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                                                                   EXHIBIT 10.21


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


                                     [LOGO]


1.   BASIC PROVISIONS ("BASIC PROVISIONS").

     1.1  PARTIES: This Lease ("LEASE"), dated for reference purposes only,
August 1, 1999, is made by and between KILROY REALTY, L.P., a Delaware Limited
Partnership, KILROY REALTY CORPORATION, a Maryland Corporation, General Partner
("LESSOR") and MEDIBUY.com, INC., a Delaware Corporation ("LESSEE"),
(collectively the "PARTIES," or individually a "PARTY").

     1.2(a) PREMISES: That certain portion of the Building, including all
improvements therein or to be provided by Lessor under the terms of this Lease,
commonly known by the street address of 10120 Pacific Heights Boulevard, Suite
100, located in the City of San Diego, County of San Diego, State of California,
with zip code 92121, as outlined on Exhibit "A" attached hereto ("PREMISES").
The "BUILDING" is that certain building containing the Premises and generally
described as (describe briefly the nature of the Building): a single story
office/commercial building containing approximately 52,540 rentable square feet,
a plot plan of which is attached hereto as Exhibit "B," located in an
industrial center comprised of two (2) buildings containing a total of
approximately 90,558 rentable square feet, a plot plan of which is attached
hereto as Exhibit "C." The Premises contain approximately 36,091 rentable square
feet. In addition to Lessee's rights to use and occupy the Premises as
hereinafter specified, Lessee shall have non-exclusive rights to the Common
Areas (as defined in Paragraph 2.7 below) as hereinafter specified, but shall
not have any rights to the roof, exterior walls or utility raceways of the
Building or to any other buildings in the Industrial Center. The Premises, the
Building, the Common Areas, the land upon which they are located, along with all
other buildings and improvements thereon, are herein collectively referred to as
the "INDUSTRIAL CENTER." (Also see Paragraph 2.)

     1.2(b) PARKING: one hundred twenty-six (126) unreserved vehicle parking
spaces ("UNRESERVED PARKING SPACES"); and -0- reserved vehicle parking spaces
("RESERVED PARKING SPACES"). (Also see Paragraph 2.6 and paragraph 60 of the
Addendum to Lease.)

     1.3  TERM: approximately five (5) years and three (3) months ("ORIGINAL
TERM") commencing August 1, 1999 (the "Lease Term Commencement Date"). Lessee
shall commence payment of Base Rent upon substantial completion of Lessee
Improvements by Lessor, as set forth in paragraph 51 of the Addendum to Lease,
estimated to be November 1, 1999, but in no event prior to November 1, 1999
("COMMENCEMENT DATE") and ending on the last day of the calendar month five (5)
years after the Commencement Date, estimated to be October 31, 2004, subject to
one (1) five-year option to renew ("EXPIRATION DATE"). (Also see Paragraph 3 and
paragraph 62 of the Addendum to Lease.)

     1.4  EARLY POSSESSION: Lessee may obtain early possession of the Premises
as more particularly described in paragraph 50 of the Addendum to Lease ("EARLY
POSSESSION DATE"). (Also see Paragraphs 3.2 and 3.3.)

     1.5  BASE RENT: $36,091.00 per month ("BASE RENT"), payable on the first
day of each month commencing on the Commencement Date.  (Also see Paragraph 4.)

[x]  If this box is checked, this Lease provides for the Base Rent to be
     adjusted per Addendum 49, attached hereto.

     1.6(a) BASE RENT PAID UPON EXECUTION: $36,091.00 as Base Rent for the
period first full month of the Lease Term. Base Rent for any partial month at
the Commencement Date of the Term shall be prorated as provided in paragraph 4.1
of this Lease and shall be based upon the later of the first day of the first
full month of the Lease Term or ten (10) days following Lessee's receipt of an
invoice from Lessor.

     1.6(b) LESSEE'S SHARE OF COMMON AREA OPERATING EXPENSES: sixty-eight and
69/100 percent (68.69%) of the Building, and the Building is fifty-eight and
02/100 percent (58.02%) of the Industrial Center ("LESSEE'S SHARE") as
determined by [x] pro rata square footage of the Premises as compared to the
total square footage of the Building and the prorata square footage of the
Building as compared to the total square footage of the Industrial Center,
respectively or [ ] other criteria as described in Addendum ________.

     1.7  SECURITY DEPOSIT: $36,091.00 (equivalent to 1st month's rent)
("SECURITY DEPOSIT"). (Also see Paragraph 5.)

     1.8  PERMITTED USE: General office, customer support and other permitted
uses per the MIB zoning of the City of San Diego. Lessee shall have access to
and may use the Premises 7 days per week, 365 days per year ("PERMITTED USE")
(Also see Paragraph 6.)

     1.9  INSURING PARTY. Lessor is the "INSURING PARTY." (Also see Paragraph
8.)

     1.10(a) REAL ESTATE BROKERS. The following real estate broker(s)
(collectively, the "BROKERS") and brokerage relationships exist in this
transaction and are consented to by the Parties (check applicable boxes):

[x] CB Richard Ellis, Inc. (Doug Lozier) represents Lessor exclusively
("LESSOR'S BROKER");

[x] CB Richard Ellis, Inc. (Christopher Pascale) represents Lessee exclusively
("LESSEE'S BROKER"); or

[ ] _____________________ represents both Lessor and Lessee ("DUAL AGENCY").
(Also see Paragraph 15.)

     1.10(b) PAYMENT TO BROKERS. Upon the execution of this Lease by both
Parties, Lessor shall pay to said Broker(s) jointly, or in such separate shares
as they may mutually designate in writing, a fee as set forth in a separate
written agreement between Lessor and said Broker.

     1.11 GUARANTOR. The obligations of the Lessee under this Lease are to be
guaranteed by N/A ("GUARANTOR"). (Also see Paragraph 37.)

     1.12 ADDENDA AND EXHIBITS. Attached hereto is an Addendum or Addenda
consisting of Paragraphs 49 through 70, and Exhibits "A" through "E", all of
which constitute a part of this Lease.

2.   PREMISES, PARKING AND COMMON AREAS.

     2.1  LETTING. Lessor hereby leases to Lessee, and Lessee hereby leases from
Lessor, the Premises, for the term, at the rental, and upon all of the terms,
covenants and conditions set forth in this Lease. Unless otherwise provided
herein, any statement of square footage set forth in this Lease, or that may
have been used in calculating rental and/or Common Area Operating Expenses, is
an approximation which Lessor and Lessee agree is reasonable and the rental and
Lessee's Share (as defined in Paragraph 1.6(b)) based thereon is not subject to
revision whether or not the actual square footage is more or


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less.

     2.2  CONDITION. Lessor shall deliver the Premises to Lessee clean and free
of debris on the Commencement Date and warrants to Lessee that the existing
plumbing, electrical systems, fire sprinkler system, lighting, air conditioning
and heating systems and loading doors, if any, in the Premises, other than those
constructed by Lessee, shall be in good operating condition on the Commencement
Date. If a non-compliance with said warranty exists as of the Commencement Date,
Lessor shall, except as otherwise provided in this Lease, promptly after receipt
of written notice from Lessee setting forth with specificity the nature and
extent of such non-compliance, rectify same at Lessor's expense. If Lessee does
not give Lessor written notice of a non-compliance with this warranty within
thirty (30) days after the Commencement Date, correction of that non-compliance
shall be the obligation of Lessee at Lessee's sole cost and expense.

     2.3  COMPLIANCE WITH COVENANTS, RESTRICTIONS AND BUILDING CODE. Lessor
warrants that any improvements (other than those constructed by Lessee or at
Lessee's direction) on or in the Premises which have been constructed or
installed by Lessor or with Lessor's consent or at Lessor's direction shall
comply with all applicable covenants or restrictions of record and applicable
building codes, regulations and ordinances in effect on the Commencement Date.
Lessor further warrants to Lessee that Lessor has no knowledge of any claim
having been made by any governmental agency that a violation or violations of
applicable building codes, regulations, or ordinances exist with regard to the
Premises as of the Commencement Date. Said warranties shall not apply to any
Alterations or Utility Installations (defined in Paragraph 7.3(a)) made or to be
made by Lessee. If the Premises do not comply with said warranties, Lessor
shall, except as otherwise provided in this Lease, promptly after receipt of
written notice from Lessee given within six (6) months following the
Commencement Date and setting forth with specificity the nature and extent of
such non-compliance, take such action, at Lessor's expense, as may be
reasonable or appropriate to rectify the non-compliance. Lessor makes no
warranty that the Permitted Use in Paragraph 1.8 is permitted for the Premises
under Applicable Laws (as defined in Paragraph 2.4).

     2.4  ACCEPTANCE OF PREMISES. Lessee hereby acknowledges: (a) that it has
been advised by the Broker(s) to satisfy itself with respect to the condition of
the Premises (including, but not limited to the electrical and fire sprinkler
systems, security, environmental aspects, seismic and earthquake requirements,
and compliance with the Americans with Disabilities Act and applicable zoning,
municipal, county, state and federal laws, ordinances and regulations, and any
covenants or restrictions of record (collectively, "APPLICABLE LAWS") and the
present and future suitability of the Premises for Lessee's intended use; (b)
that Lessee has made such investigation as it deems necessary with reference to
such matters, is satisfied with reference thereto, and assumes all
responsibility therefore as the same relate to Lessee's occupancy of the
Premises and/or the terms of this Lease; and (c) that neither Lessor, nor any of
Lessor's agents, has made any oral or written representations or warranties with
respect to said matters other than as set forth in this Lease.

     2.5  LESSEE AS PRIOR OWNER/OCCUPANT. The warranties made by Lessor in this
Paragraph 2 shall be of no force or effect if immediately prior to the date set
forth in Paragraph 1.1 Lessee was the owner or occupant of the Premises. In such
event, Lessee shall, at Lessee's sole cost and expense, correct any
non-compliance of the Premises with said warranties. Provided, however, that if
non-compliance is latent in nature, the time period for notice to lessor shall
be within ninety (90) days from the Commencement Date.

     2.6  VEHICLE PARKING. Lessee shall be entitled to use the number of
Unreserved Parking Spaces and Reserved Parking Spaces specified in Paragraph
1.2(b) on those portions of the Common Areas designated from time to time by
Lessor for parking. Lessee 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 Lessor in the Rules and Regulations (as
defined in Paragraph 40) issued by Lessor. (Also see Paragraph 2.9.)

          (a)  Lessee shall not permit or allow any vehicles that belong to or
are controlled by Lessee or Lessee's employees, suppliers, shippers, customers,
contractors or invitees to be loaded, unloaded, or parked in areas other than
those designated by Lessor for such activities.

          (b)  If Lessee permits or allows any of the prohibited activities
described in this Paragraph 2.6, then Lessor shall have the right, without
reasonable prior notice to Lessee, or no notice in the event of an emergency, in
addition to such other rights and remedies that it may have, to remove or tow
away the vehicle involved and charge the cost to Lessee, which cost shall be
immediately payable upon demand by Lessor.

          (c)  Lessor shall at the Commencement Date of this Lease, provide the
parking facilities required by Applicable Law.

          (d)  Unreserved parking spaces shall be provided to Lessee at no cost
during the Term of the Lease, including any extension to the Lease Term.
Reserved parking spaces shall be provided to Lessee at the current rate therefor
as established by Lessor from time to time and shall be subject to availability.

     2.7  COMMON AREAS -- DEFINITION. The term "COMMON AREAS" is defined as all
areas and facilities outside the Premises and within the exterior boundary line
of the Industrial Center and interior utility raceways within the Premises that
are provided and designated by the Lessor from time to time for the general
nonexclusive use of Lessor, Lessee and other lessees 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.

     2.8  COMMON AREAS -- LESSEE'S RIGHTS. Lessor hereby grants to Lessee, for
the benefit of Lessee and its employees, suppliers, shippers, contractors,
customers and invitees, during the term of this Lease, the non-exclusive right
to use, in common with others entitled to such use, the Common Areas as they
exist from time to time, subject to any rights, powers, and privileges reserved
by Lessor under the terms hereof or under the terms of any rules and regulations
or restrictions governing the use of the Industrial Center. Under no
circumstances shall the right herein granted to use the Common Areas be deemed
to include the right to store any property, temporarily or permanently, in the
Common Areas. Any such storage shall be permitted only by the prior written
consent of Lessor or Lessor's designated agent, which consent may be revoked at
any time. In the event that any unauthorized storage shall occur then Lessor
shall have the right, without notice, in addition to such other rights and
remedies that it may have, to remove the property and charge the cost to Lessee,
which cost shall be immediately payable upon demand by Lessor.

     2.9  COMMON AREAS -- RULES AND REGULATIONS. Lessor or such other person(s)
as Lessor may appoint shall have the exclusive control and management of the
Common Areas and shall have the right, from time to time, to establish, modify,
amend and enforce reasonable Rules and Regulations, as set forth in Exhibit "D,"
attached hereto with respect thereto in accordance with Paragraph 40. Lessee
agrees to abide by and conform to all such Rules and Regulations, and to cause
its employees, suppliers, shippers, customers, contractors and invitees to so
abide and conform. Lessor shall use commercially reasonable efforts to enforce
said Rules and Regulations against all tenants occupying the Building, however,
Lessor shall not be responsible to Lessee for the non-compliance with said rules
and regulations by other lessees of the Industrial Center.

     2.10 COMMON AREAS -- CHANGES. Lessor shall have the right, in Lessor's sole
discretion, from time to time:

          (a)  To make changes to the Common Areas, including, without
limitation, changes in the location, size, shape and number of driveways,
entrances, parking spaces, parking areas, loading and unloading areas, ingress,
egress, direction of traffic, landscaped areas, walkways and utility raceways;

          (b)  To close temporarily any of the Common Areas for maintenance
purposes so long as reasonable access to the Premises remains available;

          (c)  To designate other land adjacent to but now outside the
boundaries of the Industrial Center to be a part of the Common Areas;

          (d)  To add additional buildings and improvements to the Common Areas
provided that Lessee's use and occupancy of the Premises Common Areas and
parking facilities is not materially, adversely affected;

          (e)  To use the Common Areas while engaged in making additional
improvements, repairs or alterations to the Industrial Center, or any portion
thereof; and

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

3.   TERM.

     3.1  TERM. The Lease Term Commencement Date, Commencement Date, Expiration
Date and Original Term of this Lease are as specified in Paragraph 1.3.

     3.2  EARLY POSSESSION. If an Early Possession Date is specified in
Paragraph 1.4 and if Lessee totally or partially occupies the Premises after the
Early Possession Date but prior to the Commencement Date, the obligation to pay
Base Rent shall be abated for the period of such early occupancy. All other
terms of this Lease, however, (including but not limited to the obligations to
pay Lessee's Share of Common Area Operating Expenses and to carry the insurance
required by Paragraph 8) shall be in effect during such period. Any such early
possession shall not affect nor advance the Expiration Date of the


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Original Term.

     3.3  DELAY IN POSSESSION. If for any reason Lessor cannot deliver
possession of the Premises to Lessee by the Early Possession Date, if one is
specified in Paragraph 1.4, or if no Early Possession Date is specified, by the
Commencement Date, Lessor shall not be subject to any liability therefor, nor
shall such failure affect the validity of this Lease, or the obligations of
Lessee hereunder, or extend the term hereof, but in such case, Lessee shall not,
except as otherwise provided herein, be obligated to pay rent or perform any
other obligation of Lessee under the terms of this Lease until Lessor delivers
possession of the Premises to Lessee. If possession of the Premises is not
delivered to Lessee within sixty (60) days after the Commencement Date, Lessee
may, at its option, by notice in writing to Lessor within ten after the end of
said sixty (60) day period, cancel this Lease, in which event the Parties shall
be discharged from all obligations hereunder. Except as may be otherwise
provided, and regardless of when the Original Term actually commences, if
possession is not tendered to Lessee when required by this Lease and Lessee does
not terminate this Lease, as aforesaid, the period free of the obligation to pay
Base Rent, if any, that Lessee would otherwise have enjoyed shall run from the
date of delivery of possession and continue for a period equal to the period
during which the Lessee would have otherwise enjoyed under the terms hereof, but
minus any days of delay caused by the acts, changes or omissions of Lessee. See
also paragraphs ?? and 53 of the Addendum to Lease.

4.   RENT.

     4.1  BASE RENT. Lessee shall pay Base Rent and other rent or charges, as
the same may be adjusted from time to time, to Lessor in lawful money of the
United States, without offset or deduction, on or before the day on which it is
due under the terms of this Lease. Base Rent and all other rent and charges for
any period during the term hereof which is for less than one full month shall be
prorated based upon the actual number of days of the month involved. Payment of
Base Rent and other charges shall be made to Lessor at its address stated herein
or to such other persons or at such other addresses as Lessor may from time to
time designate in writing to Lessee.

     4.2  COMMON AREA OPERATING EXPENSES. Lessee shall pay to Lessor during the
term hereof, in addition to the Base Rent, Lessee's Share (as specified in
Paragraph 1.6(b)) of all Common Area Operating Expenses, as hereinafter defined,
during each calendar year of the term of this Lease, in accordance with the
following provisions:

          (a)  "COMMON AREA OPERATING EXPENSES" are defined, for purposes of
this Lease, as all costs incurred by Lessor relating to the ownership and
operation of the Industrial Center, including, but not limited to, the
following:

               (i)  The operation, repair and maintenance, in neat, clean,
good order and condition, of the following:

                    (aa) The Common Areas, including parking areas, loading and
unloading areas, trash areas, roadways, sidewalks, walkways, parkways,
driveways, landscaped areas, striping, bumpers, irrigation systems, Common Area
lighting facilities, fences and gates, elevators and roof.

                    (bb) Exterior signs and any tenant directories.

                    (cc) Fire detection and sprinkler systems.

               (ii) The cost of water, gas, electricity and telephone to service
the Common Areas.

               (iii) Trash disposal, property management and security services
and the costs of any environmental inspections.

               (iv)  Real Property Taxes (as defined in Paragraph 10.2) to be
paid by Lessor for the Building and the Common Areas under Paragraph 10 hereof.

               (v) The costs of the premiums for the insurance policies
maintained by Lessor under Paragraph 8 hereof.

               (vi) Any deductible portion of an insured loss concerning the
Building or the Common Areas.

               (vii) Any other services to be provided by Lessor that are
stated elsewhere in this Lease to be a Common Area Operating Expense.

          (b)  Any Common Area Operating Expenses and Real Property Taxes
that are specifically attributable to the Building or to any other building in
the Industrial Center or to the operation, repair and maintenance thereof, shall
be allocated entirely to the Building or to such other building. However, any
Common Area Operating Expenses and Real Property Taxes that are not specifically
attributable to the Building or to any other building or to the operation,
repair and maintenance thereof, shall be equitably allocated by Lessor to all
buildings in the Industrial Center.

               (c)  The inclusion of the improvements, facilities and services
set forth in Subparagraph 4.2(a) shall not be deemed to impose an obligation
upon Lessor to either have said improvements or facilities or to provide those
services unless the Industrial Center already has the same, Lessor already
provides the services, or Lessor has agreed elsewhere in this Lease to provide
the same or some of them.

               (d)  Lessee's Share of Common Area Operating Expenses shall be
payable by Lessee within ten (10) days after a reasonably detailed statement of
actual expenses is presented to Lessee by Lessor. At Lessor's option, however,
an amount may be estimated by Lessor from time to time of Lessee's Share of
annual Common Area Operating Expenses and the same shall be payable monthly or
quarterly, as Lessor shall designate, during each 12-month period of the Lease
term, on the same day as the Base Rent is due hereunder. Lessor shall deliver to
Lessee within sixty (60) days after the expiration of each calendar year a
reasonably detailed statement showing Lessee's Share of the actual Common Area
Operating Expenses incurred during the preceding year. If Lessee's payments
under this Paragraph 4.2(d) during said preceding year exceed Lessee's Share as
indicated on said statement, Lessee shall be credited the amount of such
overpayment against Lessee's Share of Common Area Operating Expenses next
becoming due. If Lessee's payments under this Paragraph 4.2(d) during said
preceding year were less than Lessee's Share as indicated on said statement,
Lessee shall pay to Lessor the amount of the deficiency within ten (10) days
after delivery by Lessor to Lessee of said statement.

               (e)  Lessee's Share of Common Area Operating Expenses is
established to be $0.20 per rentable square foot per $7,218.20 per month.
Lessor agrees that Common Area Operating Expenses which are controllable by
Lessor shall not exceed a ?//???
of greater than five percent (5%) per year, compounded. Controllable Common
Area Expenses are all costs and ??//?????
constituting Common Area Operating Expense, except as set forth in paragraph 54
of the Addendum excluding the following ??/?????
utilities, including services performed by governmental agencies such as trash
and rubbish collection; (ii) Real Property ???///???
Insurance premiums; (IV) service performed b y employees of Lessor who are
members of a union and who have a union ??//????
Lessor (Operating Engineers are the only employees now so included); (v)
services performed by independent contractors of Less?? ??//?????
independent contractors have union employees and a union contract (janitorial
contractors may meet this definition in the futu?? ??//????
costs or expenses required by Applicable Laws or added or Interpreted to apply
to the Building subsequent to the date of this ???????;
(vii) costs and expenses specifically permitted by this Lease.

     5.   SECURITY DEPOSIT. Lessee shall deposit with Lessor upon Lessee's
execution hereof the Security Deposit set forth in Paragraph 1.7 as security for
Lessee's faithful performance of Lessee's obligations under this Lease. If
Lessee fails to pay Base Rent or other rent or charges due hereunder, or
otherwise Defaults under this Lease (as defined in Paragraph 13.1), Lessor may
use, apply or retain all or any portion of said Security Deposit for the payment
of any amount due Lessor or to reimburse or compensate Lessor for any liability,
cost, expense, loss or damage (including attorneys' fees) which Lessor may
suffer or incur by reason thereof. If Lessor uses or applies all or any portion
of said Security Deposit, Lessee shall within ten (10) days after written
request therefore deposit monies with Lessor sufficient to restore said Security
Deposit to the full amount required by this Lease. Lessor shall, at the
expiration or earlier termination of the term hereof and after Lessee has
vacated the Premises, return to Lessee (or, at Lessor's option, to the last
assignee, if any, of Lessee's interest herein), that portion of the Security
Deposit not used or applied by Lessor. Unless otherwise expressly agreed in
writing by Lessor, no part of the Security Deposit shall be considered to be
held in trust, to bear interest or other increment for its use, or to be
prepayment for any monies to be paid by Lessee under this Lease.

6.   USE.

     6.1  PERMITTED USE.

          (a)  Lessee shall use and occupy the Premises only for the Permitted
Use set forth in Paragraph 1.8, or any other legal use which is reasonably


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comparable thereto, and for no other purpose. Lessee shall not use or permit the
use of the Premises in a manner that is unlawful, creates waste or a nuisance,
or that disturbs owners and/or occupants of, or causes damage to the Premises or
neighboring premises or properties.

          (b)  Lessor hereby agrees to not unreasonably withhold or delay its
consent to any written request by Lessee, Lessee's assignees or subtenants, and
by prospective assignees and subtenants of Lessee, its assignees and subtenants,
for a modification of said Permitted Use, so long as the same will not impair
the structural integrity of the improvements on the Premises or in the Building
or the mechanical or electrical systems therein, does not conflict with uses by
other lessees, is not significantly more burdensome to the Premises or the
Building and the improvements thereon, and is otherwise permissible pursuant to
this Paragraph 6. If Lessor elects to withhold such consent, Lessor shall within
five (5) business days after such request give a written notification of same,
which notice shall include an explanation of Lessor's reasonable objections to
the change in use.

     6.2  HAZARDOUS SUBSTANCES.

          (a)  REPORTABLE USES REQUIRE CONSENT. The term "HAZARDOUS SUBSTANCE"
as used in this Lease shall mean any product, substance, chemical, material or
waste whose presence, nature, quantity and/or intensity of existence, use,
manufacture, disposal, transportation, spill, release or effect, either by
itself or in combination with other materials expected to be on the Premises, is
either: (i) potentially injurious to the public health, safety or welfare, the
environment, or the Premises; (ii) regulated or monitored by any governmental
authority; or (iii) a basis for potential liability of Lessor to any
governmental agency or third party under any applicable statute or common law
theory. Hazardous Substance shall include, but not be limited to, hydrocarbons,
petroleum, gasoline, crude oil or any products or by-products thereof. Lessee
shall not engage in any activity in or about the Premises which constitutes a
Reportable Use (as hereinafter defined) of Hazardous Substances without the
express prior written consent of Lessor and compliance in a timely manner (at
Lessee's sole cost and expense) with all Applicable Requirements (as defined in
Paragraph 6.3). "REPORTABLE USE" shall mean (i) the installation or use of any
above or below ground storage tank, (ii) the generation, possession, storage,
use, transportation, or disposal of a Hazardous Substance that requires a permit
from, or with respect to which a report, notice, registration or business plan
is required to be filed with, any governmental authority, and (iii) the presence
in, on or about the Premises of a Hazardous Substance with respect to which any
Applicable Laws require that a notice be given to persons entering or occupying
the Premises or neighboring properties. Notwithstanding the foregoing, Lessee
may, without Lessor's prior consent, but in compliance with all Applicable
Requirements, use any ordinary and customary materials reasonably required to be
used by Lessee in the normal course of the Permitted Use, so long as such use is
not a Reportable Use and does not expose the Premises or neighboring properties
to any meaningful risk of contamination or damage or expose Lessor to any
liability therefor. In addition, Lessor may (but without any obligation to do
so) condition its consent to any Reportable Use of any Hazardous Substance by
Lessee upon Lessee's giving Lessor such additional assurances as Lessor, in its
reasonable discretion, deems necessary to protect itself, the public, the
Premises and the environment against damage, contamination or injury and/or
liability therefor, including but not limited to the installation (and, at
Lessor's option, removal on or before Lease expiration or earlier termination)
of reasonably necessary protective modifications to the Premises (such as
concrete encasements) and/or the deposit of an additional Security Deposit under
Paragraph 5 hereof.

          (b)  DUTY TO INFORM LESSOR. If Lessee knows, or has reasonable cause
to believe, that a Hazardous Substance has come to be located in, on, under or
about the Premises or the Building, other than as previously consented to by
Lessor, Lessee shall immediately give Lessor written notice thereof, together
with a copy of any statement, report, notice, registration, application, permit,
business plan, license, claim, action, or proceeding given to, or received from,
any governmental authority or private party concerning the presence, spill,
release, discharge of, or exposure to, such Hazardous Substance including but
not limited to all such documents as may be involved in any Reportable Use
involving the Premises. Lessee shall not cause or permit any Hazardous Substance
to be spilled or released in, on, under or about the Premises (including,
without limitation, through the plumbing or sanitary sewer system).

          (c)  INDEMNIFICATION. Lessee shall indemnify, protect, defend and hold
Lessor, its agents, employees, lenders and ground lessor, if any, and the
Premises, harmless from and against any and all damages, liabilities, judgments,
costs, claims, liens, expenses, penalties, loss of permits and attorneys' and
consultants' fees arising out of or involving any Hazardous Substance brought
onto the Premises by or for Lessee or by anyone under Lessee's control. Lessee's
obligations under this Paragraph 6.2(c) shall include, but not be limited to,
the effects of any contamination or injury to person, property or the
environment created or suffered by Lessee, and the cost of investigation
(including consultants' and attorneys' fees and testing), removal, remediation,
restoration and/or abatement thereof, or of any contamination therein involved,
and shall survive the expiration or earlier termination of this Lease. No
termination, cancellation or release agreement entered into by Lessor and Lessee
shall release Lessee from its obligations under this Lease with respect to
Hazardous Substances, unless specifically so agreed by Lessor in writing at the
time of such agreement.

     6.3  LESSEE'S COMPLIANCE WITH REQUIREMENTS. Lessee shall, at Lessee's sole
cost and expense, fully, diligently and in a timely manner, comply with all
"APPLICABLE REQUIREMENTS," which term is used in this Lease to mean all laws,
rules, regulations, ordinances, directives, covenants, easements and
restrictions of record, permits, the requirements of any applicable fire
insurance underwriter or rating bureau, and the recommendations of Lessor's
engineers and/or consultants, relating in any manner to the Premises (including
but not limited to matters pertaining to (i) industrial hygiene; (ii)
environmental conditions on, in, under or about the Premises, including soil and
groundwater conditions; and (iii) the use, generation, manufacture, production,
installation, maintenance, removal, transportation, storage, spill, or release
of any Hazardous Substance), now in effect or which may hereafter come into
effect. Lessee shall, within five (5) days after receipt of Lessor's written
request, provide Lessor with copies of all documents and information, including
but not limited to permits, registrations, manifests, applications, reports and
certificates, evidencing Lessee's compliance with any Applicable Requirements
specified by Lessor, and shall immediately upon receipt, notify Lessor in
writing (with copies of any documents involved) of any threatened or actual
claim, notice, citation, warning, complaint or report pertaining to or involving
failure by Lessee or the Premises to comply with any Applicable Requirements.

     6.4  INSPECTION; COMPLIANCE WITH LAW. Lessor, Lessor's agents, employees,
contractors and designated representatives, and the holders of any mortgages,
deeds of trust or ground leases on the Premises ("LENDERS") shall have the right
to enter the Premises at any time in the case of an emergency, except that in an
emergency, Lessor shall use its best efforts to provide reasonable notice, and
otherwise at reasonable times, with at least forty-eight (48) hours prior notice
to Lessee, for the purpose of inspecting the condition of the Premises and for
verifying compliance by Lessee with this Lease and all Applicable Requirements
(as defined in Paragraph 6.3), and Lessor shall be entitled to employ experts
and/or consultants in connection therewith to advise Lessor with respect to
Lessee's activities, including but not limited to Lessee's installation,
operation, use, monitoring, maintenance, or removal of any Hazardous Substance
on or from the Premises. The costs and expenses of any such inspections shall be
paid by the party requesting same, unless a Default or Breach of this Lease by
Lessee or a violation of Applicable Requirements or a contamination, caused or
materially contributed to by Lessee, is found to exist or to be imminent, or
unless the inspection is requested or ordered by a governmental authority as the
result of any such existing or imminent violation or contamination. In such
case, Lessee shall upon request reimburse Lessor or Lessor's Lender, as the case
may be, for the costs and expenses of such inspections. In the event of any
entry by Lessor onto the Premises pursuant to this paragraph 6.4, Lessor shall
use its best efforts not to interfere with Lessee's business operations.

7.   MAINTENANCE, REPAIRS, UTILITY INSTALLATIONS, TRADE FIXTURES AND
     ALTERATIONS.

     7.1  LESSEE'S OBLIGATIONS.

     (a)  Subject to the provisions of Paragraphs 2.2 (Condition), 2.3
(Compliance with Covenants, Restrictions and Building Code), 7.2 (Lessor's
Obligations), 9 (Damage or Destruction), and 14 (Condemnation), Lessee shall, at
Lessee's sole cost and expense and at all times, keep the Premises and every
part thereof in good order, condition and repair (whether or not such portion of
the Premises requiring repair, or the means of repairing the same, are
reasonably or readily accessible to Lessee, and whether or not the need for such
repairs occurs as a result of Lessee's use, any prior use, the elements or the
age of such portion of the Premises), including, without limiting the generality
of the foregoing, all equipment or facilities specifically serving the Premises,
such as plumbing, heating, air conditioning, ventilating, electrical, lighting
facilities, boilers, fired or unfired pressure vessels, fire hose connections if
within the Premises, fixtures, interior walls, interior surfaces of exterior
walls, ceilings, floors, windows, doors, plate glass, and skylights, but
excluding any items which are the responsibility of Lessor pursuant to Paragraph
7.2 below. Lessee, in keeping the Premises in good order, condition and repair,
shall exercise and perform good maintenance practices. Lessee's obligations
shall include restorations, replacements or renewals when necessary to keep the
Premises and all improvements thereon or a part thereof in good order, condition
and state of repair.

     (b)  Lessor shall, at Lessee's sole cost and expense, procure and maintain
a contract in customary form and substance for and with a contractor
specializing and experienced in the inspection, maintenance and service of the
heating, air conditioning and ventilation system for the Premises. However,
Lessee shall not be obligated for any heating, ventilation or air conditioning
system maintenance, repair, inspection service or contractor costs on the first
six (6) months of the Lease Term, unless the necessity therefore was caused by
the negligence or willful act of Lessee. Lessee shall contract for electrical
energy service directly from the electric utility provider and Lessee shall
perform its own Premises janitorial services. However


                                  Page 4 of 14
<PAGE>   5

     (c)  If Lessee fails to perform Lessee's obligations under this Paragraph
7.1, Lessor may enter upon the Premises after ten (10) days' prior written
notice to Lessee (except in the case of an emergency, in which case no notice
shall be required), perform such obligations on Lessee's behalf, and put the
Premises in good order, condition and repair, in accordance with Paragraph 13.2
below.

     7.2  LESSOR'S OBLIGATIONS. Subject to the provisions of Paragraphs 2.2
(Condition), 2.3 (Compliance with Covenants, Restrictions and Building Code),
4.2 (Common Area Operating Expenses), 6 (Use), 7.1 (Lessee's Obligations), 9
(Damage or Destruction) and 14 (Condemnation), Lessor, subject to reimbursement
pursuant to Paragraph 4.2, shall keep in good order, condition and repair the
foundations, exterior walls, structural condition of interior bearing walls,
exterior roof, fire sprinkler and/or standpipe and hose (if located in the
Common Areas) or other automatic fire extinguishing system including fire alarm
and/or smoke detection systems and equipment, fire hydrants, parking lots,
walkways, parkways, driveways, landscaping, fences, signs and utility systems
serving the Common Areas and all parts thereof, as well as providing the
services for which there is a Common Area Operating Expense pursuant to
Paragraph 4.2. Lessor shall not be obligated to paint the exterior or interior
surfaces of exterior walls nor shall Lessor be obligated to maintain, repair or
replace windows, doors or plate glass of the Premises. Lessee expressly waives
the benefit of any statute now or hereafter in effect which would otherwise
afford Lessee the right to terminate this Lease because of Lessor's failure to
keep the Building, Industrial Center or Common Areas in good order, condition
and repair. Notwithstanding the provisions of this paragraph 7.2, if Lessor
fails to commence any necessary maintenance or repair pursuant to this paragraph
within five (5) business days of Lessee's written request regarding same, Lessee
shall have the right to cause such repair or maintenance to be performed at
Lessor's expense, and to deduct the reasonable cost thereof, with interest
thereon at the highest rate permitted by law, from Lessee's Base Rent.

     7.3  UTILITY INSTALLATIONS, TRADE FIXTURES, ALTERATIONS.

     (a)  DEFINITIONS; CONSENT REQUIRED. The term "UTILITY INSTALLATIONS" is
used in this Lease to refer to all air lines, power panels, electrical
distribution, security, fire protection systems, communications systems,
lighting fixtures, heating, ventilating and air conditioning equipment,
plumbing, and fencing in, on or about the Premises. The term "TRADE FIXTURES"
shall mean Lessee's machinery and equipment which can be removed without doing
material damage to the Premises. The term "ALTERATIONS" shall mean any
modification of the improvements on the Premises which are provided by Lessor
under the terms of this Lease, other than Utility Installations or Trade
Fixtures. "LESSEE-OWNED ALTERATIONS AND/OR UTILITY INSTALLATIONS" are defined as
Alterations and/or Utility Installations made by Lessee that are not yet owned
by Lessor pursuant to Paragraph 7.4(a). Lessee shall not make nor cause to be
made any Alterations or Utility Installations in, on, under or about the
Premises without Lessor's prior written consent, unless (a) the cost of said
Alteration or Utility Installation does not exceed $5,000.00; and (b) said
Alteration or Utility Installation does not affect any structural or exterior
portions of the Building or Industrial Center, or adversely affect the Building
or Industrial Center's electrical, plumbing or HVAC systems. Lessee may make
non-structural Utility Installations to the interior of the Premises (excluding
the roof) without Lessor's consent but upon notice to Lessor, so long as they
are not visible from the outside of the Premises, do not involve puncturing,
relocating or removing the roof or any existing walls, or changing or
interfering with the fire sprinkler or fire detection systems and the cumulative
cost thereof during the term of this Lease as extended does not exceed
$2,500.00.

     (b) CONSENT. Any Alterations or Utility Installations that Lessee shall
desire to make and which require the consent of the Lessor, which consent shall
not be unreasonably withheld, shall be presented to Lessor in written form with
detailed plans. All consents given by Lessor, whether by virtue of Paragraph
7.3(a) or by subsequent specific consent, shall be deemed conditioned upon: (i)
Lessee's acquiring all applicable permits required by governmental authorities;
(ii) the furnishing of copies of such permits together with a copy of the plans
and specifications for the Alteration or Utility Installation to Lessor prior to
commencement of the work thereon; and (iii) the compliance by Lessee with all
conditions of said permits in a prompt and expeditious manner. Any Alterations
or Utility Installations by Lessee during the term of this Lease shall be done
in a good and workmanlike manner, with good and sufficient materials, and be in
compliance with all Applicable Requirements. Lessee shall promptly upon
completion thereof furnish Lessor with as-built plans and specifications
therefor. Lessor may (but without obligation to do so) condition its consent to
any requested Alteration or Utility Installation that costs $2,500.00 or more
upon Lessee's providing Lessor with a lien and completion bond in an amount
equal to one and one-half times the estimated cost of such Alteration or Utility
Installation.

     (c)  LIEN PROTECTION. Lessee shall pay when due all claims for labor or
materials furnished or alleged to have been furnished to or for Lessee at or for
use on the Premises, which claims are or may be secured by any mechanic's or
materialmen's lien against the Premises or any interest therein. Lessee shall
give Lessor not less than ten (10) days' notice prior to the commencement of any
work in, on, or about the Premises, and Lessor shall have the right to post
notices of non-responsibility in or on the Premises as provided by law. If
Lessee shall, in good faith, contest the validity of any such lien, claim or
demand, then Lessee shall, at its sole expense, defend and protect itself,
Lessor and the Premises against the same and shall pay and satisfy any such
adverse judgment that may be rendered thereon before the enforcement thereof
against the Lessor or the Premises. If Lessor shall require, Lessee shall
furnish to Lessor a surety bond satisfactory to Lessor, in an amount equal to
one and one-half times the amount of such contested lien claim or demand,
indemnifying Lessor against liability for the same, as required by law for the
holding of the Premises free from the effect of such lien or claim. In addition,
Lessor may require Lessee to pay Lessor's attorneys' fees and costs in
participating in such action if Lessor shall decide it is to its best interest
to do so.

     7.4  OWNERSHIP, REMOVAL, SURRENDER, AND RESTORATION.

     (a)  OWNERSHIP. Subject to Lessor's right to require their removal and to
cause Lessee to become the owner thereof as hereinafter provided in this
Paragraph 7.4, all Alterations and Utility Installations made to the Premises by
Lessee shall be the property of and owned by Lessee, but considered a part of
the Premises. Lessor may, at any time and at its option, elect in writing to
Lessee to be the owner of all or any specified part of the Lessee-Owned
Alterations and Utility Installations. Unless otherwise instructed per
Subparagraph 7.4(b) hereof, all Lessee-Owned Alterations and Utility
Installations shall, at the expiration or earlier termination of this Lease,
become the property of Lessor and remain upon the Premises and be surrendered
with the Premises by Lessee.

     (b)  REMOVAL. Unless otherwise agreed in writing, Lessor may require that
any or all Lessee-Owned Alterations or Utility Installations be removed by the
expiration or earlier termination of this Lease, notwithstanding that their
installation may have been consented to by Lessor. Lessor may require the
removal at any time of all or any part of any Alterations or Utility
Installations made without the required consent of Lessor.

     (c)  SURRENDER/RESTORATION. Lessee shall surrender the Premises by the end
of the last day of the Lease term or any earlier termination date, clean and
free of debris and in good operating order, condition and state of repair,
ordinary wear and tear excepted. Ordinary wear and tear shall not include any
damage or deterioration that would have been prevented by good maintenance
practice or by Lessee performing all of its obligations under this Lease. Except
as otherwise agreed or specified herein, the Premises, as surrendered, shall
include the Alterations and Utility Installations. The obligation of Lessee
shall include the repair of any damage occasioned by the installation,
maintenance or removal of Lessee's Trade Fixtures, furnishings, equipment, and
Lessee-Owned Alterations and Utility Installations, as well as the removal of
any storage tank installed by or for Lessee, and the removal, replacement, or
remediation of any soil, material or ground water contaminated by Lessee, all as
may then be required by Applicable Requirements and/or good practice. Lessee's
Trade Fixtures shall remain the property of Lessee and shall be removed by
Lessee subject to its obligation to repair and restore the Premises per this
Lease.

8.   INSURANCE; INDEMNITY.

     8.1  PAYMENT OF PREMIUMS. The cost of the premiums for the insurance
policies maintained by Lessor under this Paragraph 8 shall be a Common Area
Operating Expense pursuant to Paragraph 4.2 hereof. Premiums for policy periods
commencing prior to, or extending beyond, the term of this Lease shall be
prorated to coincide with the corresponding Commencement Date or Expiration
Date.

     8.2  LIABILITY INSURANCE.

     (a)  CARRIED BY LESSEE. Lessee shall obtain and keep in force during the
term of this Lease a Commercial General Liability policy of insurance protecting
Lessee, Lessor and any Lender(s) whose names have been provided to Lessee in
writing (as additional insureds) against claims for bodily injury, personal
injury and property damage based upon, involving or arising out of the
ownership, use, occupancy or maintenance of the Premises and all areas
appurtenant thereto. Such insurance shall be on an occurrence basis providing
single limit coverage in an amount not less than ???? $2,000,000 per occurrence
with an "Additional Insured-Managers or Lessors of Premises" endorsement and
contain the "Amendment of the Pollution Exclusion" endorsement for damage caused
by heat, smoke or fumes from a hostile fire. The policy shall not contain any
intra-insured exclusions as between insured persons or organizations, but shall
include coverage for liability assumed under this Lease as an "INSURED CONTRACT"
for the performance of Lessee's indemnity obligations under this Lease. The
limits of said insurance required by this Lease or as carried by Lessee shall
not, however, limit the liability of


                                  Page 5 of 14
<PAGE>   6

Lessee nor relieve Lessee of any obligation hereunder. All insurance to be
carried by Lessee shall be primary to and not contributory with any similar
insurance carried by Lessor, whose insurance shall be considered excess
insurance only.

     (b)  CARRIED BY LESSOR. Lessor shall also maintain liability insurance
described in Paragraph 8.2(a) above, in addition to and not in lieu of, the
insurance required to be maintained by Lessee. Lessee shall not be named as an
additional insured therein.

     8.3  PROPERTY INSURANCE -- BUILDING, IMPROVEMENTS AND RENTAL VALUE.

     (a)  BUILDING AND IMPROVEMENTS. Lessor shall obtain and keep in force
during the term of this Lease a policy or policies in the name of Lessor, with
loss payable to Lessor and to any Lender(s), insuring against loss or damage to
the Premises. Such insurance shall be for full replacement cost, as the same
shall exist from time to time, or the amount required by any Lender(s), but in
no event more than the commercially reasonable and available insurable value
thereof if, by reason of the unique nature or age of the improvements involved,
such latter amount is less than full replacement cost. Lessee-Owned Alterations
and Utility Installations, Trade Fixtures and Lessee's personal property shall
be insured by Lessee pursuant to Paragraph 8.4. If the coverage is available and
commercially appropriate, Lessor's policy or policies shall insure against all
risks of direct physical loss or damage (except the perils of flood and/or
earthquake unless required by a Lender), including coverage for any additional
costs resulting from debris removal and reasonable amounts of coverage for the
enforcement of any ordinance or law regulating the reconstruction or replacement
of any undamaged sections of the Building required to be demolished or removed
by reason of the enforcement of any building, zoning, safety or land use laws as
the result of a covered loss, but not including plate glass insurance. Said
policy or policies shall also contain an agreed valuation provision in lieu of
any co-insurance clause, waiver of subrogation, and inflation guard protection
causing an increase in the annual property insurance coverage amount by a factor
of not less than the adjusted U.S. Department of Labor Consumer Price Index for
All Urban Consumers for the city nearest to where the Premises are located.

     (b)  RENTAL VALUE. Lessor shall also obtain and keep in force during the
term of this Lease a policy or policies in the name of Lessor, with loss payable
to Lessor and any Lender(s), insuring the loss of the full rental and other
charges payable by all lessees of the Building to Lessor for one year (including
all Real Property Taxes, insurance costs, all Common Area Operating Expenses and
any scheduled rental increases). Said insurance may provide that in the event
the Lease is terminated by reason of an insured loss, the period of indemnity
for such coverage shall be extended beyond the date of the completion of repairs
or replacement of the Premises, to provide for one full year's loss of rental
revenues from the date of any such loss. Said insurance shall contain an agreed
valuation provision in lieu of any co-insurance clause, and the amount of
coverage shall be adjusted annually to reflect the projected rental income, Real
Property Taxes, insurance premium costs and other expenses, if any, otherwise
payable, for the next 12-month period. Common Area Operating Expenses shall
include any deductible amount in the event of such loss.

     (c)  ADJACENT PREMISES. Lessee shall pay for any increase in the premiums
for the property insurance of the Building and for the Common Areas or other
buildings in the Industrial Center if said increase is caused by Lessee's acts,
omissions, use or occupancy of the Premises.

     (d)  LESSEE'S IMPROVEMENTS. Since Lessor is the Insuring Party, Lessor
shall not be required to insure Lessee-Owned Alterations and Utility
Installations unless the item in question has become the property of Lessor
under the terms of this Lease.

     8.4  LESSEE'S PROPERTY INSURANCE. Subject to the requirements of Paragraph
8.5, Lessee at its cost shall either by separate policy or, at Lessor's option,
by endorsement to a policy already carried, maintain insurance coverage on all
of Lessee's personal property, Trade Fixtures and Lessee-Owned Alterations and
Utility Installations in, on, or about the Premises similar in coverage to that
carried by Lessor as the Insuring Party under Paragraph 8.3(a). Such insurance
shall be full replacement cost coverage with a deductible not to exceed $1,000
per occurrence. The proceeds from any such insurance shall be used by Lessee for
the replacement of personal property and the restoration of Trade Fixtures and
Lessee-Owned Alterations and Utility Installations. Upon request from Lessor,
Lessee shall provide Lessor with written evidence that such insurance is in
force.

     8.5  INSURANCE POLICIES. Insurance required hereunder shall be in companies
duly licensed to transact business in the state where the Premises are located,
and maintaining during the policy term a "General Policyholders Rating" of at
least B+, V, or such other rating as may be required by a Lender, as set forth
in the most current issue of "Best's Insurance Guide." Lessee shall not do or
permit to be done anything which shall invalidate the insurance policies
referred to in this Paragraph 8. Lessee shall cause to be delivered to Lessor,
within seven (7) days after the earlier of the Early Possession Date or the
Commencement Date, certified copies of, or certificates evidencing the existence
and amounts of, the insurance required under Paragraph 8.2(a) and 8.4. No such
policy shall be cancelable or subject to modification except after thirty (30)
days' prior written notice to Lessor. Lessee shall, at least thirty (30) days
prior to the expiration of such policies, furnish Lessor with evidence of
renewals or "insurance binders" evidencing renewal thereof, or Lessor may order
such insurance and charge the cost thereof to Lessee, which amount shall be
payable by Lessee to Lessor upon demand.

     8.6  WAIVER OF SUBROGATION. Without affecting any other rights or remedies,
Lessee and Lessor each hereby release and relieve the other, and waive their
entire right to recover damages (whether in contract or in tort) against the
other, for loss or damage to their property arising out of or incident to the
perils required to be insured against under Paragraph 8. The effect of such
releases and waivers of the right to recover damages shall not be limited by the
amount of insurance carried or required, or by any deductibles applicable
thereto. Lessor and Lessee agree to have their respective insurance companies
issuing property damage insurance waive any right to subrogation that such
companies may have against Lessor or Lessee, as the case may be, so long as the
insurance is not invalidated thereby.

     8.7  INDEMNITY.

     (a)  Except for Lessor's negligence and/or breach of express warranties,
Lessee shall indemnify, protect, defend and hold harmless the Premises, Lessor
and its agents, Lessor's master or ground lessor, partners and Lenders, from and
against any and all claims, loss of rents and/or damages, costs, liens,
judgments, penalties, loss of permits, attorneys' and consultants' fees,
expenses and/or liabilities arising out of, involving, or in connection with,
the occupancy of the Premises by Lessee, the conduct of Lessee's business, any
act, omission or neglect of Lessee, its agents, contractors, employees or
invitees, and out of any Default or Breach by Lessee in the performance in a
timely manner of any obligation on Lessee's part to be performed under this
Lease. The foregoing shall include, but not be limited to, the defense or
pursuit of any claim or any action or proceeding involved therein, and whether
or not (in the case of claims made against Lessor) litigated and/or reduced to
judgment. In case any action or proceeding be brought against Lessor by reason
of any of the foregoing matters, Lessee, upon notice from Lessor, shall defend
the same at Lessee's expense by counsel reasonably satisfactory to Lessor and
Lessor shall cooperate with Lessee in such defense. Lessor need not have first
paid any such claim in order to be so indemnified.

     (b)  Lessor shall protect, defend and hold harmless Lessee and Lessee's
employees, officers, agents, directors and shareholders, and their respective
successors and assigns, from and against any and all claims, demands, losses,
liabilities, damages, costs and expenses, including, without limitation,
attorneys and consultants' fees and the costs and expenses of defense arising
out of or resulting from (i) Lessor's or Lessor's Agents' breach of any covenant
representation or warranty under the Lease; and (ii) Lessor's or Lessor's
Agents' negligence or willful misconduct.

     8.8  EXEMPTION OF LESSOR FROM LIABILITY. Lessor shall not be liable for
injury or damage to the person or goods, wares, merchandise or other property of
Lessee, Lessee's employees, contractors, invitees, customers, or any other
person in or about the Premises, whether such damage or injury is caused by or
results from fire, steam, electricity, gas, water or rain, or from the breakage,
leakage, obstruction or other defects of pipes, fire sprinklers, wires,
appliances, plumbing, air conditioning or lighting fixtures, or from any other
cause, whether said injury or damage results from conditions arising upon the
Premises or upon other portions of the Building of which the Premises are a
part, from other sources or places, and regardless of whether the cause of such
damage or injury or the means of repairing the same is accessible or not. Lessor
shall not be liable for any damages arising from any act or neglect of any other
lessee of Lessor nor from the failure by Lessor to enforce the provisions of any
other lease in the Industrial Center. Notwithstanding Lessor's negligence or
breach of this Lease, Lessor shall under no circumstances be liable for injury
to Lessee's business or for any loss of income or profit therefrom.

9.   DAMAGE OR DESTRUCTION.

     9.1  DEFINITIONS.

          (a)  "PREMISES PARTIAL DAMAGE" shall mean damage or destruction to the
Premises, other than Lessee-Owned Alterations and Utility Installations, the
repair cost of which damage or destruction is less than fifty percent (50%) of
the then Replacement Cost (as defined in Paragraph 9.1(d)) of the Premises
(excluding Lessee-Owned Alterations and Utility Installations and Trade
Fixtures) immediately prior to such damage or destruction.

          (b)  "PREMISES TOTAL DESTRUCTION" shall mean damage or destruction to
the Premises, other than Lessee-Owned Alterations and Utility Installations, the
repair cost of which damage or destruction is fifty percent (50%) or more of the
then Replacement Cost of the Premises (excluding Lessee-Owned Alterations and
Utility Installations and Trade Fixtures) immediately prior to such damage or
destruction. In addition, damage or destruction to the Building, other than
Lessee-Owned Alterations and Utility Installations and Trade Fixtures of any
lessees of the Building, the cost of which damage or destruction is fifty
percent (50%) or more of the then Replacement Cost (excluding Lessee-Owned
Alterations and Utility Installations and Trade Fixtures of any lessees of the
Building) of the Building shall, at the option of Lessor, be deemed to be
Premises Total Destruction.

                                  Page 6 of 14
<PAGE>   7

          (c)  "INSURED LOSS" shall mean damage or destruction to the Premises,
other than Lessee-Owned Alterations and Utility Installations and Trade
Fixtures, which was caused by an event required to be covered by the insurance
described in Paragraph 8.3(a) irrespective of any deductible amounts or coverage
limits involved.

          (d)  "REPLACEMENT COST" shall mean the cost to repair or rebuild the
improvements owned by Lessor at the time of the occurrence to their condition
existing immediately prior thereto, including demolition, debris removal and
upgrading required by the operation of applicable building codes, ordinances or
laws, and without deduction for depreciation.

          (e)  "HAZARDOUS SUBSTANCE CONDITION" shall mean the occurrence or
discovery of a condition involving the presence of, or a contamination by, a
Hazardous Substance as defined in Paragraph 6.2(a), in, on, or under the
Premises.

     9.2  PREMISES PARTIAL DAMAGE -- INSURED LOSS. If Premises Partial Damage
that is an Insured Loss occurs, then Lessor shall, at Lessor's expense, repair
such damage (but not Lessee's Trade Fixtures or Lessee-Owned Alterations and
Utility Installations) as soon as reasonably possible and this Lease shall
continue in full force and effect. In the event, however, that there is a
shortage of insurance proceeds and such shortage is due to the fact that, by
reason of the unique nature of the improvements in the Premises, full
replacement cost insurance coverage was not commercially reasonable and
available, Lessor shall have no obligation to pay for the shortage in insurance
proceeds or to fully restore the unique aspects of the Premises unless Lessee
provides Lessor with the funds to cover same, or adequate assurance thereof,
within ten (10) days following receipt of written notice of such shortage and
request therefor. If Lessor receives said funds or adequate assurance thereof
within said ten (10) day period, Lessor shall complete them as soon as
reasonably possible and this Lease shall remain in full force and effect. If
Lessor does not receive such funds or assurance within said period, Lessor may
nevertheless elect by written notice to Lessee within ten (10) days thereafter
to make such restoration and repair as is commercially reasonable with Lessor
paying any shortage in proceeds, in which case this Lease shall remain in full
force and effect. If Lessor does not receive such funds or assurance within such
ten (10) day period, and if Lessor does not so elect to restore and repair, then
this Lease shall terminate sixty (60) days following the occurrence of the
damage or destruction. Unless otherwise agreed, Lessee shall in no event have
any right to reimbursement from Lessor for any funds contributed by Lessee to
repair any such damage or destruction. Premises Partial Damage due to flood or
earthquake shall be subject to Paragraph 9.3 rather than Paragraph 9.2,
notwithstanding that there may be some insurance coverage, but the net proceeds
of any such insurance shall be made available for the repairs if made by either
Party.

     9.3  PARTIAL DAMAGE -- UNINSURED LOSS. If Premises Partial Damage that is
not an Insured Loss occurs, unless caused by a negligent or willful act of
Lessee (in which event Lessee shall make the repairs at Lessee's expense and
this Lease shall continue in full force and effect), Lessor may, at Lessor's
option, either (i) repair such damage as soon as reasonably possible at Lessor's
expense, in which event this Lease shall continue in full force and effect, or
(ii) give written notice to Lessee within thirty (30) days after receipt by
Lessor of knowledge of the occurrence of such damage of Lessor's desire to
terminate this Lease as of the date sixty (60) days following the date of such
notice. In the event Lessor elects to give such notice of Lessor's intention to
terminate this Lease, Lessee shall have the right within ten (10) days after the
receipt of such notice to give written notice to Lessor of Lessee's commitment
to pay for the repair of such damage totally at Lessee's expense and without
reimbursement from Lessor. Lessee shall provide Lessor with the required funds
or satisfactory assurance thereof within thirty (30) days following such
commitment from Lessee. In such event this Lease shall continue in full force
and effect, and Lessor shall proceed to make such repairs as soon as reasonably
possible after the required funds are available. If Lessee does not give such
notice and provide the funds or assurance thereof within the times specified
above, this Lease shall terminate as of the date specified in Lessor's notice of
termination.

     9.4  TOTAL DESTRUCTION. Notwithstanding any other provision hereof, if
Premises Total Destruction occurs (including any destruction required by any
authorized public authority), this Lease shall terminate sixty (60) days
following the date of such Premises Total Destruction, whether or not the damage
or destruction is an Insured Loss or was caused by a negligent or willful act of
Lessee. In the event, however, that the damage or destruction was caused by
Lessee, Lessor shall have the right to recover Lessor's damages from Lessee
except as released and waived in Paragraph 8.6.

     9.5  DAMAGE NEAR END OF TERM. If at any time during the last six (6) months
of the term of this Lease there is damage for which the cost to repair exceeds
one month's Base Rent, whether or not an Insured Loss, Lessor may, at Lessor's
option, terminate this Lease effective sixty (60) days following the date of
occurrence of such damage by giving written notice to Lessee of Lessor's
election to do so within thirty (30) days after the date of occurrence of such
damage. Provided, however, if Lessee at that time has an exercisable option to
extend this Lease or to purchase the Premises, then Lessee may preserve this
Lease by (a) exercising such option, and (b) providing Lessor with any shortage
in insurance proceeds (or adequate assurance thereof) needed to make the repairs
on or before the earlier of (i) the date which is ten (10) days after Lessee's
receipt of Lessor's written notice purporting to terminate this Lease, or (ii)
the day prior to the date upon which such option expires. If Lessee duly
exercises such option during such period and provides Lessor with funds (or
adequate assurance thereof) to cover any shortage in insurance proceeds, Lessor
shall, at Lessor's expense, repair such damage as soon as reasonably possible
and this Lease shall continue in full force and effect. If Lessee fails to
exercise such option and provide such funds or assurance during such period,
then this Lease shall terminate as of the date set forth in the first sentence
of this Paragraph 9.5.

     9.6  ABATEMENT OF RENT; LESSEE'S REMEDIES.

          (a)  In the event of (i) Premises Partial Damage or (ii) Hazardous
Substance Condition for which Lessee is not legally responsible, the Base Rent,
Common Area Operating Expenses and other charges, if any, payable by Lessee
hereunder for the period during which such damage or condition, its repair,
remediation or restoration continues, shall be abated in proportion to the
degree to which Lessee's use of the Premises is impaired. Except for abatement
of Base Rent, Common Area Operating Expenses and other charges, if any, as
aforesaid, all other obligations of Lessee hereunder shall be performed by
Lessee, and Lessee shall have no claim against Lessor for any damage suffered by
reason of any such damage, destruction, repair, remediation or restoration.

          (b)  If Lessor shall be obligated to repair or restore the Premises
under the provisions of this Paragraph 9 and shall not commence, in a
substantial and meaningful way, the repair or restoration of the Premises within
ninety (90) days after such obligation shall accrue, Lessee may, at any time
prior to the commencement of such repair or restoration, give written notice to
Lessor and to any Lenders of which Lessee has actual notice of Lessee's election
to terminate this Lease on a date not less than sixty (60) days following the
giving of such notice. If Lessee gives such notice to Lessor and such Lenders
and such repair or restoration is not commenced within thirty (30) days after
receipt of such notice, this Lease shall terminate as of the date specified in
said notice. If Lessor or a Lender commences the repair or restoration of the
Premises within thirty (30) days after the receipt of such notice, this Lease
shall continue in full force and effect. "COMMENCE" as used in this Paragraph
9.6 shall mean either the unconditional authorization of the preparation of the
required plans, or the beginning of the actual work on the Premises, whichever
occurs first.

     9.7  HAZARDOUS SUBSTANCE CONDITIONS. If a Hazardous Substance Condition
occurs, unless Lessee is legally responsible therefor (in which case Lessee
shall make the investigation and remediation thereof required by Applicable
Requirements and this Lease shall continue in full force and effect, but subject
to Lessor's rights under Paragraph 6.2(c) and Paragraph 13), Lessor may, at
Lessor's option, either (i) investigate and remediate such Hazardous Substance
Condition, if required, as soon as reasonably possible at Lessor's expense, in
which event this Lease shall continue in full force and effect, or (ii) if the
estimated cost to investigate and remediate such condition exceeds twelve (12)
times the then monthly Base Rent or $100,000, whichever is greater, give written
notice to Lessee within thirty (30) days after receipt by Lessor of knowledge of
the occurrence of such Hazardous Substance Condition of Lessor's desire to
terminate this Lease as of the date sixty (60) days following the date of such
notice. In the event Lessor elects to give such notice of Lessor's intention to
terminate this Lease, Lessee shall have the right within ten (10) days after the
receipt of such notice to give written notice to Lessor of Lessee's commitment
to pay for the excess costs of (a) investigation and remediation of such
Hazardous Substance Condition to the extent required by Applicable Requirements,
over (b) an amount equal to twelve (12) times the then monthly Base Rent or
$100,000, whichever is greater. Lessee shall provide Lessor with the funds
required of Lessee or satisfactory assurance thereof within thirty (30) days
following said commitment by Lessee. In such event this Lease shall continue in
full force and effect, and Lessor shall proceed to make such investigation and
remediation as soon as reasonably possible after the required funds are
available. If Lessee does not give such notice and provide the required funds or
assurance thereof within the time period specified above, this Lease shall
terminate as of the date specified in Lessor's notice of termination.

     9.8  TERMINATION -- ADVANCE PAYMENTS. Upon termination of this Lease
pursuant to this Paragraph 9, Lessor shall return to Lessee any advance payment
made by Lessee to Lessor and so much of Lessee's Security Deposit as has not
been, or is not then required to be, used by Lessor under the terms of this
Lease.

     9.9  WAIVER OF STATUTES. Lessor and Lessee agree that the terms of this
Lease shall govern the effect of any damage to or destruction of the Premises
and the Building with respect to the termination of this Lease and hereby waive
the provisions of any present or future statute to the extent it is inconsistent
herewith.

10.  REAL PROPERTY TAXES.

                                  Page 7 of 14
<PAGE>   8

     10.1 PAYMENT OF TAXES. Lessor shall pay the Real Property Taxes, as defined
in Paragraph 10.2, applicable to the Industrial Center, and except as otherwise
provided in Paragraph 10.3, any such amounts shall be included in the
calculation of Common Area Operating Expenses in accordance with the provisions
of Paragraph 4.2.

     10.2 REAL PROPERTY TAX DEFINITION. As used herein, the term "REAL PROPERTY
TAXES" shall include any form of real estate tax or assessment, general,
special, ordinary or extraordinary, and any license fee, commercial rental tax,
improvement bond or bonds, levy or tax (other than inheritance, personal income
or estate taxes) imposed upon the Industrial Center by any authority having the
direct or indirect power to tax, including any city, state or federal
government, or any school, agricultural, sanitary, fire, street, drainage, or
other improvement district thereof, levied against any legal or equitable
interest of Lessor in the Industrial Center or any portion thereof, Lessor's
right to rent or other income therefrom, and/or Lessor's business of leasing the
Premises. The term "REAL PROPERTY TAXES" shall also include any tax, fee, levy,
assessment or charge, or any increase therein, imposed by reason of events
occurring, or changes in Applicable Law taking effect, during the term of this
Lease, including but not limited to a change in the ownership of the
Industrial Center or in the improvements thereon, the execution of this Lease,
or any modification, amendment or transfer thereof, and whether or not
contemplated by the Parties. In calculating Real Property Taxes for any calendar
year, the Real Property Taxes for any real estate tax year shall be included in
the calculation of Real Property Taxes for such calendar year based upon the
number of days which such calendar year and tax year have in common.

     10.3 ADDITIONAL IMPROVEMENTS. Common Area Operating Expenses shall not
include Real Property Taxes specified in the tax assessor's records and work
sheets as being caused by additional improvements placed upon the Industrial
Center by other lessees or by Lessor for the exclusive enjoyment of such other
lessees. Notwithstanding Paragraph 10.1 hereof, Lessee shall, however, pay to
Lessor at the time Common Area Operating Expenses are payable under Paragraph
4.2, the entirety of any increase in Real Property Taxes if assessed solely by
reason of Alterations, Trade Fixtures or Utility Installations placed upon the
Premises by Lessee or at Lessee's request.

     10.4 JOINT ASSESSMENT. If the Building is not separately assessed, Real
Property Taxes allocated to the Building shall be an equitable proportion of the
Real Property Taxes for all of the land and improvements included within the tax
parcel assessed, such proportion to be determined by Lessor from the respective
valuations assigned in the assessor's work sheets or such other information as
may be reasonably available. Lessor's reasonable determination thereof, in good
faith, shall be conclusive.

     10.5 LESSEE'S PROPERTY TAXES. Lessee shall pay prior to delinquency all
taxes assessed against and levied upon Lessee-Owned Alterations and Utility
Installations, Trade Fixtures, furnishings, equipment and all personal property
of Lessee contained in the Premises or stored within the Industrial Center. When
possible, Lessee shall cause its Lessee-Owned Alterations and Utility
Installations, Trade Fixtures, furnishings, equipment and all other personal
property to be assessed and billed separately from the real property of Lessor.
If any of Lessee's said property shall be assessed with Lessor's real property,
Lessee shall pay Lessor the taxes attributable to Lessee's property within ten
(10) days after receipt of a written statement setting forth the taxes
applicable to Lessee's property.

11.  UTILITIES. Lessee shall pay directly for all utilities and services
supplied to the Premises, including, but not limited to, electricity, telephone,
security, gas and cleaning of the Premises, together with any taxes thereon. If
any such utilities or services are not separately metered to the Premises or
separately billed to the Premises, Lessee shall pay to Lessor a reasonable
proportion to be determined by Lessor of all such charges jointly metered or
billed with other premises in the Building, in the manner and within the time
periods set forth in Paragraph 4.2(d).

12.  ASSIGNMENT AND SUBLETTING.

     12.1 LESSOR'S CONSENT REQUIRED.

          (a)  Lessee shall not voluntarily or by operation of law assign,
transfer, mortgage or otherwise transfer or encumber (collectively, "assign") or
sublet all or any part of Lessee's interest in this Lease or in the Premises
without Lessor's prior written consent given under and subject to the terms of
Paragraph 36.

          (d)  An assignment or subletting of Lessee's interest in this Lease
without Lessor's specific prior written consent shall, at Lessor's option, be a
Default curable after notice per Paragraph 13.1, unless such assignment or
subletting is permitted pursuant to paragraph 63 of the Addendum.

          (e)  Lessee's remedy for any breach of this Paragraph 12.1 by Lessor
shall be limited to compensatory damages and/or injunctive relief.

     12.2 TERMS AND CONDITIONS APPLICABLE TO ASSIGNMENT AND SUBLETTING.

          (a)  Regardless of Lessor's consent, any assignment or subletting
shall not (i) be effective without the express written assumption by such
assignee or sublessee of the obligations of Lessee under this Lease, (ii)
release Lessee of any obligations hereunder, nor (iii) alter the primary
liability of Lessee for the payment of Base Rent and other sums due Lessor
hereunder or for the performance of any other obligations to be performed by
Lessee under this Lease.

          (b)  Lessor may accept any rent or performance of Lessee's obligations
from any person other than Lessee pending approval or disapproval of an
assignment. Neither a delay in the approval or disapproval of such assignment
nor the acceptance of any rent for performance shall constitute a waiver or
estoppel of Lessor's right to exercise its remedies for the Default or Breach by
Lessee of any of the terms, covenants or conditions of this Lease.

          (c)  The consent of Lessor to any assignment or subletting shall not
constitute a consent to any subsequent assignment or subletting by Lessee or to
any subsequent or successive assignment or subletting by the assignee or
sublessee. However, Lessor may consent to subsequent sublettings and assignments
of the sublease or any amendments or modifications thereto without notifying
Lessee or anyone else liable under this Lease or the sublease and without
obtaining their consent, and such action shall not relieve such persons from
liability under this Lease or the sublease.

          (d)  In the event of any Default or Breach of Lessee's obligation
under this Lease, Lessor may proceed directly against Lessee, any Guarantors or
anyone else responsible for the performance of the Lessee's obligations under
this Lease, including any sublessee, without first exhausting Lessor's remedies
against any other person or entity responsible therefor to Lessor, or any
security held by Lessor.

          (e)  Each request for consent to an assignment or subletting shall be
in writing, accompanied by information relevant to Lessor's determination as to
the financial and operational responsibility and appropriateness of the proposed
assignee or sublessee, including but not limited to the intended use and/or
required modification of the Premises, if any, and after the first sublease or
assignment, together with a non-refundable deposit of $1,000 as reasonable
consideration for Lessor's considering and processing the request for consent.
Lessee agrees to provide Lessor with such other or additional information and/or
documentation as may be reasonably requested by Lessor.

          (f)  Any assignee of, or sublessee under, this Lease shall, by reason
of accepting such assignment or entering into such sublease, be deemed,


                                  Page 8 of 14
<PAGE>   9

for the benefit of Lessor, to have assumed and agreed to conform and comply with
each and every term, covenant, condition and obligation herein to be observed or
performed by Lessee during the term of said assignment or sublease, other than
such obligations as are contrary to or inconsistent with provisions of an
assignment or sublease to which Lessor has specifically consented in writing.

     12.3 ADDITIONAL TERMS AND CONDITIONS APPLICABLE TO SUBLETTING. The
following terms and conditions shall apply to any subletting by Lessee of all or
any part of the Premises and shall be deemed included in all subleases under
this Lease whether or not expressly incorporated therein:

          (a)  Lessee hereby assigns and transfers to Lessor all of Lessee's
interest in all rentals and income arising from any sublease of all or a portion
of the Premises heretofore or hereafter made by Lessee, and Lessor may collect
such rent and income and apply same toward Lessee's obligations under this
Lease; provided, however, that until a Breach (as defined in Paragraph 13.1)
shall occur in the performance of Lessee's obligations under this Lease, Lessee
may, except as otherwise provided in this Lease, receive, collect and enjoy the
rents accruing under such sublease. Lessor shall not, by reason of the foregoing
provision or any other assignment of such sublease to Lessor, nor by reason of
the collection of the rents from a sublessee, be deemed liable to the sublessee
for any failure of Lessee to perform and comply with any of Lessee's obligations
to such sublessee under such Sublease. Lessee hereby irrevocably authorizes and
directs any such sublessee, upon receipt of a written notice from Lessor stating
that a Breach exists in the performance of Lessee's obligations under this
Lease, to pay to Lessor the rents and other charges due and to become due under
the sublease. Sublessee shall rely upon any such statement and request from
Lessor and shall pay such rents and other charges to Lessor without any
obligation or right to inquire as to whether such Breach exists and
notwithstanding any notice from or claim from Lessee to the contrary. Lessee
shall have no right or claim against such sublessee, or, until the Breach has
been cured, against Lessor, for any such rents and other charges so paid by said
sublessee to Lessor.

          (b)  In the event of a Breach by Lessee in the performance of its
obligations under this Lease, Lessor, at its option and without any obligation
to do so, may require any sublessee to attorn to Lessor, in which event Lessor
shall undertake the obligations of the sublessor under such sublease from the
time of the exercise of said option to the expiration of such sublease;
provided, however, Lessor shall not be liable for any prepaid rents or security
deposit paid by such sublessee to such sublessor or for any other prior defaults
or breaches of such sublessor under such sublease.

          (c)  Any matter or thing requiring the consent of the sublessor under
a sublease shall also require the consent of Lessor herein.

          (d)  No sublessee under a sublease approved by Lessor shall further
assign or sublet all or any part of the Premises without Lessor's prior written
consent.

          (e)  Lessor shall deliver a copy of any notice of Default or Breach by
Lessee to the sublessee, who shall have the right to cure the Default of Lessee
within the grace period, if any, specified in such notice. The sublessee shall
have a right of reimbursement and offset from and against Lessee for any such
Defaults cured by the sublessee.

13.  DEFAULT; BREACH; REMEDIES.

     13.1 DEFAULT; BREACH. Lessor and Lessee agree that if an attorney is
consulted by Lessor in connection with a Lessee Default or Breach (as
hereinafter defined), $350.00 is a reasonable minimum sum per such occurrence
for legal services and costs in the preparation and service of a notice of
Default, and that Lessor may include the cost of such services and costs in said
notice as rent due and payable to cure said default. A "DEFAULT" by Lessee is
defined as a failure by Lessee to observe, comply with or perform any of the
terms, covenants, conditions or rules applicable to Lessee under this Lease. A
"BREACH" by Lessee is defined as the occurrence of any one or more of the
following Defaults, and, where a grace period for cure after notice is specified
herein, the failure by Lessee to cure such Default prior to the expiration of
the applicable grace period, and shall entitle Lessor to pursue the remedies set
forth in Paragraphs 13.2 and/or 13.3:

          (a)  The vacating of the Premises without the intention to reoccupy
same, or the abandonment of the Premises.

          (b)  Except as expressly otherwise provided in this Lease, the failure
by Lessee to make any payment of Base Rent, Lessee's Share of Common Area
Operating Expenses, or any other monetary payment required to be made by Lessee
hereunder as and when due, the failure by Lessee to provide Lessor with
reasonable evidence of insurance or surety bond required under this Lease, or
the failure of Lessee to fulfill any obligation under this Lease which endangers
or threatens life or property, where such failure continues for a period of
three (3) days following written notice thereof by or on behalf of Lessor to
Lessee.

          (c)  Except as expressly otherwise provided in this Lease, the failure
by Lessee to provide Lessor with reasonable written evidence (in duly executed
original form, if applicable) of (i) compliance with Applicable Requirements per
Paragraph 6.3, (ii) the inspection, maintenance and service contracts required
under Paragraph 7.1(b), (iii) the rescission of an unauthorized assignment or
subletting per Paragraph 12.1, (iv) a Tenancy Statement per Paragraphs 16 or 37,
(v) the subordination or non-subordination of this Lease per Paragraph 30, (vi)
the guaranty of the performance of Lessee's obligations under this Lease if
required under Paragraphs 1.11 and 37, (vii) the execution of any document
requested under Paragraph 42 (easements), or (viii) any other documentation or
information which Lessor may reasonably require of Lessee under the terms of
this Lease, where any such failure continues for a period of ten (10) days
following written notice by or on behalf of Lessor to Lessee.

          (d)  A Default by Lessee as to the terms, covenants, conditions or
provisions of this Lease, or of the rules adopted under Paragraph 40 hereof that
are to be observed, complied with or performed by Lessee, other than those
described in Subparagraphs 13.1(a), (b) or (c), above, where such Default
continues for a period of thirty (30) days after written notice thereof by or on
behalf of Lessor to Lessee; provided, however, that if the nature of Lessee's
Default is such that more than thirty (30) days are reasonably required for its
cure, then it shall not be deemed to be a Breach of this Lease by Lessee if
Lessee commences such cure within said thirty (30) day period and thereafter
diligently prosecutes such cure to completion.

          (e)  The occurrence of any of the following events: (i) the making by
Lessee of any general arrangement or assignment for the benefit of creditors;
(ii) Lessee's becoming a "debtor" as defined in 11 U.S. Code Section 101 or any
successor statute thereto (unless, in the case of a petition filed against
Lessee, the same is dismissed within sixty (60) days); (iii) the appointment of
a trustee or receiver to take possession of substantially all of Lessee's assets
located at the Premises or of Lessee's interest in this Lease, where possession
is not restored to Lessee within thirty (30) days; or (iv) the attachment,
execution or other judicial seizure of substantially all of Lessee's assets
located at the Premises or of Lessee's interest in this Lease, where such
seizure is not discharged within thirty (30) days; provided, however, in the
event that any provision of this Subparagraph 13.1(e) is contrary to any
applicable law, such provision shall be of no force or effect, and shall not
affect the validity of the remaining provisions.

          (f)  The discovery by Lessor that any financial statement of Lessee or
of any Guarantor, given to Lessor by Lessee or any Guarantor, was materially
false.

          (g)  If the performance of Lessee's obligations under this Lease is
guaranteed: (i) the death of a Guarantor, (ii) the termination of a Guarantor's
liability with respect to this Lease other than in accordance with the terms of
such guaranty, (iii) a Guarantor's becoming insolvent or the subject of a
bankruptcy filing, (iv) a Guarantor's refusal to honor the guaranty, or (v) a
Guarantor's breach of its guaranty obligation on an anticipatory breach basis,
and Lessee's failure, within sixty (60) days following written notice by or on
behalf of Lessor to Lessee of any such event, to provide Lessor with written
alternative assurances of security, which, when coupled with the then existing
resources of Lessee, equals or exceeds the combined financial resources of
Lessee and the Guarantors that existed at the time of execution of this Lease.

     13.2 REMEDIES. If Lessee fails to perform any affirmative duty or
obligation of Lessee under this Lease, within ten (10) days after written notice
to Lessee (or in case of an emergency in Lessor's reasonable discretion),
without notice (except that in an emergency Lessor shall use its best efforts to
provide reasonable notice), Lessor may at its option (but without obligation to
do so), perform such duty or obligation on Lessee's behalf, including, but not
limited to, the obtaining of reasonably required bonds, insurance policies, or
governmental licenses, permits or approvals. The costs and expenses of any such
performance by Lessor shall be due and payable by Lessee to Lessor upon invoice
therefor. If any check given to Lessor by Lessee shall not be honored by the
bank upon which it is drawn, Lessor, at its own option, may require all future
payments to be made under this Lease by Lessee to be made only by cashier's
check. In the event of a Breach of this Lease by Lessee (as defined in Paragraph
13.1), with or without further notice or demand, and without limiting Lessor in
the exercise of any right or remedy which Lessor may have by reason of such
Breach, Lessor may:

          (a)  Terminate Lessee's right to possession of the Premises by any
lawful means, in which case this Lease and the term hereof shall terminate and
Lessee shall immediately surrender possession of the Premises to Lessor. In such
event Lessor shall be entitled to recover from Lessee: (i) the worth at the time
of the 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

                                  Page 9 of 14
<PAGE>   10

unpaid rent which would have been earned after termination until the time of
award exceeds the amount of such rental loss that the Lessee proves could have
been reasonably avoided; (iii) the worth at the time of award of the amount by
which the unpaid rent for the balance of the term after the time of award
exceeds the amount of such rental loss that the Lessee proves could be
reasonably avoided; and (iv) any other amount necessary to compensate Lessor for
all the detriment proximately caused by the Lessee's failure to perform its
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom, including, but not limited to, the cost of
recovering possession of the Premises, expenses of reletting, including
necessary renovation and alteration of the Premises, reasonable attorneys' fees,
and that portion of any leasing commission paid by Lessor in connection with
this Lease applicable to the unexpired term of this Lease. The worth at the time
of award of the amount referred to in provision (iii) of the immediately
preceding sentence shall be computed by discounting such amount at the discount
rate of the Federal Reserve Bank of San Francisco or the Federal Reserve Bank
District in which the Premises are located at the time of award plus one percent
(1%). Efforts by Lessor to mitigate damages caused by Lessee's Default or Breach
of this Lease shall not waive Lessor's right to recover damages under this
Paragraph 13.2. If termination of this Lease is obtained through the provisional
remedy of unlawful detainer, Lessor shall have the right to recover in such
proceeding the unpaid rent and damages as are recoverable therein, or Lessor may
reserve the right to recover all or any part thereof in a separate suit for such
rent and/or damages. If a notice and grace period required under Subparagraphs
13.1(b), (c) or (d) was not previously given, a notice to pay rent or quit, or
to perform or quit, as the case may be, given to Lessee under any statute
authorizing the forfeiture of leases for unlawful detainer shall also constitute
the applicable notice for grace period purposes required by Subparagraph
13.1(b), (c) or (d). In such case, the applicable grace period under the
unlawful detainer statute shall run concurrently after the one such statutory
notice, and the failure of Lessee to cure the Default within the greater of the
two (2) such grace periods shall constitute both an unlawful detainer and a
Breach of this Lease entitling Lessor to the remedies provided for in this Lease
and/or by said statute.

          (b)  Continue the Lease and Lessee's right to possession in effect (in
California under California Civil Code Section 1951.4) after Lessee's Breach and
recover the rent as it becomes due, provided Lessee has the right to sublet or
assign, subject only to reasonable limitations. Lessor and Lessee agree that the
limitations on assignment and subletting in this Lease are reasonable. Acts of
maintenance or preservation, efforts to relet the Premises, or the appointment
of a receiver to protect the Lessor's interest under this Lease, shall not
constitute a termination of the Lessee's right to possession.

          (c)  Pursue any other remedy now or hereafter available to Lessor
under the laws or judicial decisions of the state wherein the Premises are
located.

          (d)  The expiration or termination of this Lease and/or the
termination of Lessee's right to possession shall not relieve Lessee from
liability under any indemnity provisions of this Lease as to matters occurring
or accruing during the term hereof or by reason of Lessee's occupancy of the
Premises.

     13.3 INDUCEMENT RECAPTURE IN EVENT OF BREACH. Any agreement by Lessor for
free or abated rent or other charges applicable to the Premises, or for the
giving or paying by Lessor to or for Lessee of any cash or other bonus,
inducement or consideration for Lessee's entering into this Lease, all of which
concessions are hereinafter referred to as "INDUCEMENT PROVISIONS" shall be
deemed conditioned upon Lessee's full and faithful performance of all of the
terms, covenants and conditions of this Lease to be performed or observed by
Lessee during the term hereof as the same may be extended. Upon the occurrence
of a Breach (as defined in Paragraph 13.1) of this Lease by Lessee, any such
Inducement Provision shall automatically be deemed deleted from this Lease and
of no further force or effect, and any rent, other charge, bonus, inducement or
consideration theretofore abated, given or paid by Lessor under such an
Inducement Provision shall be immediately due and payable by Lessee to Lessor,
and recoverable by Lessor, as additional rent due under this Lease,
notwithstanding any subsequent cure of said Breach by Lessee. The acceptance by
Lessor of rent or the cure of the Breach which initiated the operation of this
Paragraph 13.3 shall not be deemed a waiver by Lessor of the provisions of this
Paragraph 13.3 unless specifically so stated in writing by Lessor at the time of
such acceptance.

     13.4 LATE CHARGES. Lessee hereby acknowledges that late payment by Lessee
to Lessor of rent and other sums due hereunder will cause Lessor to incur costs
not contemplated by this Lease, the exact amount of which will be extremely
difficult to ascertain. Such costs include, but are not limited to, processing
and accounting charges, and late charges which may be imposed upon Lessor by the
terms of any ground lease, mortgage or deed of trust covering the Premises.
Accordingly, if any installment of rent or other sum due from Lessee shall not
be received by Lessor or Lessor's designee within ten (10) days after such
amount shall be due, then, without any requirement for notice to Lessee, Lessee
shall pay to Lessor a late charge equal to six percent (6%) of such overdue
amount. The Parties hereby agree that such late charge represents a fair and
reasonable estimate of the costs Lessor will incur by reason of late payment by
Lessee. Acceptance of such late charge by Lessor shall in no event constitute a
waiver of Lessee's Default or Breach with respect to such overdue amount, nor
prevent Lessor from exercising any of the other rights and remedies granted
hereunder. In the event that a late charge is payable hereunder, whether or not
collected, for three (3) consecutive installments of Base Rent, then
notwithstanding Paragraph 4.1 or any other provision of this Lease to the
contrary, Base Rent shall, at Lessor's option, become due and payable quarterly
in advance.

     13.5 BREACH BY LESSOR. Lessor shall not be deemed in breach of this Lease
unless Lessor fails within a reasonable time to perform an obligation required
to be performed by Lessor. For purposes of this Paragraph 13.5, a reasonable
time shall in no event be less than thirty (30) days after receipt by Lessor,
and by any Lender(s) whose name and address shall have been furnished to Lessee
in writing for such purpose, of written notice specifying wherein such
obligation of Lessor has not been performed; provided, however, that if the
nature of Lessor's obligation is such that more than thirty (30) days after such
notice are reasonably required for its performance, then Lessor shall not be in
breach of this Lease if performance is commenced within such thirty (30) day
period and thereafter diligently pursued to completion.

14.  CONDEMNATION. If the Premises or any portion thereof are taken under the
power of eminent domain or sold under the threat of the exercise of said power
(all of which are herein called "condemnation"), this Lease shall terminate as
to the part so taken as of the date the condemning authority takes title or
possession, whichever first occurs. If more than ten percent (10%) of the floor
area of the Premises, or more than twenty-five percent (25%) of the portion of
the Common Areas designated for Lessee's parking, is taken by condemnation,
Lessee may, at Lessee's option, to be exercised in writing within ten (10) days
after Lessor shall have given Lessee written notice of such taking (or in the
absence of such notice, within ten (10) days after the condemning authority
shall have taken possession) terminate this Lease as of the date the condemning
authority takes such possession. If Lessee does not terminate this Lease in
accordance with the foregoing, this Lease shall remain in full force and effect
as to the portion of the Premises remaining, except that the Base Rent shall be
reduced in the same proportion as the rentable floor area of the Premises taken
bears to the total rentable floor area of the Premises. No reduction of Base
Rent shall occur if the condemnation does not apply to any portion of the
Premises. Any award for the taking of all or any part of the Premises under the
power of eminent domain or any payment made under threat of the exercise of such
power shall be the property of Lessor, whether such award shall be made as
compensation for diminution of value of the leasehold or for the taking of the
fee, or as severance damages; provided, however, that Lessee shall be
entitled to any compensation, separately awarded to Lessee for Lessee's
relocation expenses and/or loss of Lessee's Trade Fixtures. In the event that
this Lease is not terminated by reason of such condemnation, Lessor shall to the
extent of its net severance damages received, over and above Lessee's share of
the legal and other expenses incurred by Lessor in the condemnation matter,
repair any damage to the Premises caused by such condemnation authority. Lessee
shall be responsible for the payment of any amount in excess of such net
severance damages required to complete such repair.

15.  BROKERS' FEES

     15.1 PROCURING CAUSE. The Broker(s) named in Paragraph 1.10 is/are the
procuring cause of this Lease.

     15.3 ASSUMPTION OF OBLIGATIONS. Any buyer or transferee of Lessor's
interest in this Lease, whether such transfer is by agreement or by operation of
law, shall be deemed to have assumed Lessor's obligation under this Paragraph
15. Each Broker shall be an intended third party beneficiary of the provisions
of Paragraph 1.10 and of this Paragraph 15 to the extent of its interest in any
commission arising from this Lease and may enforce that right directly against
Lessor and its successors.

     15.4 REPRESENTATIONS AND WARRANTIES. Lessee and Lessor each represent and
warrant to the other that it has had no dealings with any person, firm, broker
or finder other than as named in Paragraph 1.10(a) in connection with the
negotiation of this Lease and/or the consummation of the transaction
contemplated hereby, and that no broker or other person, firm or entity other
than said named Broker(s) is entitled to any commission or finder's fee in
connection with said transaction. Lessee and Lessor do each hereby agree to
indemnify, protect, defend and hold the other harmless from and against
liability for compensation or charges which may be claimed by any such unnamed
broker, finder or other similar party by reason of any dealings or actions of
the indemnifying Party, including any costs, expenses, and/or attorneys' fees
reasonably incurred with respect thereto.

                                 Page 10 of 14
<PAGE>   11

16.  TENANCY AND FINANCIAL STATEMENTS.

     16.1 TENANCY STATEMENT. Each Party (as "RESPONDING PARTY") shall within ten
(10) days after written notice from the other Party (the "REQUESTING PARTY")
execute, acknowledge and deliver to the Requesting Party a statement in writing
in a form similar to the then most current "TENANCY STATEMENT" form published by
the American Industrial Real Estate Association, plus such additional
information, confirmation and/or statements as may be reasonably requested by
the Requesting Party.

     16.2 FINANCIAL STATEMENT. If Lessor desires to finance, refinance, or sell
the Premises or the Building, or any part thereof, Lessee and all Guarantors
shall deliver to any potential lender or purchaser designated by Lessor such
financial statements of Lessee and such Guarantors as may be reasonably required
by such lender or purchaser, including, but not limited to, Lessee's financial
statements for the past three (3) years. All such financial statements shall be
received by Lessor and such lender or purchaser in confidence and shall be used
only for the purposes herein set forth.

17.  LESSOR'S LIABILITY. The term "LESSOR" as used herein shall mean the owner
or owners at the time in question of the fee title to the Premises. In the event
of a transfer of Lessor's title or interest in the Premises or in this Lease,
Lessor shall deliver to the transferee or assignee (in cash or by credit) any
unused Security Deposit held by Lessor at the time of such transfer or
assignment. Except as provided in Paragraph 15.3, upon such transfer or
assignment and delivery of the Security Deposit, as aforesaid, the prior Lessor
shall be relieved of all liability with respect to the obligations and/or
covenants under this Lease thereafter to be performed by the Lessor. Subject to
the foregoing, the obligations and/or covenants in this Lease to be performed by
the Lessor shall be binding only upon the Lessor as hereinabove defined.

18.  SEVERABILITY. The invalidity of any provision of this Lease, as determined
by a court of competent jurisdiction, shall in no way affect the validity of any
other provision hereof.

19.  INTEREST ON PAST-DUE OBLIGATIONS. Any monetary payment due Lessor
hereunder, other than late charges, not received by Lessor within ten (10) days
following the date on which it was due, shall bear interest from the date due at
the prime rate charged by the largest state chartered bank in the state in which
the Premises are located plus four percent (4%) per annum, but not exceeding the
maximum rate allowed by law, in addition to the potential late charge provided
for in Paragraph 13.4.

20.  TIME OF ESSENCE. Time is of the essence with respect to the performance of
all obligations to be performed or observed by the Parties under this Lease.

21.  RENT DEFINED. All monetary obligations of Lessee to Lessor under the terms
of this Lease are deemed to be rent.

22.  NO PRIOR OR OTHER AGREEMENTS; BROKER DISCLAIMER. This Lease contains all
agreements between the Parties with respect to any matter mentioned herein, and
no other prior or contemporaneous agreement or understanding shall be effective.
Lessor and Lessee each represents and warrants to the Brokers that it has made,
and is relying solely upon, its own investigation as to the nature, quality,
character and financial responsibility of the other Party to this Lease and as
to the nature, quality and character of the Premises. Brokers have no
responsibility with respect thereto or with respect to any default or breach
hereof by either Party. Each Broker shall be an intended third party beneficiary
of the provisions of this Paragraph 22.

23.  NOTICES.

     23.1 NOTICE REQUIREMENTS. All notices required or permitted by this Lease
shall be in writing and may be delivered in person (by hand or by messenger or
courier service) or may be sent by regular, certified or registered mail or U.S.
Postal Service Express Mail, with postage prepaid, or by facsimile transmission
during normal business hours, and shall be deemed sufficiently given if served
in a manner specified in this Paragraph 23. The addresses noted adjacent to a
Party's signature on this Lease shall be that Party's address for delivery or
mailing of notice purposes. Either Party may by written notice to the other
specify a different address for notice purposes, except that upon Lessee's
taking possession of the Premises, the Premises shall constitute Lessee's
address for the purpose of mailing or delivering notices to Lessee. A copy of
all notices required or permitted to be given to Lessor hereunder shall be
concurrently transmitted to such party or parties at such addresses as Lessor
may from time to time hereafter designate by written notice to Lessee.

     23.2 DATE OF NOTICE. Any notice sent by registered or certified mail,
return receipt requested, shall be deemed given on the date of delivery shown on
the receipt card, or if no delivery date is shown, the postmark thereon. If sent
by regular mail, the notice shall be deemed given forty-eight (48) hours after
the same is addressed as required herein and mailed with postage prepaid.
Notices delivered by United States Express Mail or overnight courier that
guarantees next day delivery shall be deemed given twenty-four (24) hours after
delivery of the same to the United States Postal Service or courier. If any
notice is transmitted by facsimile transmission or similar means, the same shall
be deemed served or delivered upon telephone or facsimile confirmation of
receipt of the transmission thereof, provided a copy is also delivered via
delivery or mail. If notice is received on a Saturday or a Sunday or a legal
holiday, it shall be deemed received on the next business day.

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

25.  RECORDING. Either Lessor or Lessee shall, upon request of the other,
execute, acknowledge and deliver to the other a short form memorandum of this
Lease for recording purposes. The Party requesting recordation shall be
responsible for payment of any fees or taxes applicable thereto.

26.  NO RIGHT TO HOLDOVER. Lessee has no right to retain possession of the
Premises or any part thereof beyond the expiration or earlier termination of
this Lease. In the event that Lessee holds over in violation of this Paragraph
26 then the Base Rent payable from and after the time of the expiration or
earlier termination of this Lease shall be increased to two hundred percent
(200%) of the Base Rent applicable during the month immediately preceding such
expiration or earlier termination. Nothing contained herein shall be construed
as a consent by Lessor to any holding over by Lessee.

27.  CUMULATIVE REMEDIES. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies at
law or in equity.

28.  COVENANTS AND CONDITIONS. All provisions of this Lease to be observed or
performed by Lessee are both covenants and conditions.

29.  BINDING EFFECT; CHOICE OF LAW. This Lease shall be binding upon the
Parties, their personal representatives, successors and assigns and be governed
by the laws of the state in which the Premises are located. Any litigation
between the Parties hereto concerning this Lease shall be initiated in the
county in which the Premises are located.

30.  SUBORDINATION; ATTORNMENT; NON-DISTURBANCE.

     30.1 SUBORDINATION. This Lease and any Option granted hereby shall be
subject and subordinate to any ground lease, mortgage, deed of trust, or other
hypothecation or security device (collectively, "SECURITY DEVICE"), now or
hereafter placed by Lessor upon the real property of which the Premises are a
part, to any and all advances made on the security thereof, and to all renewals,
modifications, consolidations, replacements and extensions thereof. Lessee
agrees that the Lenders holding any such Security Device shall have no duty,
liability or obligation to perform any of the obligations of Lessor under this
Lease, but that in the event of Lessor's default with respect to any such
obligation, Lessee will give any Lender whose name and address have been
furnished Lessee in writing for such purpose notice of Lessor's default pursuant
to Paragraph 13.5. If any Lender shall elect to have this Lease and/or any
Option granted hereby superior to the lien of its Security Device and shall give
written notice thereof to Lessee, this Lease and such Options shall be deemed
prior to such Security Device, notwithstanding the relative dates of the
documentation or recordation thereof.

     30.2 ATTORNMENT. Subject to the non-disturbance provisions of Paragraph
30.3, Lessee agrees to attorn to a Lender or any other party who acquires
ownership of the Premises by reason of a foreclosure of a Security Device, and
that in the event of such foreclosure, such new owner shall not: (i) be liable
for any act or omission of any prior lessor or with respect to events occurring
prior to acquisition of ownership, (ii) be subject to any offsets or defenses
which Lessee might have against any prior lessor, or (iii) be bound by
prepayment of more than one (1) month's rent.

     30.3 NON-DISTURBANCE. With respect to Security Devices entered into by
Lessor after the execution of this Lease, Lessee's subordination of this Lease
shall be subject to receiving assurance (a "non-disturbance agreement") from the
Lender that Lessee's possession and this Lease, including any options to extend
the term hereof, will not be disturbed so long as Lessee is not in Breach hereof
and attorns to the record owner of the Premises.

     30.4 SELF-EXECUTING. The agreements contained in this Paragraph 30 shall be
effective without the execution of any further documents; provided, however,
that upon written request from Lessor or a Lender in connection with a sale,
financing or refinancing of Premises, Lessee and Lessor shall execute such
further writings as may be reasonably required to separately document any such
subordination or non-subordination, attornment and/or non-disturbance agreement
as is provided for herein.

31.  ATTORNEYS' FEES. If any Party or Broker brings an action or proceeding to
enforce the terms hereof or declare rights hereunder, the Prevailing Party (as

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<PAGE>   12

hereafter defined) in any such proceeding, action, or appeal thereon, shall be
entitled to reasonable attorneys' fees. Such fees may be awarded in the same
suit or recovered in a separate suit, whether or not such action or proceeding
is pursued to decision or judgment. The term "PREVAILING PARTY" shall include,
without limitation, a Party or Broker who substantially obtains or defeats the
relief sought, as the case may be, whether by compromise, settlement, judgment,
or the abandonment by the other Party or Broker of its claim or defense. The
attorneys' fee award shall not be computed in accordance with any court fee
schedule, but shall be such as to fully reimburse all attorneys' fees reasonably
incurred. Lessor shall be entitled to attorneys' fees, costs and expenses
incurred in preparation and service of notices of Default and consultations in
connection therewith, whether or not a legal action is subsequently commenced in
connection with such Default or resulting Breach. Broker(s) shall be intended
third party beneficiaries of this Paragraph 31.

32.  LESSOR'S ACCESS; SHOWING PREMISES; REPAIRS. Lessor and Lessor's agents
shall have the right to enter the Premises at any time, in the case of an
emergency, but in the event of an emergency, Lessor shall use its best efforts
to provide reasonable notice to Lessee and otherwise at reasonable times, with
at least forty-eight (48) hours prior notice, for the purpose of showing the
same to prospective purchasers, lenders, or lessees, and making such
alterations, repairs, improvements or additions to the Premises or to the
Building, as Lessor may reasonably deem necessary. Lessor may at any time place
on or about the Premises or Building any ordinary "For Sale" signs and Lessor
may at any time during the last one hundred eighty (180) days of the term hereof
place on or about the Premises any ordinary "For Lease" signs. All such
activities of Lessor shall be without abatement of rent or liability to Lessee.

33.  AUCTIONS. Lessee shall not conduct, nor permit to be conducted, either
voluntarily or involuntarily, any auction upon the Premises without first having
obtained Lessor's prior written consent. Notwithstanding anything to the
contrary in this Lease, Lessor shall not be obligated to exercise any standard
of reasonableness in determining whether to grant such consent.

34.  SIGNS. Lessee shall not place any sign upon the exterior of the Premises or
the Building, except that Lessee may, with Lessor's prior written consent,
install (but not on the roof) such signs as are reasonably required to advertise
Lessee's own business so long as such signs are in a location designated by
Lessor and comply with Applicable Requirements and the signage criteria
established for the Industrial Center by Lessor. The installation of any sign on
the Premises by or for Lessee shall be subject to the provisions of Paragraph 7
(Maintenance, Repairs, Utility Installations, Trade Fixtures and Alterations).
Unless otherwise expressly agreed herein, Lessor reserves all rights to the use
of the roof of the Building, and the right to install advertising signs on the
Building, including the roof, which do not unreasonably interfere with the
conduct of Lessee's business; Lessor shall be entitled to all revenues from such
advertising signs.

35.  TERMINATION; MERGER. Unless specifically stated otherwise in writing by
Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual
termination or cancellation hereof, or a termination hereof by Lessor for Breach
by Lessee, shall automatically terminate any sublease or lesser estate in the
Premises; provided, however, Lessor shall, in the event of any such surrender,
termination or cancellation, have the option to continue any one or all of any
existing subtenancies. Lessor's failure within ten (10) days following any such
event to make a written election to the contrary by written notice to the holder
of any such lesser interest, shall constitute Lessor's election to have such
event constitute the termination of such interest.

36.  CONSENTS.

          (a)  Except for Paragraph 33 hereof (Auctions) or as otherwise
provided herein, wherever in this Lease the consent of a Party is required to an
act by or for the other Party, such consent shall not be unreasonably withheld
or delayed. Lessor's actual reasonable costs and expenses (including but not
limited to architects', attorneys', engineers' and other consultants' fees)
incurred in the consideration of, or response to, a request by Lessee for any
Lessor consent pertaining to this Lease or the Premises, including but not
limited to consents to an assignment a subletting or the presence or use of a
Hazardous Substance, shall be paid by Lessee to Lessor upon receipt of an
invoice and supporting documentation therefor. In addition to the deposit
described in Paragraph 12.2(e), Lessor may, as a condition to considering any
such request by Lessee, require that Lessee deposit with Lessor an amount of
money (in addition to the Security Deposit held under Paragraph 5) reasonably
calculated by Lessor to represent the cost Lessor will incur in considering and
responding to Lessee's request. Any unused portion of said deposit shall be
refunded to Lessee without interest. Lessor's consent to any act, assignment of
this Lease or subletting of the Premises by Lessee shall not constitute an
acknowledgment that no Default or Breach by Lessee of this Lease exists, nor
shall such consent be deemed a waiver of any then existing Default or Breach,
except as may be otherwise specifically stated in writing by Lessor at the time
of such consent.

          (b)  All conditions to Lessor's consent authorized by this Lease are
acknowledged by Lessee as being reasonable. The failure to specify herein
any particular condition to Lessor's consent shall not preclude the impositions
by Lessor at the time of consent of such further or other conditions as are then
reasonable with reference to the particular matter for which consent is being
given.

37.  GUARANTOR.

     37.1 FORM OF GUARANTY. If there are to be any Guarantors of this Lease per
Paragraph 1.11, the form of the guaranty to be executed by each such Guarantor
shall be in the form most recently published by the American Industrial Real
Estate Association, and each such Guarantor shall have the same obligations as
Lessee under this Lease, including but not limited to the obligation to
provide the Tenancy Statement and information required in Paragraph 16.

     37.2 ADDITIONAL OBLIGATIONS OF GUARANTOR. It shall constitute a Default of
the Lessee under this Lease if any such Guarantor fails or refuses, upon
reasonable request by Lessor to give: (a) evidence of the due execution of the
guaranty called for by this Lease, including the authority of the Guarantor (and
of the party signing on Guarantor's behalf) to obligate such Guarantor on said
guaranty, and resolution of its board of directors authorizing the making of
such guaranty, together with a certificate of incumbency showing the signatures
of the persons authorized to sign on its behalf, (b) current financial
statements of Guarantor as may from time to time be requested by Lessor, (c) a
Tenancy Statement, or (d) written confirmation that the guaranty is still in
effect.

38.  QUIET POSSESSION. Upon payment by Lessee of the Rent for the Premises and
the performance of all of the covenants, conditions and provisions on Lessee's
part to be observed and performed under this Lease, Lessee shall have quiet
possession of the Premises for the entire term hereof subject to all of the
provisions of this Lease.

39.  OPTIONS.

     39.1 DEFINITION. As used in this Lease, the word "OPTION" has the following
meaning: (a) the right to extend the term of this Lease or to renew this Lease
or to extend or renew any lease that Lessee has on other property of Lessor; (b)
the right of first refusal to lease the Premises or the right of first offer to
lease the Premises or the right of first refusal to lease other property of
Lessor or the right of first offer to lease other property of Lessor; (c) the
right to purchase the Premises, or the right of first refusal to purchase the
Premises, or the right of first offer to purchase the Premises, or the right to
purchase other property of Lessor, or the right of first refusal to purchase
other property of Lessor, or the right of first offer to purchase other property
of Lessor.

     39.2 OPTIONS PERSONAL TO ORIGINAL LESSEE. Each Option granted to Lessee in
this Lease is personal to the original Lessee named in Paragraph 1.1 hereof, and
cannot be voluntarily or involuntarily assigned or exercised by any person or
entity other than said original Lessee while the original Lessee is in full and
actual possession of the Premises and without the intention of thereafter
assigning or subletting. The Options, if any, herein granted to Lessee are not
assignable, either as a part of an assignment of this Lease or separately or
apart therefrom, and no Option may be separated from this Lease in any manner,
by reservation or otherwise.

     39.3 MULTIPLE OPTIONS. In the event that Lessee has any multiple Options to
extend or renew this Lease, a later option cannot be exercised unless the prior
Options to extend or renew this Lease have been validly exercised.

     39.4 EFFECT OF DEFAULT ON OPTIONS.

          (a)  Lessee shall have no right to exercise an Option, notwithstanding
any provision in the grant of Option to the contrary: (i) during the period
commencing with the giving of any notice of Default under Paragraph 13.1 and
continuing until the noticed Default is cured, or (ii) during the period of time
any monetary obligation due Lessor from Lessee is unpaid (without regard to
whether notice thereof is given Lessee), or (iii) during the time Lessee is in
Breach of this Lease, or (iv) in the event that Lessor has given to Lessee three
(3) or more notices of separate Default under Paragraph 13.1 during the twelve
(12) month period immediately preceding the exercise of the Option, whether or
not the Defaults are cured.

          (b)  The period of time within which an Option may be exercised shall
not be extended or enlarged by reason of Lessee's inability to exercise an
Option because of the provisions of Paragraph 39.4(a).

          (c)  All rights of Lessee under the provisions of an Option shall
terminate and be of no further force or effect, notwithstanding Lessee's due and
timely exercise of the Option, if, after such exercise and during the term of
this Lease, (i) Lessee fails to pay to Lessor a monetary obligation of Lessee
for a period of thirty (30) days after such obligation becomes due (without any
necessity of Lessor to give notice thereof to Lessee), or (ii) Lessor gives to
Lessee three (3) or more notices of separate Defaults under Paragraph 13.1
during any twelve (12) month period, whether or not the Defaults are cured, or
(iii) if Lessee commits a Breach of this Lease.

40.  RULES AND REGULATIONS. Lessee agrees that it will abide by, and keep and
observe all reasonable rules and regulations ("RULES AND REGULATIONS") which
Lessor may make from time to time for the management, safety, care, and
cleanliness of the grounds, the parking and unloading of vehicles and the


                                 Page 12 of 14
<PAGE>   13

preservation of good order, as well as for the convenience of other occupants or
tenants of the Building and the Industrial Center and their invitees.

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

42.  RESERVATIONS. Lessor reserves the right, from time to time, to grant,
without the consent or joinder of Lessee, such easements, rights of way, utility
raceways, and dedications that Lessor 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 reasonably
interfere with the use of the Premises by Lessee. Lessee agrees to sign any
documents reasonably requested by Lessor to effectuate any such easement rights,
dedication, map or restrictions.

43.  PERFORMANCE UNDER PROTEST. If at any time a dispute shall arise as to any
amount or sum of money to be paid by one Party to the other under the provisions
hereof, the Party against whom the obligation to pay the money is asserted shall
have the right to make payment "under protest" and such payment shall not be
regarded as a voluntary payment and there shall survive the right on the part of
said Party to institute suit for recovery of such sum. If it shall be adjudged
that there was no legal obligation on the part of said Party to pay such sum or
any part thereof, said Party shall be entitled to recover such sum or so much
thereof as it was not legally required to pay under the provisions of this
Lease.

44.  AUTHORITY. If either Party hereto is a corporation, trust, or general or
limited partnership, each individual executing this Lease on behalf of such
entity represents and warrants that he or she is duly authorized to execute and
deliver this Lease on its behalf. If Lessee is a corporation, trust or
partnership, Lessee shall, within thirty (30) days after request by Lessor,
deliver to Lessor evidence satisfactory to Lessor of such authority.

45.  CONFLICT. Any conflict between the printed provisions of this Lease and the
typewritten or handwritten provisions shall be controlled by the typewritten or
handwritten provisions.

46.  OFFER. Preparation of this Lease by either Lessor or Lessee or Lessor's
agent or Lessee's agent and submission of same to Lessee or Lessor shall not be
deemed an offer to lease. This Lease is not intended to be binding until
executed and delivered by all Parties hereto.

47.  AMENDMENTS. This Lease may be modified only in writing, signed by the
Parties in interest at the time of the modification. The Parties shall amend
this Lease from time to time to reflect any adjustments that are made to the
Base Rent or other rent payable under this Lease. As long as they do not
materially change Lessee's obligations hereunder, Lessee agrees to make such
reasonable non-monetary modifications to this Lease as may be reasonably
required by an institutional insurance company or pension plan Lender in
connection with the obtaining of normal financing or refinancing of the property
of which the Premises are a part.

48.  MULTIPLE PARTIES. Except as otherwise expressly provided herein, if more
than one person or entity is named herein as either Lessor or Lessee, the
obligations of such multiple parties shall be the joint and several
responsibility of all persons or entities named herein as such Lessor or Lessee.

                                 Page 13 of 14
<PAGE>   14

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

     IF THIS LEASE HAS BEEN FILLED IN, IT HAS BEEN PREPARED FOR YOUR ATTORNEY'S
     REVIEW AND APPROVAL. FURTHER, EXPERTS SHOULD BE CONSULTED TO EVALUATE THE
     CONDITION OF THE PROPERTY FOR THE POSSIBLE PRESENCE OF ASBESTOS,
     UNDERGROUND STORAGE TANKS OR HAZARDOUS SUBSTANCES. NO REPRESENTATION OR
     RECOMMENDATION IS MADE BY THE AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
     OR BY THE REAL ESTATE BROKERS OR THEIR CONTRACTORS, AGENTS OR EMPLOYEES AS
     TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE
     OR THE TRANSACTION TO WHICH IT RELATES; THE PARTIES SHALL RELY SOLELY UPON
     THE ADVICE OF THEIR OWN COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF
     THIS LEASE. IF THE SUBJECT PROPERTY IS IN A STATE OTHER THAN CALIFORNIA, AN
     ATTORNEY FROM THE STATE WHERE THE PROPERTY IS LOCATED SHOULD BE CONSULTED.

The Parties hereto have executed this Lease at the place and on the dates
specified above their respective signatures.

Executed at: _________________________    Executed at: _________________________

on: __________________________________    on: __________________________________


BY LESSOR:                                BY LESSEE:

     KILROY REALTY, L.P.                       MEDIBUY.com,INC.,
     a Delaware Limited Partnership            A Delaware Corporation
     By: KILROY REALTY CORPORATION,
         A Maryland Corporation,
         General Partner

By:___________________________________    By:___________________________________

Name Printed:_________________________    Name Printed:_________________________

Title:________________________________    Title:________________________________


By:___________________________________    By:___________________________________

Name Printed:_________________________    Name Printed:_________________________

Title:________________________________    Title:________________________________

Address: 2250 E. Imperial Highway         Address:______________________________
         Suite 360
         El Segundo, CA 90245
Telephone: (310)563-5500                  Telephone: (___)______________________

Facsimile: (310)416-9113                  Facsimile: (___)______________________


BROKER:                                   BROKER:

Executed at:__________________________    Executed at:__________________________

on:___________________________________    on:___________________________________

By:___________________________________    By:___________________________________

Name Printed:_________________________    Name Printed:_________________________

Title:________________________________    Title:________________________________

Address:______________________________    Address:______________________________

______________________________________    ______________________________________

Telephone: (___)______________________    Telephone: (___)______________________

Facsimile: (___)______________________    Facsimile: (___)______________________


NOTE: These forms are often modified to meet changing requirements of law and
      needs of the industry. Always write or call to make sure you are utilizing
      the most current form: AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION, 700
      South Flower Street, Suite 600, Los Angeles, California 90017. (213)
      687-8777.

                                 Page 14 of 14
<PAGE>   15

                      ADDENDUM TO THAT CERTAIN LEASE DATED
                                 AUGUST 1, 1999
                                 BY AND BETWEEN
                              KILROY REALTY, L.P.,
                         A DELAWARE LIMITED PARTNERSHIP
                           KILROY REALTY CORPORATION,
                            A MARYLAND CORPORATION,
                                GENERAL PARTNER
                                   ("LESSOR")
                                     - AND -
                               MEDIBUY.COM, INC.,
                                   ("LESSEE")

                   FOR THAT REAL PROPERTY COMMONLY KNOWN AS:
        10120 PACIFIC HEIGHTS BOULEVARD, SUITE 100, SAN DIEGO, CA 92121

49.  RENT ADJUSTMENT. Upon each twelfth (12th) month anniversary date of the
     term Commencement Date of the Premises, during each year of the Lease
     Term, Lessee's monthly Base Rent shall increase by three and one-half
     percent (3.50%) over the monthly Base Rent paid during the immediately
     preceding twelve (12) month period.

50.  EARLY POSSESSION. Pursuant to paragraph 1.4 of the Lease, Lessee may take
     early possession of the Premises, prior to the completion of Lessor's
     construction of the Lessee Improvements, as more particularly described in
     Exhibit "E", attached hereto, for the purpose of installing Lessee's
     furniture, fixtures and equipment, provided, however, that Lessee's early
     possession shall not interfere with or in any way delay completion of the
     Lessee Improvements. If Lessee's early possession results in a delay in
     completion of the Lessee Improvements, and a subsequent delay in the Lease
     Commencement Date, the Lease Term shall commence and Base Rent shall be
     paid effective on the date on which the Premises would have been delivered
     to Lessee ready for occupancy but for the delay caused by Lessee's early
     possession. If the substantial completion of the Lessee Improvement Work
     occurs prior to November 1, 1999, then Lessee shall have the right to
     occupy the Premises prior to November 1, 1999, provided that (A) Lessee
     shall give Lessor at least ten (10) days' prior notice of any such
     occupancy of the Premises, (B) a temporary certificate of occupancy shall
     have been issued by the appropriate governmental authorities (or Lessee
     shall have obtained the appropriate permit or approval allowing Lessee to
     legally occupy the Premises) for each such portion to be occupied, and (C)
     all of the terms and conditions of the Lease shall apply, other than
     Lessee's obligation to pay Base Rent and Lessee's Share of Common Area
     Operating Expenses, as though the Commencement Date had occurred (although
     the Commencement Date shall not actually occur until the occurrence of the
     same pursuant to the terms of paragraph 3 of the Lease) upon such
     occupancy of a portion of the Premises by Lessee.

51.  CONDITION OF PREMISES; LESSEE IMPROVEMENTS. Except as otherwise set forth
     in the Lease, Lessee acknowledges that it has made a thorough inspection
     of the Premises and Lessee has and shall accept the Premises in the
     present "as is" condition thereof at the Commencement Date of the Lease,
     as more particularly described in Exhibit "E", attached hereto, subject to
     the obligation of Lessor to complete the Allowance Work, as more
     particularly described in said Exhibit "E."

52.  RENTABLE SQUARE FEET OF PREMISES; ADJUSTMENTS.

     52.1   Standard of Calculation. For purposes of the Lease, "Rentable Area,"
            "Rentable Square Feet," "Rentable Square Footage" and "Usable
            Square Feet" shall be calculated under the American National
            Standard Method for Measuring Floor Area in Buildings, ANSI/BOMA
            Z65.1-1996 or successor standard(s), adopted by the Building Owners
            and Managers Association International ("BOMA").


                                      -1-
<PAGE>   16
      52.2  Verification of Rentable Area of Premises, Building and Industrial
            Center. The Rentable Area of the Premises and the Building is
            subject to verification from time to time by Lessor's architect or
            consultant specializing in such calculations (e.g. computer modeling
            and calculation specialists); provided that the determination of the
            Rentable Square Feet of the Premises shall be made following the
            completion of all of Lessor's Work to the Premises and shall not
            thereafter be changed except for discovery of an error in the
            measurement of the Premises or the calculation of the Rentable or
            Usable Square Feet contained in the Building or the Premises. Lessor
            agrees to use its reasonable best efforts to cause the Determination
            to be made and completed prior to Lease Commencement Date. That
            verification shall be made in accordance with this paragraph.
            Lessee's architect and/or consultant may consult with Lessor and
            Lessor's architect and/or consultant. The determination of Lessor's
            architect and/or consultant shall be conclusive and binding on the
            parties.

      52.3  Adjustment of Base Rent. If Lessor's architect and/or consultant
            determines that the Rentable Area or the Usable Area of the Premises
            or the Building is different from that stated in the Lease (the
            "Determination"), all Rent, Lessee's Security Deposit and Lessee's
            Share of Common Area Operating Expenses that is based on that
            incorrect Rentable Area or Usable Area shall be modified in
            accordance with that Determination. PROVIDED, HOWEVER, that in no
            event shall the Determination result in a change from the rentable
            or usable square footage set forth in paragraph 1.2(a) of the Lease,
            of greater than fifteen percent (15%). If the Determination is made,
            it shall be confirmed in writing by Lessor to Lessee. Any over
            payment or under payment of Base Rent or Additional Rent resulting
            from such Determination shall be adjusted and paid by Lessee to
            Lessor or credited to Lessee by Lessor, as the case may be, at the
            next Base Rent payment date.

      52.4  Amendment to Lease. In the event of any such Determination, Lessor
            and Lessee shall execute an amendment to the Lease in the reasonable
            form prepared by Lessor incorporating the results of such
            Determination and other matters thus known affecting the provisions
            and covenants of the Lease by reason of the Determination.

53.   COMMENCEMENT DATE GUARANTY/DELAY IN DELIVERY OF PREMISES. If Lessor is
      unable to substantially complete the Lessee Improvement Work pursuant to
      the provisions of Exhibit "E" and deliver possession of the Premises to
      Lessee on or before November 1, 1999 (which time period shall be extended
      to the extent of any "Lessee Delay," as that term is defined in paragraph
      5.1 of the Work Letter Agreement attached hereto as Exhibit "E," as
      described therein Lessor shall not be subject to any liability for its
      failure to do so, except that Lessee shall be entitled to a rent credit of
      $250.00 per day until such date as Lessor obtains a temporary Certificate
      of Occupancy. Said rent credit shall appear as reduced rent and applied to
      the Base Rent due Lessor during the second full month of the Lease Term.
      This failure shall not affect the validity of the Lease or the obligations
      of Lessee under it, but the Term shall commence on the date on which
      Lessor delivers possession of the Premises to Lessee with the Lessee
      Improvement Work substantially completed. The Expiration Date of the Term
      of the Lease shall be extended for a like period plus any additional
      period required to make the Expiration Date the last day of the calendar
      month. Promptly following the delivery of the Premises to Lessee, Lessor
      and Lessee shall execute a written confirmation of the Commencement Date
      and Expiration Date of the Term.

54.   COMMON AREA OPERATING EXPENSES. Except as set forth in this paragraph 54,
      Lessee shall pay Common Area Operating Expenses in accordance with the
      provisions of paragraph 4.2 of the Lease.

      54.1  Exclusions from Common Area Operating Expenses. The following are
            excluded from the definition of Common Area Operating Expenses:

                  (i)   capital costs and improvements, except as otherwise set
            forth herein and except for capital improvements made by Lessor as a
            replacement or



                                      -2-
<PAGE>   17
            labor saving measure primarily for the benefit of lessees of the
            Building, or that reduce Operating Expenses (to the extent of the
            reduction received or to be received over the anticipated useful
            life thereof), or that are required under any governmental law or
            regulation for energy conservation, fire, life or safety purposes,
            such costs to be amortized over the anticipated useful life thereof;

                 (ii)   costs of special services rendered to individual
            lessees (including Lessee) for which a special charge is made or
            customarily is made for which Lessor is entitled to be reimbursed as
            additional rent or other charge not included in said tenant's base
            rent, including any escalations payable under said tenant's lease;

                (iii)   principal, interest, points and fees on debt or
            amortization payments on any real property mortgages or deeds of
            trust, or ground lease payments, including refinancing fees and late
            payment penalties;

                 (iv)   costs of improvements for Lessee or other lessees of
            the Building or for preparing vacant space;

                  (v)   costs of services or other benefits of a type which are
            not available to Lessee but which are available to other lessees or
            occupants;

                 (vi)   costs for which Lessor is reimbursed by other lessees of
            the Building other than through payment of lessees' shares of
            Common Area Operating Expenses and Real Property Taxes, except that
            in no event shall Lessor collect more than 100% of any actual cost;

               (vii)    leasing commissions, attorneys' fees, disbursements and
            other expenses incurred in connection with leasing space in the
            Building or enforcing such leases;

               (viii)   depreciation or amortization, other than as specifically
            enumerated in the definition of Operating Expenses herein, and as
            determined by Lessor in accordance with generally accepted
            accounting and management practices of Lessor consistently applied;

                 (ix)   costs, fines or penalties incurred due to Lessor's
            violation of any Applicable Laws or any late payment;

                  (x)   The costs of repair to the Building or Industrial
            Center, including the Premises and other costs and expenses (which
            would otherwise be included as part of Operating Expenses), to the
            extent such costs are reimbursed by insurance or under warranty
            provided to Lessor by a manufacturer, contractor or supplier or, to
            the extent such costs are reimbursed pursuant to a service contract;

                 (xi)   The cost of alterations/improvements, painting or
            decorating the interior of the Premises or premises of other
            lessees;

                 (xii)  Legal and other related expenses associated with the
            initial leasing, enforcement of leases disputes with tenants, or the
            defense of Lessor's title to the Industrial Center, the Building or
            other portions of the Industrial Center;

               (xiii)   Advertising and marketing costs incurred with respect
            to the Building or other portions of the Industrial Center;

                (xiv)   Lessor's general corporate overhead and general
            administrative expenses not related to the operation of the
            Industrial Center;

                 (xv)   Any compensation paid to clerks, attendants or other
            persons in commercial concessions operated by or on behalf of
            Lessor;



                                      -3-
<PAGE>   18
          (xvi) Costs of capital alterations, improvements, replacements,
     capital repairs to the Building and other portions of the Industrial Center
     or other capital items which, in accordance with generally accepted
     accounting and management practices of Lessor, consistently applied, are
     not to be expensed;

          (xvii) Costs, fees and compensation paid to Lessor or to affiliates or
     subsidiaries of Lessor for services and materials to the extent the same
     exceeds the charges for comparable services and materials performed or
     provided by unaffiliated entities of comparable stature and reputation and
     on a competitive basis;

          (xviii) Costs resulting from the active negligence or intentional acts
     of Lessor, its employees, or its agents, or any other lessee, or any
     vendors, contractors, subcontractors or providers of materials or services
     selected, hired or engaged by Lessor or its agents to the extent Lessor
     receives reimbursement therefrom;

          (xix) All amounts which would otherwise be included in Operating
     Expenses which are paid to Lessor or which exceed the amount which would
     have been paid in the absence of such relationship for similar services of
     comparable quality rendered by persons or entities of similar skill,
     competence and experience;

          (xx) Costs of complying with laws, codes, regulations, or ordinances
     relating to hazardous materials which are incurred (A) as a result of
     Lessor's negligence or intentional acts in the course of construction of
     the Industrial Center, including the selection and use of building
     materials which Lessor should have known were hazardous substances at the
     time of their installation or (B) as a result of the presence of hazardous
     substances in the soil or groundwater under the Industrial Center on or
     before the date of execution of the Lease (which substances were considered
     to be hazardous as of the date of execution of the Lease). The parties
     agree that the clean-up of hazardous substances required because of the use
     or selection of building materials for the Premises (other than those known
     to be hazardous at the time of the installation) shall be either an
     Operating Expense, or to the extent that such clean-up constitutes an
     improvement to the Industrial Center, a Capital Improvement pursuant to the
     Lease. To the extent that such clean-up of hazardous substances is a
     Capital Improvement, the cost thereof shall be payable by Lessee to Lessor
     amortized over the remaining useful life of the Capital Improvement (such
     useful life to be for the life of the Building, if of a structural nature,
     or for its useful life if other than of a structural nature).

          (xxi) Except for making repairs or keeping permanent systems in
     operation while repairs are being made, rentals and other related expenses
     incurred in leasing air-conditioning systems, elevators or other equipment
     ordinarily considered to be of a capital nature, except equipment not
     affixed to the Building which is used in providing janitorial or similar
     services;

          (xxii) Any bad debt loss, rent loss or reserves for bad debts or rent
     loss;

          (xxiii) Costs incurred by Lessor due to the violation by Lessor or any
     lessee (other than Lessee) of the terms and conditions of any lease of
     space in the Project;

          (xxiv) Costs (including in connection therewith all attorneys' fees
     and costs of settlement judgment and payments in lieu thereof) arising from
     claims, disputes and potential disputes in connection with claims,
     litigation or arbitrations pertaining to Lessor or the Industrial Center;

          (xxv) Depreciation, amortization and interest payments, except as
     provided herein and except on materials, tools, supplies and vendor-type


                                      -4-

<PAGE>   19
     equipment purchased by Lessor to enable Lessor to supply services Lessor
     might otherwise contract for with a third party where such depreciation,
     amortization, and interest payments would otherwise have been included in
     the charge for such third party's services, all as determined in accordance
     with generally accepted accounting and management practices of Lessor,
     consistently applied, and when depreciation or amortization is permitted or
     required, the item shall be amortized over its reasonably anticipated
     useful life;

          (xxvi) Electric power costs for which any lessee directly contracts
     with the local public service company;

          (xxvii) Costs incurred in connection with Lessor's upgrading the
     Building to comply with handicap, life, fire and safety codes shall be
     amortized over the anticipated useful life of the upgrade;

          (xxviii) Costs of defending any lawsuits with any mortgagee (except as
     the actions of Lessee may be in issue), costs of selling, syndicating,
     financing, mortgaging or hypothecating any of Lessor's interest in the
     Building, or outside fees paid in connection with disputes with other
     lessees;

          (xxix) The wages and salaries of supervisor and executive personnel
     over and above the level of the property manager;

          (xxx) Any payments under a ground lease or master lease relating to
     the Industrial Center; and

          (xxxi) Any other expenses which, in accordance with generally accepted
     accounting and management practices of Lessor, consistently applied, would
     not normally be treated as Operating Expenses by lessors of other
     comparable buildings.

54.2 Lessee's Right to Audit. If Lessee shall so request, Lessor shall permit
     Lessee to review Lessor's books and records relating to Common Area
     Operating Expenses and any other reimbursables by Lessee to Lessor for any
     year, such review to be made, if at all, within twelve (12) months after
     the date Lessee receives a statement of Common Area Operating Expenses or
     reimbursable for any year, for the purpose of Lessee's verification of any
     accounting and statement that Lessor is required or elects to give
     hereunder. During the pendency of any such examination, Lessee shall make
     all payments claimed by Lessor to be due, such payments to be without
     prejudice to Lessee's position. If as a result of such review, Lessee
     disputes Lessor's accounting or statement, Lessee shall give Lessor notice
     thereof and, if such dispute has not been resolved by agreement within
     sixty (60) days after Lessee's notice of such dispute, then either party
     may submit the matter to arbitration in accordance with the Commercial
     Arbitration Rules of the American Arbitration Association, except that
     there shall be only one arbitrator, who shall have had at least ten (10)
     years' experience as a certified property manager or certified public
     accountant in properties similar to the Industrial Center and in the same
     general location and market. If neither party submits the matter to
     arbitration within sixty (60) days after Lessee's notice of such dispute,
     then Lessor's accounting and statement shall be deemed to be correct. Any
     decision by an arbitrator shall be final and binding on the parties. If the
     dispute shall be resolved in Lessee's favor, Lessor shall forthwith refund
     to Lessee the amount overpaid by Lessee, and Lessor shall reimburse Lessee
     for the reasonable cost of such examination and arbitrator. If such dispute
     shall be resolved in Lessor's favor, Lessee shall reimburse Lessor for the
     reasonable cost of such arbitrator and Lessor's reasonable cost of such
     examination. Lessee shall not be liable for any amounts not billed to
     Lessee within two (2) years of being incurred by Lessor and all statements
     received by Lessee shall be final and conclusive unless Lessee shall audit
     the same within the one (1) year period after received, as provided above.


                                      -5-




<PAGE>   20
55.  SECURITY DEPOSIT AND ADVANCE RENT. Upon execution of the Lease, Lessee
     shall pay a security deposit of $36,091.00 and advance rent of $36,091.00
     for a total of $72,182.00. The amounts set forth in this paragraph 55 may
     be adjusted pursuant to the provisions of paragraph 52 of this Addendum to
     Lease.

56.  LESSEE'S LETTER OF CREDIT. As an inducement to Lessor to construct the
     Lessee Improvements, as more particularly described in Exhibit "E",
     attached hereto, Lessee shall deliver to Lessor an irrevocable Letter of
     Credit ("LOC"), composed of the following:

     56.1 Form of LOC. An LOC in the amount of Five Hundred Thousand Dollars
          ($500,000.00), plus leasing commissions in the amount of One Hundred
          Sixty-Two Thousand Five Hundred Seventy-One Dollars ($162,571.00), for
          a total of Six Hundred Sixty-Two Thousand Five Hundred Seventy-One
          Dollars ($662,571.00) ("LOC Amount") to be deposited by Lessee with
          Lessor within five (5) business days of the date of execution of the
          Lease by Lessee, and thereafter to be replaced annually during the
          original Term of the Lease ("LOC Period") (as such LOC Period may be
          extended pursuant to paragraph 62 of this Addendum to Lease), each
          such LOC to be issued by a Bank as may be designated by Lessee,
          subject to Lessor's approval of such issuing Bank, said approval not
          to be unreasonably withheld, each of which LOC's shall not expire
          before the last day of the first through fifth, respectively, year of
          the original Term and the option term thereafter if exercised, so
          that, during the LOC Period (except as provided below), Lessor shall
          always be in possession and the beneficiary of an LOC, in full force
          and effect, in the LOC Amount. The LOC shall be in a form subject to
          the Uniform Customs and Practice for Documentary Credits (1993
          Revision) and reasonably approved by Lessor. On or before thirty (30)
          days prior to the first anniversary of the Commencement Date,
          estimated to be September 20, 2000 (in which event the replacement
          must be delivered to Lessor on or before August 20, 2000), the
          replacement LOC to be delivered to Lessor shall be in an amount equal
          to the LOC Amount currently in effect (the first LOC to expire on the
          last day of the first year of the LOC Period, estimated to be
          September 30, 2000). In the event of a material breach under paragraph
          13.1(b) of the Lease by reason of Lessee's failure to pay Rent or
          other charges due hereunder, after the notice period provided for in
          said paragraph 13.1(b), Lessor may draw upon the currently issued LOC
          for the payment of such Rent or any other charges which are then
          payable under the terms of the Lease. If Lessor so uses and draws upon
          such LOC, Lessor shall give written notice to Lessee of such draw, and
          Lessee shall have ten (10) business days after receipt of such notice
          to deliver and deposit with Lessor a replacement or amended LOC (in
          substantially the same form and substance as the LOC drawn upon),
          restoring the amount of the LOC to the full original LOC Amount upon
          which Lessor shall be entitled to continue to draw as set forth above
          and as further set forth herein. On or before the later of ten (10)
          business days after delivery of the notice pursuant to this paragraph
          56, or thirty (30) days before the expiration of each LOC held by
          Lessor, Lessee shall deliver and deposit with Lessor a new LOC in the
          same form and substance as the form of LOC being replaced, which new
          LOC shall not expire prior to the last day of the first through the
          fifth year, as applicable, of the LOC Period (or 6th through 10th
          year, as such LOC Period may be extended pursuant to paragraph 62 of
          this Addendum to Lease), and concurrently Lessor shall return the
          prior LOC to Lessee. Lessee's failure to replace an LOC on or before
          the later of ten (10) business days after delivery of the notice
          pursuant to this paragraph 56 or thirty (30) days prior to the
          expiration of the then existing LOC, or to replace or amend an LOC
          which has been drawn upon within ten (10) business days after receipt
          of Lessor's notice to Lessee that it has been drawn upon, as provided
          above, shall be a Default, with respect of which the only remedy shall
          be the replacement of the LOC by a cash deposit with Lessor by Lessee
          in an amount equal to the then remaining balance of the LOC which may
          be drawn upon by Lessor at that time, partially, or in full, as then
          applicable. Should any LOC not be replaced in any year by thirty (30)
          days prior to its expiration, then Lessor may draw upon said LOC in
          full and thereafter hold the


                                      -6-
<PAGE>   21
          cash received as a part of the Security Deposit under the Lease. The
          failure of Lessee to comply with the provisions of this paragraph 56,
          or a breach of Lessee's affirmative obligations hereunder, shall
          constitute a Default of Lessee under the Lease entitling Lessor to the
          remedies provided by paragraph 13.2 of the Lease. In the event a
          Breach has occurred under the covenants and conditions of the Lease
          during the LOC Period, then the LOC Period, and Lessee's obligation to
          provide such LOC, shall be extended for a period equal to the length
          of time of such Breach.

     56.2 Permitted Lapse of Letter of Credit. Notwithstanding the provisions of
          paragraph 56.1, above, the LOC shall be allowed to lapse at any time
          during the initial Lease Term or option term thereafter and an LOC
          shall no longer be required under the Lease, upon either of the
          following occurrences:

          56.2.1 Lessee completes an initial public offering whereby Lessee nets
                 in excess of $25,000,000.00 in cash; or

          56.2.2 Lessee completes an initial public offering and thereafter
                 Lessee remains profitable for three consecutive quarters.

     56.3 Increase in Amount. The LOC shall increase by $0.50 for every $1.00 of
          additional Lessee Improvement Allowance above the initial allowance of
          $15.00 per usable square foot.

57.  RIGHT OF FIRST REFUSAL. Throughout the Lease Term, including during any
     option period, Lessee shall have a continuing Right of First Refusal to
     lease the balance of space available in the Industrial Center. The terms of
     said Right of First Refusal shall be based on the actual terms and
     conditions of any proposal to lease received by Lessor from any bona fide
     third party. Said terms and conditions of the Right of First Refusal shall
     be equal to or greater than that received by Lessor from said bona fide
     third party. Lessor shall offer the proposed lease space to Lessee in
     writing, to the address specified in paragraph 23 of the Lease. Lessee
     shall have three (3) business days in which to agree to exercise its Right
     of First Refusal. Lessee's failure  to exercise said Right of First Refusal
     within three (3) business days from the date of receipt of Lessor's written
     offer shall constitute a rejection of Lessor's written offer to lease.

58.  SIGNAGE. As a supplement to paragraph 34 of the Lease, Lessor and Lessee
     have agreed that Lessee may, at Lessee's sole cost and expense, install
     Building signage on the exterior of the Building signage adjacent to
     Lessee's main suite entrance and monument signage, subject to the
     compliance by Lessee with paragraphs 7.3 and 7.4 of the Lease as if such
     sign or signs were an Alteration. All such signage shall be subject to
     availability and Lessor's approval.

59.  INTENTIONALLY DELETED

60.  PARKING. The Unreserved Parking Spaces set forth in paragraph 1.2(b) of the
     Lease have been established on the basis of 3.5 unreserved parking spaces
     per 1,000 square feet leased, which shall be undesignated and unreserved.
     Such parking shall be free of charge during the Original Term of the Lease,
     as the same may be extended, and shall be taken into account in the
     determination of Fair Market Rental Rate during any option term.

61.  OPTION TO EXPAND.

     61.1 No Default: Expansion Premises. Provided that the Lease is in full
          force and effect and Lessee is not then in default hereunder, Lessor
          hereby grants to Lessee an option to expand the Premises at any time
          during the first twelve (12) months of the Term of the Lease and prior
          to receiving a Notice from Lessor regarding Lessee's right of first
          refusal, subject to availability of space, upon the terms and
          conditions set forth in this paragraph 61.


                                      -7-
<PAGE>   22

      61.2  Terms and Conditions. If Lessee shall have a requirement to expand
            its Premises, Lessee shall exercise this option to expand by giving
            a minimum of ninety (90) days written notice to Lessor ("Lessor's
            Expansion Notice") in which Lessee shall advise Lessor of Lessee's
            desire to expand its Premises which expansion premises shall,
            subject to availability, be leased to Lessee at the then current
            rental rate being paid by Lessee for the Premises, and shall
            include a pro rata Lessee Improvement Allowance as calculated below:

                  15.00 x Expansion Square Footage x No. of Months Remaining =
                  Term 60 months where "Number of Months Remaining Term is
                  calculated from the Lease Commencement Date.

            If Lessee exercises such option, the Expansion Premises shall be
            added to the Premises demised by the Lease and an amendment to the
            Lease shall be executed by Lessor and Lessee incorporating the
            Expansion Premises as a part of the Premises, confirming the
            Expansion Premises Commencement Date, the square footage of the
            Expansion Premises and the new total square footage of the
            Premises, increased Basic Rent and the increased Lessee's Pro Rata
            Share.

      61.3  Expansion Increments. Should Lessee exercise its option to expand
            the Premises pursuant to this paragraph 61, Lessee shall be
            required to increase the size of the premises in the following
            increments.

                                                Approximate Rentable
                        Expansion Space             Square Feet
                        ---------------         --------------------

                              A                         4,766
                              A&B                       8,925
                              A,B&C                    16,828

      61.4  Lessee Improvements. Should Lessee exercise its option to expand
            the Premises pursuant to this paragraph 61, Lessee shall, as part
            of the Lessee Improvement Allowance described in paragraph 61.1,
            above, pay for one-half of any demising partition costs, and all
            costs associated with the demolition of any existing demising
            partitions required to accommodate Lessee's expansion.

      61.5  Option for Benefit of Lessee. The option to expand set forth in
            this paragraph 61 is solely for the benefit of Lessee or any
            "Permitted Transferee," as that term is defined in paragraph 63.2,
            below, and such right shall not be exercised by any other sublessee
            or assignee of Lessee.

62.   OPTION TO RENEW.

      62.1  Option: Exercise. Provided Lessee is not in default beyond any
            applicable notice and cure period set forth in the Lease of any
            terms and conditions of the Lease, Lessee shall have an option to
            renew the Lease for an additional five (5) years, Lessee shall
            notify Lessor in writing no earlier than 210 days and no later than
            180 days prior to the termination of the Lease as to its intent to
            exercise the option to renew the Lease. If notification is not
            given and received, this option shall automatically expire.

      62.2  Adjustment of Rent. Base rent for the Option Period will be based
            on the then current Fair Market Rental Rate ("FMRR") for five year
            leases of space comparable to the Premises located in the Sorrento
            Mesa, California area. The FMRR shall be determined as follows:

            62.2.1      The FMRR shall be the effective annual rental rate a
                         space would bring if the space were offered on the
                         open market for lease for a reasonable period of time.


                                      -8-
<PAGE>   23
           62.2.2  Lessor and Lessee shall review and negotiate in good faith
                   such FMRR, and if mutual agreement is reached as to the FMRR,
                   a Lease Amendment setting forth the new monthly Base Rent to
                   be paid for the Premises and the renewal period shall be
                   prepared and executed.

           62.2.3  If mutual agreement is not reached regarding the FMRR to be
                   paid by Lessee within thirty (30) days from the date which
                   Lessee notifies Lessor of its exercise of the option to renew
                   the Lease, then the FMRR to be paid by the Lessee shall be
                   determined as follows:

                   62.2.3.1  One (1) independent third party (licensed
                             California Commercial Real Estate Broker or
                             Appraiser), as provided below, shall be employed to
                             determine the FMRR. As used herein the term FMRR
                             shall mean that Base Rent to be effective during
                             the period, which the Premises would bring if
                             exposed for lease in the open market under all the
                             covenants, terms and conditions contained in the
                             Lease.

                   62.2.3.2  The parties shall agree on the independent third
                             party appraiser. If the parties cannot agree,
                             either party may submit the matter arbitration to
                             make the selection. The independent third party
                             appraiser shall be familiar with the market in
                             Sorrento Mesa, California area.

                   62.2.3.3  The appraiser shall receive written instruments
                             with regard to a value determination as set forth
                             in paragraph 62.2.4, below.

           62.2.4  The value determination of the FMRR for the Premises shall be
                   made by taking into consideration the following factors:

                   62.2.4.1  Quoted and actual rental rates, Lessee's credit
                             rating and the size of the Premises.

                   62.2.4.2  The duration of the Lease term and FMRR in Sorento
                             Mesa, California buildings of size, age,
                             conditions, quality, tenant mix, and tenant
                             improvements similar to the Building.

                   62.2.4.3  The locations, accessibility and amenities of the
                             Building as it relates to the comparative
                             buildings.

                   62.2.4.4  The method of area measurement shall be determined
                             to insure that appropriate adjustments are made to
                             reflect rental rates quoted on a similar method of
                             measurement.

                   62.2.4.5  The appraisal must be completed and submitted
                             within thirty (30) days from the date the appraiser
                             is selected.

           62.2.5  The total costs of the report shall be divided equally by the
                   Lessor and by the Lessee.

           62.2.6  The FMRR determined in accordance herewith shall be final and
                   binding upon the Lessor and Lessee and shall be enforceable
                   by any court of competent jurisdiction.

63.  ASSIGNMENT AND SUBLETTING.

     63.1  Transfer Premium Payment Relative to an Assignment or Sublease. As a
           reasonable condition to Lessor's consent to any assignment or
           sublease (a "Transfer" to a "Transferee" for purposes of this
           paragraph 63), Lessee shall pay to Lessor fifty percent (50%) of any
           Transfer Premium, as defined below. Despite this provision, no
           Transfer Premium is payable for any Transfer by


                                      -9-
<PAGE>   24
            Lessee to an Affiliate of Lessee. An "Affiliate" means any entity
            that controls, is controlled by, or is under common control with
            Lessee. "Control" means the direct or indirect ownership of more
            than fifty percent (50%) of the voting securities of an entity or
            possession of the right to vote more than fifty percent (50%) of the
            voting interest in the ordinary direction of the entity's affairs. A
            "Transfer Premium" means all Rent and other consideration actually
            received by Lessee from a Transferee after deducting:

            63.1.1  The Base Rent payable by Lessee under the Lease for the
                    Premises.

            63.1.2  Reasonable leasing commissions paid by Lessee for the
                    procurement of the Transferee.

            63.1.3  Other reasonable out-of-pocket costs paid by Lessee
                    (including attorneys' fees, advertising costs and expenses
                    of readying the Premises for occupancy by a Transferee).

            63.1.4  Lessee shall pay the Transfer Premium on a monthly basis to
                    Lessor together with Lessee's payment of Rent required by
                    the Lease.

      63.2  Sublease Not Requiring Lessor's Approval. Notwithstanding anything
            to the contrary contained in the Lease, neither (i) an assignment to
            a transferee of all or substantially all of the assets of Lessee,
            (ii) an assignment of the Premises to a transferee which is the
            resulting entity of a merger or consolidation of Lessee with another
            entity, (iii) an assignment or subletting of all or a portion of the
            Premises to an affiliate of lessee an entity which is controlled by,
            controls, or is under common control with, Lessee), nor (iv) a
            public offering of stock by Lessee, shall be deemed an "assignment"
            under paragraph 12 of the Lease, provided that Lessee notifies
            lessor of any such assignment or sublease and promptly supplies
            lessor with any documents or information reasonably requested by
            Lessor regarding such transfer to transferee as set forth in items
            (i) through (iii) above, that such assignment or sublease is not a
            subterfuge by Lessee to avoid its obligations under the Lease (each
            of the foregoing shall be deemed a "Permitted Transferee").
            "Control," as used in this paragraph 63.2, shall mean the ownership
            directly or indirectly, of at least fifty-one percent (51%) of the
            voting securities of, or possession of the right to vote, in the
            ordinary directions of its affairs, of at least fifty-one percent
            (51%) of the voting interest in, any person or entity. Any other
            assignment or subletting of the Premises shall require Lessor's
            written consent, as set forth in paragraph 12 of the Lease, and
            shall be subject to the provisions of this paragraph 63. All other
            provisions of paragraph 12 of the Lease remain in full force and
            effect.

64.  ROOF SPACE LICENSE. Lessor shall grant to Lessee a non-exclusive right to
     install, operate and maintain a satellite dish, antenna devices and related
     equipment (the "Equipment"), including the right to run necessary cabling
     from the Equipment location to the Premises. Such right shall be granted to
     Lessee free of charge. The right granted hereunder shall be exclusively for
     the benefit of Lessee and such right shall not be available to any
     sublessee or assignee of Lessee. Lessee's exercise of its right hereunder
     shall not interfere with the rights of other tenants in the Building or
     Industrial Center.

65.  HAZARDOUS SUBSTANCES. Lessor warrants and representatives to Lessee that,
     to the best of Lessor's actual knowledge without independent investigation
     or inquiry (Lessor acquired the subject property in 1998), as of the
     effective date of the Lease;

     65.1   There has been no release onto or under the Premises or the Building
            of any Hazardous Material in violation of any Environmental Law; and
            Lessor, its agents, entities, employees, representatives, tenants
            and its predecessors-in-interest in the Premises being leased did
            not discharge, release or dispose of in any form any Hazardous
            Materials into or onto the Premises that may result in any violation
            of any federal, state or local laws, regulations or ordinances
            relating to the protection of the environment or the public health
            and welfare.

                                      -10-
<PAGE>   25
65.2  Lessor has received no notice that the Premises or the Building is in
      violation of any Environmental Law; Lessor has no liability and there are
      no outstanding claims against Lessor for the clean up of any material
      substances deposited in the environment, either directly on the Premises
      or elsewhere in the Office Building Project that resulted from or were in
      connection with Lessor's occupation or ownership of the Premises.

65.3  If, during the Lease Term (including any extensions), either Lessor or
      Lessee becomes aware of (a) any actual or threatened release of any
      Hazardous Material on, under, or about the Premises of the Building or
      (b) any inquiry, investigation, proceeding, or claim by any government
      agency or other person regarding the presence of Hazardous Material on,
      under, or about the Premises or the Building, that party shall give the
      other party written notice of the release or investigation within five
      (5) days after learning of it and shall simultaneously furnish to the
      other party copies of any claims, notices of violation, reports, or other
      writings received by the party providing notice that concern the release
      or investigation.

65.4  Lessor and Lessee shall, at that party's sole expense, indemnify, defend
      and hold harmless the other party and the other party's shareholders,
      directors, officers, employees, partners, affiliates and agents with
      respect to all losses arising out of or resulting from the release of any
      Hazardous Material in or about the Premises or the Building, or the
      violation of any Environmental Law, by that party or that party's agents,
      contractors or invitees. This indemnification includes all losses,
      liabilities, obligations, penalties, fines, claims, actions (including
      remedial or enforcement actions of any kind and administrative or
      judicial proceedings, orders or judgments), damages (excluding all
      consequential, special and punitive damages) and costs (including
      attorney, consultants and expert fees and expenses) resulting from the
      release or violation. This indemnification shall survive the expiration
      or termination of the Lease.

65.5  If the presence of any Hazardous Material brought onto the Premises or
      the Building by either Lessor or Lessee or by Lessor's or Lessee's
      employees, agents, contractors or invitees results in contamination of
      the Premises or the Building, that party shall promptly take all
      necessary actions, at that party's sole expense to return the Premises or
      the Building to the condition that existed before the introduction of
      such Hazardous Material. Lessee shall first obtain Lessor's approval of
      the proposed remedial action, which may not be unreasonably withheld or
      delayed. This provision does not limit the indemnification obligations
      set forth in paragraph 65.4, above.

65.6  If Lessor undertakes any cleanup, detoxification or similar action,
      whether or not required by any government or quasi-government agency, as
      a result of the presence, release or disposal in or about the Building of
      any Hazardous Material, and that action requires that Lessee be denied
      access to the Premises or Lessee is otherwise unable to conduct its
      business on the Premises for a period of greater than 24 hours, the Base
      Rent payable by Lessee shall be abated ratably for the period that Lessee
      is unable to conduct does not conduct its business on the Premises. The
      costs of any Hazardous Material cleanup or remediation undertaken by
      Lessor during the Lease Term shall be borne by Lessor, but subject to the
      terms of paragraph 54.1(xx), above, may be included in Operating Expenses
      defined in paragraph 4.2(d) of the Lease.

65.7  As used in this paragraph 66 and the Lease, the term "Hazardous Material"
      shall mean any hazardous or toxic substance, material or waste that is or
      becomes regulated by the United States, the State of California, or any
      local government authority having jurisdiction over the Building.
      Hazardous Material includes:

      65.7.1  Any "hazardous substance," as that term is defined in the
              Comprehensive Environmental Response, Compensation and Liability
              Act of 1980 (CERCLA) (42 United States Code sections 9601-9675).


                                      -11-
<PAGE>   26
           65.7.2 "Hazardous waste," as that term is defined in the Resource
                  Conservation and Recovery Act of 1978 (RCRA)(42 United States
                  Code sections 6901-6992k).

           65.7.3 Any pollutant, contaminant or hazardous, dangerous or toxic
                  chemical, material or substance, within the meaning of any
                  other applicable federal, state or local law, regulation,
                  ordinance or requirement (including consent decrees and
                  administrative orders imposing liability or standards of
                  conduct concerning any hazardous, dangerous or toxic waste,
                  substance or material, now or hereafter in effect).

           65.7.4 Petroleum products.

66.  OWNERSHIP; REMOVAL; SURRENDER; RESTORATION.

     66.1  Notwithstanding the provisions of paragraph 7.4 of the Lease, Lessor
           agrees that upon the expiration or earlier termination of the Lease
           Term, Lessee may elect, but shall not be required (except as set
           forth below and in paragraph 3.2 of the Work Letter Agreement), to
           remove: (a) any improvements installed by Lessee in, on or about the
           Premises pursuant to Lessee's obligation to repair the Premises
           hereunder; (b) any of the initial Lessee Improvements constructed by
           Lessor as a condition and prior to the commencement of the Lease
           Term; and (c) any Alterations or Utility Installations for which
           Lessee has obtained Lessor's prior consent. Notwithstanding the
           foregoing, Lessor shall have the right, upon Lessor's approval of the
           "Final Plans," as that term is defined in the Work Letter Agreement,
           or of any Alterations or Utility Installations, to require Lessee to
           remove the same upon the expiration or earlier termination of the
           Lease, and Lessee shall repair any damage to the Premises or Building
           caused by such removal.

     66.2  Lessee shall, at Lessee's sole cost, repair any damage to the
           Premises and/or the Common Areas caused by Lessee's removal of any
           personal property, equipment, fixtures and/or Alterations and Utility
           Installations at the expiration or earlier termination of the Lease
           Term.

67.  BROKERS. Each party warrants that it has had no dealing with any real
     estate broker or agent in connection with the negotiation of the Lease
     except Chris Pascale of CB Richard Ellis, Inc. ("Lessee's Broker"), and
     Doug Lozier of CB Richard Ellis ("Lessor's Broker"). In the event any claim
     is made for brokerage commissions in connection with the Lease by any
     person other than Brokers, the party whose actions, omissions or
     representations give rise to the claim hereby agrees to indemnify and hold
     harmless the other party from and against, without limitation, all claims,
     damages, liabilities, judgments, attorneys fees, costs or expenses incurred
     by said party in connection with such claim. This paragraph shall inure to
     the benefit of each party, its successor and assigns.

68.  LESSOR'S WARRANTY. Lessor hereby warrants that it is the fee Owner of the
     Premises, that it has authority to enter into the Lease, and that it shall
     take all actions reasonably necessary, at Lessor's sole expense, to defend
     Lessee's rights of possession of the Premises.

69.  ESTOPPEL CERTIFICATE. The Tenancy Statement referred to in paragraph 16.1
     and the "further writings" referred to in line 3 of paragraph 30.4 of the
     Lease each shall be, at the option of the Lessor or a lender or purchaser
     from Lessor, in the customary form of the requesting lender or a purchaser
     of all or a potion of the Building.

                                      -12-
<PAGE>   27
70.  NOTICES.  Copies of any notices given to Lessor pursuant to the provisions
     of paragraph 23.1 of the Lease also shall be given to the local office of
     Lessor within the county in which the Building is located and to Lessor's
     attorney, as follows:

                 Kilroy Realty, L.P.,
                 12348 High Bluff Drive, Suite 110
                 San Diego, California 92130
                 Tel. No. (619) 546-4766
                 Fax No.  (619) 546-4767

                 with a copy to:

                 Kilroy Realty, L.P.,
                 2250 E. Imperial Highway, Suite 1200
                 El Segundo, California 90245
                 Attention: Legal Department
                 Tel. No. (310) 563-5500
                 Fax No.  (310) 322-8790


                                      -13-
<PAGE>   28
                                   EXHIBIT A

                                    PREMISES


                        10120 Pacific Heights Boulevard
                             San Diego, California



                                [PREMISES GRAPH]















                               Exhibit A - Page 1
<PAGE>   29
                                   EXHIBIT B

                                    BUILDING





                                [BUILDING GRAPH]















                               Exhibit B - Page 1
<PAGE>   30
                                   EXHIBIT C

                               INDUSTRIAL CENTER





                           [INDUSTRIAL CENTER GRAPH]















                               Exhibit C - Page 1
<PAGE>   31
                                   EXHIBIT D

                             RULES AND REGULATIONS

1.   Nuisances - No rubbish or debris of any kind shall be placed or permitted
     to accumulate upon or adjacent to the Premises, and no odors shall be
     permitted to arise therefrom, so as to be offensive or detrimental to any
     of the property in the vicinity thereof or to the occupants thereof. No
     nuisance shall be permitted to exist or operate upon or in the Premises so
     as to be offensive or detrimental.

     1.1  Without limiting any of the foregoing, no exterior speakers, horns,
          whistles/bells or other sound devices, except security devices used
          exclusively for security purposes, shall be used or located or placed
          in the Premises.

     1.2  No Lessee shall install or operate any phonograph, musical instrument,
          radio receiver or similar device in the Premises in such manner as to
          disturb or annoy other lessees of the building or the neighborhood.

2.   Trash Containers - All garbage or trash shall be placed and kept in the
     trash and rubbish receptacles maintained by Lessee.

3.   Exterior Storage - No machinery, equipment, material, or supplies shall be
     placed, stored or operated at the exterior or adjacent to any leasehold
     space, so as to be visible from outside the Premises.

4.   Lessee must, upon termination of Lessee's tenancy, return to Lessor all
     keys to stores, offices and toilet rooms, either furnished or to otherwise
     procured by Lessee.

5.   Damage - The toilets and urinals shall not be used for any purpose other
     than those for which they were constructed, and no rubbish, newspapers or
     other substance of any kind shall be thrown into them. Waste and excessive
     or unusual use of water shall not be allowed.

6.   Window Shades - No Lessee shall install blinds, shades, awnings, or other
     forms of inside or outside window coverings, or window ventilators or
     similar devices without the prior written consent of Lessor.

7.   Wiring - Electric wiring of every kind shall be introduced and connected
     as directed by Lessor and no boring or cutting for wires will be allowed
     except with the prior consent of Lessor. Lessee shall not install any
     antennae, aerial wires or other equipment outside the Premises without
     prior written approval of Lessor.

8.   Installation of Floor Coverings - Lessee shall not lay vinyl tile or other
     similar floor covering so that the same shall be affixed to the floor of
     the Premises in any manner except by a paste, or other material, which may
     easily be removed with water, the use of cement or other similar adhesive
     materials being expressly prohibited. The method of affixing any such
     vinyl tile or similar flooring covering to the floor, as well as the method
     of affixing carpets or rugs to the Premises, shall be subject to approval
     by Lessor. The expense of repairing any damage resulting from a violation
     of this rule, shall be borne by Lessee.



                               EXHIBIT D - Page 1

<PAGE>   32
                              KILROY REALTY, L.P.,
                     2250 EAST IMPERIAL HIGHWAY, SUITE 1200
                          EL SEGUNDO, CALIFORNIA 90245
                                 (310) 563-5500


August 1, 1999

Medibuy.com, Inc.
10120 Pacific Heights Boulevard
San Diego, California 92121

          "LESSEE"

REFERENCE: Work Letter Agreement

     In accordance with the provisions of paragraph 1.3 of your Lease, dated
August 1, 1999, with the undersigned Lessor, the "Lessee Improvement Work" (as
hereinafter defined) to the Premises shall be completed by Lessor substantially
in accordance with the following:

1.   GENERAL INTENT

     1.1  It is the intent of this Work Letter Agreement that Lessee shall be
permitted freedom in the interior design and layout of Lessee's Premises so
long as the same is consistent with Lessor's policies, Building Standards (as
hereinafter defined) and structural requirements, applicable City of San Diego
building codes, and with sound architectural and construction practice, and
provided further that no interference is caused to the operation of the
Building's mechanical heating, cooling, electrical systems or structure or
other Building operations or functions, and that no increase in maintenance,
insurance, taxes, fees or utility charges will be incurred by Lessor as a
result thereof. Any additional cost of design, construction, operation,
insurance premiums, maintenance, taxes, fees or utilities which results from
"Above Standard Lessee Improvement Work" (as hereinafter defined) shall be
charged to Lessee and paid for by Lessee in accordance with the provisions
hereof and of the Lease.

2.   PREPARATION OF LESSEE'S PLANS

     2.1  Space Planner; Lessee Plans

     Lessor has provided the services of Lessor's space planner who, in
consultation with Lessee, prepared a space layout for the Premises ("Lessee's
Plans"). The cost of the Lessee's Plans, including revisions, shall be deducted
from Lessor's Lessee Improvement Allowance (as hereinafter defined). The
Lessee's Plans for the Improvements to the Premises ("Lessee Improvement Work")
shall:

          2.1.1  be compatible with the design, construction and equipment of
the Building;

          2.1.2  comply with all applicable laws and ordinances and the rules
and regulations of all governmental authorities having jurisdiction;

          2.1.3  include locations and complete dimensions; and

          2.1.4  contain all such information as may be required for the
preparation of the "Engineering Drawings" (as hereinafter defined), if required
for the remodel.



                                  EXHIBIT "E"

                               Page 1 of 6 Pages
<PAGE>   33
     2.2  Time Limits

     Lessee shall devote such time in consultation with Lessor's space planner
as shall be necessary to enable the planner to prepare the complete working
drawings which shall constitute the Lessee's Plans. The following maximum time
periods shall be allowed for the preparation of the Lessee's Plans:

<TABLE>
<CAPTION>
                                                            TIME LIMIT AFTER
                                                            COMPLETION OF
                             ACTION                         PRECEDING ITEM
                             ------                         ----------------
<S>                 <C>                                     <C>
          2.2.1     Lessee approved Space Plan              Completed
                    No. 99260, dated July 8, 1999,          (approved by Lessee
                    prepared by Smith Consulting            on July 12, 1999)
                    Architects ("Approved Space Plan"),
                    a copy of which is attached hereto
                    as Exhibit "E-1."

          2.2.2     Lessee furnishes complete working       15 working days
                    drawing information to Lessor's
                    space planner

          2.2.3     Lessor's space planner submits          5 working days
                    working drawings to Lessee for
                    review and approval

          2.2.4     Lessee gives Lessor its approval of     5 working days
                    working drawings with any required
                    changes in detail (and this shall
                    constitute approval by Lessee).
</TABLE>

     2.3  Preparation of Engineering Drawings

     Lessor shall prepare from Lessee's Plans complete mechanical and
engineering working drawings (the "Engineering Drawings"), including the layout
for complete electrical and plumbing work and for air conditioning (Lessee's
Plans and the Engineering Drawings are herein collectively called the "Final
Plans") on a design-build basis performed by the "TI Contractor," as that term
is defined in paragraph 6.1, below.

     2.4  Changes at Lessee's Expense

     If the Final Plans or any amendment thereof or supplement thereto shall
require alterations in the Building (as contrasted with the Lessee Improvement
Work), and if Lessor in its sole and exclusive discretion agrees to any such
alterations, and notifies Lessee of the need and cost for such alterations,
then Lessee shall have the option to revise the Final Plans or pay the cost of
such required changes upon receipt of bills therefor. Lessee shall pay all
direct architectural and/or engineering fees in connection therewith.

3.   LESSEE IMPROVEMENT WORK

     3.1  Definition of Work

     "Above Standard Lessee Improvement Work" means (a) any part of the Lessee
Improvement Work which does not constitute Building standard Lessee
Improvements, including, but not limited to, plumbing and millwork; (b) any
changes in or additions to the Lessee Improvement Work made at the request of
Lessee or due to any other act or omission on the part of Lessee; and (c) a
configuration of the Lessee Improvement Work which is not usual and customary
for normal occupancy. Lessor shall not be obligated to furnish or install any
item not included in the Lessee Improvement Work.



                                  EXHIBIT "E"

                               Page 2 of 6 Pages

<PAGE>   34


     3.2  Removal of Building Nonstandard Lessee Improvement Work

     If directed so to do by Lessor at the time of approval of the Final Plans,
Lessee at its costs and expense shall remove any Above Standard Lessee
Improvement Work from the Premises designated by Lessor, and shall replace such
designated Above Standard Lessee Improvement Work to be removed with Building
standard Lessee Improvement Work. Such replacement of Above Standard Lessee
Improvement Work shall be performed promptly and shall be completed by Lessee
on or before the end of the Term of the Lease.

4.   COST OF THE WORK

     4.1  Definition of Work Cost

     "Work Cost means, as to any part of the Lessee Improvement Work, the total
of all actual costs and charges incurred by Lessor in doing such part of the
Lessee Improvement Work and/or in having it done by a contractor or contractors
under the supervision of Lessor (including in such costs and charges the
reasonable fees of any engineers whose services may be required because of the
nature of the Lessee Improvement Work), plus two percent (2%) of such actual
hard costs and charges for Lessor's supervision and overhead if the Lessee
Improvement Work is performed by an independent general contractor. The total
Work Cost shall be set forth in a construction budget which shall be approved
by Lessee prior to the commencement of the Lessee Improvement Work.

     4.2  Lessor's Lessee Improvement Allowance

     Lessor shall provide an allowance to construct the Lessee Improvement
Work included within the Premises, as shown on the Approved Space Plan, in an
amount not to exceed Five Hundred Forty-One Thousand and Three Hundred
Sixty-Five Dollars ($541,365.00) ("Lessor's Lessee Improvement Allowance"),
i.e., Fifteen Dollars ($15.00) per usable square foot contained in the
Premises, except as set forth in paragraph 4.3, below. Lessee shall be
responsible for and Lessee shall pay for any items shown on the approved space
plan as "Not Included" ("NIC"), "Lessee to Install," "Lessee to Provide," or
"Lessee to Provide and Install." All costs of the Lessee Improvement Work in
excess of Lessor's Lessee Improvement Allowance, except as set forth in
paragraph 4.3, below, shall be paid for by Lessee within thirty (30) days after
receipt of an invoice therefor from Lessor. Lessor's Lessee Improvement
Allowance shall be increased or decreased in the event the square feet of the
Premises shall be increased or decreased, and upon the occurrence of such event
an amendment to the Lease shall be executed by Lessor and Lessee confirming
such new Lessor's Lessee Improvement Allowance. Any costs incurred due to the
remediation of Hazardous Materials which were not brought onto the Premises,
Building or Industrial Center by Lessee or its agents shall not be included in
the Work Cost and shall instead be the responsibility of Lessor.

     4.3  Lessor's Excess Tenant Improvement Allowance

     Lessor shall provide an additional allowance at Lessee's request to
construct additional Lessee Improvement Work included within the Premises, as
shown on the Approved Space Plan ("Lessor's Additional Lessee Improvement
Allowance"), in an amount not to exceed One Hundred Eighty Thousand and Four
Hundred Fifty-Five Dollars ($180,455.00), i.e., Five Dollars ($5.00) per usable
square foot contained in the Premises. Lessee shall continue to be responsible
for and Lessee shall pay for any items shown on the approved space plan as
"Lessee to Install," "Lessee to Provide," or "Lessee to Provide and Install."
The Lessee Improvement Allowance shall be amortized over the initial Term of
the Lease, with interest thereof at a rate of ten percent (10%) per annum,
compounded annually ("Amortized Work Cost") and such Amortized Work Cost shall
be payable monthly in advance as Additional Rent pursuant to the Lease. All
costs of the Additional Lessee Improvement Allowance in excess of the
Amortized Work Cost shall be paid for by Lessee within thirty (30) days after
receipt of an invoice therefor from Lessor.

     4.4  Cost of Lessee Improvement Work

     Prior to Lessor's commencement of any Lessee Improvement Work not included
as part of the Final Plans, or shown thereon as NIC or Lessee to Install,
Lessee to Provide, or Lessee to Provide and Install, or any cost above
Lessor's Lessee Improvement Allowance or Additional Lessee Improvement
Allowance ("Extra Work"), Lessor, or its contractor or architect, shall submit
to Lessee a written estimate of the cost thereof, in excess of Lessor's Lessee
Improvement

                                  EXHIBIT "E"

                               Page 3 of 6 Pages
<PAGE>   35
Allowance or Additional Lessee Improvement Allowance, to be determined as
provided in paragraph 4.1. If Lessee approves such estimate it shall notify
Lessor in writing within ten (10) days, pay to Lessor the full amount of such
estimate in excess of Lessor's Lessee Improvement Allowance or Additional
Lessee Improvement Allowance within thirty (30) days, and Lessor's contractor
shall proceed with such work. If Lessee fails to provide to Lessor written
notice of its approval of such costs within ten (10) days after submission
thereof to Lessee, such failure shall be deemed a disapproval thereof, and
Lessor's contractor shall not be required to proceed with such Extra Work. It
is understood by the parties hereto that Lessee shall thereupon be liable for
any delay and any increased cost in completing the Lessee Improvement Work
caused thereby. Notwithstanding any such estimate or sum delivered to Lessor,
Lessee shall nevertheless be responsible for and pay the actual Work Cost of
the Extra Work in excess of Lessor's Lessee Improvement Allowance, immediately
upon receipt of bills therefor showing the actual cost of the Lessee
Improvement Work prior to Lessee taking occupancy of the Premises.

5.   COMPLETION, TERM AND RENTAL COMMENCEMENT DATE

     5.1  Delays in Completion

     Pursuant to the provisions of paragraphs 3.3 and 4.1 of the Lease the Term
and Lessee's obligation for the payment of rent under the Lease commences when
Lessor has substantially completed the Lessee Improvement Work; provided,
however, that if Lessor shall be delayed in substantially completing the Lessee
Improvement Work as a result of:

          5.1.1 Lessee's failure to meet the time limits set forth in
paragraph 2.2 hereof;

          5.1.2 Lessee's request for materials, finishes, or installations
other than Lessor's Building Standard Lessee Improvements, as described in
Exhibit "E-1" to this Work Letter agreement; or

          5.1.3 Lessee's changes in the Lessee's Plans after their submission
to Lessor in accordance with the provisions of paragraph 2.2.4 of this Work
Letter Agreement; or

          5.1.4 Delays in performance or completion caused by Lessee or a party
employed by Lessee; or

          5.1.5 Building Code problems inherent from special or unusual
improvements included as a part of the Lessee Improvement Work;

(each of the foregoing shall be individually referred to as a "Lessee Delay")
then in any such events the scheduled date that the Premises are to be Ready
for Occupancy shall be extended by the number of days of such delay(s) and the
commencement of the Term of the Lease and the obligation to pay rent shall be
accelerated by the number of days of such delay(s).

     5.2  Punch List Items

     Lessor and Lessee agree that the substantial completion of the Lessee
Improvement Work shall not include items of work and adjustment of equipment
and fixtures which can be completed after occupancy has been taken without
causing substantial interference with Lessee's use of the Premises (i.e.,
so-called "punch list items"). It is expressly understood by the parties that
Ready for Occupancy does not include the completion of a telephone system in
the Premises.

     5.3  Lessee's Acceptance of the Premises

     Subject to the terms and conditions of the Lease, Lessee will inspect the
Building and the Premises prior to the delivery of possession of the Premises
and will be thoroughly acquainted with their condition, and, subsequent to the
completion by Lessor of the Lessee Improvement Work, Lessee agrees to take the
same "as is." Subject to the terms and conditions of the Lease, Lessee
acknowledges that the taking of possession of the Premises by Leases shall be
conclusive evidence that the Premises and the Building were in good and
satisfactory condition at the time such possession was so taken, subject to the
obligation of Lessor to complete punch list obligations.

                                  EXHIBIT "E"

                               Page 4 of 6 Pages
<PAGE>   36
6.   CONSTRUCTION BY LESSOR'S CONTRACTOR

     6.1  Lessee agrees that, unless otherwise agreed in writing in this Work
Letter Agreement, all construction work in the Premises including Above
Standard Lessee Improvement Work shall be performed by Kilroy Services, Inc.
("TI Contractor") retained by Lessor. The TI Contractor shall perform such work
in a good and workmanlike manner and shall construct the improvements in the
Premises substantially in accordance with the Final Plans.

7.   LESSEE COORDINATOR

     7.1  Lessor has designated a "Project Manager" who shall be responsible
for the implementation of all Lessee Improvement Work to be performed by Lessor
in the Premises. With regard to all matters involving such Lessee Improvement
Work, Lessee shall communicate with the Project Manager rather than with the TI
Contractor. Lessor shall not be responsible for any statement, representation
or agreement made between Lessee and the TI Contractor or any subcontractor. It
is hereby expressly acknowledged by Lessee that such TI Contractor is not
Lessor's agent and has no authority whatsoever to enter into agreement on
Lessor's behalf or otherwise bind Lessor. The Project Manager will furnish
Lessee with notices of substantial completion, cost estimates for Above
Standard Lessee Improvement Work, Lessor's approvals or disapprovals of Plans
and changes thereto.

8.   CHANGES

     8.1  If Lessee requests or necessitates any change, addition or deletion
to the Premises after approval of the Lessee Plans pursuant to paragraph 2.2, a
request for the change shall be submitted to the Project Manager accompanied by
revised plans prepared by Lessor's space planner or architect at Lessee's sole
expense. The Project Manager shall thereafter notify Lessee's authorized
representative in writing of the estimated cost which will be chargeable to
Lessee by reason of such change, addition or deletion. Such estimated cost
shall include Lessor's cost of any delay in completion of the Premises
resulting from such change (including loss of rent, additional interest, and
extra labor costs incurred in order to minimize further delay). Lessee shall
within five (5) business days thereafter notify the Project Manager in writing
if it desires to proceed with such change. In the absence of such written
authorization, Lessor shall not be obligated to perform such change and shall
be deemed to have been authorized by Lessee to proceed without making such
change. All Costs of the Lessee Improvement Work in excess of Lessor's Lessee
Improvement Allowance shall be paid for by Lessee immediately upon receipt of
an invoice therefor from Lessor, but in any event prior to Lessee taking
occupancy of the Premises.

9.   SUBSIDIARY OF LESSOR AS TI CONTRACTOR

     9.1  Lessor may cause the Lessee Improvement Work to be performed by a
subsidiary or affiliate of Lessor. In such event Lessor shall so notify Lessee
and such TI Contractor shall be responsible as an agent of Lessor and shall
bind Lessor notwithstanding any contrary provision of paragraph 6.1, above.

10.  INTENTIONALLY DELETED

11.  NOTICES; DEFAULT

     11.1 Any notice, statement, advice, approval, consent or other
communication required or permitted to be given by either party to the other
pursuant to this Work Letter Agreement shall be given in the manner set forth
in paragraph 23 of the Lease. Upon default of Lessee in payment of any sum to
be paid by Lessee pursuant to this Work Letter Agreement, Lessor shall (in
addition to all other remedies) have all the rights as in the case of default
by Lessee in payment of rent under the Lease.


                                  EXHIBIT "E"

                               Page 5 of 6 Pages

<PAGE>   37

     If the foregoing correctly sets forth our understanding, kindly sign
copies of this Work Letter Agreement where indicated.

     The foregoing Work Letter Agreement correctly sets forth our understanding
as of the date first hereinabove set forth.

                                        KILROY REALTY, L.P.,
                                        A Delaware Limited Partnership

                                        By: KILROY REALTY CORPORATION,
                                            A Maryland Corporation,
                                            General Partner

                                            By:
                                                --------------------------------

                                            Title:
                                                   -----------------------------

                                            By:
                                                --------------------------------

                                            Title:
                                                   -----------------------------

                                                           "LESSOR"



                                        MEDIBUY.com, INC.,
                                        A Delaware Corporation

                                        By:
                                            ------------------------------------

                                        Title:
                                               ---------------------------------

                                        By:
                                            ------------------------------------

                                        Title:
                                               ---------------------------------

                                                           "LESSEE"




                                  EXHIBIT "E"

                               Page 6 of 6 Pages