole cost and expense, shall
(i) cause the Premises to comply with the provisions of the Americans With
Disabilities Act, 42 U.S.C. § 12101 et seq. and any governmental regulations
with respect thereto (the "ADA"), title 24 of the California Administrative Code
("Title 24") and other similar federal, state and local laws and regulations,
including, without limitation, any alterations required under ADA for the
purposes of "public accommodations" (as that term is used in the ADA), and
(ii) reimburse Landlord upon demand for any and all costs incurred by Landlord
to comply with ADA, Title 24 or such other similar federal, state or local laws
and regulations in any other portion of the floor on which the Premises are
located or any other portion of the Building arising out of Tenant's use of or
construction in the Premises (but excluding any alterations in connection with
the Work, which costs shall be borne solely by Landlord). Except as provided
above, Tenant shall have no responsibility to comply with such laws for the
exterior of the building.

        13.    Waste Disposal.    

        (a)   All normal trash and waste (i.e., waste that does not require
special handling pursuant to subparagraph (b) below) shall be deposited in
dumpsters located at the Property.

        (b)   Tenant shall be responsible for the removal and disposal of any
waste deemed by any governmental authority having jurisdiction over the matter
to be hazardous or infectious waste or waste requiring special handling, such
removal and disposal to be in accordance with any and all applicable
governmental rules, regulations, codes, orders or requirements. Tenant agrees to
separate and mark appropriately all waste to be removed and disposed of in
dumpsters pursuant to (a) above and hazardous, infectious or special waste to be
removed and disposed of by Tenant pursuant to this subparagraph (b). Tenant
hereby indemnifies and holds harmless Landlord from and against any loss,
claims, demands, damage or injury Landlord may suffer or sustain as a result of
Tenant's failure to comply with the provisions of this subparagraph (b).

        14.    Rules and Regulations.    The rules and regulations in regard to
the Building and the Property, a copy of which is attached hereto as Exhibit
"E", and all reasonable non-discriminatory, rules and regulations and
modifications thereto which Landlord may hereafter from time to time adopt and
promulgate after notice thereof to Tenant, for the government and management of
the Building and the Property, are hereby made a part of this Lease and shall
during the Term be observed and performed by Tenant, its agents, employees and
invitees.

D.    Utilities/Signage/Tenant Buildout.

        15.    Utilities.    Tenant will promptly pay, directly to the
appropriate supplier, the cost of all natural gas, heat, cooling, energy, light,
power, sewer service, telephone, water, refuse disposal and other utilities ands
services supplied to the Premises, together with any related installation or
connection charges or deposits (collectively, "Utility Costs") incurred during
the Term. If any services or utilities are jointly metered with other premises,
Landlord will make a reasonable determination of Tenant's proportionate share of
such Utility Costs and Tenant will pay such share to Landlord. Landlord reserves
the right to participate in wholesale energy purchase programs and to provide
energy to the Premises through such programs so long as the cost to Tenant is
competitive. The Premises are currently separately metered for natural gas and
electricity.

        16.    Signs.    Tenant shall not paint or place any signs, placards, or
other advertisements of any character upon the outside walls, common areas or
the roof of the Building (except with the prior consent of Landlord, which
consent may be withheld by Landlord in its absolute discretion).

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Notwithstanding the foregoing, subject to Landlord's reasonable approval of its
design, and provided that the following are allowed under, and are in compliance
with, all applicable laws, (i) Tenant shall be permitted to install signage
including Tenant's name and logo, in the top position on the existing monument
sign on the Property adjacent to Cushing Parkway, and (ii) Tenant shall be
permitted to install identification signage on the Building of a size and in a
color, font and location that is similar to other building signs in the vicinity
of the Building, subject to Landlord's reasonable approval. Up to Three Thousand
Dollars ($3,000) for the cost of the monument sign shall be paid by Landlord (as
shown on the Budget described in Exhibit "B"), and any signage costs in excess
of such amount shall be Tenant's sole responsibility.

        17.    Buildout Allowance and Tenant Finishes.    

        (a)   Landlord shall perform the Work as described in Exhibit "B" on a
turnkey basis, at Landlord's sole cost and expense. Additionally, Landlord will
provide to Tenant the following allowances (each an "Allowance") (i) an
allowance ("Tenant Improvement Allowance") per rentable square foot contained
within the Premises for Additional Work and costs of Tenant's holdover at its
existing premises, and (ii) an additional amount equal to Fifty Thousand and
No/100 Dollars ($50,000.00) for moving and other expenses related to the
preparation of the Premises for occupancy by Tenant (the "Moving Allowance"),
and, (iii) at Tenant's option, an additional allowance ("Supplemental
Allowance") per rentable square foot, all as set forth in Paragraph 10 of the
Basic Lease Provisions, which Supplemental Allowance is subject to repayment as
set forth below in subsection (f), to be applied to the cost of the Additional
Work permitted in Exhibit "B", and all costs relating thereto including without
limitation, the costs of contractors, architects or other consultants in
connection therewith, as well as "soft costs" related thereto, and toward the
payment of costs for furniture or furniture systems, and cabling and
telecommunications equipment to be installed and used in the Premises by Tenant.
However, notwithstanding the description above regarding the purpose of each
designated Allowance, any unused portion of any Allowance may be used for any
purpose provided for any other Allowance as described above.

        (b)   All such reimbursements for costs other than for the Work and the
Additional Work shall be paid by Landlord to Tenant (or at Tenant's directions,
directly to Tenant's vendors and contractors) within fifteen (15) calendar days
after Landlord's receipt of written request thereof from Tenant accompanied by
invoices covering all work and costs for which the request is so submitted). The
Tenant Improvement Allowance and the Supplemental Allowance shall be available
for application to the cost of the Additional Work only to the extent that the
Additional Work is commenced on or before thirty (30) days after the Target
Commencement Date (unless Landlord has failed to deliver the Premises to Tenant
for reasons other than Tenant Delay, in which case, such period for
reimbursement shall extend through the date thirty (30) days after the
Commencement Date).

        (c)   Tenant and Landlord agree that all costs of the Additional Work in
excess of such Tenant Improvement Allowance or Supplemental Allowance which are
requested by Tenant and approved by Landlord shall be paid by Tenant to Landlord
as follows: twenty-five (25%) percent of such excess costs prior to the
commencement of the Additional Work, fifty percent (50%) of such excess costs
within five (5) business days of Landlord's notice that fifty percent (50%) of
the Additional Work is complete and the balance (i.e. 25%) of actual costs upon
substantial completion and prior to occupancy. The amount due for each
installment shall be set forth in a written invoice from Landlord. Should Tenant
fail to pay for such excess costs when due as herein provided, such amount due
shall accrue interest at the lesser of a rate of one and one-half (11/2%)
percent per month or fraction thereof from the date such payment is due until
paid (Annual Percentage Rate = 18%), or the highest rate permitted by applicable
law, and the failure to pay such amount when due shall be a default, subject to
the provisions of Section 33 below.

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        (d)   Within sixty (60) days after substantial completion of any
Additional Work, Landlord shall provide Tenant with a final accounting of the
application of the Tenant Improvement Allowance and the Supplemental Allowance
to such Additional Work, along with copies of invoices, subcontracts or other
documentation as reasonably required to evidence the application of such funds.
If there are any sums remaining in the Tenant Improvement Allowance or the
Moving Allowance (but not the Supplemental Allowance) after application of such
Allowances to the actual costs of Tenant's holdover, the costs of the Additional
Work, the actual costs of Tenant's move and preparation of the Premises for
occupancy, or the cost of Tenant's furniture, furniture systems, cabling and
telecommunications equipment, then the total of such sums remaining in the
Tenant Improvement Allowance and the Moving Allowance shall be applied as a
credit in Tenant's favor against the rents first becoming due under this Lease.

        (e)   The Work Letter attached hereto as Exhibit "B" and executed by
Landlord and Tenant, is hereby made a part of this Lease, and its provisions
shall control in the event of a conflict with the provisions contained in this
Lease.

        (f)    The Supplemental Allowance shall be made available to Tenant as a
loan and only upon Tenant's written request to Landlord therefor made no later
than thirty (30) days after the Target Commencement Date. Such written request
shall specify the maximum amount of the Supplemental Allowance desired. Landlord
shall have no obligation to disburse any portion of the Supplemental Allowance
in excess of the amount so requested by Tenant. The Supplemental Allowance shall
be disbursed in the same manner and upon the same conditions as the Tenant
Improvement Allowance. Landlord shall first disburse all portions of the Tenant
Improvement Allowance and the Moving Allowance prior to disbursing any portions
of the Supplemental Allowance. Upon the date that Tenant submits the final
application for reimbursement of costs other than directly related to the
Additional Work, or upon completion of the Additional Work, whichever is later,
Landlord shall advise Tenant of the amount of the Supplemental Allowance
(including said final application for reimbursement) disbursed and the payment
schedule for repayment thereof. Tenant shall only be obligated to pay Landlord
for the Supplemental Allowance actually disbursed (the "Amortized Payment") and
not the maximum amount of the Supplemental Allowance requested (unless such
maximum amount shall have been actually disbursed). The Amortized Payment shall
be made by Tenant to Landlord in equal monthly installments over the sixty-two
(62) month term of this Lease, amortized at ten percent (10%) per annum, simple,
as Additional Rent, payable at the same time in the same manner as Base Rent,
prepayable at any time (without future interest). If Landlord has not advised
Tenant of the payment schedule prior to the Commencement Date, Tenant shall make
those payments which would have been due as of the Commencement Date within ten
(10) business days after notification thereof. In the event of an early
termination of the Lease (for any reason, including, without limitation, by
reason of casualty or condemnation), the repayment of the Amortized Payment may
be accelerated by Landlord and, otherwise, Tenant shall remain liable for the
principal balance thereof and all accrued interest thereon without regard to the
limitations of California Civil Code § 1951.2, acknowledging that such
obligation is not future rent, but rather a loan.

        18.    Force Majeure.    In the event of a strike, lockout, labor
trouble, civil commotion, an act of God, or any other event beyond Landlord's
control (a "force majeure event") which results in the Landlord or Tenant being
unable to timely perform its obligations hereunder to repair the Premises,
provide services, or complete Work (as provided in Exhibit "B"), so long as such
party diligently proceeds to perform such obligations after the end of such
force majeure event, such party shall not be in breach hereunder, nor shall this
Lease terminate, provided, however, that in no event shall Tenant's obligation
to pay any Base Rent, Additional Rent, or any other charges and sums due and
payable be excused.

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E.    Repairs/Alterations/Casualty/Condemnation.

        19.    Repairs By Landlord.    Tenant, by taking possession of the
Premises, shall accept and shall be held to have accepted the Premises as
suitable for the use intended by this Lease, subject to the terms and conditions
of this Lease. In no event shall Tenant be entitled to compensation or any other
damages or any other remedy against Landlord in the event the Premises are not
deemed suitable for Tenant's use. Landlord shall not be required, after
possession of the Premises has been delivered to Tenant, to make any repairs or
improvements to the Premises, except as set forth in this Lease.

        Except for damage caused by casualty and condemnation (which shall be
governed by Sections 23 and 24 below), and subject to normal wear and tear,
Landlord shall maintain in good condition and repair the structural components
of the exterior walls, roof and foundation, and the common areas of the
Industrial Center, provided such repairs are not necessitated or occasioned by
Tenant, Tenant's invitees or anyone in the employ or control of Tenant.

        Additionally, Landlord hereby warrants that all Building systems (the
"Premises Systems"), including the electrical, life safety, plumbing and
heating, ventilation and air conditioning, security alarm, and doors, windows
and skylights, to the extent existing therein, are and will be in good working
order and condition for the period commencing on the Commencement Date hereunder
and expiring on the date six full calendar months thereafter (the "Warranty
Period"). During the Warranty Period, upon written notice given by Tenant to
Landlord of a failure or faulty operation of the Premises Systems, Landlord
shall repair the failed or improperly operating Premises Systems at Landlord's
sole cost and expense as long as such failure was not caused by Tenant's willful
or negligent misconduct. Upon expiration of the Warranty Period, and after
completion of any repair earlier noticed, and except as may otherwise be
required pursuant to the Work, Landlord shall have no further obligation to
repair or correct any failure of the Premises Systems during the Term of this
Lease. Tenant hereby waives the provisions of California Civil Code Sections
1941 and 1942 with respect to Landlord's obligations under the Lease.

        20.    Repairs By Tenant.    Except as described in Section 19 above,
Tenant shall, at its own cost and expense, maintain the Premises in good repair
and in a neat and clean condition, including making all necessary repairs and
replacements; provided, however, that the cost of any capital repair or
replacement in excess of $10,000 (and not made as a result of the negligence or
willful misconduct of Tenant's or its employees, guests, agents or invitees),
the cost and necessity of which repair or replacement has been approved in
writing by Landlord prior to its making, which approval shall not be
unreasonably withheld, shall be amortized on a straight-line basis over the
useful life of the item in question, as reasonably determined by Landlord, and,
as long as Tenant is not in default of this Lease (beyond any applicable cure
period) at any time after such repair or replacement is made, Landlord shall
reimburse Tenant for the portion of such cost that relates to the period of time
from and after the expiration of the Lease Term upon such natural expiration.
Tenant shall provide Landlord with appropriate evidence of such costs promptly
after making such repair or replacement. Tenant shall further, at its own cost
and expense, repair or restore any damage or injury to all or any part of the
Premises or Building or Property caused by Tenant or Tenant's agents, employees,
invitees, licensees, visitors or contractors, including but not limited to any
repairs or replacements necessitated by (i) the construction or installation of
improvements to the Premises by or on behalf of Tenant, and (ii) the moving of
any property into or out of the Premises. If Tenant fails to make such repairs
or replacements promptly, Landlord may, at its option, upon prior reasonable
written notice to Tenant (except in an emergency) make the required repairs and
replacements and the costs of such repair or replacements shall be charged to
Tenant as Additional Rent and shall become due and payable by Tenant with the
monthly installment of Base Rent next due hereunder. Tenant shall, at its own
cost and expense, enter into a regularly scheduled preventive
maintenance/service contract with a maintenance contractor for serving all hot
water, heating and air conditioning systems and equipment within the Premises.
The maintenance contractor and the contract must be approved in writing by
Landlord in

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advance. The service contract shall include all services recommended by the
equipment manufacturer within the operation/maintenance manual and shall become
effective (and a copy thereof delivered to Landlord) within thirty (30) days
following the date Tenant takes possession of the Premises.

        21.    Alterations and Improvements.    Except for minor, decorative
alterations which do not affect the Building structure or systems, are not
visible from outside the Premises and do not cost in excess of $20,000.00 in the
aggregate, Tenant shall not make or allow to be made any alterations, physical
additions or improvements in or to the Premises without first obtaining in
writing Landlord's written consent for such alterations or additions, which
consent may be granted or withheld in Landlord's sole discretion if the
alterations will affect the Building structure or systems or will be visible
from outside the Premises, but which consent shall not be unreasonably withheld
if the alterations will not affect the Building structure or systems and will
not be visible from outside the Premises. Upon Landlord's request, Tenant shall
deliver to Landlord plans and specifications for any proposed alterations,
additions or improvements and shall reimburse Landlord for Landlord's reasonable
cost to review such plans. Any alterations, physical additions or improvements
shall automatically become the property of Landlord upon the termination of the
Lease Term; provided, however, that Landlord, at its option, may require Tenant
to remove any alterations, additions or improvements in order to restore the
Premises to the condition existing on the Commencement Date (provided Landlord
notified Tenant at the time of Landlord's consent to any such alterations,
additions or improvements that Landlord reserved the right to require the
removal thereof). All costs of any such alterations, additions or improvements
shall be borne by Tenant. All alterations, additions or improvements shall be
made in a good, first-class, workmanlike manner and in a manner that does not
disturb other tenants, if any, and Tenant must maintain adequate liability and
builder's risk insurance throughout the construction. Tenant does hereby
indemnify and hold Landlord harmless from and against any and all claims for
damages or death of persons or damage or destruction of property arising out of
or relating to the performance of any such alterations, additions or
improvements made by or on behalf of Tenant. Under no circumstances shall
Landlord be required to pay, during the Term of this Lease and any extensions or
renewals hereof, any ad valorem or Property tax on such alterations, additions
or improvements, Tenant hereby covenanting to pay all such taxes when they
become due. In the event any alterations, additions, improvements or repairs are
to be performed by contractors or workmen other than Landlord's contractors or
workmen, any such contractors or workmen must first be approved, in writing, by
Landlord (which approval shall not be unreasonably withheld). Landlord agrees to
assign to Tenant and itself, for the Term of this Lease, any rights Landlord may
have against the contractor of the Premises with respect to any work performed
by such contractor in connection with improvements made by Landlord at the
request of Tenant. The cost of the Alterations to be paid by Tenant shall
include a reasonable charge for the administration, by Landlord or an agent, of
the construction or installation of the Alterations, the amount of which shall
bear a reasonable relationship to the scope of the Alterations and the costs of
performing the administration.

        22.    Liens.    Tenant shall have no authority, express or implied, to
create or place any lien or encumbrance of any kind or nature whatsoever upon,
or in any manner to bind, the interest of Landlord or Tenant in the Premises,
the Building or the Property or to charge the Rent payable hereunder for any
claim in favor of any person dealing with Tenant, including those who may
furnish materials or perform labor for any construction repairs. Tenant shall
pay or cause to be paid all sums legally due and payable by it on account of any
labor performed or materials furnished in connection with any work performed by
Tenant on the Premises. Tenant shall discharge of record by payment, bonding or
otherwise any lien filed against the Premises, the Building or the Property on
account of any labor performed or materials furnished in connection with any
work performed by Tenant on the Premises immediately upon the filing of any
claim of lien. Tenant shall indemnify, defend and hold Landlord harmless from
and against any and all liability, loss, cost or expense based on or arising out
of asserted claims or liens against the leasehold estate or against the right,
title and interest of Landlord in the Premises, the Building or the Property or
this Lease arising from the act or agreement

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of Tenant. Tenant agrees to give Landlord immediate written notice of the
placing of any lien or encumbrance against the Premises, the Building or the
Property. If such lien is not paid or discharged (by bond or otherwise) within
ten (10) days after notice from Landlord, Landlord shall have the right, at
Landlord's option, of paying and discharging the same or any portion thereof
without inquiry as to the validity thereof, and any amounts so paid, including
expenses and applicable late charge, shall be Additional Rent immediately due
and payable by Tenant upon rendition of a bill therefor.

        23.    Destruction or Damage.    

        (a)   If the Building or the Premises are totally destroyed by storm,
fire, earthquake, or other casualty, or damaged to the extent that, in
Landlord's reasonable opinion, the damage cannot be restored within one hundred
eighty (180) days of the date Landlord provides Tenant written notice of
Landlord's reasonable estimate of the time necessary to restore the damage, then
Tenant and Landlord shall each have the right to terminate this Lease. Further,
if such damage is not covered by standard "all risks" property insurance, or if
the Landlord's lender requires that the insurance proceeds be applied to its
loan, Landlord shall have the right to terminate this Lease. In either case,
such termination shall be effective as of the date of such destruction or
damage, by written notice delivered to the other party on or before thirty
(30) days following Landlord's notice described in the next sentence and Rent
shall be accounted for as between Landlord and Tenant as of that date. Landlord
shall provide Tenant with written notice no later than sixty (60) days following
the date of such damage of the estimated time needed to restore, whether the
loss is covered by Landlord's insurance coverage and whether or not Landlord's
lender requires the insurance proceeds be applied to its loan.

        (b)   If the Premises are damaged by any such casualty or casualties but
neither Tenant nor Landlord is entitled to or does not terminate this Lease as
provided in subparagraph (a) above, this Lease shall remain in full force and
effect, Landlord shall notify Tenant in writing no later than sixty (60) days
after the date of such damage that such damage will be restored (and will
include Landlord's good faith estimate of the date the restoration will be
complete), in which case Rent shall abate as to any portion of the Premises
which is not usable for the period of such untenantability, and Landlord shall
promptly commence to diligently restore the Premises to substantially the same
condition as before such damage occurred as soon as practicable, whereupon full
Rent shall recommence. Notwithstanding any contrary expression or implication in
the foregoing or anywhere else in this Lease, Landlord shall have no obligation
whatsoever to repair or replace any alterations made to the Premises by Tenant
pursuant to Section 21 above unless or only to the extent that Tenant provides
Landlord with all funds necessary to repair or replace any such alterations
prior to such repair or replacement.

        (c)   If material damage occurs within the last twelve (12) months of
the Term, either party shall have the right, upon delivery of written notice to
the other party within thirty (30) days following such damage, to cancel and
terminate this Lease as of the date of such damage, provided, however, that
Tenant may not elect to terminate this Lease if such damage was caused by the
intentional act of Tenant, its agents, servants, employees or invitees, and
Landlord may not elect to terminate this Lease if such damage was caused by the
intentional act of Landlord, its agents, servants, employees or invitees.

        (d)   Tenant agrees that Landlord's obligation to restore, and the
abatement of Rent provided herein, or Tenant's right to terminate as above set
forth in this Section 23, shall be Tenant's sole recourse in the event of such
damage, and waives any other rights Tenant may have under any applicable Law to
terminate the Lease by reason of damage to the Premises or Property. If prior to
any such election to terminate Tenant has elected to extend the Term pursuant to
the provisions of this Lease and such election may not then according to its
terms be rescinded or terminated, then for purposes of this Section 23 the Term
shall be deemed to expire on such extended date.

        24.    Eminent Domain.    If the whole of the Building or Premises or
the Property, or such portion thereof as will make the Building or Premises or
common areas unusable in the reasonable judgment

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of Landlord for their intended purposes, is condemned or taken by any legally
constituted authority for any public use or purpose, then in either of such
events, this Lease shall terminate and the Term hereby granted shall cease from
that time when possession thereof is taken by the condemning authorities, and
Rent shall be accounted for as between Landlord and Tenant as of such date. If a
portion of the Building or Premises or Property is so taken, but not such amount
as will make the Premises or common areas unusable in the reasonable judgment of
Landlord for the purposes herein leased, or if this Lease has not terminated,
this Lease shall continue in full force and effect and the Rent shall be reduced
prorata in proportion to the amount of the Premises or common areas so taken.
Tenant shall have no right or claim to any part of any award made to or received
by Landlord for such condemnation or taking, and all awards for such
condemnation or taking shall be made solely to Landlord, provided however that
Tenant shall have the right to pursue any separate award for loss of its
equipment and trade fixtures and for moving expenses so long as such action does
not reduce the award to which Landlord is entitled. Landlord and Tenant hereby
waive the provisions of California Code of Civil Procedure Section 1265.130 to
the extent inconsistent with this Lease.

        25.    Damage or Theft of Personal Property.    All personal property
brought into the Premises shall be at the risk of the Tenant only and Landlord
shall not be liable for theft thereof or any damage thereto occasioned by any
acts of co-tenants, or other occupants of the Building, or any other person,
except, with respect to damage to the Premises, as may be occasioned by the
negligent or willful act of the Landlord, its employees and agents (but subject
to the insurance and waiver of subrogation provisions set forth in Section 26
below).

F.    Insurance/Indemnities/Waiver/Estoppel.

        26.    Insurance; Waivers.    

        (a)   Tenant covenants and agrees that from and after the date of
delivery of the Premises from Landlord to Tenant, Tenant will carry and
maintain, at its sole cost and expense, the following types of insurance, in the
amounts specified and in the form hereinafter provided for:

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        (i)    Commercial General Liability ("CGL") Insurance written on an
occurrence basis, covering the Premises and all operations of the Tenant in or
about the Premises against claims for bodily injury, property damage and product
liability and to include contractual liability coverage insuring Tenant's
indemnification obligations under this Lease, to be in combined single limits of
not less than $1,000,000 each occurrence for bodily injury and property damage,
$1,000,000 for products/completed operations aggregate, $1,000,000 for personal
injury, and to have general aggregate limits of not less than $2,000,000 (per
location) and Umbrella Liability Insurance in an amount not less than $4,000,000
for each policy year. The general aggregate limits under the Commercial General
Liability insurance policy or policies shall apply separately to the Premises
and to Tenant's use thereof (and not to any other location or use of Tenant) and
such policy shall contain an endorsement to that effect. The certificate of
insurance evidencing the CGL form of policy shall specify all endorsements
required herein and shall specify on the face thereof that the limits of such
policy apply separately to the Premises.

        (ii)   Insurance covering all of the items included in Tenant's
leasehold improvements, heating, ventilating and air conditioning equipment
maintained by Tenant, trade fixtures, merchandise and personal property from
time to time in, on or upon the Premises, and alterations, additions or changes
made by Tenant pursuant to Section 21, in an amount not less than one hundred
percent (100%) of their full replacement value from time to time during the
Term, providing protection against perils included within the standard form of
"all-risks" fire and casualty insurance policy. Any policy proceeds from such
insurance shall be held in trust by Tenant's insurance company for the repair,
construction and restoration or replacement of the property damaged or destroyed
unless this Lease shall cease and terminate under the provisions of Section 23
of this Lease.

        (iii)  Workers' Compensation and Employer's Liability insurance
affording statutory coverage and containing statutory limits with the Employer's
Liability portion thereof to have minimum limits of $500,000.00.

        (iv)  Business Interruption Insurance equal to not less than fifty
percent (50%) of the estimated gross earnings (as defined in the standard form
of business interruption insurance policy) of Tenant at the Premises which
insurance shall be issued on an "all risks" basis (or its equivalent).

        (b)   All policies of the insurance provided for in Section 26(a) above
shall be issued in form acceptable to Landlord by insurance companies with a
rating and financial size of not less than A-VIII in the most current available
"Best's Insurance Reports", and licensed to do business in the state in which
the Building is located. Each and every such policy:

        (i)    shall name Landlord as an additional insured (as well as any
mortgagee of Landlord and any other party reasonably designated by Landlord),
except with respect to the insurance described in Section 26(a)(iii) above;

        (ii)   shall be evidenced by a certificate delivered to Landlord at or
prior to the execution of the Lease and any such other parties in interest
within thirty (30) days after delivery of possession of the Premises to Tenant
and thereafter within five (5) days after the inception (or renewal) of each new
policy, and as often as any such policy shall expire or terminate. Renewal or
additional policies shall be procured and maintained by Tenant in like manner
and to like extent;

        (iii)  shall contain a provision that the insurer will give to Landlord
and such other parties in interest at least thirty (30) days notice in writing
(and ten days in the case of non-payment) in advance of any material change,
cancellation, termination or lapse, or the effective date of any reduction in
the amounts of insurance; and

        (iv)  shall be written as a primary policy which does not contribute to
and is not in excess of coverage which Landlord may carry.

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        (c)   Any insurance provided for in Section 26(a) may be maintained by
means of a policy or policies of blanket insurance, covering additional items or
locations or insureds, provided, however, that:

        (i)    Landlord and any other parties in interest from time to time
designated by Landlord to Tenant shall be named as an additional insured
thereunder as its interest may appear;

        (ii)   the coverage afforded Landlord and any such other parties in
interest will not be reduced or diminished by reason of the use of such blanket
policy of insurance; and

        (iii)  the requirements set forth in this Section 26 are otherwise
satisfied.

        (d)   During the Term hereof, Landlord shall in a manner comparable to
other comparable industrial buildings in the market where the Building is
located keep in effect (i) commercial property insurance on the Building, its
fixtures and equipment, and rent loss insurance for a period and amount of not
less than one (1) year of rent (such commercial property insurance policy shall,
at a minimum, cover the perils insured under the ISO special causes of loss form
which provides "all risk" coverage, and include replacement cost coverage), and
(ii) a policy or policies of commercial general liability insurance insuring
against liability arising out of the risks of death, bodily injury, property
damage and personal injury liability with respect to the Building and Property.

        (e)   Notwithstanding anything to the contrary in this Lease, Landlord
and Tenant do hereby waive any and all claims against one another for damage to
or destruction of real or personal property to the extent such damage or
destruction can be covered by "all risks" property insurance of the type
described in Section 26(a)(ii) and Section 26(d)(i) above. Each party shall also
be responsible for the payment of any deductible amounts required to be paid
under the applicable "all risks" fire and casualty insurance carried by the
party whose property is damaged. These waivers shall apply if the damage would
have been covered by a customary "all risks" insurance policy, even if the party
fails to obtain such coverage. The intent of this provision is that each party
shall look solely to its insurance with respect to property damage or
destruction which can be covered by "all risks" insurance of the type described
in Section 26(a)(ii) and Section 26(d)(i). Each such policy shall include a
waiver of all rights of subrogation by the insurance carrier against the other
party, its agents and employees with respect to property damage covered by the
applicable "all risks" fire and casualty insurance policy.

        (f)    In the event that, as a result of changed circumstances from time
to time, comparable landlords and/or tenants in the area in which the Building
is located are typically carrying kinds or amounts of insurance that exceed the
requirements of this Lease or if, in the opinion of Landlord's lender or
insurance broker, the amount of insurance then required under this Lease is not
adequate, Tenant shall, within thirty (30) days following written demand by
Landlord, obtain and thereafter maintain in effect such additional insurance,
which shall, to the extent reasonably applicable, conform to, and be governed
by, the existing insurance provisions of this Lease.

        27.    Indemnities.    Tenant does hereby indemnify and save harmless
Landlord from and against all claims for damages to persons or property which
are caused anywhere in the Premises, the Building or on the Property by the
negligence or willful misconduct of Tenant, its agents or employees or which
occur in the Premises (or arise out of actions taking place in the Premises)
unless such damage is caused by the negligence or willful misconduct of
Landlord, its agents, or employees. Landlord does hereby indemnify and hold
Tenant harmless against all claims for damage to persons or property caused by
the negligence or willful misconduct of Landlord, its agents or employees which
occur on the Property or common areas of the Building. The indemnities set forth
hereinabove shall include the application to pay reasonable expenses incurred by
the indemnified party, including, without limitation, reasonable, actually
incurred attorney's fees. The indemnities contained herein control over all
other provisions in this Lease, except that they do not override the waivers
contained in Section 26(e) above.

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        28.    Acceptance and Waiver.    Except to the extent caused by the
negligence or willful misconduct of Landlord, its agents and employees (but
subject to the insurance provisions in Section 26 above), Landlord shall not be
liable to Tenant, its agents, employees, guests or invitees (and, if Tenant is a
corporation, its officers, agents, employees, guests or invitees) for any damage
caused to any of them due to the Building or any part or appurtenances thereof
being improperly constructed or being or becoming out of repair, or arising from
the leaking of gas, water, sewer or steam pipes, or from electricity, but
Tenant, by moving into the Premises and taking possession thereof, shall accept,
and shall be held to have accepted the Premises as suitable for the purposes for
which the same are leased, and shall accept and shall be held to have accepted
the Building and every appurtenances thereof, and Tenant by said act waives any
and all defects therein, subject to the express warranties, representations and
covenants of Landlord under this Lease; provided, however, that this Section
shall not preclude Tenant from seeking recovery from any third party responsible
for such damage or injury.

        29.    Estoppel.    Tenant shall, from time to time, upon not less than
ten (10) days prior written request by Landlord, execute, acknowledge and
deliver to Landlord a written statement certifying that this Lease is unmodified
and in full force and effect (or, if there have been modifications, that the
same is in full force and effect as modified and stating the modifications), the
dates to which the Rent has been paid, that Tenant is not in default hereunder
and whether Tenant has any offsets or defenses against Landlord under this
Lease, and whether or not to the best of Tenant's knowledge Landlord is in
default hereunder (and if so, specifying the nature of the default and any other
facts relating to this Lease as may be reasonably requested by Landlord), it
being intended that any such statement delivered pursuant to this paragraph may
be relied upon by a prospective purchaser of Landlord's interest or by a
mortgagee of Landlord's interest or assignee of any security deed upon
Landlord's interest in the Premises.

G.    Default/Remedies/Surrender/Holding Over.

        30.    Notices.    Any notice which is required or permitted to be given
by either party under this Lease shall be in writing and must be given only by
certified mail, return receipt requested, by hand delivery or by nationally
recognized overnight courier service at the addresses set forth in Paragraph 13
of the Basic Lease Provisions. Each party shall further use reasonable efforts
to provide the other party with a courtesy copy of any notice by fax and by
electronic mail. Any such notice shall be deemed given on the earlier of two
business days after the date sent in accordance with one of the permitted
methods described above or the date of actual receipt thereof, provided that
receipt of notice solely by fax or electronic mail shall not be deemed to be
delivery of notice hereunder. The time period for responding to any such notice
shall begin on the date the notice is actually received, but refusal to accept
delivery or inability to accomplish delivery because the party can no longer be
found at the then current notice address, shall be deemed receipt. Either party
may change its notice address by notice to the other party in accordance with
the terms of this Section 30. The initial notice addresses for each party are
set forth in the Basic Lease Provisions.

        31.    Abandonment of Premises.    Tenant agrees not to abandon or
vacate (where such vacation is accompanied by a failure to maintain the Premises
or secure it from unauthorized entry) the Premises during the Term of this
Lease. If Tenant does abandon or vacate (where such vacation is accompanied by a
failure to maintain the Premises or secure it from unauthorized entry) the
Premises for more than ninety (90) days, Landlord may terminate this Lease, by
written notice to Tenant at any time prior to Tenant reoccupying the Premises,
but such termination shall not entitle Landlord to pursue any other remedies
unless an uncured Default then exists, in which case Landlord may pursue any and
all remedies provided by this Lease, at law or in equity.

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        32.    Default.    

        The following shall constitute events of default under this Lease:

        (a)   If Tenant shall default in the payment of Rent herein reserved
when due and fails to cure such default within ten (10) days after the date due;

        (b)   if Tenant shall fail to perform any of the terms, conditions or
provisions of this Lease (other than the provisions requiring the payment of
Rent), and fails to cure such non-monetary default within thirty (30) days after
written notice of such default is given to Tenant by Landlord, provided however
that if such non-monetary default is of such a nature that it cannot through the
exercise of diligent and reasonable efforts be cured within thirty (30) days,
then Tenant shall not be in default in such instance if Tenant promptly
commences and diligently pursues the cure of such non-monetary default to
completion as soon as possible and in all events within ninety (90) days after
such initial notice;

        (c)   if Tenant is adjudicated a bankrupt;

        (d)   if a permanent receiver is appointed for Tenant's property and
such receiver is not removed within sixty (60) days after appointment thereof;

        (e)   if, whether voluntarily or involuntarily, Tenant takes advantage
of any debtor relief proceedings under any present or future laws, whereby the
Rent or any part thereof, is, or is proposed to be, reduced or payment thereof
deferred;

        (f)    if Tenant's effects should be levied upon or attached and such
levy or attachment is not satisfied or dissolved within thirty (30) days after
such levy or attachment; or

        (g)   if Tenant is an individual, in the event of the death of the
individual and the failure of the executor, administrator or personal
representative of the estate of the deceased individual to have assigned the
Lease within three (3) months after such death to an assignee approved by
Landlord.

        In any of such events, Landlord, at its sole option, may exercise any or
all of the remedies set forth in Section 33 below.

        33.    Landlord's Remedies.    Upon the occurrence of any default set
forth in Section 32 above which is not cured by Tenant within the applicable
cure period provided therein, if any, Landlord may exercise all or any of the
following remedies:

        (a)   terminate this Lease by giving Tenant written notice of
termination, in which event this Lease shall terminate on the date specified in
such notice and all rights of Tenant under this Lease shall expire and terminate
as of such date, Tenant shall remain liable for all obligations under this Lease
up to the date of such termination and Tenant shall surrender the Premises to
Landlord on the date specified in such notice; and if Tenant fails to so
surrender, Landlord shall have the right, by judicial process, to enter upon and
take possession of the Premises and to expel and remove Tenant and its effects
without prejudice to any other remedies that Landlord may have by reason of
Tenant's default or the termination of this Lease;

        (b)   If this Lease is terminated, Landlord shall have all of the rights
and remedies of a landlord provided by Civil Code § 1951.2, in addition to any
other rights and remedies Landlord may have. The damages which Landlord may
recover shall include, without limitation, (i) the worth at the time of award of
the unpaid rent which had been earned at the time of termination; (ii) the worth
at the time of award of the amount by which the unpaid rent which would have
been earned after termination until the time of the award exceeds the amount of
the rental loss that Tenant proves could have been reasonably avoided; (iii) the
worth at the time of award computed by discounting the amount at the discount
rate of the Federal Reserve Bank of San Francisco at the time of award plus one
percent (1%) of the amount by which the unpaid rent for the balance of the term
after the time of award exceeds the amount of rental loss that Tenant proves
could be reasonably avoided; (iv) all reasonable

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legal expenses and other related costs incurred by Landlord following Tenant's
default; (v) all reasonable costs incurred by Landlord in restoring the Premises
to good order and condition to relet the Premises; and (vi) all reasonable
costs, including without limitation, any brokerage commissions incurred by
Landlord in reletting the Premises;

        (c)   to continue this Lease in effect for so long as Landlord does not
terminate Tenant's right to possession, and Landlord may enforce all rights and
remedies under this Lease, including the right to recover the rental as it
becomes due under this Lease. Acts of maintenance or preservation, efforts to
relet the Premises, or the appointment of a receiver upon initiative of Landlord
to protect Landlord's interest under this Lease shall not constitute a
termination of Tenant's right to possession.

        (d)   pursue such other remedies as are available at law or in equity;
and

        (e)   Landlord may, without waiving or releasing Tenant from any
obligations of Tenant, make payment or perform other acts required by this Lease
on Tenant's behalf and all sums so paid by Landlord and all necessary incidental
costs so incurred shall be payable to Landlord on demand and shall constitute
Additional Rent under this Lease.

        34.    Service of Notice.    Except as otherwise provided by law, Tenant
hereby appoints as its agent to receive the service of all dispossessory or
distraint proceedings and notices thereunder, the person in charge of or
occupying the Premises at the time of such proceeding or notice; and if no
person be in charge or occupying the Premises, then such service may be made by
attaching the same to the front entrance of the Premises and depositing the same
in the United States mail for delivery by Tenant as provided by applicable law.

        35.    Advertising.    Landlord may advertise the Premises as being "For
Rent" at any time following a default by Tenant which remains uncured following
the expiration of all applicable notice and cure provisions and at any time
within one hundred eighty (180) days prior to the expiration, cancellation or
termination of this Lease for any reason and during any such periods Landlord
may exhibit the Premises to prospective tenants upon prior reasonable notice to
Tenant, subject to the terms of Section 42.

        36.    Surrender of Premises.    Whenever under the terms hereof
Landlord is entitled to possession of the Premises, Tenant at once shall
surrender the Premises and the keys thereto to Landlord in the same condition as
on the Commencement Date hereof, normal wear and tear only excepted, and Tenant
shall remove all of its personalty therefrom and shall, if directed to do so by
Landlord as permitted in accordance with Section 21, remove the specified
alterations and restore the Premises to its original condition prior to the
construction of such alterations, excluding any improvements made prior to the
Commencement Date. Tenant's obligation to observe or perform these covenants
shall survive the expiration or other termination of the Term of this Lease. If
the last day of the Term of this Lease or any renewal falls on a Saturday,
Sunday or a legal holiday, this Lease shall expire on the business day
immediately preceding.

        37.    Cleaning Premises.    Upon vacating the Premises, Tenant agrees
to return the Premises to Landlord broom clean and in the same condition when
Tenant's possession commenced, natural wear and tear and casualty not caused by
Tenant excepted.

        38.    Removal of Fixtures.    Tenant may, prior to the expiration of
the Term of this Lease, or any extension thereof, remove any fixtures and
equipment which Tenant has placed in the Premises which can be removed without
significant damage to the Premises, provided Tenant promptly repairs all damages
to the Premises caused by such removal.

        39.    Holding Over.    In the event Tenant remains in possession of the
Premises after the expiration of the Term hereof, or of any renewal term, with
Landlord's written consent, Tenant shall be a tenant at will and such tenancy
shall be subject to all the provisions hereof, except that the monthly

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rental shall be at the following rates: (i) for the first sixty (60) days of any
holdover period, 125% of the monthly Base Rent payable hereunder upon such
expiration of the Term hereof, or of any renewal term; and (ii) thereafter, 150%
of the monthly Base Rent payable hereunder upon such expiration of the Term
hereof, or of any renewal term. In the event Tenant remains in possession of the
Premises after the expiration of the Term hereof, or any renewal term, without
Landlord's written consent, Tenant shall be a tenant at sufferance and be liable
for any and all damages Landlord suffers as a result of such holdover including,
without limitation, the loss of a prospective tenant for such space. There shall
be no renewal of this Lease by operation of law or otherwise. Nothing in this
Section shall be construed as a consent by Landlord for any holding over by
Tenant after the expiration of the Term hereof, or any renewal term.

        40.    Attorney's Fees.    In case Landlord shall, without fault on its
part, be made a party to any litigation commenced by or against Tenant, then
Tenant shall pay all costs, expenses and reasonable attorneys' fees incurred or
paid by Landlord in connection with such litigation. In the event of any action,
suit or proceeding brought by Landlord or Tenant to enforce any of the other's
covenants and agreements in this Lease, the prevailing party shall be entitled
to recover from the non-prevailing party any costs, expenses and reasonable
attorneys' fees incurred in connection with such action, suit or proceeding.

        41.    Mortgagee's Rights.    

        (a)   Tenant agrees that this Lease shall be subject and subordinate to
(i) any mortgage, deed of trust or other security interest now encumbering the
Property and to all advances which may be hereafter made, to the full extent of
all debts and charges secured thereby and to all renewals or extensions of any
part thereof, and, subject to the delivery of an SNDA (as defined below), to any
mortgage, deed of trust or other security interest which any owner of the
Property may hereafter, at any time, elect to place on the Property; (ii) any
assignment of Landlord's interest in the leases and rents from the Building or
Property which includes the Lease which now exists or which any owner of the
Property may hereafter, at any time, elect to place on the Property; and
(iii) any Uniform Commercial Code Financing Statement covering the personal
property rights of Landlord or any owner of the Property which now exists or any
owner of the Property may hereafter, at any time, elect to place on the
foregoing personal property (all of the foregoing instruments set forth in (i),
(ii) and (iii) above being hereafter collectively referred to as "Security
Documents").

        Tenant agrees upon request of the holder of any Security Documents
("Holder") to hereafter execute any documents which the counsel for Landlord or
Holder may reasonably deem necessary to evidence the subordination of the Lease
to the Security Documents in a commercially reasonable, industry typical form
(in each instance, an "SNDA"). Landlord agrees that Tenant shall not have the
obligation to execute any SNDA that does not contain an obligation by the Holder
of the relevant Security Document not to disturb the possession of Tenant of the
Premises so long as Tenant observes and performs all of its obligations under
this Lease. Within ten (10) days after request therefor, if Tenant fails to
execute any such requested documents meeting the requirements of this paragraph,
Landlord or Holder is hereby empowered to execute such documents in the name of
Tenant evidencing such subordination, as the act and deed of Tenant, and this
authority is hereby declared to be coupled with an interest and not revocable.

        For the benefit of Tenant, Landlord agrees to use commercially
reasonable efforts to seek and obtain, as soon as reasonably possible following
the execution of this Lease, an SNDA meeting the above requirements from the
Holder of any Security Document now encumbering the Property.

        (b)   In the event of a foreclosure pursuant to any Security Documents,
Tenant shall at the election of the Landlord, thereafter remain bound pursuant
to the terms of this Lease as if a new and identical Lease between the purchaser
at such foreclosure ("Purchaser"), as landlord, and Tenant, as tenant, had been
entered into for the remainder of the Term hereof and Tenant shall attorn to the
Purchaser upon

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such foreclosure sale and shall recognize such Purchaser as the Landlord under
the Lease. Such attornment shall be effective and self-operative without the
execution of any further instrument on the part of any of the parties hereto.
Tenant agrees, however, to execute and deliver at any time and from time to
time, upon the request of Landlord or of Holder, any instrument or certificate
that may be necessary or appropriate in any such foreclosure proceeding or
otherwise to evidence such attornment.

        (c)   If the Holder of any Security Document or the Purchaser upon the
foreclosure of any of the Security Documents shall succeed to the interest of
Landlord under the Lease, such Holder or Purchaser shall have the same remedies,
by entry, action or otherwise for the non-performance of any agreement contained
in the Lease, for the recovery of Rent or for any other default or event of
default hereunder that Landlord had or would have had if any such Holder or
Purchaser had not succeeded to the interest of Landlord. Any such Holder or
Purchaser which succeeds to the interest of Landlord hereunder, shall not be
(a) liable for any act or omission of any prior Landlord (including Landlord)
unless such act or omission is of a continuing nature; or (b) subject to any
offsets or defenses which Tenant might have against any prior Landlord
(including Landlord); or (c) bound by any Rent which Tenant might have paid for
more than the current month to any prior Landlord (including Landlord); or
(d) bound by any amendment or modification of the Lease made without its
consent.

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        (d)    Notwithstanding anything to the contrary set forth in this
Section 41, the Holder of any Security Documents shall have the right, at any
time, to elect to make this Lease superior and prior to its Security Document.
No documentation, other than written notice to Tenant, shall be required to
evidence that the Lease has been made superior and prior to such Security
Documents, but Tenant hereby agrees to execute any documents reasonably
requested by Landlord or Holder to acknowledge that the Lease has been made
superior and prior to the Security Documents.

H.    Landlord Entry/Relocation/Assignment and Subletting.

        42.    Entering Premises.    Landlord may enter the Premises at
reasonable hours provided that Landlord's entry shall not unreasonably interrupt
or interfere with Tenant's business operations and that prior notice is given
when reasonably possible (and, if in the opinion of Landlord any emergency
exists, at any time and without notice): (a) to make repairs, perform
maintenance and provide other services described in Section 19 above (no prior
notice is required to provide routine services) which Landlord is obligated to
make to the Premises or the Building pursuant to the terms of this Lease or to
the other premises within the Building pursuant to the leases of other tenants;
(b) to inspect the Premises in order to confirm that Tenant is complying with
all of the terms and conditions of this Lease and with the rules and regulations
hereof; (c) to remove from the Premises any articles or signs kept or exhibited
therein in violation of the terms hereof; (d) to run pipes, conduits, ducts,
wiring, cabling or any other mechanical, electrical, plumbing or HVAC equipment
through the areas behind the walls, below the floors or above the ceilings in
the Premises and elsewhere in the Building; and (e) to exercise any other right
or perform any other obligation that Landlord has under this Lease. In entering
the Premises pursuant to the foregoing, Landlord shall (x) exercise reasonable
measures to minimize any disruption to Tenant's business operations or
activities; (y) abide by all reasonable security measures and restrictions
required by Tenant to protect the safety and security of its personnel and
confidential information; and (x) cooperate with any reasonable requests by
Tenant to schedule the work at times that do not inconvenience Tenant's business
operations. Subject to compliance with the foregoing provisions of this
Section 42: (i) Landlord shall be allowed to take all material into and upon the
Premises that may be required to make any repairs, improvements and additions,
or any alterations, without in any way being deemed or held guilty of trespass
and without constituting a constructive eviction of Tenant; (ii) the Rent
reserved herein shall not abate while such repairs, alterations or additions are
being made and Tenant shall not be entitled to maintain a set-off or
counterclaim for damages against Landlord by reason of loss from interruption to
the business of Tenant because of the prosecution of any such work; and
(iii) unless any work would unreasonably interfere with Tenant's use of the
Premises if performed during business hours, all such repairs, decorations,
additions and improvements shall be done during ordinary business hours, or, if
any such work is at the request of Tenant to be done during any other hours, the
Tenant shall pay all overtime and other extra costs.

        43.    Relocation.    Intentionally deleted.

        44.    Assignment and Subletting    

        (a)    Except as otherwise expressly permitted by this Lease, Tenant
shall not, without the prior written consent of Landlord, which shall not be
unreasonably withheld, conditioned or delayed, voluntarily or involuntarily,
assign or hypothecate this Lease or any interest in this Lease, sublet the
Premises or any part of them, or license the use of the Premises by any party
other than Tenant. Any of the previous acts without consent shall be void and
shall, at the option of Landlord, constitute a noncurable default under this
Lease.

        In connection with each consent requested by Tenant, Tenant shall submit
to Landlord the terms of the proposed transaction, the identity of the parties
to the transaction, the proposed documentation for the transaction, and all
other information reasonably requested by Landlord concerning the proposed
transaction and the parties involved. Tenant agrees that any instrument by which
Tenant assigns or

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sublets all or any portion of the Premises shall expressly provide that the
subtenant or assignee may not further assign or sublet the assigned or sublet
space without Landlord's prior written consent as provided herein, and that the
assignee or subtenant (to the extent of the sublet space only) will assume and
comply with all of the applicable provisions of this Lease and that Landlord may
enforce the Lease provisions directly against such assignee or subtenant.

        For purposes of this Section 44, the following events shall be deemed an
assignment or sublease, as appropriate: (i) the issuance of equity interests
(whether stock, partnership interests or otherwise) in Tenant or any subtenant
or assignee, or any entity controlling any of them, to any person or group of
related persons, in a single transaction or a series of related or unrelated
transactions, such that, following such issuance, such person or group shall
gain Control (as defined below) of Tenant; or (ii) a transfer of Control of
Tenant or any subtenant or assignee, or any entity controlling any of them, in a
single transaction or a series of related or unrelated transactions, except that
the transfer of outstanding capital stock or other listed equity interests by
persons or parties other than "insiders" within the meaning of the Securities
Exchange Act of 1934, as amended, through the "over-the-counter" market or any
recognized national or international securities exchange, shall not be included
in determining whether Control has been transferred. "Control" shall mean direct
or indirect ownership of fifty percent (50%) or more of all of the voting stock
of such corporation or fifty percent (50%) or more of all the legal and
equitable interest in any other business entity.

        However, Tenant may, without resulting in a default under this Lease and
without notice to Landlord, license the use of the Premises by (i) any entity of
which Tenant, any of Tenant's subsidiaries, or Tenant's parent is a limited
partner, general partner, joint venturer, or shareholder; (ii) any other limited
partner, general partner, joint venturer or shareholder in that entity;
(iii) any consultant, contractor, accountant, or counsel of Tenant; or (iv) any
of the directors, officers, employees, contractors, accountants, or counsel of
any of the foregoing. The license or other permitted use does not in any way
create in the licensee or any other party rights to possess or remain in the
Premises beyond the termination of the Lease.

        Further, notwithstanding anything in this Section 44 to the contrary,
provided that no Event of Default has occurred and is then continuing, Tenant
shall have the right, upon thirty (30) days prior written notice to Landlord
(except where the proposed transaction is confidential, in which case Tenant
shall give notice as soon as reasonably practicable following public
notification of the transaction), but without any requirement for prior written
consent by Landlord, (i) to sublet all or part of the Premises to any person or
entity which is Controlled by, under common Control with, or which Controls
Tenant (any of such persons entities being herein called an "Altigen
Affiliate"); (ii) to assign this Lease to (x) an Altigen Affiliate or (y) a
successor corporation into which or with which Tenant is merged or consolidated
or which acquires substantially all of Tenant's assets and property at the
Premises, provided that, with respect to an assignment pursuant to (ii)(y), such
successor corporation assumes all of the obligations and liabilities of Tenant.
With respect to any assignment under this paragraph, Tenant shall provide in its
notice to Landlord such information as may be reasonably required by Landlord to
determine that the requirements of this paragraph have been satisfied. With
respect to any assignment or sublease to an Altigen Affiliate, Landlord will not
be entitled to exercise the rights granted to Landlord in subparagraphs (e) or
(f) regarding bonus rents.

        (b)    Without limiting other instances in which Landlord may reasonably
withhold consent to an assignment or subletting, Landlord and Tenant acknowledge
that it shall be reasonable for Landlord to withhold consent in the following
instances:

        (i)    if at the time consent is requested, or at any time following
such request but prior to the granting of consent, an uncured Event of Default
exists under this Lease following all applicable notice and cure periods, or if
Tenant is in monetary default under this Lease which default remains uncured
following notice by Landlord;

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        (ii)    if the proposed assignee or sublessee is a governmental agency
that intends to use (or is not prohibited from using) the Premises to provide
services to the public;

        (iii)    if the proposed assignee or sublessee is an existing tenant of
the Industrial Center and Landlord then has space available at the Property
which would meet such existing tenant's needs;

        (iv)    if Landlord reasonably determines that circumstances warrant a
consideration of the financial worth of a proposed assignee or sublessee, and
the financial worth, in Landlord's reasonable judgment, does not meet the credit
standards applied by Landlord for other tenants under leases with comparable
terms; and

        (v)    if, in Landlord's reasonable judgment, the character, reputation,
or business of the proposed assignee or sublessee would detract from the quality
of the other tenancies in the Industrial Center.

        (c)    If at any time during the Term, Tenant desires to assign this
Lease or to sublet all or any part of the Premises to a third party (i.e., a
party other than an Altigen Affiliate), Tenant shall notify Landlord of the date
on which Tenant would first want to effect the same. Landlord shall have the
option, exercisable by notice given to Tenant within thirty (30) days after
Tenant's notice is given, to (i) terminate this Lease in the event of a proposed
assignment, effective as of the date proposed in Tenant's notice, or
(ii) recapture the space proposed for sublease in the event of a proposed
subletting for ninety percent (90%) or more of the Premises to end within the
last year of the Term, effective as of the date proposed in the notice. If
Landlord does not exercise this option, for a period of one hundred twenty
(120) days following Landlord's election not to exercise this option, Tenant
shall be free to assign this Lease or to sublet the space to any assignee or
sublessee, subject to obtaining Landlord's prior consent in accordance with this
Section 44. If Tenant does not assign this Lease or sublet the space within such
120-day period, Landlord's option shall be reinstated as if no earlier notice
had been delivered.

        (d)    No sublessee shall have a right to further sublet or to assign
its sublease without Landlord's prior consent, which consent shall not be
withheld unreasonably, in the same manner as if Tenant were entering into a new
sublease. No sublease, once consented to by Landlord, shall be modified in any
material way that could affect Landlord's interests, or be terminated by Tenant
and such sublessee, without Landlord's prior consent, which shall not be
unreasonably withheld.

        (e)    In the case of an assignment, fifty percent (50%) of all of any
sums or other economic consideration received by Tenant as a result of the
assignment (excluding any consideration reasonably attributed to assets or
services other than this Lease) shall be paid to Landlord after first deducting
the unamortized cost of leasehold improvements paid for by Tenant, and the cost
of any real estate commissions, reasonable attorney fees, or other third party
professional services paid by Tenant in connection with the assignment.

        (f)    In the case of a subletting, fifty percent (50%) of all of any
sums or economic consideration received by Tenant as a result of the subletting
(excluding any consideration reasonably attributed to assets or services other
than this Lease) shall be paid to Landlord after first deducting (i) the rental
due under this Lease, prorated to reflect only rental allocable to the sublet
portion of the Premises, (ii) the cost of leasehold improvements made to the
sublet portion of the Premises at Tenant's cost, amortized over the term of this
Lease, except for leasehold improvements made for the specific benefit of the
sublessee, which shall be amortized over the term of the sublease, and (iii) the
cost of any real estate commissions, reasonable attorney fees, or other third
party professional services paid by Tenant in connection with the subletting.

        (g)    Regardless of Landlord's consent, no subletting or assignment
shall release or alter Tenant's obligation or primary liability to pay the
rental and perform all other obligations under this Lease. The acceptance of
rental by Landlord from any other person shall not be deemed a waiver by
Landlord of

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any provision of this Lease. Consent to one assignment or subletting shall not
be deemed consent to any subsequent assignment or subletting. In the event of
default by any assignee or successor of Tenant in the performance of any of the
terms of this Lease, after notice of default to Tenant pursuant to Section 32
and the expiration of any applicable cure period, Landlord may proceed directly
against Tenant without the necessity of exhausting remedies against the assignee
or successor. Landlord may consent to subsequent assignments or subletting of
this Lease or amendments or modifications to this Lease with assignees of
Tenant, without notifying Tenant, or any successor of Tenant, and without
obtaining consent. This action shall not relieve Tenant of liability under this
Lease provided, however, that Tenant shall not be liable for any increase in
Tenant's obligations under this Lease because of any amendment or modification
to this Lease, unless Tenant has consented to it in writing.

        Further, no permitted subletting by Tenant shall be effective until
there has been delivered to Landlord a counterpart of the sublease in which the
subtenant agrees to be and remain jointly and severally liable with Tenant for
the payment of rent pertaining to the sublet space and for the performance of
all of the terms and provisions of this Lease as applicable to the sublet space;
provided, however, that the subtenant shall be liable to Landlord for rent only
in the amount set forth in the sublease. No permitted assignment shall be
effective unless and until there has been delivered to Landlord a counterpart of
the assignment in which the assignee assumes all of Tenant's obligations under
this Lease arising on or after the date of the assignment. The failure or
refusal of a subtenant or assignee to execute any such instrument shall not
release or discharge the subtenant or assignee from its liability as set forth
above.

        (h)    If Tenant assigns this Lease, sublets the Premises, or requests
the consent of Landlord to any assignment, subletting, hypothecation, or other
action requiring Landlord's consent under this Lease, Tenant shall pay
Landlord's reasonable attorney fees incurred in connection with the action, not
to exceed $1,000 during the initial Term of this Lease, and $1,500 thereafter.

I.    Sale of Building; Limitation of Liability.

        45.    Sale.    In the event the original Landlord hereunder, or any
successor owner of the Building, shall sell or convey the Building and/or the
Property, all liabilities and obligations on the part of the original Landlord,
or such successor owner, under this Lease accruing thereafter shall terminate,
and thereupon all such liabilities and obligations shall be binding upon the new
owner. Tenant agrees to attorn to such new owner.

        46.    Limitation of Liability.    Landlord's obligations and liability
with respect to this Lease shall be limited solely to Landlord's interest in the
Building and the Property, as such interest is constituted from time to time,
and neither Landlord nor any partner of Landlord, or any officer, director,
shareholder, or partner or member of any partner or member of Landlord, shall
have any individual or personal liability whatsoever with respect to this Lease.

J.    Brokers/Construction/Authority.

        47.    Broker Disclosure.    The Landlord's Broker identified in the
Basic Lease Provisions, who is a real estate broker licensed in the State where
the Building is located, has acted as agent for Landlord in this transaction and
is to be paid a commission by Landlord pursuant to a separate agreement. The
Tenant's Broker identified in the Basic Lease Provisions, who is a real estate
broker licensed in the State where the Building is located, has acted as agent
for Tenant in this transaction and shall be free to share in the commission paid
to Landlord's Broker as may be agreed among Landlord's Broker and Tenant's
Broker pursuant to a separate agreement. Landlord represents that Landlord has
dealt with no other broker other than the broker(s) identified herein. Landlord
agrees that, if any other broker makes a claim for a commission based upon the
actions of Landlord, Landlord shall indemnify, defend and hold Tenant harmless
from any such claim. Tenant represents that Tenant has dealt with no broker

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other than the broker(s) identified herein. Tenant agrees that, if any other
broker makes a claim for a commission based upon the actions of Tenant, Tenant
shall indemnify, defend and hold Landlord harmless from any such claim.

        48.    Definitions.    "Landlord," as used in this Lease, shall include
the party named in the first paragraph hereof, its representatives, assigns and
successors in title to the Premises. "Tenant" shall include the party named in
the first paragraph hereof, its heirs and representatives, and, if this Lease
shall be validly assigned or sublet, shall also include Tenant's assignees or
subtenants, as to the Premises, or portion thereof, covered by such assignment
or sublease. "Landlord" and "Tenant" include male and female, singular and
plural, corporation, partnership, limited liability company (and the officers,
members, partners, employees or agents of any such entities) or individual, as
may fit the particular parties.

        49.    Construction of this Agreement.    No failure of Landlord to
exercise any power given Landlord hereunder, or to insist upon strict compliance
by Tenant of its obligations hereunder, and no custom or practice of the parties
at variance with the terms hereof shall constitute a waiver of Landlord's right
to demand exact compliance with the terms hereof. Time is of the essence of this
Lease. The waiver by either party of any agreement, condition, or provision
contained in this Lease shall not be deemed to be a waiver of any subsequent
breach of the agreement, condition, or provision or any other agreement,
condition, or provision contained in the Lease, nor shall any custom or practice
that may arise between the parties in the administration of the terms of this
Lease be construed to waive or to lessen the right of either party to the
performance by the other party in strict accordance with these terms. The
subsequent acceptance of rental under this Lease by Landlord shall not be deemed
to be a waiver of any preceding breach by the other party of any agreement,
condition, or provision of this Lease, other than the failure of Tenant to pay
the particular accepted rental, regardless of knowledge of the preceding breach
at the time of the rental acceptance.

        50.    No Estate In Land.    This contract shall create the relationship
of landlord and tenant between Landlord and Tenant; no estate shall pass out of
Landlord (other than a leasehold estate); Tenant has only a right of possession
and use, not subject to levy or sale, and not assignable by Tenant except with
Landlord's consent. The surrender of this Lease by Tenant, or a mutual
cancellation of it, shall not work a merger and shall, at the option of
Landlord, terminate all or any existing subleases or subtenancies or operate as
an assignment to Landlord of all subleases or subtenancies.

        51.    Paragraph Titles; Severability.    The paragraph titles used
herein are not to be considered a substantive part of this Lease, but merely
descriptive aids to identify the paragraph to which they refer. Use of the
masculine gender includes the feminine and neuter, and vice versa, where
necessary to impart contextual continuity. If any paragraph or provision herein
is held invalid by a court of competent jurisdiction, all other paragraphs or
severable provisions of this Lease shall not be affected thereby, but shall
remain in full force and effect.

        52.    Cumulative Rights.    All rights, powers and privileges conferred
hereunder upon the parties hereto shall be cumulative but not restrictive to
those given by law.

        53.    Waiver of Jury Trial.    Landlord and Tenant shall and do hereby
waive trial by jury in any action, proceeding or counterclaim brought by either
of the parties hereto against the other on any matters whatsoever arising out of
or in any way connected with this Lease, the relationship of Landlord and
Tenant, Tenant's use or occupancy of the Premises, or any statutory remedy.

        54.    Entire Agreement.    This Lease contains the entire agreement of
the parties and no representations, inducements, promises or agreements, oral or
otherwise, between the parties not embodied herein shall be of any force or
effect.

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        55.    Submission of Agreement.    Submission of this Lease to Tenant
for signature does not constitute a reservation of space or an option to acquire
a right of entry. This Lease is not binding or effective until execution by and
delivery to both Landlord and Tenant.

        56.    Authority.    If Tenant executes this Lease as a corporation,
limited partnership, limited liability company or any other type of entity,
Tenant does hereby represent and warrant that Tenant is a duly organized and
validly existing corporation, limited partnership, limited liability company or
other type of entity, that Tenant is qualified to do business in the state where
the Building is located, that Tenant has full right, power and authority to
enter into this Lease, and that each person signing on behalf of Tenant is
authorized to do so. Upon Landlord's request, Tenant shall provide Landlord with
evidence reasonably satisfactory to Landlord confirming the foregoing
representations and warranties.

        57.    Good Faith; Consents.    The parties acknowledge and agree that,
to the fullest extent applicable under California law, this Lease is subject to
the "covenant of good faith and fair dealing" which requires that each party
will do all things reasonably contemplated by the terms of the contract to
accomplish its purposes. Additionally, wherever this Lease calls for the consent
or approval by either party, that party shall not unreasonably withhold,
condition or delay the granting of such consent or approval unless this Lease
expressly provides that such consent or approval may be withheld in such party's
sole discretion, or words to that effect. Notwithstanding any contrary
expression or implication in the foregoing, wherever in this Lease, a party has
a right to exercise an option to do something, such party shall have the
unfettered discretion and right to exercise or not exercise that option for any
reason or no reason, without reference a to any subjective or objective standard
or good faith or reasonableness under the circumstances.

        58.    Joint and Several Obligations.    If there is more than one
Tenant, the obligations imposed on Tenant shall be joint and several.

        59.    Name of Building.    Tenant shall not, without consent of
Landlord, use the name of the Building for any purpose other than as the address
of the business to be conducted by Tenant in the Premises.

        60.    Governing Law.    This Lease shall be governed by and construed
pursuant to law of the State of California. The headings and titles to the
paragraphs of this Lease are for convenience only and are not to be used to
interpret or construe this Lease. Wherever the term "including" or "includes" is
used in this Lease it shall be construed as if followed by the phrase "without
limitation."

        61.    Obligations Independent.    The obligations of each party
hereunder are independent and do not constitute conditions to the effectiveness
of the other party's obligations. The nonperformance by either party of any of
its obligations shall not excuse any nonperformance by the other party except to
the extent that it makes such other party's performance impossible or
impracticable.

        62.    Exhibits.    The exhibits and addendum, if any, specified in the
Table of Contents set forth at the beginning of this Lease are attached to this
Lease and by this reference made a part of it.

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

        64.    Reservations.    Landlord reserves the right, from time to time,
to grant, without the consent or joinder of Tenant, such easements, rights of
way, utility raceways, and dedications that Landlord deems necessary, and to
cause the recordation of parcel maps and restrictions, so long as such
easements, rights of way, utility raceways, dedications, maps and restrictions
do not materially adversely affect the use and enjoyment of the Premises or
common areas by Tenant. Tenant agrees to sign any

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documents reasonably requested by Landlord to effectuate any such easement
rights, dedication, map or restrictions.

        65.    Interruption of Services.    In the event of an interruption in,
or failure or inability to provide any utilities serving the Premises due to any
cause other than Landlord's wanton or willful misconduct, such interruption,
failure or inability shall not constitute an eviction of Tenant, constructive or
otherwise, or impose upon Landlord any liability whatsoever, including, but not
limited to, liability for consequential damages or loss of business by Tenant.
Tenant hereby waives the provisions of California Civil Code Section 1932(1) or
any other applicable existing or future law, ordinance or governmental
regulations permitting the termination of this Lease due to such interruption,
failure or inability. However, in the event of any such interruption or failure,
arising from any cause other than Tenant's acts, that lasts for five
(5) business days or longer, and materially interferes with Tenant's ability to
conduct business in the Premises, starting on the sixth (6th) business day after
such interruption or failure and continuing until such utility service has been
restored and Tenant is able to conduct business therefrom without material
interference, all Rent payable under this Lease shall be abated.

        66.    Furniture.    

        (a)    Landlord hereby leases to Tenant the items of personal property
identified in Exhibit "F" hereto, together with all Cat 5 Wiring attached
thereto (the "Furniture"). The term of this lease of the Furniture shall
commence on the Commencement Date, and shall be co-terminus with the Lease.
Possession of the Furniture shall be delivered to Tenant on the Commencement
Date and shall be returned to Landlord upon the expiration or earlier
termination of this Lease.

        (b)    Tenant accepts the Furniture in its "as is" "where is" condition
and Tenant acknowledges that Landlord makes no warranty as to the condition of
the Furniture or its present or future suitability for Tenant's purposes except
as follows: Landlord hereby warrants that the Furniture is and will be in good
working order and condition for the period commencing on the Commencement Date
hereunder and expiring on the date thirty (30) days thereafter (the "Warranty
Period"). Upon written notice given by Tenant to Landlord prior to the
expiration of the Warranty Period, of a material defect in the operation,
installation or performance of the Furniture, Landlord shall correct such defect
at Landlord's sole cost and expense.

        (c)    This lease of the Furniture is a net lease, and as such, Tenant
shall pay maintenance, insurance and taxes on all Furniture leased hereunder.
The Furniture shall be held at all times during the term hereof at the sole risk
of Tenant from injury, loss or destruction with the obligation of restoration or
reimbursement to Landlord. Tenant agrees to procure and maintain throughout the
term of this Lease insurance covering the Furniture against all risk of physical
loss, theft, damage and destruction, which insurance may be under the same
policy required pursuant to Section 26(a)(ii) hereof. Such insurance shall be
procured in commercially reasonable amounts naming Landlord as an additional
insured. Tenant shall deliver to Landlord a certificate evidencing such
insurance at the Commencement Date. Such insurance shall provide for payment for
loss to Landlord (the proceeds of any such policy shall be held by Landlord and
made available to Tenant for repair or replacement of the Furniture during the
Term of this Lease). If Tenant fails to procure such insurance, Landlord shall
have the right to procure such insurance at Tenant's cost. Tenant shall not take
any steps or allow to be invalidated the insurance required to be maintained
hereunder.

        (d)    Upon the termination of this Lease, Tenant shall return the
Furniture to Landlord in the same condition as when received, ordinary wear and
tear excepted (it being understood that occasionally chairs, drawer mechanisms
and other mechanical features may malfunction over time with normal use),
conditioned on the obligations set forth in the next sentence having been
accomplished. Tenant is responsible for performing all maintenance, repair and
cleaning of the Furniture, which may be necessary to maintain the Furniture in
the condition in which it was initially provided to Tenant. Tenant shall use the
Furniture in a careful and proper manner, and shall comply with all laws and

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regulations relating to the possession and use of the Furniture. Landlord shall
have the right to inspect the Furniture during business hours, subject to the
provisions of Section 42.

        (e)    Tenant covenants that: (i) Tenant will not, without the prior
written consent of Landlord, assign, pledge, loan, mortgage, or part with
possession of any of the Furniture, or in any other manner attempt to dispose of
it, or permit its use by others (other than to another occupant of the Premises
as permitted under Section 44) or suffer any liens or legal process to be
incurred or levied thereon; (ii) Tenant will not make any alterations or permit
any alterations to be made on or to the Furniture (other than reconfigurations
of the Furniture within the Premises) without the written consent of Landlord,
which consent shall not be unreasonably withheld, conditioned or delayed; and
(iii) Tenant will keep and maintain the Furniture at 4555 Cushing Parkway,
Fremont, California and will not permit any of the Furniture to removed from
such location without Landlord's prior written consent.

(f)    (i) In addition to any other obligations of Tenant hereunder, Tenant
shall indemnify and hold harmless Landlord from and against any and all claims
arising from Tenant's use of the Furniture, and from and against all costs,
attorneys' fees, expenses and liabilities incurred in the defense of any such
claim or any action or proceeding brought thereon; and in case any action or
proceeding be brought against Landlord by reason of any such claim, Tenant, upon
written notice from Landlord, shall defend the same at Tenant's expense by
counsel satisfactory to Landlord. Tenant, as a material part of the
consideration to Landlord, hereby assumes all risk of damage to property or
injury to persons arising from any cause connected with the Furniture and waives
all claims in respect thereof against Landlord. This paragraph shall not include
anything resulting from Landlord's own negligence or willful misconduct.

        (ii)   In addition to any other obligation of Tenant hereunder, Tenant
agrees that Landlord shall not be liable for injury to Tenant's business or any
loss of income therefrom or for damage to the goods, wares, merchandise or other
property of Tenant, Tenant's employees, invitees, customers, or any other person
occasioned by or in connection with Tenant's possession of use of any of the
Furniture, nor shall Landlord be liable for injury to the person of Tenant,
Tenant's employees, agents, or contractors occasioned by or in connection with
Tenant's possession or use of any of the Leased Furniture.

        (g)    The Furniture shall at all times be and remain the exclusive
property of Landlord, and Tenant shall have no title therein. Tenant shall, at
its sole cost and expense, at all times protect and defend the title of Landlord
in the Furniture from and against all liens, claims and legal processes of the
creditors of Tenant and keep the Furniture free of such liens, claims and
encumbrances. The Furniture or any of Tenant's rights under this Lease shall not
be assigned or transferred by Tenant to any person, firm or corporation without
the prior written consent of Landlord (except pursuant to Section 44) and any
attempted assignment or transfer in violation thereof shall, at the option of
Landlord, be void. Nothing contained herein, however, shall be deemed to limit
or otherwise restrict Landlord's right to transfer in any manner its interest in
any or all of the Furniture or in this Lease, subject to the rights of Tenant
under this Lease.

        (h)    Tenant shall, during the term of this Lease, pay and discharge
all license fees, assessments and sales, use, property and other tax or taxes
now or hereafter imposed by any state, Federal or local government upon the
ownership, leasing, renting, sale, possession or use of the Furniture whether
the same be assessed to Landlord or Tenant, together with any penalties or
interest in connection therewith, excepting Federal, state or local governmental
taxes, or payments in lieu thereof, imposed upon or measured by the income of
Landlord. If any tax is, by law, to be assessed or billed to Landlord, Tenant at
its expense will do any and all things required to be done by Landlord in
connection with the levy, assessment, billing or payment of such taxes and is
hereby authorized by Landlord to act for and on behalf of Landlord in any and
all respects. Tenant will cause all billings of such taxes to Landlord to be
made to it in care of Tenant and will from time to time, on request of Landlord,
submit written evidence of the payment of all of the governmental obligations
mentioned in this paragraph.

        IN WITNESS WHEREOF, the parties hereto have executed this Lease as of
the date first above written.

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EXHIBIT "A"

PROPERTY

All that certain real property situated in the City of Fremont, County of
Alameda, State of California, described as follows:

PARCEL ONE:

Lot 17, Tract 5048, filed July 5, 1983, Map Book 139, Pages 61, 62 and 63,
Alameda County Records.

PARCEL TWO:

THAT PORTION of Cushing Road abandoned by Resolution No. 5824 adopted by The
City Council of Fremont, a certified copy of which recorded August 29, 1983 as
Instrument No. 83-15971 and Re-recorded on September 26, 1983 as Instrument
No. 83-178013, Alameda County Records, described as follows:

BEGINNING at a point 307.45 feet easterly of the southwesterly corner of Lot 11
of said Tract 5048, said point also being the intersection of the southerly line
of said Lot 11 with the southerly boundary line of said Tract 5048 thence
westerly along the southerly lines of Lot 11 and Lot 17 of said Tract 5048,
south 82o 48' 27" west 727.45 feet to a tangent curve concave northeasterly
along said tangent curve through a central angle of 90o 00' 00" a distance of
62.83 feet to a point tangent with the westerly line of said Lot 17, thence
leaving the westerly line of said Lot 17 on a southerly prolongation of said
westerly line south 07o 11' 33" east 2.00 feet to a tangent curve concave
northeasterly having a radius of 40.00 feet, thence southerly and easterly along
last said tangent curve through a central angle of 90o 00' 00" a distance of
62.83 feet to a point, thence leaving last said curve tangent and parallel to
the southerly line of said Lot 17 north 82o 48' 27" east 713.32 feet to the
southerly boundary of said Tract 5048, thence northeasterly along said boundary
of said Tract 5048 north 74o 45' 11" east 14.28 feet to the point of beginning.

EXCEPTING THEREFROM that portion thereof lying easterly of the southerly
prolongation of said Lot 17.

Commonly known as: 4555 Cushing Parkway
Alameda County Account Nos: 525-1350-26-01

A-1

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EXHIBIT "A-1"

GRAPHIC [g429877.jpg]

A-2

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EXHIBIT "B"

(WORK LETTER)

        To induce Tenant to enter into the Lease (to which this Exhibit "B" is
attached) and in consideration of the mutual covenants hereinafter contained,
Landlord and Tenant agree as follows:

        1.    (a)    Landlord shall construct, or cause to be constructed, at
Landlord's sole cost and expense, leasehold improvements to the Premises (the
"Work") in accordance with the Space Plan attached to and made a part of this
Lease as Exhibit "G" and in accordance with the additional specifications set
forth in that certain Orchard Commercial Construction Project Budget, Project
Altigen Tenant Improvement, Project Location Cushing Parkway Fremont Ca., dated
[9/15/03] Rev.[0.1] (the "Budget"), which is attached to and made a part of this
Lease as Exhibit "G-1"). The Budget is referenced herein for purposes of further
describing the Work, and shall not be interpreted to limit Landlord's costs and
expenses in the event that the actual costs and expenses of the Work exceed the
amounts budgeted therefor.

        (b)    Landlord shall prepare, or cause to be prepared, working drawings
for the construction of the Work, adequate in detail to perform the Work and
shall have mechanical (sprinkler, air conditioning, heating, electrical and
plumbing) drawings prepared by Landlord's mechanical engineer covering
mechanical elements of the Work all in keeping with the Space Plan and the
Budget (the working drawings, including the mechanical drawings, are referred to
as the "Plans"). The Plans (and any modifications thereof) shall comply with all
governmental standards, regulations and requirements, and shall be subject to
Tenant's approval (which approval shall not be unreasonably withheld). Tenant's
failure to approve or disapprove the Plans within five (5) days of submission
shall be deemed an approval. Tenant shall not unreasonably withhold its approval
of the Plans or any part thereof.

        2.    (a)    Any other work desired by Tenant, and approved by Landlord
(which approval shall not be unreasonably withheld), shall be performed by
Landlord or Landlord's contractors, unless Landlord otherwise consents in
writing. If Tenant desires any work in addition to the Work described in
Section 1 hereof ("Additional Work"), Tenant shall advise Landlord and Landlord
shall, upon approval of such request, cause the necessary drawings, plans and
specifications for the Additional Work to be included on the Plans as soon as
reasonably possible after request and approval, or shall submit to Landlord or
Landlord's agent (at Tenant's sole cost and expense) the necessary drawings,
plans and specifications for the Additional Work. Any requests for Additional
Work not made by Tenant within five (5) days of submission of the Plans for the
Work to Tenant for approval may cause delay in the Work, and any such delay
shall be deemed tenant delay. Prior to commencing any such Additional Work
requested by Tenant, Landlord or Landlord's agent shall submit to Tenant a
written estimate of the cost of such Additional Work, as well as the amount of
delay reasonably expected to result therefrom. If Tenant shall fail to approve
said estimate within five (5) days from the receipt thereof, the same shall be
deemed disapproved in all respects by Tenant and Landlord shall not be
authorized to proceed thereon nor shall Landlord be obligated to construct such
Additional Work, and no such failure shall be deemed in any way a delay in
completion of the Work.

        (b)    No material changes, modifications or alterations in the Plans or
the Work or Additional Work (a "Change") shall be made by either party without
the prior written consent of the other party, which consent shall not be
unreasonably withheld or delayed. If Tenant desires a Change, Landlord or
Landlord's agent shall submit to Tenant a written estimate of the cost of such
Change, as well as the amount of delay reasonably expected to result therefrom.
If Tenant shall fail to approve said estimate within five (5) days from the
receipt thereof, the same shall be deemed disapproved in all respects by Tenant
and Landlord shall not be authorized to proceed thereon nor shall Landlord be
obligated to make such Change, and no such failure shall be deemed in any way a
delay in completion of the Work.

B-1

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        3.    (a)    The Tenant Improvement Allowance and the Supplemental
Allowance provided in Paragraph 10 of the Basic Lease Provisions and Section 17
of the Lease, includes funds to be applied toward (i) the cost of preparing the
Plans for any Additional Work, (ii) the cost of any Changes to the Plans
requested by Tenant and (iii) any costs necessary to file the Plans for
Additional Work not included in the Plans for the Work or for Changes, and to
obtain the necessary permits and approvals of, any governmental authority having
jurisdiction thereof for any Additional Work or Changes.

        (b)    Any costs in excess of the funds available in the Tenant
Improvement Allowance or the Supplemental Allowance for preparation of Plans for
Additional Work or Changes requested by Tenant shall be due and payable by
Tenant to Landlord within ten (10) days after receipt by Tenant of a statement
therefor. Any costs of such Additional Work or Changes in excess of the Tenant
Improvement Allowance and the Supplemental Allowance specified in the Lease
shall be due and payable as provided in the Lease.

        (c)    Landlord shall be solely responsible for (i) the cost of
preparing the Space Plan, the Budget, and the Plans for the Work, (ii) the cost
of any changes to the Plans requested by Landlord and (iii) any costs necessary
to file the Plans for the Work, and to obtain the necessary permits and
approvals of, any governmental authority having jurisdiction thereof for the
Work, including the cost of satisfying any requirements "triggered" by the Work
to comply with the ADA, or building or fire codes, or other governmental
requirements that must be satisfied as a condition of approval of the Work.

        4.    (a)    Upon obtaining all necessary governmental permits and
approvals, Landlord shall commence construction of and diligently pursue the
completion of the Work and any Additional Work in conformance with the Plans and
this Lease, and in compliance with all conditions necessary for lawful occupancy
of the Premises.

        (b)    Substantial completion of the Work shall be deemed to occur on
the date when the Work has been completed as required herein (except for Punch
List items which do not materially, adversely affect Tenant's use) and a
Temporary Certificate of Occupancy has been issued for the Premises. If the
substantial completion of the Work is delayed due to (i) any interference or
hindrance by Tenant or Tenant's representatives in the progress of construction,
(ii) the inclusion of any Additional Work in the Premises (following the date
specified in Paragraph 2(a) above), or (iii) any Changes requested by Tenant,
the Work shall be deemed substantially completed on the date when the Work would
have been substantially completed but for such delay. Landlord shall use all
commercially reasonable efforts to notify Tenant promptly after the occurrence
of a delay, in order to provide Tenant an opportunity to mitigate the delay at
Tenant's sole cost and expense

        5.    Within fifteen (15) business days after Landlord notifies Tenant
that the Work and/or Additional Work is substantially complete, Tenant shall
conduct a walk-through inspection of the Premises with Landlord and provide to
Landlord a statement describing all items of the Work or Additional Work that
still remain to be completed (the "Punch List"). Upon receipt of the Punch List,
Landlord shall notify Tenant promptly if Landlord disagrees with any items, in
which case the parties shall meet and confer in good faith to resolve such
disagreement. Landlord shall promptly commence correction of the agreed-upon
items and proceed diligently to complete the same.

        6.    In addition to the foregoing, if Tenant, during the first twelve
(12) months after substantial completion, notifies Landlord, in writing, of any
defects, errors or omissions in the Work or the Additional Work, Landlord shall
promptly commence and diligently pursue the correction of all such items at
Landlord's sole cost and expense. This Paragraph 6 shall not apply to equipment
or materials that were specified by Tenant, but in such case Landlord shall
assign to Tenant for the Term of this Lease Landlord's interest in any warranty
from a subcontractor or supplier regarding such equipment or materials. If any
latent defects in the Work or the Additional Work are discovered after the
twelve month period described above, Landlord shall have the option of either
(i) correcting such defects at Landlord's sole cost and expense, or
(ii) pursuing, on Tenant's behalf, all remedies available under any existing
construction warranties regarding such improvements, or (iii) if such warranties
are assignable, assigning Landlord's rights thereunder to Tenant for the Term of
this Lease.

B-2

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EXHIBIT "C"

SUBSTANTIAL COMPLETION/ACCEPTANCE LETTER

Date                                               

Re:Lease dated as of                         ,       , by and between Landlord,
and                         , as Tenant, for                          rentable
square feet at the Building located at                         .

Dear                                         :

        In accordance with the terms and conditions of the above referenced
Lease, Tenant accepts possession of the Premises and agrees:

1.The Commencement Date of the Term of the Lease is                         ;

2.The Termination Date of the Term of the Lease is                         .

        Please acknowledge your acceptance of possession and agreement to the
terms set forth above by signing all 3 counterparts of this Commencement Letter
in the space provided and returning 2 fully executed counterparts to my
attention.

Sincerely,   Agreed and Accepted:

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Property Manager
 
 
 
      Tenant:     

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    By:     

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    Name:     

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    Title:     

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    Address:     

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C-1

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EXHIBIT D

HAZARDOUS MATERIALS QUESTIONNAIRE

This questionnaire is designed to solicit information regarding your proposed
use of hazardous or toxic materials. If your use of materials or generation of
wastes is considered to be significant, further information may be requested
regarding your plans for hazardous and toxic materials management.

I.    Proposed Tenant

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Name (Corporation, Individual, Corporate, or Individual DBA, or Public Agency)

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Standard Industrial Classification Code ("SIC")

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Street Address

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City, State, Zip Code
Contact Person & Title:

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Telephone Number:
(            )

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Facsimile Number:
(            )

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II.    Location and address of Proposed Lease

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Street Address

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City, State, Zip Code

III.    Description of Proposed Facility Use

Describe proposed use and operation of Premises including principal products or
service to be conducted at facility:

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Does the operation of your business involve the use, generation, treatment,
storage, transfer, or disposal of hazardous wastes or materials? Yes     
No      If yes, or if your SIC code number is between 2000 to 4000, please
complete Section IV.

IV.    Permit Disclosure

Does the operation of your business require permits, a license, or plan approval
from any of the following agencies?

oU.S. Environmental Protection Agency

oCity or County Sanitation District

oState Department of Health Services

D-1

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oU.S. Nuclear Regulatory Commission

oAir Quality Management District

oBureau of Alcohol, Firearms and Tobacco

oCity or County Fire Department

oRegional Water Quality Control Board

oAny Laboratory Certification Agency (Indicate permit or license numbers,
issuing agency, and expiration date or renewal date, if applicable.)

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If your answer is yes to any of the above questions, please complete Sections V
and VI.

V.    Hazardous Materials Disclosure

Will any hazardous or toxic materials or substances be stored on site? Yes     
No      If yes, please describe the materials or substances to be stored,
quantities and proposed method of storage (i.e., drums, aboveground or
underground storage tanks, cylinders, or other), and whether the material is a
Solid (S), Liquid (L) or Gas (G):

Material

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  Storage Method

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  Quantity On
A Monthly Basis

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Attach additional sheets if necessary.

Is any facility modification required or planned to mitigate the release of
toxic or hazardous substance or wastes into the environment? Yes      No      If
yes, please describe the proposed facility modifications.

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VI.    Hazardous Waste Disclosure

Will any hazardous waste, including recyclable waste, be generated by the
operation of your business? Yes      No      If yes, please state the hazardous
waste that will be generated at the facility, its hazard class, and
volume/frequency of generation on a monthly basis

Waste Name

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  Hazard Class

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  Volume/Month

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D-2

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If yes, please also describe the method(s) of disposal for each waste. Indicate
where disposal will take place and the method of transportation to be used:

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Is any treatment or processing of hazardous wastes to be conducted on site?
Yes      No      If yes, please describe proposed treatment/processing methods:

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Which agencies are responsible for monitoring and evaluating compliance with
respect to the storage and disposal of hazardous materials or wastes at or from
the Premises?

(Please list all agencies)

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Has an environmental audit ever been conducted at any of your company's existing
facilities? Yes      No      If yes, please describe:

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Does your company carry environmental impairment insurance? Yes      No     . If
yes, what is the name of the carrier and what are the effective periods and
monetary limits of that coverage?

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This Hazardous Materials Questionnaire is certified as being true and accurate
and has been completed by the party whose signature appears below on behalf of
Tenant as of the date set forth below.

Dated:     

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  Signature:     

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        Print Name:     

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        Title:     

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D-3

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EXHIBIT "E"

RULES AND REGULATIONS

        1.     Tenant will not place any signs on the Property without
Landlord's prior written consent. All signage must comply with all applicable
laws, codes and regulations, including, without limitation, zoning and building
codes. No advertisements, pictures or signs of any sort may be displayed on or
outside the Premises without the prior written consent of Landlord. This
prohibition includes any portable signs or vehicles placed within the parking
lot, common areas or on streets adjacent thereto for the purpose of advertising
or display. Landlord has the right to remove any such unapproved item without
notice and at Tenant's expense.

        2.     Tenant may not park or store motor vehicles, trailers or
containers outside the Premises after the conclusion of normal daily business
activity except in approved areas specifically designated by Landlord; provided,
however, that Tenant's employees may park their Permitted Size Vehicles in their
usual parking areas on a 24x7 basis for as long as such employee is concurrently
working in the Premises.

        3.     Tenant may not use any method of heating or air-conditioning
other than that supplied by Landlord without the prior written consent of
Landlord.

        4.     All window coverings and window films or coatings installed by
Tenant and visible from outside of the Building require the prior written
approval of Landlord. Except for dock shelters and seals as may be expressly
permitted by Landlord, no awnings or other projections may be attached to the
outside walls of the Building.

        5.     Tenant may not use, keep or permit to be used or kept any foul or
noxious gas or substance on, in or around the Premises unless approved by
Landlord. Tenant may not use, keep or permit to be used or kept any flammable or
combustible materials without proper governmental permits and approvals.

        6.     Tenant may not use, keep or permit to be used or kept food or
other edible materials in or around the Premises in such a manner as to attract
rodents, vermin or other pests. Tenant may not permit cooking in or about the
Premises other than in microwave ovens; provided, however, that, subject to
compliance with further reasonable rules and regulations promulgated by Landlord
regarding the conduct, location, timing and coordination of same, Tenant may
occasionally use the common areas in the vicinity of the Premises to conduct
company events, including barbecues, further subject to Tenant's compliance with
all applicable laws and regulations and assurance that Tenant has procured
appropriate insurance relating thereto.

        7.     Tenant may not use or permit the use of the Premises for lodging
or sleeping, for public assembly, or for any illegal or immoral purpose.

        8.     Tenant may not alter any lock or install any new locks or bolts
on any door at the Premises without the prior written consent of Landlord.
Tenant agrees not to make any duplicate keys without the prior consent of
Landlord.

        9.     Tenant will park motor vehicles only in those general parking
areas as designated by Landlord except for active loading and unloading. During
loading and unloading of vehicles or containers, Tenant will not unreasonably
interfere with traffic flow within the Property and loading and unloading areas
of other tenants.

        10.   Storage of propane tanks, whether interior or exterior, will be in
secure and protected storage enclosures approved by the local fire department
and, if exterior, shall be located in areas specifically designated by Landlord.
Safety equipment, including eye wash stations and approved neutralizing

E-1

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agents, will be provided in areas used for the maintenance and charging of
lead-acid batteries. Tenant will protect electrical panels and building
mechanical equipment from damage from forklift trucks.

        11.   Tenant will not disturb, solicit or canvas any occupant of the
Building or Property and will cooperate to prevent same.

        12.   No person may go on the roof of the Building without Landlord's
permission except to perform obligations under its lease.

        13.   No animals (other than seeing eye dogs) or birds of any kind may
be brought into or kept in or about the Premises.

        14.   Machinery, equipment and apparatus belonging to Tenant which cause
noise or vibration that may be transmitted to the structure of the Building to
such a degree as to be objectionable to Landlord or other tenants or to cause
harm to the Building will be placed and maintained by Tenant, at Tenant's
expense, on vibration eliminators or other devices sufficient to eliminate the
transmission of such noise and vibration. Tenant will cease using any such
machinery which causes objectionable noise and vibration which can not be
sufficiently mitigated.

        15.   All goods, including material used to store goods, delivered to
the Premises of Tenant will be immediately moved into the Premises and will not
be left in parking or exterior loading areas overnight.

        16.   Tractor trailers which must be unhooked or parked with dolly
wheels beyond the concrete loading areas must use steel plates or wood blocks of
sufficient size to prevent damage to the asphalt paving surfaces. No parking or
storing of such trailers will be permitted in the auto parking areas of the
industrial park or on streets adjacent thereto.

        17.   Forklifts which operate on asphalt paving areas may not have solid
rubber tires and may use only tires that do not damage the asphalt.

        18.   Tenant will be responsible for the safe storage and removal of all
pallets. Pallets will be stored behind screened enclosures at locations approved
by the Landlord.

        19.   Tenant will be responsible for the safe storage and removal of all
trash and refuse. All such trash and refuse will be contained in suitable
receptacles stored behind screened enclosures at locations approved by Landlord.
Landlord reserves the right to remove, at Tenant's expense and without further
notice, any trash or refuse left elsewhere outside of the Premises or on the
Property.

        20.   Tenant may not store or permit the storage or placement of goods
or merchandise in or around the common areas surrounding the Premises. No
displays or sales of merchandise is allowed in the parking lots or other common
areas.

        21.   Tenant will appoint an Emergency Coordinator who shall be
responsible for assuring notification of the local fire department in the event
of an emergency, assuring that sprinkler valves are kept open and implementing
the Factory Mutual "Red Tag Alert" system including weekly visual inspection of
all sprinkler system valves on or within the Premises. Tenant will provide
Landlord access to fire protection and any related communications equipment in
the Premises at all times.

E-2

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EXHIBIT "F"

FURNITURE

[Remainder of Page Intentionally Left Blank.]

F-1

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EXHIBIT "G"

SPACE PLAN

         GRAPHIC [g398849.jpg]

G-1

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EXHIBIT "G-1"

ORCHARD COMMERCIAL
CONSTRUCTION PROJECT BUDGET

DATE
9/29/03
Rev.02

   
   
   
  PROJECT ALTIGEN
TENANT IMPROVEMENT

   
  PROJECT LOCATION
CUSHING PARKWAY FREMONT, CA.

COST
CODE

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  TASK

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  DESCRIPTION

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                11200   PROJECT SUPERVISION     7,244   Onsite Project
Superintendent & Project Management services. 14050   TEMP. ELECT POWER     —  
By Owner. 17100   PROGRESSIVE CLEAN UP     2,420   Onsite Laborers for course of
construction cleaning. 17250   DUMP FEES     1,880     20700   INTERIOR
DEMOLITION     12,424   Demo walls, doors. 20770   CONCRETE SAWCUT/PATCH     —  
Excluded. 20800   ASBESTOS REMOVAL     —   Excluded. 25200   SITE CONCRETE     —
  Excluded. 28300   FENCING     —   Excluded. 28450   MONUMENT SIGNAGE     3,000
  Allowance. 61200   STRUCTURAL STEEL     —   Excluded. 61000   ROUGH CARPENTRY
    —   Excluded. 62200   MILLWORK/CABINETS         Excluded. 72000   INSULATION
    2,473   Installed at (N) manufacturing area walls & front office sidewalls.
75000   MEMBRANE ROOFING     —   Excluded. 82000   DOOR\FRAMES\HARDWARE    
10,428   Install (N) doors & relocate doors per plan. 88000   GLASS/GLAZING    
5,860   Install (N) sidelights & glass sections per plan. 92500   METAL
STUDS/DRYWALL     27,420   New walls, patch wall scars per plan.
Finish to match existing. 95000   ACOUSTIC CEILINGS     2,458   Minor demo &
restoration as required to accommodate (N) layout 96800   FLOORING     11,754  
Install (N) VCT flooring at production area, Install base at new walls. VCT to
be: Armstrong Standard Excelon Imperial texture, color TBD 12 x 12 tiles, 1/8th
in. thick,
Install Building standard direct glue carpet & new base at all office, open
office, conf. Areas. Carpet to be Pacificrest "Strategy" pattern loop 28 oz psy
Dupont DSDN solution dyed, Royal guard soil resist treatment 5 year
colorfastness to Atmospheric contaminants and limited life of carpet anti static
warranties 99000   PAINTING     5,987   Repainting of all existing walls to
match building standard flat latex material Painting of (N) walls & all walls
affected by Construction, gyp board ceilings warehouse walls full height,
exposed columns                

G-1-1

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99500   CUBICLES     —   Provide & install approx. 51 building standard 8' x 8'
cubicles 125100   MINI BLINDS     —   Excluded. 153300   FIRE PROTECTION    
8,923   Demo & relocate sprinkler drops to accommodate (N) layout. 154000  
PLUMBING     —   Excluded. 154800   PROCESS PIPING/MECHANICAL     —   Excluded.
165000   HVAC     20,116   Seperation & reduct (E) system as required to
accommodate (N) layout, including galvanized spiral ducting & air to service
warehouse area
Provide seperate unit for 24 hr HVAC to (E) server room 155250   EXHAUST SYSTEM
    —   Excluded. 157500   RIGGING     —   Excluded. 157550   MOVING RELOCATION
    —   Excluded. 160000   ELECTRICAL     51,824   Electrical demolition,
relocate & add lites, reswitch & (N) switching to accommodate (N) layout,
standard electrical office fit up at all (N) offices, Panel & x-former
relocation to adjacent (N) suite (N) subpanel to feed (N) circuits, dedicated
4-plex cord drop grid in manufacturing area.
Plan, permits 167200   SECURITY/ALARM     —   Excluded. 167400   COM/DATA
EQUIPMENT     —   As may be required is Excluded. 167400   COMMUNICATION/DATA
LINES     12,280   Completion of Cat 5 cabling to all cubes, (E) & (N) offices  
     

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        SUB-TOTAL>>>     186,491     17875   HAZMAT CONSULTANT     —   Excluded.
18100   ARCHITECTURE     7,577   Permit set / Construction drawings. 18200  
STRUCTURAL ENGINEERING     —     19200   BUILDING PERMITS     8,019     19925  
DESIGN, COORDINATION FEE     7,460     19975   PROFIT & OVERHEAD     11,189    
19990   CONTINGENCY     13,987            

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        TOTAL COST>>>   $ 234,723            

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        Unit square footage            31,925     7.35   Cost Per sq. ft. Move
allowance   $50,000                                31,925     1.57   Cost Per
sq. ft.     Total Cost     $8.92   Per sq. ft.

G-1-2

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QuickLinks

TABLE OF CONTENTS LEASE AGREEMENT
LIST OF EXHIBITS
BASIC LEASE PROVISIONS
INDUSTRIAL LEASE AGREEMENT
EXHIBIT "A" PROPERTY
EXHIBIT "A-1"
EXHIBIT "B" (WORK LETTER)
EXHIBIT "C" SUBSTANTIAL COMPLETION/ACCEPTANCE LETTER
EXHIBIT D HAZARDOUS MATERIALS QUESTIONNAIRE
EXHIBIT "E" RULES AND REGULATIONS
EXHIBIT "F" FURNITURE
EXHIBIT "G" SPACE PLAN
EXHIBIT "G-1"