<PAGE>


                                 SORRENTO RIM II

                                  OFFICE LEASE

         This Office Lease (the "LEASE"), dated as of the date set forth in
Section 1 of the Summary of Basic Lease Information (the "SUMMARY"), below, is
made by and between KILROY REALTY, L.P., a Delaware limited partnership
("LANDLORD"), and NEWGEN RESULTS CORPORATION, a Delaware corporation ("TENANT").

                       SUMMARY OF BASIC LEASE INFORMATION


         TERMS OF LEASE                               DESCRIPTION
         --------------                               -----------
1.       Date:                               March 27, 2000

2.       Premises

         2.1      Building:                  That certain three (3)-story
                                             building to be located on the
                                             Northeast quadrant of Mira Mesa
                                             Boulevard and Genetic Center
                                             Drive in the "Project," which
                                             building shall contain
                                             approximately 102,875 rentable
                                             square feet of space.

         2.2      Premises:                  All of the approximately
                                             102,875 rentable square feet of
                                             space located in the Building
                                             and that certain three (3)
                                             level "Building Parking
                                             Structure," as that term is set
                                             forth in Section 1.1.2 of the
                                             Lease, all as further set forth
                                             in EXHIBIT A to the Office
                                             Lease.

         2.3      Project:                   The Building is part of a
                                             single-building office project
                                             known as "Sorrento Rim II", as
                                             further set forth in SECTION
                                             1.1.2 of this Lease.


3.       Lease Term
         (Article 2).

         3.1      Length of Term:            Fifteen (15) years and no
                                             (0) months.

         3.2      Lease Commencement Date:   April 1, 2001, subject to
                                             extension pursuant to Section 4
                                             of the Tenant Work Letter
                                             attached to this Lease as
                                             EXHIBIT B.


                                       -1-
<PAGE>


         3.3      Lease Expiration Date:     The date immediately preceding
                                             the 15th anniversary of the
                                             Lease Commencement Date.

         3.4      Option Term(s):            Two (2) five (5)-year options
                                             to renew, as more particularly
                                             set forth in Section 2.2 of
                                             this Lease.

4.       Base Rent (Article 3):

<TABLE>
<CAPTION>

                                                                                                    Monthly
                                                                       Monthly                    Rental Rate
                                         Annual                      Installment                 per Rentable
Lease Year                             Base Rent                    of Base Rent                  Square Foot
----------                             ---------                    ------------                  -----------
<S>                                    <C>                          <C>                           <C>
1-2                                    $2,789,970.00                   $232,497.50                    $2.26
3-4                                    $2,985,021.00                   $248,751.75                    $2.418
5-6                                    $3,193,651.44                   $266,137.62                    $2.587
7-8                                    $3,418,330.44                   $284,860.87                    $2.769
9-10                                   $3,656,589.00                   $304,715.75                    $2.962
11-12                                  $3,913,365.00                   $326,113.75                    $3.170
13-14                                  $4,187,424.00                   $348,952.00                    $3.392
15                                     $4,480,000.44                   $373,333.37                    $3.629

</TABLE>

6.       Tenant's Share                      One hundred percent (100%).
         (Article 4):

7.       Permitted Use                       Tenant shall use the Premises
         (Article 5):                        solely for general office,
                                             engineering, customer support
                                             and service, telemarketing,
                                             customary purposes ancillary to
                                             the foregoing, and any other
                                             legally permitted use pursuant
                                             to the M1B zoning applicable to
                                             the Building.

8.       Security Deposit                    Tenant shall fund a letter of
         (Article 21):                       credit in an initial amount of
                                             $2,789,970.00, in the form more
                                             particularly set forth in
                                             Article 21, and subject to
                                             reductions pursuant to the
                                             terms of Article 21.

9.       Parking Passes                      No less than nine hundred (900)
         (Article 28):                       reserved, exclusive parking spaces
                                             in the Building Parking
                                             Structure and the surface
                                             parking spaces, located
                                             adjacent to the Building as
                                             more particularly indicated on
                                             EXHIBIT A.


                                       -2-
<PAGE>


10.      Address of Tenant                   NewGen Results Corporation
         (Section 29.18):                    12680 High Bluff Drive, Suite 300
                                             San Diego, California  92130
                                             Attention: Mr. Chris Clark or
                                                        the Facilities Manager
                                                        (Prior to Lease
                                                        Commencement Date)

         and                                 at the Premises to the
                                             attention of Mr. Chris Clark
                                             (After Lease Commencement Date)

         with a copy to:                     Procopio, Cory, Hargreaves &
                                             Savitch LLP
                                             530 B Street, Suite 2100
                                             San Diego, California  92101-4469
                                             Attention: Todd E. Leigh, Esq.

11.      Address of Landlord                 See Section 29.18 of the Lease.
         (Section 29.18):

12.      Broker(s)                           Mr. David B. Marino
         (Section 29.24):                    Executive Vice President
                                             The Irving Hughes Group
                                             501 West Broadway, Suite 2020
                                             San Diego, CA  92101

13.      Tenant Improvement Allowance        $30.00 per Rentable Square Foot of
         (Section 2 of EXHIBIT B):           the Premises ($3,086,250.00 based
                                             on 102,875 Rentable Square Feet
                                             of Space).


                                       -3-
<PAGE>


                                    ARTICLE 1

                  PREMISES, BUILDING, PROJECT, AND COMMON AREAS


     1.1 PREMISES, BUILDING, PROJECT AND COMMON AREAS.

         1.1.1 THE PREMISES. Landlord hereby leases to Tenant and Tenant hereby
leases from Landlord the premises which are to be constructed by Landlord and
are set forth in Section 2.2 of the Summary (the "PREMISES"). The outline of the
Premises is set forth in EXHIBIT A attached hereto and the Premises shall have
approximately the number of rentable square feet as set forth in Section 2.2 of
the Summary. The parties hereto agree that the lease of the Premises is upon and
subject to the terms, covenants and conditions herein set forth, and Tenant
covenants as a material part of the consideration for this Lease to keep and
perform each and all of such terms, covenants and conditions by it to be kept
and performed and that this Lease is made upon the condition of such
performance. The parties hereto hereby acknowledge that the purpose of EXHIBIT A
is to show the approximate location of the "Building" and the "Building Parking
Facility," as those terms are defined in Section 1.1.2, below, only, and such
Exhibit is not meant to constitute an agreement, representation or warranty as
to the construction of the Premises, the precise area thereof or the specific
location of the "COMMON AREAS," as that term is defined in Section 1.1.3, below,
or the elements thereof or of the accessways to the Premises or the "PROJECT,"
as that term is defined in Section 1.1.2, below. Except as specifically set
forth in this Lease and in the Tenant Work Letter attached hereto as EXHIBIT B
(the "TENANT WORK LETTER"), Landlord shall not be obligated to provide or pay
for any improvement work or services related to the improvement of the Premises.
Tenant also acknowledges that neither Landlord nor any agent of Landlord has
made any representation or warranty regarding the condition of the Premises, the
Building or the Project or with respect to the suitability of any of the
foregoing for the conduct of Tenant's business, except as specifically set forth
in this Lease and the Tenant Work Letter. The taking of possession of the "Base
Building," as that term is defined in Section 1.1 of the Tenant Work Letter and
Section 8.2 of this Lease, by Tenant shall conclusively establish that the Base
Building is at such time in good and sanitary order, condition and repair,
subject only to punchlist items and Landlord's obligations set forth in Article
7 of this Lease with respect to the condition and repair of the Base Building,
including, without limitation, Landlord's obligation to maintain in accordance
with Section 7.1 the "Building Structure" and the "Building Systems," as those
terms are defined in Section 7.1 of this Lease.

         1.1.2 THE BUILDING AND THE PROJECT. The Premises shall consist of the
building set forth in Section 2.1 of the Summary (the "BUILDING") and the three
(3) level parking structure located adjacent to the Building (the "BUILDING
PARKING STRUCTURE"). The Building and Building Parking Structure are part of a
single building office project known as "Sorrento Rim II." The term "PROJECT,"
as used in this Lease, shall mean (i) the Building and the Common Areas as shown
on the Project Site Plan attached hereto as EXHIBIT A-1, (ii) the land (which is
improved with landscaping, parking areas and other improvements) upon which the
Building and the Common Areas are located, the legal description of which is
attached hereto as EXHIBIT A-2, and (iii) the Building Parking Structure, the
land upon which the Building Parking Structure is


                                      -4-
<PAGE>


located, and the surface parking located on the Project as more particularly
indicated on EXHIBIT A-1, which, collectively, shall contain no fewer than 900
reserved, exclusive parking spaces.

         1.1.3 COMMON AREAS. Tenant shall have the exclusive right to use,
subject to the rules and regulations referred to in Article 5 of this Lease and
the "CC&R's," as that term is set forth in Section 5.3 of this Lease, those
portions of the Project which are provided, from time to time, for use in common
by Landlord, Tenant and any other tenants of adjacent projects (the "COMMON
AREAS"). The Common Areas shall consist of the portion of the Building and
Project designated as such by Landlord. The manner in which the Common Areas are
maintained and operated shall be at the reasonable discretion of Landlord and
the use thereof shall be subject to such reasonable "Rules and Regulations" as
Landlord may make from time to time as provided in Section 5.2 of this Lease,
provided that Landlord shall at all times maintain and operate the Common Areas
in a first-class manner consistent with the "Comparable Buildings," as such term
is defined in Section 1.5.2 of this Lease. Landlord reserves the right to close
temporarily, make alterations or additions to, or change the location of
elements of the Project and the Common Areas, as long as such changes do not
change the nature of the Project to something other than a first-class office
building project or materially, adversely effect Tenant's use of the Premises
for the Permitted Use, as set forth in Section 7 of the Summary, or Tenant's
ingress to or egress from the Project, Building, the Premises or the parking
areas servicing the same. Except when and where Tenant's right of access is
specifically excluded as the result of (i) an emergency, (ii) a requirement by
law, or (iii) a specific provision set forth in this Lease, Tenant shall have
the right of ingress and egress to the Premises, the Building and the Project
parking areas twenty-four (24) hours per day, seven (7) days per week,
commencing on the "Initial Base Building Delivery Date," as that term is defined
in Section 1 of the Tenant Work Letter, and continuing until the date this Lease
terminates.

     1.2 VERIFICATION OF RENTABLE SQUARE FEET OF PREMISES AND BUILDING. For
purposes of this Lease, "rentable square feet" and "usable square feet" shall be
calculated pursuant to Standard Method of Measuring Floor Area in Single Tenant
Office Building, ANSI Z65.1 - 1996 ("BOMA"). Within thirty (30) days after the
Lease Commencement Date, Landlord's space planner/architect shall measure the
rentable and usable square feet of the Premises, and thereafter the rentable and
usable square feet of the Premises is subject to verification from time to time
by Landlord's space planner/architect and such verification shall be made in
accordance with the provisions of this SECTION 1.2. Tenant shall have the right,
exercisable within forty-five (45) days after its written receipt of such
determination by Landlord's space planner/architect, to remeasure the Premises
within such forty-five (45) day period. Landlord shall have ten (10) business
days after its receipt of the results of such remeasurement to either (i) accept
Tenant's remeasurement determination in writing, in which event all amounts,
percentages and figures appearing or referred to in this Lease based upon an
incorrect amount (including, without limitation, the amount of the Rent and the
Tenant Improvement Allowance) shall be modified in accordance with such
determination, or (ii) reject Tenant's determination in which event such dispute
will be resolved pursuant to binding arbitration by (and in accordance with the
rules of) the American Arbitration Association. Upon the resolution of such
dispute through such binding arbitration, (i) all amounts, percentages and
figures appearing or referred to in this Lease based upon an incorrect amount
(including, without limitation, the amount of the Rent and Tenant Improvement
Allowance) shall be modified in accordance with such determination, and (ii) any
payments due to Landlord from Tenant based upon the amount of square feet
contained in the Premises shall be


                                      -5-
<PAGE>


proportionally, retroactively (to the point of the applicable verification
initiating such process) and prospectively reduced or increased, as appropriate,
to reflect the actual number of square feet as properly remeasured under the
BOMA standard. In any event, upon reaching a final determination, it will be
confirmed in writing by Landlord and Tenant.

     1.3 NEW BUILDING OPTION. Throughout the initial Lease Term and the first
"Option Term," as that term is set forth in Section 2.2.1 of this Lease, if any,
Landlord hereby grants to the "Original Tenant," and its "Affiliates," as those
terms are defined in Section 2.2.1 and 14.8 of this Lease, respectively, an
exclusive option to lease a new building on the northern portion of the Project
(the "NEW BUILDING"), the exact location of which New Building is to be
determined at the time of, and in connection with, Tenant's exercise of Tenant's
option set forth in this Section 1.3. Tenant's option to lease such New Building
(the "NEW BUILDING OPTION") shall be on the terms and conditions set forth in
this Section 1.3.

         1.3.1 TENANT DEMAND. During the initial Lease Term and the first Option
Term, if any, Tenant may, upon written notice (the "NEW BUILDING DEMAND NOTICE")
to Landlord, irrevocably exercise its option to lease the New Building, in which
event Landlord shall, subject to the remaining terms and conditions of this
Section 1.3.1, construct the New Building. Notwithstanding the foregoing,
Landlord may, (1) within ten (10) business days following receipt of the New
Building Demand Notice, provide Tenant with a factually correct written notice
(the "UNAVAILABILITY NOTICE") that Landlord does not then possess the required
governmental entitlements to construct such New Building containing a minimum of
50,000 rentable square feet up to 80,000 rentable square feet (the exact square
footage of such New Building to be determined and agreed upon by Landlord and
Tenant pursuant to Section 1.3.3, below), or (2) within twenty (20) business
days following the "New Building Rent Meeting," as that term is set forth in
Section 1.3.3 below, provide Tenant with a written notice (the "FAILURE TO AGREE
NOTICE") that Landlord, in its sole and absolute discretion, was unable to reach
an agreement with Tenant regarding the "New Building Rent," as that term is set
forth in Section 1.3.3, below, in which event the New Building Demand Notice
shall be void and of no force or effect, and Landlord shall have no obligation
to construct the New Building and lease the same to Tenant based upon Tenant's
delivery of the New Building Demand Notice, but Tenant shall have the continuing
option, from time to time during the initial Lease Term and the first Option
Term, if any, to send another New Building Demand Notice to Landlord in
accordance with and subject to the terms and conditions of this Section 1.3. In
the event that Landlord does not deliver the Unavailability Notice or Failure to
Agree Notice pursuant to the terms and conditions of this Section 1.3.1, then
within thirty (30) business days following receipt of the New Building Demand
Notice, Landlord shall deliver to Tenant a written notice (the "NEW BUILDING
TERMS NOTICE") indicating the exact location and approximate size of the New
Building and the New Building Rent.

         1.3.2 DELIVERY OF THE NEW BUILDING. Landlord shall deliver the New
Building to Tenant in the "Initial NB Delivery Condition," as that term is set
forth hereinbelow, on or before the "INITIAL NB DELIVERY DATE" which in such
instance shall be eighteen (18) months following the "New Building Option
Trigger Date," as that term is defined, below, and shall deliver the New
Building to Tenant in the "Final NB Building Delivery Condition," as that term
is set forth hereinbelow, on or before the "New Building Commencement Date," as
that term is defined in Section 1.3.5.2, below; provided, however, such Initial
NB Delivery Date and New


                                      -6-
<PAGE>


Building Commencement Date shall be subject to Force Majeure. Landlord shall
deliver the base building drawings applicable to the New Building to Tenant at
least thirty (30) days prior to the date Landlord submits such base building
drawings to the appropriate governmental agencies/entities for the required
approvals and permits. For purposes of this Section 1.3.2, the "NEW BUILDING
OPTION TRIGGER DATE" shall be the date Landlord delivers the New Building Terms
Notice. For purposes of this Section 1.3, (a) the "Initial NB Delivery
Condition" shall mean the same as the "Initial Delivery Condition," as that term
is defined in Section 1.2 of the Tenant Work Letter, and (b) the "Final NB
Delivery Condition" shall mean the same as the "Final Delivery Condition," as
that term is defined in Section 1.2 of the Tenant Work Letter.

         1.3.3 NEW BUILDING RENT. Unless Landlord has delivered an
Unavailability Notice to Tenant pursuant to Section 1.3.1, above, Landlord and
Tenant shall, within ten (10) business days following Landlord's receipt of the
New Building Demand Notice from Tenant, meet (the "NEW BUILDING RENT MEETING")
to determine the rent to be payable by Tenant for, and the other material
economic terms (including the approximate size of the New Building and any
credit enhancement by Tenant) relating to, the New Building (the "NEW BUILDING
RENT"). Upon agreement by Landlord and Tenant of the New Building Rent, which
agreement shall be in writing, Tenant shall be deemed to have irrevocably
exercised the New Building Option set forth in this Section 1.3. In the event
Landlord and Tenant are unable to reach agreement in such initial New Building
Rent Meeting, Landlord and Tenant shall schedule additional New Building Rent
Meetings in which to attempt to reach agreement on such New Building Rent. In
the event Landlord and Tenant do not agree in writing, each in their sole and
absolute discretion, upon the New Building Rent within twenty (20) business days
of the initial New Building Rent Meeting, Landlord shall be deemed to have
delivered to Tenant the Failure to Agree Notice, pursuant to the terms of
Section 1.3.1, above.

         1.3.4 CONSTRUCTION IN NEW BUILDING. Tenant shall take the New Building
in its "as is" condition, except as specifically set forth in this Section 1.3.
The construction of improvements in the New Building shall comply with the terms
and conditions of EXHIBIT B attached hereto (provided, however, the appropriate
modifications shall be made thereto to reflect the appropriate tenant
improvement allowance and the other provisions of the New Building Rent).

         1.3.5 AMENDMENT TO LEASE.

               1.3.5.1 IN GENERAL. If Tenant timely exercises Tenant's option to
lease the New Building as set forth herein, Landlord and Tenant shall within
thirty (30) days thereafter execute an amendment to this Lease (the "NEW
BUILDING AMENDMENT") for such New Building upon the terms set forth in the New
Building Term Notice, but otherwise upon the terms and conditions set forth in
this Lease and this Section 1.3. Notwithstanding the foregoing, Landlord may, at
its sole and absolute option, require that a separate lease be executed by
Landlord and Tenant in connection with Tenant's lease of the New Building, in
which event such lease (the "NEW BUILDING LEASE") shall be on the same terms and
conditions as the initial Premises, except as provided in this Section 1.3 and
in this Lease. The New Building Lease, if applicable, shall be executed by
Landlord and Tenant within thirty (30) days following Tenant's exercise of its
option to lease the New Building.


                                      -7-
<PAGE>


               1.3.5.2 TERM. Tenant shall commence payment of Rent (subject to
Section 1.3.3 of this Lease) for the New Building, and the term of the New
Building (the "NEW BUILDING TERM") shall commence (the "NEW BUILDING
COMMENCEMENT DATE") on the earlier of (i) the date Tenant opens for business in
the New Building, and (ii) the date which is one hundred twenty (120) days after
the Initial NB Delivery Date (the "NEW BUILDING TI CONSTRUCTION PERIOD"),
provided that such New Building TI Construction Period (1) shall be considered
in calculating the Market Rent, and (2) shall be extended for "Force Majeure
Delays" and "Landlord Caused Delays," as those terms are defined in Section 5 of
the Tenant Work Letter, and shall terminate on (A) the expiration date of this
Lease if the New Building Commencement Date occurs during the first five (5)
years of the initial Lease Term, or (B) the last day of the month in which the
tenth (10th) anniversary of the New Building Commencement Date occurs if the New
Building Commencement Date occurs after the first five (5) years of the initial
Lease Term. In the event the termination date with regard to the New Building is
to be determined pursuant to option (B) in the preceding sentence, then
notwithstanding anything in this Lease to the contrary, Tenant shall,
concurrently with Tenant's delivery of the New Building Demand Notice, deliver
written notice to Landlord of Tenant's desire to extend the initial Lease Term
for the initial Premises to be coterminous with Tenant's lease of the New
Building, in which case Tenant's lease of the initial Premises for the period
following the original Lease Expiration Date and continuing through and
including the expiration date for the New Building shall continue on the same
terms and conditions as set forth in this Lease, provided that the Base Rent
payable by Tenant for the initial Premises for such period (which shall be
deemed an additional Option Term) shall be determined in accordance with the
provisions of Section 2.2.2 of this Lease with regard to the determination of
Option Rent and all other terms and conditions relating to the Lease Term shall
continue to apply to the initial Premises.

         1.3.6 TERMINATION OF NEW BUILDING OPTION. The option contained in this
Section 1.3 shall be personal to the Original Tenant and its Affiliates and may
only be exercised by the Original Tenant and/or its Affiliates, and shall expire
on the later to occur of (i) the last day of the initial Lease Term, or (ii) the
last day of the first Option Term, if any. Tenant shall not have the option to
lease the New Building, as provided in this Section 1.3, if, as of the date of
the attempted exercise of any New Building Option, (A) Tenant is in Default
under this Lease (beyond any applicable notice and cure periods), or (B) Tenant
is not in possession of at least ninety percent (90%) of the initial Premises.

                                   ARTICLE 2

                         INITIAL LEASE TERM; OPTION TERM

     2.1 INITIAL LEASE TERM. The terms and provisions of this Lease shall be
effective as of the date of this Lease, except for the provisions of this Lease
which relate to the payment of Rent, which monetary obligations shall commence
pursuant to the terms of Articles 3 and 4 of this Lease. The term of this Lease
(the "LEASE Term") shall be as set forth in Section 3.1 of the Summary, shall
commence on the date set forth in Section 3.2 of the Summary (the "LEASE
COMMENCEMENT DATE"), and shall terminate on the date set forth in Section 3.3 of
the Summary (the "LEASE EXPIRATION DATE") unless this Lease is sooner terminated
or extended as hereinafter provided. For purposes of this Lease, the term "LEASE
YEAR" shall mean each consecutive twelve (12) month period during the Lease
Term; provided, however, that the first Lease Year


                                      -8-
<PAGE>


shall commence on the Lease Commencement Date and end on the last day of the
eleventh month thereafter and the second and each succeeding Lease Year shall
commence on the first day of the next calendar month; and further provided that
the last Lease Year shall end on the Lease Expiration Date. At any time during
the Lease Term, Landlord may deliver to Tenant a notice in the form as set forth
in Exhibit C, attached hereto, as a confirmation only of the information set
forth therein, which Tenant, if accurate, shall execute and return to Landlord
within five (5) business days of receipt thereof.

     2.2 OPTION TERM.

         2.2.1 OPTION RIGHT. Landlord hereby grants the Tenant originally named
in this Lease (the "ORIGINAL Tenant") and its "Affiliates," as that term set
forth in Section 14.8 of this Lease, two (2) five (5)-year options (each, an
"OPTION TERM") to extend the Lease Term for the entire Premises. Such option(s)
shall be exercisable only by Notice delivered by Tenant to Landlord as provided
below, provided that, as of the date of delivery of such Notice, Tenant is not
in Default under this Lease. Upon the proper exercise of such option to extend,
and provided that, as of the end of the then applicable Lease term, Tenant is
not in Default under this Lease, the Lease Term, as it applies to the entire
Premises, shall be extended for a period of five (5) years. The rights contained
in this Section 2.2 shall only be exercised by the Original Tenant and its
Affiliate (and not any assignee, subleasee or other transferee of the Original
Tenant's interest in this Lease) if Original Tenant and/or its Affiliate (i) is
in possession of the entire Premises, and (ii) has a "Net Worth," as that term
is set forth in Section 14.8 of this Lease, equal to or greater than
$30,000,000.00; provided, however, that if Original Tenant and/or its Affiliate
does not satisfy the condition set forth in (ii), above, they may still exercise
the rights contained in this Section 2.2 if they provide additional security as
reasonably designated by Landlord.

         2.2.2 OPTION RENT. The Rent payable by Tenant during each Option Term
(the "OPTION RENT") shall be equal to the Market Rent; provided, however, that
the average annual, effective (including free rent, if applicable, on a straight
line basis) base rent component of Market Rent, shall not be lower than the then
existing "Base Rent," as that term is set forth in Article 3 of this Lease, in
effect immediately prior to the commencement of such Option Term. For purposes
of this Lease, the term "MARKET RENT" shall mean the base rent, which shall be
adjusted to reflect a "triple net" transaction, including all escalations, at
which tenants, as of the commencement of the applicable term are, pursuant to
transactions completed within the prior twenty-four (24) months, leasing
non-sublease, non-encumbered, non-synthetic, non-equity space comparable in
size, location and quality to the Building for a "Comparable Term," as that term
is defined in this Section 2.2.2 (the "COMPARABLE DEALS"), which comparable
space is located in the "Comparable Buildings," as that term is defined in this
Section 2.2.2, giving appropriate consideration to the annual rental rates per
rentable square foot (adjusting the base rent component of such rate to reflect
a net value after accounting for whether or not utility expenses are directly
paid by the tenant such as Tenant's direct utility payments provided for in
Section 6.1 of this Lease), the standard of measurement by which the rentable
square footage is measured, the ratio of rentable square feet to usable square
feet, and taking into consideration only, and granting only, the following
concessions (provided that the rent payable in Comparable Deals in which the
terms of such Comparable Deals are determined by use of a discounted fair market
rate formula shall be equitably increased in order that such Comparable Deals
will not reflect a discounted rate) (collectively, the "RENT CONCESSIONS"): (a)
rental abatement


                                      -9-
<PAGE>


concessions, if any, being granted such tenants in connection with such
comparable spaces; (b) tenant improvements, refurbishments, repainting or
allowances provided or to be provided for such comparable space, taking into
account the value of the existing improvements in the Building, such value to be
based upon the age, quality and layout of the improvements and the extent to
which the same could be utilized by general office users as contrasted with this
specific Tenant, and (c) lease takeovers/assumptions, (d) relocation and moving
allowances, (e) space planning allowances, and (f) all other inducements and
concessions, if any, being granted such tenants in connection with such
comparable space; provided, however, that notwithstanding anything to the
contrary herein, no consideration shall be given to (x) the fact that Landlord
is or is not required to pay a real estate brokerage commission in connection
with the applicable term or the fact that the Comparable Deals do or do not
involve the payment of real estate brokerage commissions, and (y) any period of
rental abatement, if any, granted to tenants in Comparable Deals in connection
with the design, permitting and construction of tenant improvements in such
comparable spaces. The term "COMPARABLE TERM" shall refer to the length of the
lease term, without consideration of options to extend such term, for the space
in question. If in determining the Market Rent for an Option Term, Tenant is
entitled to a tenant improvement or comparable allowance for the improvement
and/or refurbishment (including repainting) of the Premises (the "OPTION TERM TI
ALLOWANCE"), to the extent that Tenant's final "Construction Drawings," as that
term is defined in Section 3.1 of the Tenant Work Letter, for the Premises, as
approved by Landlord, do not require the entirety of Option Term TI Allowance,
Landlord may, at Landlord's sole and absolute option, elect any or a portion of
the following: (A) to grant some or all of the excess Option Term TI Allowance
to Tenant in the form as described above (i.e., as an improvement allowance),
and/or (B) to reduce the rental rate component of the Market Rent to be an
effective rental rate which takes into consideration that Tenant will not
receive the total dollar value of such excess Option Term TI Allowance (in which
case the excess Option Term TI Allowance evidenced in the effective rental rate
shall not be granted to Tenant); provided, however, that notwithstanding
Landlord's election to grant some or all of the excess Option Term TI Allowance
to Tenant pursuant to option (A), above, Tenant may elect, upon timely written
notice to Landlord, to instead use such excess to reduce the rental rate
component of the Market Rent pursuant to option (B), above. The term "COMPARABLE
BUILDINGS" shall mean other office buildings which are comparable to the
Building in terms of age (based upon the date of completion of construction or
major renovation as to the building containing the portion of the Premises in
question), quality of construction, level of services and amenities
(specifically including the presence of, and exclusive access to, parking
spaces), size and appearance, and are located in the Sorrento Mesa and Mira Mesa
areas of Southern California (the "COMPARABLE AREA").

         2.2.3 EXERCISE OF OPTION. The option contained in this Section 2.2
shall be exercised by Tenant, if at all, only in the manner set forth in this
Section 2.2.3. Tenant shall deliver notice (the "EXERCISE NOTICE") to Landlord
not more than fifteen (15) months nor less than nine (9) months prior to the
expiration of the then Lease Term, stating that Tenant is exercising its option.
Concurrently with such Exercise Notice, Tenant shall deliver to Landlord
Tenant's calculation of the Market Rent (the "TENANT'S OPTION RENT
CALCULATION"). Landlord shall deliver notice (the "Landlord Response Notice") to
Tenant on or before the later to occur of (i) the date which is thirty (30) days
after Landlord's receipt of the Exercise Notice and Tenant's Option Rent
Calculation, or (ii) the date which is nine (9) months prior to the expiration
of the then Lease Term (the "Landlord Response Date"), stating that (A) Landlord
is accepting Tenant's


                                      -10-
<PAGE>


Option Rent Calculation as the Market Rent, or (B) rejecting Tenant's Option
Rent Calculation and setting forth Landlord's calculation of the Market Rent
(the "LANDLORD'S OPTION RENT CALCULATION"). Within thirty (30) days of its
receipt of the Landlord Response Notice, Tenant may, at its option, accept the
Market Rent contained in the Landlord's Option Rent Calculation. If Tenant does
not affirmatively accept or Tenant rejects the Market Rent specified in the
Landlord's Option Rent Calculation, the parties shall follow the procedure, and
the Market Rent shall be determined as set forth in Section 2.2.4.

         2.2.4 DETERMINATION OF MARKET RENT. In the event Tenant objects or is
deemed to have objected to the Market Rent, Landlord and Tenant shall attempt to
agree upon the Market Rent using reasonable good-faith efforts. If Landlord and
Tenant fail to reach agreement within sixty (60) days following Tenant's
objection or deemed objection to the Landlord's Option Rent Calculation (the
(the "Outside Agreement Date"), then in connection with the Option Rent,
Landlord's Option Rent Calculation and Tenant's Option Rent Calculation, each as
previously delivered to the other party, shall be submitted to the arbitrators
pursuant to the terms and conditions of this Section 2.2.4. The submittals shall
be made concurrently with the selection of the arbitrators pursuant to this
Section 2.2.4 and shall be submitted to arbitration in accordance with Section
2.2.4.1 through 2.2.4.7 of this Lease, but subject to the conditions, when
appropriate, of Section 2.2.3.

               2.2.4.1 Landlord and Tenant shall each appoint one arbitrator who
shall by profession be a real estate broker, appraiser or attorney who shall
have been active over the five (5) year period ending on the date of such
appointment in the leasing (or appraisal, as the case may be) of first-class
office properties in the Comparable Area. The determination of the arbitrators
shall be limited solely to the issue of whether Landlord's or Tenant's submitted
Market Rent, is the closest to the actual Market Rent as determined by the
arbitrators, taking into account the requirements of Section 2.2.2 of this
Lease. Each such arbitrator shall be appointed within fifteen (15) days after
the applicable Outside Agreement Date. Landlord and Tenant may consult with
their selected arbitrators prior to appointment and may select an arbitrator who
is favorable to their respective positions. The arbitrators so selected by
Landlord and Tenant shall be deemed ("ADVOCATE ARBITRATORS").

               2.2.4.2 The two Advocate Arbitrators so appointed shall be
specifically required pursuant to an engagement letter within ten (10) days of
the date of the appointment of the last appointed Advocate Arbitrator agree upon
and appoint a third arbitrator ("NEUTRAL ARBITRATOR") who shall be qualified
under the same criteria set forth hereinabove for qualification of the two
Advocate Arbitrators except that neither the Landlord or Tenant or either
party's Advocate Arbitrator may, directly or indirectly, consult with the
Neutral Arbitrator prior to subsequent to his or her appearance. The Neutral
Arbitrator shall be retained via an engagement letter jointly prepared by
Landlord's counsel and Tenant's counsel.

               2.2.4.3 The three arbitrators shall within thirty (30) days of
the appointment of the Neutral Arbitrator reach a decision as to Market Rent and
determine whether the Landlord's Option Rent Calculation or Tenant's Option Rent
Calculation as submitted pursuant to Section 2.2.4.1 and Section 2.2.3 of this
Lease is closest to Market Rent as determined by the arbitrators and
simultaneously publish a ruling ("Award") indicating whether Landlord's Option
Rent Calculation or Tenant's Option Rent Calculation is closest to the Market


                                      -11-
<PAGE>


Rent as determined by the arbitrators. Following notification of the Award, the
Landlord's Option Rent Calculation or Tenant's Option Rent Calculation,
whichever is selected by the arbitrators as being closest to Market Rent shall
become the then applicable Market Rent.

               2.2.4.4 The Award issued by the majority of the three arbitrators
shall be binding upon Landlord and Tenant.

               2.2.4.5 If either Landlord or Tenant fail to appoint an Advocate
Arbitrator within fifteen (15) days after the applicable Outside Agreement Date,
either party may petition the presiding judge of the Superior Court of San Diego
County to appoint such Advocate Arbitrator subject to the criteria in Section
2.2.4.1 of this Lease, or if he or she refuses to act, either party may petition
any judge having jurisdiction over the parties to appoint such Advocate
Arbitrator.

               2.2.4.6 If the two Advocate Arbitrators fail to agree upon and
appoint the Neutral Arbitrator, then either party may petition the presiding
judge of the Superior Court of San Diego County to appoint the Neutral
Arbitrator, subject to criteria in Section 2.2.4.1 of this Lease, or if he or
she refuses to act, either party may petition any judge having jurisdiction over
the parties to appoint such arbitrator.

               2.2.4.7 The cost of arbitration shall be paid by the party whose
Landlord's Option Rent Calculation or Tenant's Option Rent Calculation, as the
came may be, is not selected by the arbitrators pursuant to this Section 2.2.4.

     2.3 TERMINATION RIGHT.

         2.3.1 EXERCISE OF TERMINATION RIGHT. Provided Tenant has not previously
exercised the New Building Option set forth in Section 1.3 of this Lease, Tenant
shall have the one-time right to terminate and cancel this Lease effective as of
the tenth (10th) anniversary of the Lease Commencement Date (the "TERMINATION
DATE"), provided that (i) not later than twenty-four (24) months prior to the
Termination Date, Landlord receives written notice from Tenant (the "TERMINATION
NOTICE") that Tenant intends to terminate this Lease pursuant to the terms of
this Section 2.3, and (ii) not later than twelve (12) months prior to the
Termination date, Landlord receives cash from Tenant in the amount of Twelve
Million Seven Hundred Thousand and No/100 Dollars ($12,700,000), as
consideration for such early termination (the "TERMINATION FEE"). Upon Tenant's
delivery of the Termination Notice to Landlord, all of Tenant's rights under
Section 1.3 (with respect to the New Building) and Section 2.2 (with respect to
the Option Term) and, as of the Termination Date, all of Tenant's rights to any
future lease concessions shall automatically terminate and be of no further
force and effect regardless of whether this Lease thereafter shall be terminated
in accordance with the terms of this Section 2.3.

         2.3.2 TERMINATION OF LEASE. Provided that Tenant timely elects to
terminate this Lease in accordance with Section 2.3.1, above, this Lease shall
automatically terminate and be of no further force or effect, and Landlord and
Tenant shall be relieved of their respective obligations under this Lease, as of
the Termination Date, except with respect to those obligations set forth in this
Lease which specifically survive the expiration or earlier termination of this
Lease, including, without limitation, the payment by Tenant of all amounts owed
by Tenant


                                      -12-
<PAGE>


under this Lease. The termination right contained in this Section 2.3 shall be
personal to the Original Tenant and its Affiliates, and may only be exercised by
Original Tenant and its Affiliates (and not by any other assignee, sublessee or
other transferee of Original Tenant's interest in this Lease).

         2.3.3 NO TENANT DEFAULT. Notwithstanding anything to the contrary
contained in this Section 2.3, Tenant shall have no right to exercise the
termination right set forth in this Section 2.3 if Tenant is in default under
this Lease as of the date of Tenant's delivery to Landlord of the Termination
Notice or, at Landlord's option, at any time after such Termination Notice and
prior to the Termination Date. If Tenant is in default under the Lease following
Tenant's delivery to Landlord of the Termination Fee but prior to the
Termination Date, then, at Landlord's option, the Termination Notice shall be
null and void and of no further force or effect, and Landlord shall have the
right to add the Termination Fee to the "L-C Security Deposit," as that term is
defined in Article 21, below, held by Landlord under this Lease and, therefore,
if Tenant defaults with respect to any provisions of this Lease, then Landlord
shall have the right, without notice to Tenant, but not the obligation, to apply
all or any part of the Termination Fee for the payment of any Rent or any other
sum in default in accordance with Article 21, below. Tenant hereby waives the
provisions of Section 1950.7 of the California Civil Code, or any successor
statute, with respect to Landlord's use of the Termination Fee in connection
with Tenant's default under this Lease.

                                   ARTICLE 3

                          BASE RENT; ABATEMENT OF RENT

     3.1 BASE RENT. Tenant shall pay, without prior notice or demand, to
Landlord or Landlord's agent at the management office of the Project, or, at
Landlord's option, at such other place within the continental United States as
Landlord may from time to time designate in writing, by a check for currency
which, at the time of payment, is legal tender for private or public debts in
the United States of America, base rent ("BASE RENT") as set forth in Section 4
of the Summary, payable in equal monthly installments as set forth in Section 4
of the Summary in advance on or before the first day of each and every calendar
month during the Lease Term, without any setoff or deduction whatsoever, except
as otherwise expressly provided for in this Lease. The Base Rent for the first
full month of the Lease Term which occurs after the expiration of any free rent
period shall be paid at the time of Tenant's execution of this Lease. If any
Rent payment date (including the Lease Commencement Date) falls on a day of the
month other than the first day of such month or if any payment of Rent is for a
period which is shorter than one month, the Base Rent for any fractional month
shall accrue on a daily basis for the period from the date such payment is due
to the end of such calendar month or to the end of the Lease Term at a rate per
day which is equal to 1/30 of the then-applicable Monthly Installment of Base
Rent. All other payments or adjustments required to be made under the terms of
this Lease that require proration on a time basis shall be prorated on the same
basis.

     3.2 ABATEMENT OF RENT. In the event that Tenant is prevented from using,
and does not use, the Premises or any portion thereof, as a result of (i) any
repair, maintenance or alteration performed by Landlord, or which Landlord
failed to perform, after the Lease Commencement Date and required by this Lease,
which substantially interferes with Tenant's use


                                      -13-
<PAGE>


of or ingress to or egress from the Building, Premises or Project; or (ii) any
failure by Landlord to provide services, utilities or ingress to and egress from
the Building, Premises or Project (any such set of circumstances as set forth in
items (i) and (ii), above, to be known as an "ABATEMENT EVENT"), then Tenant
shall give Landlord Notice of such Abatement Event, and if such Abatement Event
continues for five (5) consecutive business days after Landlord's receipt of any
such Notice (the "ELIGIBILITY PERIOD"), then, as Tenant's sole remedy vis-a-vis
such Abatement Event, the Base Rent and Tenant's Share of Direct Expenses shall
be abated or reduced, as the case may be, after expiration of the Eligibility
Period for such time that Tenant continues to be so prevented from using, and
does not use, the Premises, or a portion thereof, in the proportion that the
rentable area of the portion of the Premises that Tenant is prevented from
using, and does not use ("UNUSABLE AREA"), bears to the total rentable area of
the Premises.

                                    ARTICLE 4

                                 ADDITIONAL RENT

     4.1 GENERAL TERMS. In addition to paying the Base Rent specified in Article
3 of this Lease, Tenant shall pay "TENANT'S SHARE" of the annual "DIRECT
EXPENSES," as those terms are defined in Sections 4.2.6 and 4.2.2 of this Lease.
Such payments by Tenant, together with any and all other amounts payable by
Tenant to Landlord pursuant to the terms of this Lease, are hereinafter
collectively referred to as the "ADDITIONAL RENT", and the Base Rent and the
Additional Rent are herein collectively referred to as "RENT." All amounts due
under this Article 4 as Additional Rent shall be payable for the same periods
and in the same manner as the Base Rent. Without limitation on other obligations
of Tenant which survive the expiration of the Lease Term, the obligations of
Tenant to pay the Additional Rent provided for in this Article 4 shall survive
the expiration of the Lease Term.

     4.2 DEFINITIONS OF KEY TERMS RELATING TO ADDITIONAL RENT. As used in this
Article 4, the following terms shall have the meanings hereinafter set forth:

         4.2.1 Intentionally Omitted.

         4.2.2 "DIRECT EXPENSES" shall mean "Operating Expenses" and "Tax
Expenses."

         4.2.3 "EXPENSE YEAR" shall mean each calendar year in which any portion
of the Lease Term falls, through and including the calendar year in which the
Lease Term expires, provided that Landlord, upon notice to Tenant, may change
the Expense Year from time to time to any other twelve (12) consecutive month
period, and, in the event of any such change, Tenant's Share of Direct Expenses
shall be equitably adjusted for any Expense Year involved in any such change.

         4.2.4 "OPERATING EXPENSES" shall mean all expenses, costs and amounts
of every kind and nature which Landlord pays or accrues during any Expense Year
because of or in connection with the ownership, management, maintenance,
security, repair, replacement, restoration or operation of the Project, or any
portion thereof, in accordance with sound real estate management principles,
consistently applied. Without limiting the generality of the foregoing,
Operating Expenses shall specifically include any and all of the following to
the


                                      -14-
<PAGE>


extent they relate solely to the Project: (i) the cost of supplying all
utilities, the cost of operating, repairing, maintaining, and renovating the
utility, telephone, mechanical, sanitary, storm drainage, and elevator systems,
and the cost of maintenance and service contracts in connection therewith; (ii)
the cost of licenses, certificates, permits and inspections and the cost of
contesting any governmental enactments which may affect Operating Expenses, and
the costs incurred in connection with a transportation system management program
or similar program; (iii) the cost of all insurance carried by Landlord in
connection with the Project; (iv) the cost of landscaping, relamping, and all
supplies, tools, equipment and materials used in the operation, repair and
maintenance of the Project, or any portion thereof; (v) costs incurred in
connection with the parking areas servicing the Project; (vi) fees and other
costs, including management fees (not to exceed an amount equal to the product
of (1) three percent (3.0%) and (2) the Base Rent due under this Lease),
consulting fees, legal fees and accounting fees, of all contractors and
consultants in connection with the management, operation, maintenance and repair
of the Project; (vii) payments under any equipment rental agreements and the
fair rental value of any management office space; (viii) wages, salaries and
other compensation and benefits, including taxes levied thereon, of all persons
engaged in the operation, maintenance and security of the Project; (ix) costs
under any instrument pertaining to the sharing of costs by the Project; (x)
operation, repair, maintenance and replacement of all systems and equipment and
components thereof of the Building; (xi) the cost of alarm and other services,
replacement of wall and floor coverings, ceiling tiles and fixtures in common
areas, maintenance and replacement of curbs and walkways, repair to roofs and
re-roofing; (xii) amortization (including interest on the unamortized cost) of
the cost of acquiring or the rental expense of personal property used in the
maintenance, operation and repair of the Project, or any portion thereof; (xiii)
the cost of capital improvements (which shall include all replacements in excess
of $5,000) or other costs incurred in connection with the Project (A) which are
reasonably intended to effect economies in the operation or maintenance of the
Project, or any portion thereof, (B) that are required to comply with
conservation programs as legally required and enacted after the Lease
Commencement Date, (C) which are replacements or modifications of nonstructural
items located in the Common Areas required to keep the Common Areas in good
order or condition, or (D) that are required under any governmental law or
regulation, except for capital repairs, replacements or other improvements to
remedy a condition existing prior to the Lease Commencement Date which an
applicable governmental authority, if it had knowledge of such condition prior
to the Lease Commencement Date and if such condition was not subject to a
variance or a grandfathered/grandmothered code waiver exception, would have then
required to be remedied pursuant to then-current "Applicable Law," as that term
is set forth in Article 24 of this Lease, in their form existing as of the Lease
Commencement Date; provided, however, that any such permitted capital
expenditure shall be amortized with interest over its useful life as Landlord
shall reasonably determine; and (xiv) costs, fees, charges or assessments
imposed by, or resulting from any mandate imposed on Landlord by, any federal,
state or local government for fire and police protection, trash removal,
community services, or other services which do not constitute "Tax Expenses" as
that term is defined in Section 4.2.5, below; and (xv) payments under any
easement, license, operating agreement, declaration, restrictive covenant, or
instrument pertaining to the sharing of costs by the Building.

         Notwithstanding anything in this Section 4.2.4 to the contrary, for
purposes of this Lease, Operating Expenses shall not, however, include the
following:


                                      -15-
<PAGE>


                  (A) all costs relating to the maintenance and repair of the
         following structural items: (i) the foundation slab structure under the
         Building and/or the Building Parking Structure, (ii) exterior wall
         structure of the Building, and (iii) the roof structure of the Building
         (excluding the membrane).

                  (B) marketing costs, costs of leasing commissions, attorneys'
         fees and other costs and expenses incurred in connection with
         negotiations or disputes with prospective tenants or other occupants of
         the Project;

                  (C) except as otherwise specifically provided in this Section
         4.2.4, costs incurred by Landlord in the repairs, capital additions,
         alterations or replacements made or incurred to rectify or correct
         defects in design, materials or workmanship in connection with the Base
         Building portions of the Project;

                  (D) costs (including permit, license and inspection costs)
         incurred in renovating or otherwise improving, decorating or
         redecorating rentable space for prospective tenants or vacant rentable
         space;

                  (E) cost of utilities or services sold to Tenant or others for
         which Landlord is entitled to and actually receives reimbursement
         (other than through any operating cost reimbursement provision
         identical or substantially similar to the provisions set forth in this
         Lease);

                  (F) except as otherwise specifically provided in this Section
         4.2.4, costs incurred by landlord for capital repairs, improvements,
         equipment and alterations to the Project which are considered capital
         improvements and replacements under generally accepted accounting
         principles, consistently applied;

                  (G) costs incurred due to the violation by Landlord or any
         licensee of the terms and conditions of any lease or license of space
         in the Project;

                  (H) costs of general overhead and general administrative
         expenses, not including management fees and building office expenses
         which are included in operating expenses by landlords of Comparable
         Buildings;

                  (I) costs of any compensation and employee benefits paid to
         clerks, attendants or other persons in a commercial concession operated
         by Landlord;

                  (J) marketing costs, legal fees, space planner's fees, and
         advertising and promotional expenses and brokerage fees incurred in
         connection with the original development, subsequent improvement, or
         original or future leasing of the Project;

                  (K) costs of electrical power for which Tenant directly
         contracts with and pays a local public service company

                  (L) any bad debt loss, rent loss, or reserves for bad debts or
         rent loss;


                                      -16-
<PAGE>


                  (M) costs associated with the operation of the business of the
         partnership or entity which constitutes the Landlord, as the same are
         distinguished from the costs of operation of the Project (which shall
         specifically include, but not be limited to, accounting costs
         associated with the operation of the Project, costs of partnership
         accounting and legal matters, costs of defending any lawsuits with any
         mortgagee (except as the actions of the Tenant may be in issue), costs
         of selling, syndicating, financing, mortgaging or hypothecating any of
         the Landlord's interest in the Project, and costs incurred in
         connection with any disputes between Landlord and its employees,
         between Landlord and Project management, or between Landlord and other
         tenants or occupants, and Landlord's general corporate overhead and
         general and administrative expenses);

                  (N) the wages and benefits of any employee who does not devote
         substantially all of his or her employed time to the Project unless
         such wages and benefits are prorated to reflect time spent on operating
         and managing the Project vis-a-vis time spent on matters unrelated to
         operating and managing the Project; provided, that in no event shall
         Operating Expenses for purposes of this Lease include wages and/or
         benefits attributable to personnel above the level of Project manager
         or Project engineer;

                  (O) amounts paid as ground rental for the real property
         underlying the Project by the Landlord;

                  (P) costs for sculpture, paintings, fountains or other objects
         of art, other than those incurred in ordinary maintenance and repair;

                  (Q) any costs expressly excluded from Operating Expenses
         elsewhere in this Lease;

                  (R) costs arising from Landlord's charitable or political
         contributions;

                  (S) any gifts provided to any entity whatsoever, including,
         but not limited to, Tenant, other tenants, employees, vendors,
         contractors, prospective tenants and agents;

                  (T) any costs covered by any warranty, rebate, guarantee or
         service contract which are actually collected by Landlord (which shall
         not prohibit Landlord from passing through the costs of any such
         service contract if otherwise includable in Operating Expenses);

                  (U) interest, late charges and tax penalties incurred as a
         result of Landlord's gross negligence, inability or unwillingness to
         make payments or file returns when due;

                  (V) all items and services for which Tenant reimburses
         Landlord;

                  (W) any costs included as a Tax Expense pursuant to Section
         4.2.5 below;

                  (X) any expense resulting from the gross negligence of
         Landlord, its agents, contractors or employees, or, to the extent
         landlord is entitled to reimbursement for such costs, to remedy damage
         caused by or resulting from the gross negligence of any licensees in
         the Project, including their agents, contractors and employees;


                                      -17-
<PAGE>


                  (Y) reserves for anticipated future expenses;

                  (Z) costs or repairs or other work occasioned by fire,
         casualty or other risk covered by insurance maintained (or obligated to
         be maintained pursuant to Article 10 of this Lease) by Landlord;

                  (AA) costs, fines, or fees incurred by Landlord due to
         Landlord's violations of any federal, state or local law, statute or
         ordinance, or any rule, regulation, judgment or decree of any
         governmental rule or authority;

                  (BB) any costs representing an amount paid to a person, firm,
         corporation or other entity related to Landlord which is in excess of
         the amount which would have been paid in the absence of such
         relationship;

                  (CC) rentals for items (except when needed in connection with
         normal repairs and maintenance of permanent systems) which if
         purchased, rather than rented, would constitute a capital item which is
         specifically excluded in this Lease (excluding, however, equipment not
         affixed to the Building which is used in providing janitorial or
         similar services); and

                  (DD) advertising and promotional expenditures, and costs of
         signs in or on the Building identifying the owner of the Building.


                                      -18-
<PAGE>


         4.2.5 TAXES.

               4.2.5.1 "TAX EXPENSES" shall mean all federal, state, county, or
local governmental or municipal taxes, fees, charges or other impositions of
every kind and nature, whether general, special, ordinary or extraordinary,
(including, without limitation, real estate taxes, general and special
assessments, transit taxes, leasehold taxes or taxes based upon the receipt of
rent, including gross receipts or sales taxes applicable to the receipt of rent,
unless required to be paid by Tenant, personal property taxes imposed upon the
fixtures, machinery, equipment, apparatus, systems and equipment, appurtenances,
furniture and other personal property used in connection with the Project, or
any portion thereof), which shall be paid or accrued during any Expense Year
(without regard to any different fiscal year used by such governmental or
municipal authority) because of or in connection with the ownership, leasing and
operation of the Project, or any portion thereof.

               4.2.5.2 Tax Expenses shall include, without limitation: (i) Any
tax on the rent, right to rent or other income from the Project, or any portion
thereof, or as against the business of leasing the Project, or any portion
thereof; (ii) Any assessment, tax, fee, levy or charge in addition to, or in
substitution, partially or totally, of any assessment, tax, fee, levy or charge
previously included within the definition of real property tax, it being
acknowledged by Tenant and Landlord that Proposition 13 was adopted by the
voters of the State of California in the June 1978 election ("PROPOSITION 13")
and that assessments, taxes, fees, levies and charges may be imposed by
governmental agencies for such services as fire protection, street, sidewalk and
road maintenance, refuse removal and for other governmental services formerly
provided without charge to property owners or occupants, and, in further
recognition of the decrease in the level and quality of governmental services
and amenities as a result of Proposition 13, Tax Expenses shall also include any
governmental or private assessments or the Project's contribution towards a
governmental or private cost-sharing agreement for the purpose of augmenting or
improving the quality of services and amenities normally provided by
governmental agencies; (iii) Any assessment, tax, fee, levy, or charge allocable
to or measured by the area of the Premises or the Rent payable hereunder,
including, without limitation, any business or gross income tax or excise tax
with respect to the receipt of such rent, or upon or with respect to the
possession, leasing, operating, management, maintenance, alteration, repair, use
or occupancy by Tenant of the Premises, or any portion thereof; and (iv) Any
assessment, tax, fee, levy or charge, upon this transaction or any document to
which Tenant is a party, creating or transferring an interest or an estate in
the Premises.

               4.2.5.3 Any costs and expenses (including, without limitation,
reasonable attorneys' fees) incurred in attempting to protest, reduce or
minimize Tax Expenses shall be included in Tax Expenses in the Expense Year such
expenses are paid; provided, however, Landlord shall not make such attempt
without the prior written approval of Tenant, which approval shall not be
unreasonably withheld or delayed; provided further, however, no such prior
consent shall be required to the extent such costs and expenses to be included
in Tax Expenses in such Expense Year is less than $750.00. Except as set forth
in Section 4.2.5.4, below, refunds of Tax Expenses shall be credited against Tax
Expenses and refunded to Tenant regardless of when received, based on the
Expense Year to which the refund is applicable, provided that in no event shall
the amount to be refunded to Tenant for any such Expense Year exceed the total
amount


                                      -19-
<PAGE>


paid by Tenant as Additional Rent under this ARTICLE 4 for such Expense Year. If
Tax Expenses for any period during the Lease Term or any extension thereof are
increased after payment thereof for any reason, including, without limitation,
error or reassessment by applicable governmental or municipal authorities,
Tenant shall pay Landlord upon demand Tenant's Share of any such increased Tax
Expenses included by Landlord as Building Tax Expenses pursuant to the terms of
this Lease. Notwithstanding anything to the contrary contained in this Section
4.2.5 (except as set forth in Section 4.2.4, above), there shall be excluded
from Tax Expenses (i) all excess profits taxes, franchise taxes, gift taxes,
capital stock taxes, inheritance and succession taxes, estate taxes, federal and
state income taxes, and other taxes to the extent applicable to Landlord's
general or net income (as opposed to rents, receipts or income attributable to
operations at the Project), (ii) any items included as Operating Expenses, and
(iii) any items paid by Tenant under Section 4.5 of this Lease.

         4.2.6 "TENANT'S SHARE" shall mean the percentage set forth in Section 6
of the Summary.

     4.3 INTENTIONALLY OMITTED.

     4.4 CALCULATION AND PAYMENT OF ADDITIONAL RENT. Tenant shall pay to
Landlord, in the manner set forth in Section 4.4.1, below, and as Additional
Rent, Tenant's Share of Direct Expenses for each Expense Year.

         4.4.1 STATEMENT OF ACTUAL DIRECT EXPENSES AND PAYMENT BY TENANT.
Landlord shall use commercially reasonable efforts to give to Tenant within one
hundred fifty (150) days following the end of each Expense Year, a statement
(the "STATEMENT") which shall state the Direct Expenses incurred or accrued for
such preceding Expense Year, and which shall indicate the amount of Tenant's
Share of Direct Expenses. Upon receipt of the Statement for each Expense Year
commencing or ending during the Lease Term, Tenant shall pay, with its next
installment of Base Rent due, the full amount of Tenant's Share of Direct
Expenses for such Expense Year, less the amounts, if any, paid during such
Expense Year as "ESTIMATED DIRECT EXPENSES," as that term is defined in Section
4.4.2 of this Lease, and if Tenant paid more as Estimated Direct Expenses than
the actual Tenant's Share of Direct Expenses (an "EXCESS"), Tenant shall receive
a credit in the amount of such Excess against Rent next due under this Lease.
The failure of Landlord to timely furnish the Statement for any Expense Year
shall not prejudice Landlord (provided that in the event that such failure
continues for a period of six (6) months following receipt of Notice from
Tenant, Tenant may elect to seek specific performance) or Tenant from enforcing
its rights under this Article 4. Even though the Lease Term has expired and
Tenant has vacated the Premises, when the final determination is made of
Tenant's Share of Direct Expenses for the Expense Year in which this Lease
terminates, if Tenant's Share of Direct Expenses is greater than the amount of
Estimated Direct Expenses previously paid by Tenant to Landlord, Tenant shall
immediately pay to Landlord such amount, and if Tenant paid more as Estimated
Direct Expenses than the actual Tenant's Share of Direct Expenses (again, an
Excess), Landlord shall, within thirty (30) days of Landlord's determination,
deliver a check to Tenant in the amount of such Excess. The provisions of this
Section 4.4.1 shall survive the expiration or earlier termination of the Lease
Term.


                                      -20-
<PAGE>


         4.4.2 STATEMENT OF ESTIMATED DIRECT EXPENSES. In addition, Landlord
shall, on or before March 31 of the then-current Expense Year, give Tenant a
yearly expense estimate statement (the "ESTIMATE STATEMENT") which shall set
forth Landlord's reasonable estimate (the "ESTIMATE") of what the total amount
of Direct Expenses for the then-current Expense Year shall be and the estimated
Tenant's Share of Direct Expenses (the "ESTIMATED DIRECT EXPENSES"). The failure
of Landlord to timely furnish the Estimate Statement for any Expense Year shall
not preclude Landlord from enforcing its rights to collect any Estimated Direct
Expenses under this Article 4 (provided that in the event that such failure
continues for a period of six (6) months following receipt of Notice from
Tenant, Tenant may elect to seek specific performance), nor shall Landlord be
prohibited from revising any Estimate Statement or Estimated Direct Expenses
theretofore delivered to the extent necessary. Thereafter, Tenant shall pay,
with its next installment of Base Rent due, a fraction of the Estimated Direct
Expenses for the then-current Expense Year (reduced by any amounts paid pursuant
to the next to last sentence of this Section 4.4.2). Such fraction shall have as
its numerator the number of months which have elapsed in such current Expense
Year, including the month of such payment, and twelve (12) as its denominator.
Until a new Estimate Statement is furnished (which Landlord shall have the right
to deliver to Tenant at any time), Tenant shall pay monthly, with the monthly
Base Rent installments, an amount equal to one-twelfth (1/12) of the total
Estimated Direct Expenses set forth in the previous Estimate Statement delivered
by Landlord to Tenant.

     4.5 TAXES AND OTHER CHARGES FOR WHICH TENANT IS DIRECTLY RESPONSIBLE.

         4.5.1 Tenant shall be liable for and shall pay ten (10) days before
delinquency, taxes levied against Tenant's equipment, furniture, fixtures and
any other personal property located in or about the Premises. If any such taxes
on Tenant's equipment, furniture, fixtures and any other personal property are
levied against Landlord or Landlord's property or if the assessed value of
Landlord's property is increased by the inclusion therein of a value placed upon
such equipment, furniture, fixtures or any other personal property and if
Landlord pays the taxes based upon such increased assessment, which Landlord
shall have the right to do regardless of the validity thereof but only under
proper protest if requested by Tenant, Tenant shall upon demand repay to
Landlord the taxes so levied against Landlord or the proportion of such taxes
resulting from such increase in the assessment, as the case may be.

         4.5.2 If the tenant improvements in the Premises, whether installed
and/or paid for by Landlord or Tenant and whether or not affixed to the real
property so as to become a part thereof, are assessed for real property tax
purposes at a valuation higher than the valuation at which tenant improvements
conforming to Landlord's "building standard" in other space in the Building are
assessed, then the Tax Expenses levied against Landlord or the property by
reason of such excess assessed valuation shall be deemed to be taxes levied
against personal property of Tenant and shall be governed by the provisions of
Section 4.5.1, above.

         4.5.3 Notwithstanding any contrary provision herein, Tenant shall pay
prior to delinquency any (i) rent tax or sales tax, service tax, transfer tax or
value added tax, or any other applicable tax on the rent or services herein or
otherwise respecting this Lease, (ii) taxes assessed upon or with respect to the
possession, leasing, operation, management, maintenance, alteration, repair, use
or occupancy by Tenant of the Premises or any portion of the Project, including
the


                                      -21-
<PAGE>


Building Parking Structure; or (iii) taxes assessed upon this transaction or any
document to which Tenant is a party creating or transferring an interest or an
estate in the Premises.

     4.6 LANDLORD'S BOOKS AND RECORDS. Within two (2) years after receipt of a
Statement by Tenant, if Tenant disputes the amount of Additional Rent set forth
in the Statement, an employee of Tenant or an independent certified public
accountant (which accountant is not working on a contingency fee basis),
designated and paid for by Tenant, may, after reasonable Notice to Landlord and
at reasonable times, inspect Landlord's records with respect to the Statement at
Landlord's offices, provided that Tenant is not then in Default under this Lease
and Tenant has paid all amounts required to be paid under the applicable
Estimate Statement and Statement, as the case may be. In connection with such
inspection, Tenant and Tenant's agents must agree in advance to follow
Landlord's reasonable rules and procedures regarding inspections of Landlord's
records, and shall execute a commercially reasonable confidentiality agreement
regarding such inspection. Tenant's failure to dispute the amount of Additional
Rent set forth in any Statement within two (2) years of Tenant's receipt of such
Statement shall be deemed to be Tenant's approval of such Statement and Tenant,
thereafter, waives the right or ability to dispute the amounts set forth in such
Statement. If after such inspection, Tenant still disputes such Additional Rent,
a determination as to the proper amount shall be made, at Tenant's expense, by
an independent certified public accountant (the "Accountant") selected by
Landlord and subject to Tenant's reasonable approval; provided that if such
determination by the Accountant proves that Direct Expenses were overstated by
more than five percent (5%), then the cost of the Accountant and the cost of
such determination shall be paid for by Landlord. Tenant hereby acknowledges
that Tenant's sole right to inspect Landlord's books and records and to contest
the amount of Direct Expenses payable by Tenant shall be as set forth in this
Section 4.6, and Tenant hereby waives any and all other rights pursuant to
Applicable Law to inspect such books and records and/or to contest the amount of
Direct Expenses payable by Tenant.

                                    ARTICLE 5

                                 USE OF PREMISES

     5.1 PERMITTED USE. Tenant shall use the Premises solely for the Permitted
Use set forth in Section 7 of the Summary and Tenant shall not use or permit the
Premises or the Project to be used for any other purpose or purposes whatsoever
without the prior written consent of Landlord, which may be withheld in
Landlord's sole but reasonable discretion.

     5.2 PROHIBITED USES. The uses prohibited under this Lease shall include,
without limitation, use of the Premises or a portion thereof for (i) offices of
any agency or bureau of the United States or any state or political subdivision
thereof; and (ii) offices or agencies of any foreign governmental or political
subdivision thereof. Tenant further covenants and agrees that Tenant shall not
use, or suffer or permit any person or persons to use, the Premises or any part
thereof for any use or purpose contrary to the provisions of the Rules and
Regulations set forth in EXHIBIT D, attached hereto, or in violation of the laws
of the United States of America, the State of California, or the ordinances,
regulations or requirements of the local municipal or county governing body or
other lawful authorities having jurisdiction over the Project, including,
without limitation, any such laws, ordinances, regulations or requirements
relating to hazardous


                                      -22-
<PAGE>


materials or substances, as those terms are defined by applicable laws now or
hereafter in effect. Tenant shall not do or permit anything to be done in or
about the Premises which will in any way damage the Project or obstruct or
interfere with the rights of other tenants or occupants of the Building, or
injure or annoy them or use or allow the Premises to be used for any improper,
unlawful or objectionable purpose, nor shall Tenant cause, maintain or permit
any nuisance in, on or about the Premises.

     5.3 CC&RS. Tenant shall comply with all recorded covenants, conditions, and
restrictions currently affecting the Project. Additionally, Tenant acknowledges
that it is anticipated that the Project will be subject to that certain
"Declaration of Covenants, Conditions and Restriction for Sorrento Rim Business
Park," a substantially complete copy of which is attached hereto as EXHIBIT F-1
(the "CC&RS") which Landlord deems reasonably necessary and/or desirable, and
Tenant agrees that this Lease shall be subject and subordinate to such CC&Rs.
Landlord shall have the right to require Tenant to execute and acknowledge,
within fifteen (15) business days of a request by Landlord, a "Recognition of
Covenants, Conditions, and Restriction," in a form substantially similar to that
attached hereto as EXHIBIT F-2, agreeing to and acknowledging the CC&Rs or any
amendment, modification or replacement of such CC&Rs; provided, however, that no
changes are made to the substantially complete CC&Rs attached hereto (whether in
such CC&Rs or such amendment, modification or replacement thereof), which have a
material negative impact on the Project, Premises or Tenant's permitted use,
occupancy and enjoyment thereof or Tenant's rights under this Lease.

                                    ARTICLE 6

                             SERVICES AND UTILITIES

     6.1 STANDARD TENANT SERVICES. Landlord shall maintain and operate the
Building in a manner consistent with the Comparable Buildings, and shall keep
the Building Structure and Building Systems in condition and repair consistent
with the Comparable Buildings.

     Notwithstanding the foregoing, Tenant shall pay for all utilities
(including without limitation, electricity, gas and water) attributable to its
use of the entire Premises. Such utility use shall include electricity, water,
and gas use for lighting, incidental use and "HVAC," as that term is defined
below. All such utility payments shall be excluded from Operating Expenses and
shall be paid directly by Tenant prior to the date on which the same are due to
the utility provider. Landlord shall, to the extent reasonably practicable and
at Landlord's cost (subject to reimbursement from the Tenant Improvement
Allowance pursuant to Section 2.2.1 of the Tenant Work Letter for the meter
relating to Tenant's work spaces only, as opposed to the house, irrigation and
project meters), separately meter the Premises, and shall otherwise equitably
determine Tenant's use of such utilities.

     Landlord shall provide the following services on all days (unless otherwise
stated below) during the Lease Term.

         6.1.1 Subject to limitations imposed by all governmental rules,
regulations and guidelines applicable thereto, Landlord shall provide heating
and air conditioning ("HVAC"), at Tenant's cost and expense. Tenant hereby
designates to Landlord the following number and


                                      -23-
<PAGE>


timing of hours Tenant desires HVAC for each weekday and each weekend day (the
"TENANT DESIGNATED HVAC HOURS"), and Landlord shall provide HVAC necessary for
normal comfort for normal office use during the Tenant Designated HVAC Hours:
(i) twenty-four (24) hours per day Monday through Saturday, and (ii) 8:00 A.M. -
5:00 P.M. on Sundays. Subject to the foregoing, Tenant may change the Tenant
Designated HVAC Hours upon not less than seventy-two (72) hours Notice (the
"HVAC NOTICE") to Landlord; provided however, that Landlord shall cooperate with
Tenant to establish a system by which Tenant change, on a short term basis, the
hours during which the HVAC is operating. Following written request by Tenant
from time to time but not more frequently than once each month, Landlord shall
provide Tenant with a statement reasonably indicating the HVAC utilized by
Tenant for its Premises as reflected by the meter.

         6.1.2 Landlord shall provide at Landlord's cost (subject to
reimbursement from the Tenant Improvement Allowance pursuant to Section 2.2.1 of
the Tenant Work Letter), as part of the Base Building, reasonably adequate
utility services for Tenant's intended office use and occupancy of the Premises,
including mechanical, electrical, plumbing and gas, all as more specifically set
forth in the Base Building definition attached to the Tenant Work Letter.

         6.1.3 Landlord shall provide city water from the regular Building
outlets for drinking, lavatory and toilet purposes in the Building.

         6.1.4 Tenant shall provide janitorial services to the Premises, except
the date of observation of the Holidays, in and about the Premises and window
washing services in a manner consistent with the Comparable Buildings; provided,
however, that at Tenant's reasonable request, Landlord shall provide such
janitorial services to the Premises at Tenant's sole cost and expense.

         6.1.5 Landlord shall provide exclusive, non-attended automatic
passenger elevator service for all elevators in the Building on a twenty-four
hour a day, seven days a week basis (such hours to be the "BUILDING HOURS"),
subject to closures for routine maintenance or repair, ; provided, however,
Landlord shall use reasonable efforts to schedule the timing of such routine
maintenance or repair, and shall otherwise use commercially reasonable efforts
to minimize any interference with Tenant's Permitted Use and enjoyment of the
Premises.

         6.1.6 Landlord shall, to the extent the Premises includes a freight
elevator, provide exclusive freight elevator service during all Business Hours,
subject to closures for routine maintenance or repair; provided, however,
Landlord shall use reasonable efforts to schedule the timing of such routine
maintenance or repair, and shall otherwise use commercially reasonable efforts
to minimize any interference with Tenant's Permitted Use and enjoyment of the
Premises.

         Tenant shall cooperate fully with Landlord at all times and abide by
all reasonable and customary regulations and requirements that Landlord may
reasonably prescribe for the proper functioning and protection of the HVAC,
electrical, mechanical and plumbing systems, provided that the same do not
materially adversely interfere with Tenant's permitted use of the Premises.

     6.2 INTENTIONALLY OMITTED.


                                      -24-
<PAGE>


     6.3 INTERRUPTION OF USE. Except as specifically set forth in Section 6.4
and 19.6 to the contrary, Tenant agrees that Landlord shall not be liable for
damages, by abatement of Rent or otherwise, for failure to furnish or delay in
furnishing any service (including telephone and telecommunication services), or
for any diminution in the quality or quantity thereof, when such failure or
delay or diminution is occasioned, in whole or in part, by breakage, repairs,
replacements, or improvements, by any strike, lockout or other labor trouble, by
inability to secure electricity, gas, water, or other fuel at the Building or
Project after reasonable effort to do so, by any riot or other dangerous
condition, emergency, accident or casualty whatsoever, by act or default of
Tenant or other parties, or by any other cause; and such failures or delays or
diminution shall never be deemed to constitute an eviction or disturbance of
Tenant's use and possession of the Premises or relieve Tenant from paying Rent
or performing any of its obligations under this Lease, except as specifically
set forth in this Lease to the contrary. Furthermore, except to the extent
caused by the gross negligence or willful misconduct of Landlord, Landlord shall
not be liable under any circumstances for a loss of, or injury to, property or
for injury to, or interference with, Tenant's business, including, without
limitation, loss of profits, however occurring, through or in connection with or
incidental to a failure to furnish any of the services or utilities as set forth
in this Article 6. Landlord may comply with mandatory controls or guidelines
promulgated by any governmental entity relating to the use or conservation of
energy, water, gas, light or electricity or the reduction of automobile or other
emissions without creating any liability of Landlord to Tenant under this Lease,
provided that the Premises are not thereby rendered untenantable.

                                    ARTICLE 7

                                     REPAIRS

     7.1 IN GENERAL. Landlord shall maintain in first-class condition and
operating order and keep in good repair and condition the structural portions
of the Building, including the foundation, floor/ceiling slabs, roof, curtain
wall, exterior glass and mullions, columns, beams, shafts (including elevator
shafts), stairs, parking areas, landscaping, fountains, water falls, exterior
Project signage, stairwells, elevator cabs, plazas, art work, sculptures,
men's and women's washrooms, Building mechanical, electrical and telephone
closets, and all common and public areas (collectively, "BUILDING STRUCTURE")
and the Base Building mechanical, electrical, life safety, plumbing,
sprinkler systems and HVAC systems (collectively, the "BUILDING SYSTEMS").
Notwithstanding anything in this Lease to the contrary, Tenant shall be
required to repair the Building Structure and/or the Building Systems to the
extent required because of Tenant's use of the Premises for other than normal
and customary purposes specified in Section 7 of the Summary, unless and to
the extent such damage is covered by insurance carried or required to be
carried by Landlord pursuant to Article 10 and to which the waiver of
subrogation is applicable (such obligation to the extent applicable to Tenant
as qualified and conditioned will hereinafter be defined as the "BS/BS
EXCEPTION"). Subject to Articles 11 and 13 and Section 29.36 of this Lease,
Tenant shall, at Tenant's own expense, pursuant to the terms of this Lease,
including without limitation Article 8 hereof, keep the Premises, including
all Tenant Improvements, "Alterations," as that term is defined in Section
8.1 of this Lease, fixtures, furniture, equipment and the floor or floors of
the Building (excluding the slab) on which the Premises are located, in good
order, repair and condition at all times during the Lease Term (but such
obligation shall not extend to the Building Structure and the Building System
except

                                      -25-
<PAGE>


pursuant to the BS/BS Exception). In addition, except as provided as part of
Landlord's repair obligations set forth above or elsewhere in this Lease, Tenant
shall, at Tenant's own expense, but under the supervision and subject to the
prior approval of Landlord, and within any reasonable period of time specified
by Landlord, pursuant to the terms of this Lease, including without limitation
Article 8 hereof, promptly and adequately repair all damage to the Premises and
replace or repair all damaged, broken, or worn fixtures and appurtenances (but
such obligation shall not extend to the Building Structure and the Building
System except pursuant to the BS/BS Exception), except for damage caused by
ordinary wear and tear or beyond the reasonable control of Tenant; provided
however, that, at Landlord's option, but only if Tenant fails to make such
repairs and replacements, Landlord may, but need not, make such repairs and
replacements, and Tenant shall pay Landlord the cost thereof, including a
percentage of the cost thereof (to be uniformly established for the Building
and/or the Project) sufficient to reimburse Landlord for all overhead, general
conditions, fees and other costs or expenses arising from Landlord's involvement
with such repairs and replacements forthwith upon being billed for same.
Landlord may, but shall not be required to, enter the Premises at all reasonable
times to make such repairs, alterations, improvements or additions to the
Premises or to the Project or to any equipment located in the Project as
Landlord shall desire or deem necessary or as Landlord may be required to do by
governmental or quasi-governmental authority or court order or decree. Tenant
hereby waives any and all rights under and benefits of subsection 1 of Section
1932 and Sections 1941 and 1942 of the California Civil Code or under any
similar law, statute, or ordinance now or hereafter in effect.

     7.2 TENANT'S RIGHT TO MAKE REPAIRS. Notwithstanding the provisions of
Section 7.1, above, if Tenant provides notice to Landlord of an event or
circumstance which requires the action of Landlord with respect to repair and/or
maintenance as set forth in Section 7.1, above and Landlord fails to provide
such action within a reasonable period of time, given the circumstances, after
the receipt of such notice, but in any event not later than thirty (30) days
after receipt of such notice, then Tenant may proceed to take the required
action upon delivery of an additional ten (10) business days notice to Landlord
specifying that Tenant is taking such required action, and if such action was
required under the terms of this Lease to be taken by Landlord, then Tenant
shall be entitled to prompt reimbursement by Landlord of Tenant's reasonable
costs and expenses in taking such action. In the event Tenant takes such action,
Tenant shall use only those contractors used by Landlord in the Building for
similar work unless such contractors are unwilling or unable to perform such
work, in which event Tenant may utilize the services of any other qualified
contractor which normally and regularly performs similar work in the Comparable
Buildings; provided, however, those contractors used by Landlord in the Building
for similar work shall be deemed unwilling or unable to perform such work to the
extent the cost and fees of such contractor are not reasonably competitive with
other qualified contractors which normally and regularly perform similar work in
the Comparable Buildings. Further, if Landlord does not deliver a detailed
written objection to Tenant, within thirty (30) days after receipt of an invoice
by Tenant of its costs of taking action which Tenant claims should have been
taken by Landlord, and if such invoice from Tenant sets forth a reasonably
particularized breakdown of its costs and expenses in connection with taking
such action on behalf of Landlord, then Tenant shall be entitled to deduct from
Rent payable by Tenant under this Lease, the amount set forth in such invoice.
If, however, Landlord (acting in good faith) delivers to Tenant within thirty
(30) days after receipt of Tenant's invoice, a written objection to the payment
of such invoice, setting forth with reasonable particularity Landlord's


                                      -26-
<PAGE>


reasons for its claim that such action did not have to be taken by Landlord
pursuant to the terms of this Lease or that the charges are excessive (in which
case Landlord shall pay the amount it contends would not have been excessive),
then Tenant shall not be entitled to such deduction from Rent, but as Tenant's
sole remedy, Tenant may proceed to claim a default by Landlord under this Lease;
provided that under no circumstances shall Tenant be allowed to terminate this
Lease based upon a such default by Landlord; provided further, however, the
notice and cure periods otherwise required pursuant to SECTION 19.6 of this
Lease shall be deemed to have been satisfied upon completion of the procedure
specified in this SECTION 7.2.

                                    ARTICLE 8

                            ADDITIONS AND ALTERATIONS

     8.1 LANDLORD'S CONSENT TO ALTERATIONS. Tenant may not make any
improvements, alterations, additions or changes to the Premises or any
mechanical, plumbing or HVAC facilities or systems pertaining to the Premises
which affect the Building Structure, Building Systems or exterior appearance of
the Building (collectively, the "ALTERATIONS") without first procuring the prior
written consent of Landlord to such Alterations, which consent shall be
requested by Tenant not less than ten (10) days prior to the commencement
thereof, and which consent shall not be unreasonably withheld by Landlord,
provided it shall be deemed reasonable for Landlord to withhold its consent to
any Alteration which materially adversely affects the Building Structure,
Building Systems or the exterior appearance of the Building. In the event
Landlord has not responded to Tenant's request for consent within such ten (10)
day period, Tenant shall deliver to Landlord a second such request. In the event
Landlord fails to respond (either affirmatively or negatively) to Tenant's
second such request for consent within three (3) business days after its receipt
of such second request, Landlord shall be deemed to have consented thereto. The
construction of the initial improvements to the Premises shall be governed by
the terms of the Tenant Work Letter and not the terms of this Article 8.

     8.2 MANNER OF CONSTRUCTION. Landlord may impose, as a condition of its
consent to any and all Alterations or repairs of the Premises or about the
Premises, such requirements as Landlord in its reasonable discretion may deem
desirable, including, but not limited to, the requirement that (i) the
Alterations be consistent with the Permitted Use, (ii) Tenant utilize for such
purposes only contractors, subcontractors, materials, mechanics and materialmen
selected by Tenant from a list provided to and approved by Landlord, and (iii)
upon Landlord's request (unless Landlord waived, at the time of Landlord's
approval of any Alterations pursuant to the provisions of Section 8.5, below,
its right to make such request), Tenant shall, at Tenant's expense, remove such
Alterations upon the expiration or any early termination of the Lease Term. If
such Alterations will involve the use of or disturb hazardous materials or
substances existing in the Premises, Tenant shall comply with Landlord's rules
and regulations concerning such hazardous materials or substances. Tenant shall
construct such Alterations and perform such repairs in a good and workmanlike
manner, in conformance with any and all applicable federal, state, county or
municipal laws, rules and regulations and pursuant to a valid building permit,
issued by the City of San Diego, all in conformance with Landlord's reasonable
construction rules and regulations. In the event Tenant performs any Alterations
in the Premises which require or give rise to governmentally required changes to
the "Base Building," as that term is defined below, then Landlord shall, at
Tenant's expense, make such changes to the Base


                                      -27-
<PAGE>


Building. The "BASE BUILDING" shall include the structural portions of the
Building, and the public restrooms and the systems and equipment located in the
internal core of the Building on the floor or floors on which the Premises are
located. In performing the work of any such Alterations, Tenant shall have the
work performed in such manner so as not to obstruct access to the Project or any
portion thereof, by any other tenant of the Project, and so as not to obstruct
the business of Landlord or other tenants in the Project. Tenant shall not use
(and upon notice from Landlord shall cease using) contractors, services,
workmen, labor, materials or equipment that, in Landlord's reasonable judgment,
would disturb labor harmony with the workforce or trades engaged in performing
other work, labor or services in or about the Building or the Common Areas. In
addition to Tenant's obligations under Article 9 of this Lease, within thirty
(30) days of completion of any Alterations, Tenant agrees to cause a Notice of
Completion to be recorded in the office of the Recorder of the County of San
Diego in accordance with Section 3093 of the Civil Code of the State of
California or any successor statute, and Tenant shall deliver to the Project
management office a reproducible copy of the "as built" construction drawings of
the Alterations (or, at Tenant's election, a copy of the final working drawings
for such Alterations, with field changes shown legibly thereon) as well as all
permits, approvals and other documents issued by any governmental agency in
connection with the Alterations.

     8.3 PAYMENT FOR IMPROVEMENTS. If payment is made directly to contractors,
Tenant shall comply with all applicable laws relating to final lien releases and
waivers in connection with Tenant's payment for work to contractors. Whether or
not Tenant orders any work directly from Landlord, Tenant shall reimburse
Landlord for Landlord's reasonable out-of-pocket costs and expenses reasonably
incurred in connection with Landlord's review of such Alterations.

     8.4 CONSTRUCTION INSURANCE. In addition to the requirements of Article 10
of this Lease, in the event that Tenant makes any Alterations, prior to the
commencement of such Alterations, Tenant shall provide Landlord with evidence
that Tenant carries "BUILDER'S ALL RISK" insurance in a commercially reasonable
amount given the scope and cost of the Alterations, it being understood and
agreed that all of such Alterations shall be insured by Tenant pursuant to
Article 10 of this Lease immediately upon completion thereof. In addition,
Landlord may, to the extent the same is reasonable given Tenant's net worth and
the magnitude of the Alterations, require Tenant to obtain a lien and completion
bond or some alternate form of security satisfactory to Landlord in an amount
sufficient to ensure the lien-free completion of such Alterations and naming
Landlord as a co-obligee.

     8.5 LANDLORD'S PROPERTY. All Alterations, improvements, fixtures, equipment
and/or appurtenances other than Tenant's trade fixtures and equipment which may
be installed or placed in or about the Premises, from time to time, shall be and
become the property of Landlord upon the expiration of this Lease. In addition
to its trade fixtures and equipment, Tenant may also remove any Alterations,
improvements, fixtures and/or equipment which Tenant can substantiate to
Landlord have not been paid for with any Tenant improvement allowance funds
provided to Tenant by Landlord, provided Tenant repairs any damage to the
Premises and Building caused by such removal and returns the affected portion of
the Premises to a building standard tenant improved condition as determined by
Landlord. Furthermore, Landlord may, by written notice to Tenant prior to the
end of the Lease Term, or given following any earlier termination of this Lease,
require Tenant, at Tenant's expense, to (i) remove any Alterations or
improvements in the Premises, and/or (ii) remove any "Above Building Standard
Tenant Improvements," as that term


                                      -28-
<PAGE>


is defined in the Tenant Work Letter, located within the deli, gym or computer
room portion of the Premises and to repair any damage to the Premises and
Building caused by such removal (reasonable wear and tear excepted) and returns
the affected portion of the Premises to a building standard tenant improved
condition as determined by Landlord (excepting the deli, gym and/or computer
room portions of the Premises, which need only be returned to a building
standard shell condition as determined by Landlord); provided, however, if, in
connection with its request for Landlord's approval for particular Alterations,
(1) Tenant requests Landlord's decision with regard to the removal of such
Alterations, and (2) Landlord thereafter agrees in writing to waive the removal
requirement when approving such Alterations, then Tenant shall not be required
to so remove such Alterations; provided further, however, that if Tenant
requests such a determination from Landlord and Landlord, in its approval of any
Alterations, fails to address the removal requirement with regard to such
Alterations, Landlord shall be deemed to have agreed to waive the removal
requirement with regard to such Alterations. If Tenant fails to complete such
removal and/or to repair any damage caused by the removal of any Alterations (to
the extent required to be removed pursuant to SECTION 8.1 and this SECTION 8.5)
or improvements in the Premises, and returns the affected portion of the
Premises to a building standard tenant improved condition as reasonably
determined by Landlord (reasonable wear and tear accepted), then at Landlord's
option, either (A) Tenant shall be deemed to be holding over in the Premises and
Rent shall continue to accrue in accordance with the terms of Article 16, below,
until such work shall be completed, or (B) Landlord may do so and may charge the
cost thereof to Tenant. Tenant hereby protects, defends, indemnifies and holds
Landlord harmless from any liability, cost, obligation, expense or claim of lien
in any manner relating to the installation, placement, removal or financing of
any such Alterations, improvements, fixtures and/or equipment in, on or about
the Premises by or on behalf of Tenant, which obligations of Tenant shall
survive the expiration or earlier termination of this Lease for one (1) year
following such expiration or earlier termination. At all times during the Term
of this Lease, Tenant shall be entitled to remove, and Landlord shall have no
interest in, Tenant's trade fixtures and equipment.

                                    ARTICLE 9

                             COVENANT AGAINST LIENS

     Tenant shall keep the Project and Premises free from any liens or
encumbrances arising out of the work performed, materials furnished or
obligations incurred by or on behalf of Tenant, and shall protect, defend,
indemnify and hold Landlord harmless from and against any claims, liabilities,
judgments or costs (including, without limitation, reasonable attorneys' fees
and costs) arising out of same or in connection therewith. Tenant shall give
Landlord notice at least ten (10) days prior to the commencement of any such
work on the Premises (or such additional time as may be necessary under
applicable laws) to afford Landlord the opportunity of posting and recording
appropriate notices of non-responsibility. Tenant shall remove any such lien or
encumbrance by bond or otherwise within ten (10) days after notice by Landlord,
and if Tenant shall fail to do so, Landlord may, after an additional five (5)
day notice to Tenant, pay the amount necessary to remove such lien or
encumbrance, without being responsible for investigating the validity thereof.
The amount so paid shall be deemed Additional Rent under this Lease payable upon
demand, without limitation as to other remedies available to Landlord under this
Lease. Nothing contained in this Lease shall authorize Tenant to do any act
which shall subject Landlord's title to the Building or Premises to any liens or
encumbrances whether


                                      -29-
<PAGE>


claimed by operation of law or express or implied contract. Any claim to a lien
or encumbrance upon the Building or Premises arising in connection with any such
work or respecting the Premises not performed by or at the request of Landlord
shall be null and void, or at Landlord's option shall attach only against
Tenant's interest in the Premises and shall in all respects be subordinate to
Landlord's title to the Project, Building and Premises.

                                   ARTICLE 10

                                    INSURANCE

     10.1 INDEMNIFICATION AND WAIVER. Because Tenant is required to insure all
of its Tenant Improvements and its furniture, fixtures and equipment and because
of the requirements to provide waivers of subrogation, Tenant hereby assumes all
risk of damage to property in the Premises, subject to the terms and conditions
of the waiver of subrogation set forth below. Tenant hereby assumes all risk of
injury to persons in, upon or about the Premises from any cause whatsoever
unless caused by the negligence or willful misconduct of the "Landlord Parties,"
as that terms is set forth hereinbelow. Tenant agrees that Landlord, its
partners, subpartners, parent organization, affiliates, subsidiaries, and their
respective officers, directors, legal representative, successors, assigns,
agents, servants, employees, and independent contractors and each of them
(collectively, "LANDLORD PARTIES") shall not be liable to Tenant or the "Tenant
Parties," as that term is set forth hereinbelow, for, and are hereby released
from any responsibility to Tenant or the Tenant Parties for, any damage either
to person in the Project or property of Tenant or the Tenant Parties in the
Premises or resulting from the loss of use thereof, which damage is sustained by
Tenant, the Tenant Parties or by other persons claiming through Tenant or the
Tenant Parties, except for damage to property which Landlord insures or is
required to insure pursuant to the terms and conditions of this Lease and except
for injury to persons to the extent caused by the negligence or willful
misconduct of the Landlord Parties. Tenant shall indemnify, defend, protect, and
hold harmless the Landlord Parties from any and all loss, cost, damage, expense
and liability (including without limitation court costs and reasonable
attorneys' fees) (collectively, "CLAIMS") incurred in connection with or arising
from any cause in or on the Premises or Project, any acts, omissions or
negligence of Tenant or of any person claiming by, through or under Tenant,
partners, subpartners, parent organizations, affiliates, subsidiaries and their
respective officers, directors, contractors, agents, servants, employees,
invitees, guests or licensees of Tenant and each of them (collectively, "TENANT
PARTIES") or any such person, in or on the Project, either prior to or during,
the Lease Term provided that notwithstanding the foregoing, Tenant shall not be
required to indemnify and hold Landlord harmless from any Claims (i) by any
person, company or entity resulting from the negligence or willful misconduct of
the Landlord Parties in connection with the Landlord Parties' activities in the
Building or the Project (except for damage to the "Tenant Improvements," as that
term is defined in Section 2.1 of the Tenant Work Letter, and Tenant's personal
property, fixtures, furniture and equipment in the Premises, to the extent
Tenant is required to obtain the requisite insurance coverage pursuant to this
Lease for any such Tenant Improvements or personal property, fixtures, furniture
or equipment) or the Project, or (ii) resulting from damage to the Building
Structure or Building Systems, and Landlord hereby so indemnifies and holds
Tenant and Tenant Parties harmless from any such Claims and from any Claim
resulting from injuries to persons caused by the negligence or willful
misconduct of Landlord Parties outside of the Premises; provided further that
because Landlord is required to maintain insurance on the


                                      -30-
<PAGE>


Building and the Project and Tenant compensates Landlord for such insurance as
part of Tenant's Share of Direct Expenses and because of the existence of
waivers of subrogation set forth in Section 10.5 of this Lease, Landlord hereby
indemnifies and holds Tenant harmless from any Claim to any property to the
extent such Claim is covered by such insurance (or would have been covered if
Landlord had carried the insurance required hereunder), even if resulting from
the negligent acts, omissions, or willful misconduct of the Tenant Parties.
Similarly, since Tenant must carry insurance pursuant to this Article 10 to
cover its personal property within the Premises, the Tenant Improvements, and
the "Original Improvements," as that term is defined in Section 10.3.2 of this
Lease, Tenant hereby indemnifies and holds Landlord harmless from any Claim to
any property within the Premises, to the extent such Claim is covered by such
insurance (or would have been covered if Tenant had carried the insurance
required hereunder), even if resulting from the negligent acts, omissions or
willful misconduct of the Landlord Parties. Pursuant to this Article 10,
Tenant's agreement to indemnify and hold Landlord harmless, and Landlord's
agreement to indemnify and hold Tenant harmless are not intended to and shall
not relieve any insurance carrier of its obligations under policies required to
be carried by Landlord or Tenant, respectively, pursuant to this Lease to the
extent such policies cover the results of such acts, omissions or willful
misconduct. The provisions of this Section 10.1 shall survive the expiration or
sooner termination of this Lease with respect to any claims or liability arising
in connection with any event occurring prior to such expiration or termination.

     Notwithstanding anything to the contrary contained in this Lease, nothing
in this Lease shall impose any obligations on Tenant or Landlord to be
responsible or liable for, and each hereby releases the other from all liability
for, consequential damages other than those damages incurred by Landlord in
connection with a holdover of the Premises by Tenant after the expiration or
earlier termination of this Lease which might sometimes be referred to as
consequential damages.

     10.2 TENANT'S COMPLIANCE WITH LANDLORD'S FIRE AND CASUALTY INSURANCE.
Tenant shall, at Tenant's expense, comply with all insurance company
requirements pertaining to the use of the Premises. If Tenant's conduct or use
of the Premises causes any increase in the premium for such insurance policies
then Tenant shall reimburse Landlord for any such increase. Tenant, at Tenant's
expense, shall comply with all rules, orders, regulations or requirements of the
American Insurance Association (formerly the National Board of Fire
Underwriters) and with any similar body.

     10.3 TENANT'S INSURANCE. Tenant shall maintain the following coverages in
the following amounts.

         10.3.1 Commercial General Liability Insurance covering the insured
against claims of bodily injury, personal injury and property damage (including
loss of use thereof) arising out of Tenant's operations, and contractual
liabilities (covering the performance by Tenant of its indemnity agreements)
including a Broad Form endorsement covering the insuring provisions of this
Lease and, to the extent customarily and commercially available, the performance
by Tenant of the indemnity agreements set forth in Section 10.1 of this Lease,
for limits of liability not less than:


                                      -31-
<PAGE>


               Bodily Injury and                 $5,000,000 each occurrence
               Property Damage Liability         $5,000,000 annual aggregate

               Personal Injury Liability         $5,000,000 each occurrence
                                                 $5,000,000 annual aggregate
                                                 0% Insured's participation

         10.3.2 Physical Damage Insurance covering (i) all office furniture,
business and trade fixtures, office equipment, free-standing cabinet work,
movable partitions, merchandise and all other items of Tenant's property on the
Premises installed by, for, or at the expense of Tenant, (ii) the "Tenant
Improvements," as that term is defined in Section 2.1 of the Tenant Work Letter,
and any other improvements which exist in the Premises as of the Lease
Commencement Date (excluding the Base Building) (the "ORIGINAL IMPROVEMENTS"),
and (iii) all other improvements, alterations and additions to the Premises.
Such insurance shall be written on an "all risks" of physical loss or damage
basis, for the full replacement cost value (subject to reasonable deductible
amounts) new without deduction for depreciation of the covered items and in
amounts that meet any co-insurance clauses of the policies of insurance and may
include, at Tenant's sole option, coverage for damage or other loss caused by
fire or other peril including, but not limited to, vandalism and malicious
mischief, theft, water damage of any type, including sprinkler leakage, bursting
or stoppage of pipes, and explosion, and providing business interruption
coverage for a period of one year.

         10.3.3 Worker's Compensation and Employer's Liability or other similar
insurance in amounts necessary to comply with all applicable state and local
statutes and regulations.

     10.4 FORM OF POLICIES. The minimum limits of policies of insurance required
of Tenant under this Lease shall in no event limit the liability of Tenant under
this Lease. Such insurance shall (i) name Landlord, Landlord's lender and
Landlord's managing agent, if any, as an additional insured; (ii) specifically
cover the liability assumed by Tenant under this Lease, including, but not
limited to, Tenant's obligations under Section 10.1 of this Lease; (iii) be
issued by an insurance company having a rating of not less than A-:VIII in
Best's Insurance Guide and licensed to do business in the State of California;
(iv) be primary insurance as to all claims thereunder and provide that any
insurance carried by Landlord is excess and is non-contributing with any
insurance requirement of Tenant; and (v) provide that said insurance shall not
be canceled or coverage changed unless ten (10) days' prior written notice shall
have been given to Landlord and any mortgagee of Landlord. Tenant shall deliver
said policy or policies or certificates thereof to Landlord on or before the
Lease Commencement Date and at least thirty (30) days before the expiration
dates thereof. In the event Tenant shall fail to procure such insurance, or to
deliver such policies or certificate, Landlord may, at its option, procure such
policies for the account of Tenant, and the cost thereof shall be paid to
Landlord within five (5) days after delivery to Tenant of bills therefor.

     10.5 SUBROGATION. Landlord and Tenant intend that their respective property
loss risks shall be borne by reasonable insurance carriers to the extent above
provided, and Landlord and Tenant hereby agree to look solely to, and seek
recovery only from, their respective insurance


                                      -32-
<PAGE>


carriers in the event of a property loss to the extent that such coverage is
agreed to be provided hereunder. The parties each hereby waive all rights and
claims against each other for such losses, and waive all rights of subrogation
of their respective insurers. The parties agree that their respective insurance
policies are now, or shall be, endorsed such that the waiver of subrogation
shall not affect the right of the insured to recover thereunder, so long as no
material additional premium is charged therefor; provided, however, that in the
event a material additional premium would be charged therefor, either party can,
by directly paying such additional premium, cause the other party to maintain
such waiver of subrogation in such insurance policies.

     10.6 ADDITIONAL INSURANCE OBLIGATIONS. Tenant shall carry and maintain
during the entire Lease Term, at Tenant's sole cost and expense, increased
amounts of the insurance required to be carried by Tenant pursuant to this
Article 10 and such other reasonable types of insurance coverage and in such
reasonable amounts covering the Premises and Tenant's operations therein, as may
be reasonably requested by Landlord, provided that in no event shall such
increased amounts of insurance or such other reasonable types of insurance
coverage be in excess of that being required by landlords of Comparable
Buildings.

     10.7 LANDLORD INSURANCE REQUIREMENTS. Landlord shall insure the Building
(including the Building Structure and Building Systems) and the Project during
the Lease Term with an "All Risk" property insurance policy. Such coverage shall
be in such amounts, from such companies, and on such other terms and conditions,
as Landlord may from time to time reasonably determine, provided that to the
extent consistent with the practices of landlords of the Comparable Buildings,
such coverage shall (i) be for full replacement of the Building and the Project
in compliance with all then existing Applicable Law; and (ii) be with companies
and have policies meeting the criteria set forth in Section 10.4(iii) in this
Lease. Additionally, at the sole and absolute option of Landlord, such insurance
coverage may include the risks of earthquakes and/or flood damage and additional
hazards, a rental loss endorsement and one or more loss payee endorsements in
favor of the holders of any mortgages or deeds of trust encumbering the interest
of Landlord in the Building or the ground or underlying lessors of the Building,
or any portion thereof. In addition, Landlord shall maintain a Commercial
General Liability Insurance policy covering the insured against claims of bodily
injury and personal injury, for limits of liability not initially less than
$5,000,000 each occurrence and $5,000,000 annual aggregate for each of bodily
injury and personal injury. Notwithstanding the foregoing terms and conditions
of this Section 10.7, the coverage and amounts of insurance carried by Landlord
in connection with the Building shall be comparable to the coverage and amounts
of insurance which are carried by reasonably prudent landlords of Comparable
Buildings, and Worker's Compensation and Employee's Liability coverage as
required by Applicable Law. Upon inquiry by Tenant, from time to time, Landlord
shall inform Tenant of all such insurance carried by Landlord. Notwithstanding
anything to the contrary set forth in this Section 10.7 or in Section 4.2.4 of
this Lease, (1) the full cost of such earthquake or flood insurance shall be
included as part of Operating Expenses during the first Expense Year, and (2)
thereafter, in no event shall the cost of such earthquake or flood insurance
included as Operating Expenses under this Lease exceed the "Earthquake/Flood
Cap." For purposes of this Lease the "EARTHQUAKE/FLOOD CAP" shall mean the
amount equal to the product of (A) one hundred ten percent (110%) of the amount
such earthquake and/or flood insurance would have cost as of the Lease
Commencement Date, and (B) a fraction, the numerator of which is the "Adjustment


                                      -33-
<PAGE>


Month Index," as that term is defined hereinbelow, occurring immediately prior
to the date of such calculation, and the denominator of which is the "Base Month
Index," as that term is set forth hereinbelow. "BASE MONTH INDEX" means the
"Index," as that term is defined hereinbelow, for the calendar month which is
three (3) months prior to the calendar month in which the Lease Commencement
Date occurs. "ADJUSTMENT MONTH INDEX" means the Index for the month in any given
year which is three (3) months prior to the calendar month in which the
determination is being made. "INDEX" means the Consumer Price Index, All Urban
Consumers (CPI-U), US City Average, All-items Index (1993-95 = 100), published
by the United States Department of Labor, Bureau of Labor Statistics. If the
base of the Index changes from the 1993-95 base 100, the Index shall thereafter
be adjusted to the 1993-95 base 100 before the computation indicated above is
made. If the Index cannot be converted to the 1993-95 base or if the Index is
otherwise revised, the adjustment under this Article shall be made with the use
of such conversion factor, formula or table for converting the Index as may be
published by the Bureau of Labor Statistics. If the Index is at any time no
longer published, a comparable index generally accepted and employed by the real
estate profession, as determined by Landlord in Landlord's sole discretion,
shall be used.

                                   ARTICLE 11

                             DAMAGE AND DESTRUCTION

     11.1 REPAIR OF DAMAGE TO PREMISES BY LANDLORD. Except in instances where
the Landlord Parties made Tenant aware of any such damage, Tenant shall promptly
notify Landlord of any material damage to the Premises resulting from fire or
any other casualty. If the Premises or any Common Areas serving or providing
access to the Premises shall be damaged by fire or other casualty, Landlord
shall promptly and diligently, subject to reasonable delays for insurance
adjustment or other matters beyond Landlord's reasonable control, and subject to
all other terms of this Article 11, restore the Base Building, Building Parking
Structure and such Common Areas. Such restoration shall be to substantially the
same condition of the Base Building, Building Parking Structure and the Common
Areas prior to the casualty, except for modifications required by zoning and
building codes and other laws. Upon the occurrence of any damage to the
Premises, upon notice (the "LANDLORD REPAIR NOTICE") to Tenant from Landlord,
Tenant shall assign to Landlord (or to any party designated by Landlord) all
insurance proceeds payable to Tenant under Tenant's insurance required under
Section 10.3.2(ii) and (iii) of this Lease, and Landlord shall repair any injury
or damage to the Tenant Improvements and the Original Improvements installed in
the Premises and shall return such Tenant Improvements and Original Improvements
to their original condition; provided that if the cost of such repair by
Landlord exceeds the amount of insurance proceeds received by Landlord from
Tenant's insurance carrier, as assigned by Tenant, and from Landlord's insurance
carrier, the cost of such repairs shall be paid by Tenant to Landlord prior to
Landlord's commencement of repair of the damage. In the event that Landlord does
not deliver the Landlord Repair Notice within sixty (60) days following the date
the casualty becomes known to Landlord, Tenant shall, at its sole cost and
expense, repair any injury or damage to the Tenant Improvements and the Original
Improvements installed in the Premises and shall return such Tenant Improvements
and Original Improvements to their original condition. Whether or not Landlord
delivers a Landlord Repair Notice, prior to the commencement of construction,
Tenant shall submit to Landlord, for Landlord's review and approval, all plans,
specifications and working drawings relating thereto, and Landlord shall


                                      -34-
<PAGE>


select the contractors to perform such improvement work; provided Tenant shall
have the right to reasonably approve the contractor and subcontracotrs. Landlord
shall not be liable for any inconvenience or annoyance to Tenant or its
visitors, or injury to Tenant's business resulting in any way from such damage
or the repair thereof; provided however, that if such fire or other casualty
shall have damaged the Premises or Common Areas necessary to Tenant's occupancy,
Landlord shall allow Tenant a proportionate abatement of Rent to the extent
Landlord is reimbursed from the proceeds of rental interruption insurance
purchased by Landlord as part of Operating Expenses, during the time and to the
extent the Premises are unfit for occupancy for the purposes permitted under
this Lease, and not occupied by Tenant as a result thereof; provided, further,
however, that if the damage or destruction is due to the negligence or willful
misconduct of Tenant or any of its agents, employees, contractors, invitees or
guests, Tenant shall be responsible for any reasonable, applicable insurance
deductible (which shall be payable to Landlord upon demand). In the event that
Landlord shall not deliver the Landlord Repair Notice, Tenant's right to rent
abatement pursuant to the preceding sentence shall terminate as of the date when
rental interruption proceeds are no longer payable.

     11.2 LANDLORD'S OPTION TO REPAIR. Notwithstanding the terms of Section 11.1
of this Lease, Landlord may elect not to rebuild and/or restore the Premises,
Building and/or Project, and instead terminate this Lease (or the applicable
portion thereof), by notifying Tenant in writing of such termination within
sixty (60) days after the date of discovery of the damage, such notice to
include a termination date giving Tenant sixty (60) days to vacate the Premises,
but Landlord may so elect only if the Building or Project shall be damaged by
fire or other casualty or cause, if one or more of the following conditions is
present: (i) in Landlord's reasonable judgment, repairs cannot reasonably be
completed within nine (9) months after the date of discovery of the damage (when
such repairs are made without the payment of overtime or other premiums); (ii)
the damage is not fully covered by Landlord's insurance policies (provided
Landlord is deemed to have carried (except with regard to any applicable
deductibles) one hundred percent (100%) replacement cost fire/casualty
insurance); or (iii) the damage occurs during the last twelve (12) months of the
Lease Term. If Landlord does not elect to terminate this Lease pursuant to
Landlord's termination right as provided above, and if the repairs to be made by
Landlord are not actually completed within nine (9) months of the date of
discovery of the damage, Tenant shall have the right to terminate this Lease
during the first five (5) business days of each calendar month following the end
of such period until such time as the repairs to be made by Landlord are
complete, by notice to Landlord (the "DAMAGE TERMINATION NOTICE"), effective as
of a date set forth in the Damage Termination Notice (the "DAMAGE TERMINATION
DATE"), which Damage Termination Date shall not be less than five (5) business
days following Landlord's receipt of the Damage Termination Notice.
Notwithstanding the foregoing, if Tenant delivers a Damage Termination Notice to
Landlord, then Landlord shall have the right to suspend the occurrence of the
Damage Termination Date for a period of thirty (30) days after the Damage
Termination Date set forth in the Damage Termination Notice by delivering to
Tenant, within five (5) business days of Landlord's receipt of the Damage
Termination Notice, a certificate of Landlord's contractor responsible for the
repair of the damage certifying that it is such contractor's good faith judgment
that the repairs to be made by Landlord shall be substantially completed within
thirty (30) days after the Damage Termination Date. If such repairs shall be
substantially completed prior to the expiration of such thirty-day period, then
the Damage Termination Notice shall be of no force or effect, but if such
repairs shall not be


                                      -35-
<PAGE>


substantially completed within such thirty-day period, then this Lease shall
termination upon the expiration of such thirty-day period.

     11.3 WAIVER OF STATUTORY PROVISIONS. The provisions of this Lease,
including this Article 11, constitute an express agreement between Landlord and
Tenant with respect to any and all damage to, or destruction of, all or any part
of the Premises, the Building or the Project, and any statute or regulation of
the State of California, including, without limitation, Sections 1932(2) and
1933(4) of the California Civil Code, with respect to any rights or obligations
concerning damage or destruction in the absence of an express agreement between
the parties, and any other statute or regulation, now or hereafter in effect,
shall have no application to this Lease or any damage or destruction to all or
any part of the Premises, the Building or the Project.

                                   ARTICLE 12

                                    NONWAIVER

     No provision of this Lease shall be deemed waived by either party hereto
unless expressly waived in a writing signed thereby. The waiver by either party
hereto of any breach of any term, covenant or condition herein contained shall
not be deemed to be a waiver of any subsequent breach of same or any other term,
covenant or condition herein contained. The subsequent acceptance of Rent
hereunder by Landlord shall not be deemed to be a waiver of any preceding breach
by Tenant of any term, covenant or condition of this Lease, other than the
failure of Tenant to pay the particular Rent so accepted, regardless of
Landlord's knowledge of such preceding breach at the time of acceptance of such
Rent. No acceptance of a lesser amount than the Rent herein stipulated shall be
deemed a waiver of Landlord's right to receive the full amount due, nor shall
any endorsement or statement on any check or payment or any letter accompanying
such check or payment be deemed an accord and satisfaction, and Landlord may
accept such check or payment without prejudice to Landlord's right to recover
the full amount due. No receipt of monies by Landlord from Tenant after the
termination of this Lease shall in any way alter the length of the Lease Term or
of Tenant's right of possession hereunder, or after the giving of any notice
shall reinstate, continue or extend the Lease Term or affect any notice given
Tenant prior to the receipt of such monies, it being agreed that after the
service of notice or the commencement of a suit, or after final judgment for
possession of the Premises, Landlord may receive and collect any Rent due, and
the payment of said Rent shall not waive or affect said notice, suit or
judgment.

                                   ARTICLE 13

                                  CONDEMNATION

     13.1 CONDEMNATION. If the whole or any part of the Premises, Building or
Project shall be taken by power of eminent domain or condemned by any competent
authority for any public or quasi-public use or purpose, or if any adjacent
property or street shall be so taken or condemned, or reconfigured or vacated by
such authority in such manner as to require the use, reconstruction or
remodeling of any part of the Premises, Building or Project, and if as a result
thereof Tenant cannot conduct its business operations in substantially the same
manner such business operations were conducted prior to such taking while still
retaining substantially the


                                      -36-
<PAGE>


same material rights and benefits it bargained to receive under this Lease, or
if Landlord shall grant a deed or other instrument in lieu of such taking by
eminent domain or condemnation as a result thereof, Landlord and Tenant shall
each have the option to terminate this Lease on ninety (90) days Notice to the
other party effective as of the date possession is required to be surrendered to
the authority. Subject to Section 13.2 below, Tenant shall not because of such
taking assert any claim against Landlord or the authority for any compensation
because of such taking and Landlord shall be entitled to the entire award or
payment in connection therewith, except that Tenant shall have the right to file
any separate claim available to Tenant for any taking of Tenant's personal
property and fixtures belonging to Tenant and removable by Tenant upon
expiration of the Lease Term pursuant to the terms of this Lease, and for moving
expenses, so long as such claims do not diminish the award available to
Landlord, its ground lessor with respect to the Building or Project or its
mortgagee, and such claim is payable separately to Tenant. All Rent shall be
apportioned as of the date of such termination. If any part of the Premises
shall be taken, and this Lease shall not be so terminated, the Rent shall be
proportionately abated. Tenant hereby waives any and all rights it might
otherwise have pursuant to Section 1265.130 of The California Code of Civil
Procedure. Notwithstanding anything to the contrary contained in this Article
13, in the event of a temporary taking of all or any portion of the Premises for
a period of one hundred and eighty (180) days or less, then this Lease shall not
terminate but the Base Rent and the Additional Rent shall be abated for the
period of such taking in proportion to the ratio that the amount of rentable
square feet of the Premises taken bears to the total rentable square feet of the
Premises. Landlord shall be entitled to receive the entire award made in
connection with any such temporary taking.

     13.2 TENANT'S RIGHT TO AWARD. Notwithstanding anything to the contrary set
forth in Section 13.1 above, Tenant shall have the right to claim and recover
and Landlord hereby assigns to Tenant from the award, (i) the fair market value
of Tenant Improvements and Alterations to the extent paid for solely by Tenant,
(ii) fifty percent (50%) of any sum attributable to a diminution of the present
value (at the date of such taking) of the fair market rental value of portions
of the Premises not condemned for the remainder of the term and any extensions,
(iii) fifty percent (50%) of any sum attributable to an excess of the present
value (at the date of taking) of the fair market rental value of the condemned
portion of the Premises for the remainder of the term and any extensions over
the present value at the date of taking of the actual Base Rent for the
remainder of the Lease Term and any Option Term, (iv) any sum awarded to Tenant
for damages to or loss of Tenant's business, and (v) such compensation as may be
separately awarded or recoverable by Tenant on account of any and all costs or
losses related to removing Tenant's merchandise, furniture, fixtures, leasehold
improvements, and equipment to a new location.

                                   ARTICLE 14

                            ASSIGNMENT AND SUBLETTING

     14.1 TRANSFERS. Tenant shall not, without the prior written consent (except
as otherwise provided in section 14.8 below) of Landlord, which consent will not
be unreasonably withheld, conditioned or delayed, assign, mortgage, pledge,
hypothecate, encumber, or permit any lien to attach to, or otherwise transfer,
this Lease or any interest hereunder, permit any assignment, or other transfer
of this Lease or any interest hereunder by operation of law, sublet


                                      -37-
<PAGE>


the Premises or any part thereof, or enter into any license or concession
agreements or otherwise permit the occupancy or use of the Premises or any part
thereof by any persons other than Tenant, its Affiliates and its employees and
contractors (all of the foregoing are hereinafter sometimes referred to
collectively as "TRANSFERS" and any person to whom any Transfer is made or
sought to be made is hereinafter sometimes referred to as a "TRANSFEREE");
provided, however, Landlord hereby consents to such a lien on Tenant and its
interests (including this Lease) from Tenant's existing bank, Silicon Valley
Bank. If Tenant desires Landlord's consent to any Transfer, Tenant shall notify
Landlord in writing, which notice (the "TRANSFER NOTICE") shall include (i) the
proposed effective date of the Transfer, which shall not be less than twenty
(20) days after the date of delivery of the Transfer Notice, (ii) a description
of the portion of the Premises to be transferred (the "SUBJECT SPACE"), (iii)
all of the material terms of the proposed Transfer and the consideration
therefor, including calculation of the "TRANSFER PREMIUM", as that term is
defined in Section 14.3 below, in connection with such Transfer, the name and
address of the proposed Transferee, and a copy of all existing executed
documentation pertaining to the proposed Transfer, including all existing
operative documents to be executed to evidence such Transfer or the agreements
incidental or related to such Transfer, provided that Landlord shall have the
right to require Tenant to utilize Landlord's standard Transfer documents in
connection with the documentation of such Transfer, (iv) current financial
statements of the proposed Transferee certified by an officer, partner or owner
thereof, business credit and personal references and history of the proposed
Transferee and any other information reasonably and customarily required by
landlord's of Comparable Buildings in connection with the review of similar
transfers which will enable Landlord to determine the financial responsibility,
character, and reputation of the proposed Transferee, nature of such
Transferee's business and proposed use of the Subject Space and (v) an executed
estoppel certificate from Tenant in the form attached hereto as Exhibit E.
Subject to the provisions of this Article 14 (specifically including Section
14.8 hereof), any Transfer made without Landlord's prior written consent shall,
at Landlord's option, be null, void and of no effect, and shall, at Landlord's
option, constitute a default by Tenant under this Lease. Whether or not Landlord
consents to any proposed Transfer, Tenant shall, within thirty (30) days after
written request by Landlord, reimburse Landlord for all reasonable and actual
out-of-pocket third-party costs and expenses incurred by Landlord in connection
with its review of a proposed Transfer; provided that such costs and expenses
shall not exceed One Thousand and No/100 Dollars ($1,000.00) for a Transfer in
the ordinary course of business. Landlord and Tenant hereby agree that a
proposed Transfer shall not be considered "in the ordinary course of business"
if such Transfer involves the review of documentation by Landlord on more than
two (2) occasions.

     14.2 LANDLORD'S CONSENT. Landlord shall not unreasonably withhold its
consent to any proposed Transfer of the Subject Space to the Transferee on the
terms specified in the Transfer Notice. Without limitation as to other
reasonable grounds for withholding consent, the parties hereby agree that it
shall be reasonable under this Lease and under any applicable law for Landlord
to withhold consent to any proposed Transfer where one or more of the following
apply:

               14.2.1 The Transferee is of a character or reputation or engaged
in a business which is materially inconsistent with the quality of the Building
or the Project;


                                      -38-
<PAGE>


               14.2.2 The Transferee intends to use the Subject Space for
purposes which are not permitted under this Lease;

               14.2.3 The Transferee is either a governmental agency or
instrumentality thereof;

               14.2.4 The Transferee is not a party of reasonable financial
worth and/or financial stability in light of the responsibilities to be
undertaken in connection with the Transfer on the date consent is requested;
provided the provisions of this Section 14.2.4 shall be applicable only if (A)
the proposed Transfer is an assignment of Tenant's interest in this Lease, (B)
the proposed Transfer concerns 20,000 or more rentable square feet of the
Premises, or (C) upon the consummation of the proposed Transfer, the Tenant
and/or its Affiliates will not continue to directly occupy at least 40,000
rentable square feet of the Premises;

               14.2.5 The terms of the proposed Transfer will allow the
Transferee to exercise a right of renewal, right of expansion, right of first
offer, or other similar right held by Tenant (or will allow the Transferee to
occupy space leased by Tenant pursuant to any such right); or

     If Landlord consents to any Transfer pursuant to the terms of this Section
14.2, Tenant may within nine (9) months after Landlord's consent, but not later
than the expiration of said nine (9)-month period, enter into such Transfer of
the Premises or portion thereof, upon substantially the same terms and
conditions as are set forth in the Transfer Notice furnished by Tenant to
Landlord pursuant to Section 14.1 of this Lease, provided that if there are any
material changes in the terms and conditions from those specified in the
Transfer Notice such that Landlord would initially have been entitled to refuse
its consent to such Transfer under this Section 14.2, Tenant shall again submit
the Transfer to Landlord for its approval and other action under this Article
14. Notwithstanding anything to the contrary in this Lease, if Tenant or any
proposed Transferee claims that Landlord has unreasonably withheld or delayed
its consent under Section 14.2 or otherwise has breached or acted unreasonably
under this Article 14, their sole remedies shall be a declaratory judgment and
an injunction for the relief sought without any monetary damages, and Tenant
hereby waives all other remedies, including, without limitation, any right at
law or equity to terminate this Lease, on its own behalf and, to the extent
permitted under all applicable laws, on behalf of the proposed Transferee.
Tenant shall indemnify, defend and hold harmless Landlord from any and all
liability, losses, claims, damages, costs, expenses, causes of action and
proceedings involving any third party or parties (including without limitation
Tenant's proposed subtenant or assignee) who claim they were damaged by
Landlord's wrongful withholding or conditioning of Landlord's consent, unless a
court of competent jurisdiction determines that Landlord was wrongful in its
withholding or conditioning of its consent.

     14.3 TRANSFER PREMIUM. If Landlord consents to a Transfer, as a condition
thereto which the parties hereby agree is reasonable, Tenant may retain one
hundred percent (100%) any "Transfer Premium," as that term is defined in this
Section 14.3, received by Tenant from such Transferee, and Tenant shall not have
any obligation to pay any portion of such Transfer Premium to Landlord.
"TRANSFER PREMIUM" shall mean all rent, additional rent or other consideration
payable by such Transferee in connection with the Transfer in excess of the Rent
and Additional Rent payable by Tenant under this Lease during the term of the
Transfer on a per rentable square foot basis if less than all of the Premises is
transferred, after deducting the actual expenses incurred by Tenant for (i) any
changes, alterations and improvements to the Premises in


                                      -39-
<PAGE>


connection with the Transfer, (ii) any free base rent or additional rent
provided to the Transferee, (iii) any brokerage commissions in connection with
the Transfer, (iv) any marketing costs, (v) any lease takeover costs incurred by
Tenant in connection with the Transfer, and (vi) any other costs or monetary
concessions incurred or granted in connection with the Transfer. "Transfer
Premium" shall also include, but not be limited to, key money, bonus money or
other cash consideration paid by Transferee to Tenant in connection with such
Transfer, and any payment in excess of fair market value for services rendered
by Tenant to Transferee or for assets, fixtures, inventory, equipment, or
furniture transferred by Tenant to Transferee in connection with such Transfer.
In the calculations of the Rent (as it relates to the Transfer Premium
calculated under this Section 14.3), and the Rent paid during each annual period
for the Subject Space, shall be computed after adjusting such rent to the actual
effective rent to be paid, taking into consideration any and all leasehold
concessions granted in connection therewith, including, but not limited to, any
rent credit and tenant improvement allowance. For purposes of calculating any
such effective rent all such concessions shall be amortized on a straight-line
basis over the relevant term.

     14.4 INTENTIONALLY OMITTED.

     14.5 EFFECT OF TRANSFER. If Landlord consents to a Transfer, (i) the terms
and conditions of this Lease shall in no way be deemed to have been waived or
modified, (ii) such consent shall not be deemed consent to any further Transfer
by either Tenant or a Transferee, (iii) Tenant shall deliver to Landlord,
promptly after execution, an original executed copy of all documentation
pertaining to the Transfer in commercially reasonable form, (iv) Tenant shall
furnish upon Landlord's request a complete statement, certified by an
independent certified public accountant, or Tenant's chief financial officer,
setting forth in detail the computation of any Transfer Premium Tenant has
derived and shall derive from such Transfer, and (v) except as specifically set
forth below, no Transfer relating to this Lease or agreement entered into with
respect thereto, whether with or without Landlord's consent, shall relieve
Tenant or any guarantor of the Lease from any liability under this Lease,
including, without limitation, in connection with the Subject Space; provided,
however, Tenant shall be relieved and released from all liability under this
Lease (A) as of the date of an assignment if the Transferee has a "Net Worth,"
as that term is set forth in Section 14.8 below, computed as of the date of such
Transfer, in excess of $75,000,000, or (B) at any time after such assignment
when Transferee satisfies the "Minimum Financial Requirements" set forth in
Article 21 of this Lease. Landlord or its authorized representatives shall have
the right at all reasonable times to audit the books, records and papers of
Tenant relating to any Transfer, and shall have the right to make copies
thereof. If the Transfer Premium respecting any Transfer shall be found
understated, Tenant shall, within thirty (30) days after demand, pay the
deficiency, and if understated by more than three percent (3%), Tenant shall pay
Landlord's costs of such audit.

     14.6 ADDITIONAL TRANSFERS. For purposes of this Lease, the term "TRANSFER"
shall also include (i) if Tenant is a partnership, the withdrawal or change,
voluntary, involuntary or by operation of law, of fifty percent (50%) or more of
the partners, or transfer of fifty percent (50%) or more of partnership
interests, within a twelve (12)-month period, or the dissolution of the
partnership without immediate reconstitution thereof, and (ii) if Tenant is a
closely held corporation (I.E., whose stock is not publicly held and not traded
through an exchange or over the counter), (A) the dissolution, merger,
consolidation or other reorganization of Tenant or (B) the


                                      -40-
<PAGE>


sale or other transfer of an aggregate of fifty percent (50%) or more of the
voting shares of Tenant (other than to immediate family members by reason of
gift or death), within a twelve (12)-month period, or (C) the sale, mortgage,
hypothecation or pledge of an aggregate of fifty percent (50%) or more of the
value of the unencumbered assets of Tenant within a twelve (12)-month period.

     14.7 OCCURRENCE OF DEFAULT. Any Transfer hereunder shall be subordinate and
subject to the provisions of this Lease, and if this Lease shall be terminated
during the term of any Transfer, Landlord shall have the right to: (i) treat
such Transfer as cancelled and repossess the Subject Space by any lawful means,
or (ii) require that such Transferee attorn to and recognize Landlord as its
landlord under any such Transfer. If Tenant shall be in default under this
Lease, Landlord is hereby irrevocably authorized, as Tenant's agent and
attorney-in-fact, to direct any Transferee to make all payments under or in
connection with the Transfer directly to Landlord (which Landlord shall apply
towards Tenant's obligations under this Lease) until such default is cured. Such
Transferee shall rely on any representation by Landlord that Tenant is in
default hereunder, without any need for confirmation thereof by Tenant. Upon any
assignment, the assignee shall assume in writing all obligations and covenants
of Tenant thereafter to be performed or observed under this Lease. No collection
or acceptance of rent by Landlord from any Transferee shall be deemed a waiver
of any provision of this Article 14 or the approval of any Transferee or a
release of Tenant from any obligation under this Lease, whether theretofore or
thereafter accruing. In no event shall Landlord's enforcement of any provision
of this Lease against any Transferee be deemed a waiver of Landlord's right to
enforce any term of this Lease against Tenant or any other person. If Tenant's
obligations hereunder have been guaranteed, Landlord's consent to any Transfer
shall not be effective unless the guarantor also consents to such Transfer.

     14.8 NON-TRANSFERS. Notwithstanding anything to the contrary contained in
this Article 14, an assignment or subletting of all or a portion of the Premises
to (a) an affiliate of Tenant (an entity which is controlled by, controls or is
under common control, as such term is defined in California General Corporations
Code ("CGCC") Sections 160 and 5045, with, Tenant or Tenant's parent or any
subsidiary of Tenant or Tenant's parent), (b) an entity which merges with or
acquires or is acquired by, Tenant or a parent of Tenant, as defined in CGCC
Sections 175 and 5064, or a subsidiary, as defined in CGCC Sections 189 and
5073, of Tenant's parent or Affiliate, or (c) a transferee of substantially all
of the assets of Tenant (a, b and c to be collectively be referred to herein as
an "AFFILIATE") along with any other entity which will qualify as an "affiliate"
under CGCC 150 and 5031, shall not be deemed a Transfer under this Article 14,
provided that at least thirty (30) days prior to such assignment or sublease (i)
Tenant provides Landlord with reasonable evidence, including a certified audit
opinion of an independent certified public accountant with a regional or
national reputation, that any such entity maintains a net worth, calculated in
accordance with generally accepted accounting principals, consistently applied
("NET WORTH"), equal to or greater than $20,000,000.00; (ii) Tenant notifies
Landlord of any such assignment or sublease and promptly supplies Landlord with
any documents or information requested by Landlord regarding such assignment or
sublease or such Affiliate; and (iii) such assignment or sublease is not a
subterfuge by Tenant to avoid its obligations under this Lease. In the event an
assignment or sublease to an Affiliate is made pursuant to the terms and
conditions of this Section 14.8, Tenant shall be relieved of its obligations
under this Lease to the extent the same become the terms and conditions of such
Affiliate pursuant to such assignment


                                      -41-
<PAGE>


or sublease. Notwithstanding the Net Worth requirements set forth in this
Section 14.8 above, for purposes of this Article 14, an Affiliate shall also
include any entity which is occupying, without the benefit of any demising
walls or other material barriers between its occupied space and the space
occupied by Tenant, up to 25,000 rentable square feet of the Premises;
provided that Tenant actually occupies at least seventy-five percent (75%) of
each floor of the Premises which is also occupied by such entity.

     14.9 PRE-APPROVED TRANSFERS. Notwithstanding anything to the contrary
contained in this Article 14, a subletting or licensing of less than 4,000
rentable square feet of space on the first (1st) floor of the Premises to a
qualified "Food Service Operator," as that term is defined below, shall be
pre-approved; provided that (A) all necessary governmental or quasi-governmental
approvals are secured by Tenant for such food service operation, (B) all
reasonable rules and regulations imposed by Landlord on such food service
operation shall be satisfied, specifically including, but not limited to, rules
and regulations with regard to cleaning, trash removal, grease traps and
signage, and (C) all costs associated with such food service operation,
including the cost of improvements and compliance with (A) and (B), above, shall
be borne by Tenant or its sublessee/licensee. For purposes of this Section 14.9,
a qualified "FOOD SERVICE OPERATOR" is an entity (or person) operating a
quick-service "deli-style" sandwich store or a full-service food service
operation, whose primary business is the sale of food and beverage items for
on-site consumption, which Food Service Operator (i) has a reputation of a
first-class food service operator, and (ii) is then operating another food
service operation with the same concept and has operated such a food service
operation for no less than two years.

                                   ARTICLE 15

                      SURRENDER OF PREMISES; OWNERSHIP AND
                            REMOVAL OF TRADE FIXTURES

     15.1 SURRENDER OF PREMISES. No act or thing done by Landlord or any agent
or employee of Landlord during the Lease Term shall be deemed to constitute an
acceptance by Landlord of a surrender of the Premises unless such intent is
specifically acknowledged in writing by Landlord. The delivery of keys to the
Premises to Landlord or any agent or employee of Landlord shall not constitute a
surrender of the Premises or effect a termination of this Lease, whether or not
the keys are thereafter retained by Landlord, and notwithstanding such delivery
Tenant shall be entitled to the return of such keys at any reasonable time upon
request until this Lease shall have been properly terminated. The voluntary or
other surrender of this Lease by Tenant, whether accepted by Landlord or not, or
a mutual termination hereof, shall not work a merger, and at the option of
Landlord shall operate as an assignment to Landlord of all subleases or
subtenancies affecting the Premises or terminate any or all such sublessees or
subtenancies.

     15.2 REMOVAL OF TENANT PROPERTY BY TENANT. Upon the expiration of the Lease
Term, or upon any earlier termination of this Lease, Tenant shall, subject to
the provisions of this Article 15, quit and surrender possession of the Premises
to Landlord in as good order and condition as when Tenant took possession and as
thereafter improved by Landlord and/or Tenant, reasonable wear and tear,
casualty events, damage resulting from the negligence or willful misconduct of
the Landlord Parties and repairs which are specifically made the responsibility
of Landlord hereunder excepted. Upon such expiration or termination, Tenant


                                      -42-
<PAGE>


shall, without expense to Landlord, remove or cause to be removed from the
Premises all debris and rubbish, and such items of furniture, equipment,
business and trade fixtures, free-standing cabinet work, movable partitions and
other articles of personal property owned by Tenant or installed or placed by
Tenant at its expense in the Premises (excluding, however, the initial Tenant
Improvements), and Tenant shall repair at its own expense all damage to the
Premises and Building to the extent resulting from such removal.

                                   ARTICLE 16

                                  HOLDING OVER

     If Tenant holds over after the expiration of the Lease Term or earlier
termination thereof, with or without the express or implied consent of Landlord,
such tenancy shall be from month-to-month only, and shall not, except as set
forth below, constitute a renewal hereof or an extension for any further term,
and in such case Base Rent shall be payable at a monthly rate equal to two
hundred percent (200%) of the Base Rent applicable during the last rental period
of the Lease Term under this Lease. Such month-to-month tenancy shall be subject
to every other applicable term, covenant and agreement contained herein.
Notwithstanding the foregoing, Tenant shall have the one-time right, upon notice
(the "HOLDOVER NOTICE") to Landlord not less than nine (9) months prior to the
expiration of the then Lease Term, to extend the Lease Term for a period of up
to six (6) months, the length of which shall be set forth in the Holdover Notice
(the "PERMITTED HOLDOVER TERM"), in which case the Base Rent payable by Tenant
during such Permitted Holdover Term shall equal the product of (a) the Base Rent
applicable during the last rental period of the Lease Term under this Lease, and
(b) one hundred twenty percent (120%) during the first three (3)-month period of
such Permitted Holdover Term, and one hundred fifty percent (150%) during the
second three (3)-month period of such Permitted Holdover Term. For purposes of
this Article 16, a holding over shall include Tenant's remaining in the Premises
after the expiration or earlier termination of the Lease Term, as required
pursuant to the terms of Section 8.5, above, to remove any Alterations (required
to be removed pursuant to SECTIONS 8.1 AND 8.5 of this Lease) or Above Building
Standard Tenant Improvements located within the deli, gym or computer room
portion of the Premises and replace the same with Building Standard Tenant
Improvements with regard to any such Alteration (required to be removed pursuant
to Sections 8.1 and 8.5 of this Lease). Except with respect to the Permitted
Holdover Term, nothing contained in this Article 16 shall be construed as
consent by Landlord to any holding over by Tenant, and Landlord expressly
reserves the right to require Tenant to surrender possession of the Premises to
Landlord as provided in this Lease upon the expiration or other termination of
this Lease. The provisions of this Article 16 shall not be deemed to limit or
constitute a waiver of any other rights or remedies of Landlord provided herein
or at law. Except with respect to the Permitted Holdover Term, if Tenant fails
to surrender the Premises upon the termination or expiration of this Lease, in
addition to any other liabilities to Landlord accruing therefrom, Tenant shall
protect, defend, indemnify and hold Landlord harmless from all loss, costs
(including reasonable attorneys' fees) and liability resulting from such
failure, including, without limiting the generality of the foregoing, any claims
made by any succeeding tenant founded upon such failure to surrender and any
lost profits to Landlord resulting therefrom.


                                      -43-
<PAGE>


                                   ARTICLE 17

                              ESTOPPEL CERTIFICATES

     Within ten (10) business days following a request in writing by Landlord,
Tenant shall execute, acknowledge and deliver to Landlord an estoppel
certificate, which, as submitted by Landlord, shall be substantially in the form
of EXHIBIT E, attached hereto (or such other form as may be required by any
prospective mortgagee or purchaser of the Project, or any portion thereof),
indicating therein any exceptions thereto that may exist at that time, and shall
also contain any other information reasonably requested by Landlord or
Landlord's mortgagee or prospective mortgagee. Any such certificate may be
relied upon by any prospective mortgagee or purchaser of all or any portion of
the Project. Tenant shall execute and deliver whatever other instruments may be
reasonably required for such purposes. At any time during the Lease Term, but in
no event more than twice in any twelve (12) consecutive month period, Landlord
may require Tenant to provide Landlord with a current financial statement and
financial statements of the two (2) years prior to the current financial
statement year. Such statements shall be prepared in accordance with generally
accepted accounting principles and, if such is the normal practice of Tenant,
shall be audited by an independent certified public accountant. Landlord hereby
agrees to provide to Tenant an estoppel certificate signed by Landlord,
containing the same types of information, and within the same periods of time,
as set forth above, with such changes as are reasonably necessary to reflect
that the estoppel certificate is being granted and signed by Landlord to Tenant,
rather than from Tenant to Landlord or a lender.

                                   ARTICLE 18

                                  SUBORDINATION

     Subject to Tenant's receipt of an appropriate non-disturbance agreement(s)
as set forth below, this Lease shall be subject and subordinate to all present
and future ground or underlying leases of the Premises, Building or Project and
to the lien of any mortgage, trust deed or other encumbrances now or hereafter
in force against the Building or Project or any part thereof, if any, and to all
renewals, extensions, modifications, consolidations and replacements thereof,
and to all advances made or hereafter to be made upon the security of such
mortgages or trust deeds, unless the holders of such mortgages, trust deeds or
other encumbrances, or the lessors under such ground lease or underlying leases,
require in writing that this Lease be superior thereto. As of the date of this
Lease, Landlord covenants that no deed of trust, mortgage, other encumbrance, or
ground or underlying lease encumbers the Premises, Building or Project.
Landlord's delivery to Tenant of commercially reasonable non-disturbance
agreement(s) (the "NONDISTURBANCE AGREEMENT") in favor of Tenant from any ground
lessor, mortgage holders or lien holders of Landlord who later come into
existence at any time prior to the expiration of the Lease Term shall be in
consideration of, and a condition precedent to, Tenant's agreement to be bound
by the terms and conditions of this article 18. Such commercially reasonable
Nondisturbance Agreements shall include the obligation of any such successor
ground lessor, mortgage holder or lien holder to (i) recognize Tenant's rights
specifically set forth in this Lease to offset certain amounts against Rent due
hereunder, (ii) recognize and perform Landlord's obligations to comply with the
terms and conditions of this Lease, and (iii) recognize Tenant's rights to
otherwise receive certain credits against Rent as set forth in this Lease.
Tenant covenants and


                                      -44-
<PAGE>


agrees in the event any proceedings are brought for the foreclosure of any such
mortgage or deed in lieu thereof (or if any ground lease is terminated), to
attorn, without any deductions or set-offs whatsoever, to the lienholder or
purchaser or any successors thereto upon any such foreclosure sale or deed in
lieu thereof (or to the ground lessor), if so requested to do so by such
purchaser or lienholder or ground lessor, and to recognize such purchaser or
lienholder or ground lessor as the lessor under this Lease, provided such
lienholder or purchaser or ground lessor shall agree to accept this Lease and
not disturb Tenant's occupancy, so long as Tenant timely pays the rent and
observes and performs the terms, covenants and conditions of this Lease to be
observed and performed by Tenant. Landlord's interest herein may be assigned as
security at any time to any lienholder. Tenant shall, within ten (10) business
days of request by Landlord, execute such further instruments or assurances as
Landlord may reasonably deem necessary to evidence or confirm the subordination
or superiority of this Lease to any such mortgages, trust deeds, ground leases
or underlying leases. Subject to Tenant's receipt of the Nondisturbance
Agreement described herein, Tenant waives the provisions of any current or
future statute, rule or law which may give or purport to give Tenant any right
or election to terminate or otherwise adversely affect this Lease and the
obligations of the Tenant hereunder in the event of any foreclosure proceeding
or sale.

                                   ARTICLE 19

                               DEFAULTS; REMEDIES

    19.1 EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute a default of this Lease by Tenant:

         19.1.1 Any failure by Tenant to pay any Rent or any other charge
required to be paid under this Lease, or any part thereof, when due unless such
failure is cured within five (5) business days after written notice; or

         19.1.2 Except where a specific time period is otherwise set forth for
Tenant's performance in this Lease, in which event the failure to perform by
Tenant within such time period shall be a default by Tenant under this Section
19.1.2, any failure by Tenant to observe or perform any other provision,
covenant or condition of this Lease to be observed or performed by Tenant where
such failure continues for thirty (30) days after written notice thereof from
Landlord to Tenant; provided that if the nature of such default is such that the
same cannot reasonably be cured within a thirty (30) day period, Tenant shall
not be deemed to be in default if it diligently commences such cure within such
period and thereafter diligently proceeds to rectify and cure such default; or

         19.1.3 To the extent permitted by law, a general assignment by Tenant
or any guarantor of this Lease for the benefit of creditors, or the filing by or
against Tenant or any guarantor of any proceeding under an insolvency or
bankruptcy law, unless in the case of a proceeding filed against Tenant or any
guarantor the same is dismissed within sixty (60) days, or the appointment of a
trustee or receiver to take possession of all or substantially all of the assets
of Tenant or any guarantor, unless possession is restored to Tenant or such
guarantor within sixty (60) days, or any execution or other judicially
authorized seizure of all or substantially all of


                                      -45-
<PAGE>


Tenant's assets located upon the Premises or of Tenant's interest in this Lease,
unless such seizure is discharged within sixty (60) days; or

         19.1.4 Intentionally Omitted

         19.1.5 The failure by Tenant to observe or perform according to the
provisions of Section 5.1 and Articles 17 or 18 of this Lease where such failure
continues for more than fifteen (15) days after notice from Landlord.

    The notice periods provided herein are in lieu of, and not in addition to,
any notice periods provided by law.

    19.2 REMEDIES UPON DEFAULT. Upon the occurrence of any event of default by
Tenant, Landlord shall have, in addition to any other remedies available to
Landlord at law or in equity (all of which remedies shall be distinct, separate
and cumulative), the option to pursue any one or more of the following remedies,
each and all of which shall be cumulative and nonexclusive, without any notice
or demand whatsoever.

         19.2.1 Terminate this Lease, in which event Tenant shall immediately
surrender the Premises to Landlord, and if Tenant fails to do so, Landlord may,
without prejudice to any other remedy which it may have for possession or
arrearages in rent, enter upon and take possession of the Premises and expel or
remove Tenant and any other person who may be occupying the Premises or any part
thereof, without being liable for prosecution or any claim or damages therefor;
and Landlord may recover from Tenant the following:

                         (i) The worth at the time of any unpaid rent which has
been earned at the time of such termination; plus

                         (ii) The worth at the time of award of the amount by
which the unpaid rent which would have been earned after termination until the
time of award exceeds the amount of such rental loss that Tenant proves could
have been reasonably avoided; plus

                         (iii) The worth at the time of award of the amount by
which the unpaid rent for the balance of the Lease Term after the time of award
exceeds the amount of such rental loss that Tenant proves could have been
reasonably avoided; plus

                         (iv) Any other amount necessary to compensate Landlord
for all the detriment proximately caused by Tenant's failure to perform its
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom, specifically including but not limited to, brokerage
commissions and advertising expenses incurred, expenses of remodeling the
Premises or any portion thereof for a new tenant, whether for the same or a
different use, and any special concessions made to obtain a new tenant; and

                         (v) At Landlord's election, such other amounts in
addition to or in lieu of the foregoing as may be permitted from time to time by
applicable law.

     The term "RENT" as used in this Section 19.2 shall be deemed to be and to
mean all sums of every nature required to be paid by Tenant pursuant to the
terms of this Lease, whether to


                                      -46-
<PAGE>


Landlord or to others. As used in Paragraphs 19.2.1(i) and (ii), above, the
"worth at the time of award" shall be computed by allowing interest at the rate
set forth in Article 25 of this Lease, but in no case greater than the maximum
amount of such interest permitted by law. As used in Paragraph 19.2.1(iii)
above, the "worth at the time of award" shall be computed by discounting such
amount at the discount rate of the Federal Reserve Bank of San Francisco at the
time of award plus one percent (1%).

         19.2.2 Landlord shall have the remedy described in California Civil
Code Section 1951.4 (lessor may continue lease in effect after lessee's breach
and abandonment and recover rent as it becomes due, if lessee has the right to
sublet or assign, subject only to reasonable limitations). Accordingly, if
Landlord does not elect to terminate this Lease on account of any default by
Tenant, Landlord may, from time to time, without terminating this Lease, enforce
all of its rights and remedies under this Lease, including the right to recover
all rent as it becomes due.

         19.2.3 Landlord shall at all times have the rights and remedies (which
shall be cumulative with each other and cumulative and in addition to those
rights and remedies available under Sections 19.2.1 and 19.2.2, above, or any
law or other provision of this Lease), without prior demand or notice except as
required by this Lease and applicable law, to seek any declaratory, injunctive
or other equitable relief, and specifically enforce this Lease, or restrain or
enjoin a violation or breach of any provision hereof.

     19.3 SUBLEASES OF TENANT. Whether or not Landlord elects to terminate this
Lease on account of any default by Tenant, as set forth in this ARTICLE 19,
Landlord shall have the right to terminate any and all subleases, licenses,
concessions or other consensual arrangements for possession entered into by
Tenant and affecting the Premises or may, in Landlord's sole and absolute
discretion, succeed to Tenant's interest in such subleases, licenses,
concessions or arrangements. In the event of Landlord's election to succeed to
Tenant's interest in any such subleases, licenses, concessions or arrangements,
Tenant shall, as of the date of notice by Landlord of such election, have no
further right to or interest in the rent or other consideration receivable
thereunder.

     19.4 FORM OF PAYMENT AFTER DEFAULT. Following the occurrence of three (3)
financial events of default by Tenant in any twelve (12) consecutive month
period, Landlord shall have the right to require that any or all subsequent
amounts paid by Tenant to Landlord hereunder, whether to cure the default in
question or otherwise, be paid in the form of cash, money order, cashier's or
certified check drawn on an institution acceptable to Landlord, or by other
means approved by Landlord, notwithstanding any prior practice of accepting
payments in any different form.

     19.5 EFFORTS TO RELET. No re-entry or repossession, repairs, maintenance,
changes, alterations and additions, reletting, appointment of a receiver to
protect Landlord's interests hereunder, or any other action or omission by
Landlord shall be construed as an election by Landlord to terminate this Lease
or Tenant's right to possession, or to accept a surrender of the Premises, nor
shall same operate to release Tenant in whole or in part from any of Tenant's
obligations hereunder, unless express written notice of such intention is sent
by Landlord to


                                      -47-
<PAGE>


Tenant. Tenant hereby irrevocably waives any right otherwise available under any
law to redeem or reinstate this Lease.

     19.6 LANDLORD DEFAULT. Notwithstanding anything to the contrary set forth
in this Lease, Landlord shall be in default in the performance of any obligation
required to be performed by Landlord pursuant to this Lease if Landlord fails to
perform such obligation within thirty (30) days after the receipt of notice from
Tenant specifying in detail Landlord's failure to perform; provided, however, if
the nature of Landlord's obligation is such that more than thirty (30) days are
required for its performance, then Landlord shall not be in default under this
Lease if it shall commence such performance within such thirty (30) day period
and thereafter diligently pursues the same to completion. Upon any such default
by Landlord under this Lease, Tenant may, except as otherwise specifically
provided in this Lease to the contrary, exercise any of its rights provided at
law or in equity. Any award from a court or arbitrator in favor of Tenant
requiring payment by Landlord which is not paid by Landlord within the time
period directed by such award, may be offset by Tenant from Rent next due and
payable under this Lease.

                                   ARTICLE 20

                           COVENANT OF QUIET ENJOYMENT

     Landlord covenants that Tenant, on paying the Rent, charges for services
and other payments herein reserved and on keeping, observing and performing all
the other terms, covenants, conditions, provisions and agreements herein
contained on the part of Tenant to be kept, observed and performed, shall,
during the Lease Term, peaceably and quietly have, hold and enjoy the Premises
subject to the terms, covenants, conditions, provisions and agreements hereof
without interference by any persons lawfully claiming by or through Landlord.
The foregoing covenant is in lieu of any other covenant express or implied.

                                   ARTICLE 21

                                SECURITY DEPOSIT

     21.1 DELIVERY OF LETTER OF CREDIT. Tenant shall deliver to Landlord
concurrent with Tenant's execution of this Lease, an unconditional, clean,
irrevocable letter of credit (the "L-C") in the initial amount of $2,789,970.00,
which L-C shall be issued by Silicon Valley Bank or a money-center bank (a bank
which accepts deposits, maintains accounts, has a local San Diego office which
will negotiate a letter of credit, and whose deposits are insured by the FDIC)
reasonably acceptable to Landlord, and which L-C shall be in a form and content
reasonably acceptable to Landlord. Tenant shall pay all expenses, points and/or
fees incurred by Tenant in obtaining, maintaining and/or renewing the L-C.

     21.2 APPLICATION OF LETTER OF CREDIT. The L-C shall be held by Landlord as
security for the faithful performance by Tenant of all the terms, covenants, and
conditions of this Lease to be kept and performed by Tenant during the Lease
Term. The L-C shall not be mortgaged, assigned or encumbered in any manner
whatsoever by Tenant without the prior written consent of Landlord. If Tenant
defaults with respect to any provisions of this Lease, including, but not
limited to, the provisions relating to the payment of Rent, or if Tenant fails
to renew the L-C at


                                      -48-
<PAGE>


least thirty (30) days before its expiration, Landlord may, but shall not be
required to, draw upon all or any portion of the L-C for payment of any Rent or
any other sum in default, or for the payment of any amount that Landlord may
reasonably spend or may become obligated to spend by reason of Tenant's default,
or to compensate Landlord for any other loss or damage that Landlord may suffer
by reason of Tenant's default. The use, application or retention of the L-C, or
any portion thereof, by Landlord shall not prevent Landlord from exercising any
other right or remedy provided by this Lease or by law, it being intended that
Landlord shall not first be required to proceed against the L-C and shall not
operate as a limitation on any recovery to which Landlord may otherwise be
entitled. Any amount of the L-C which is drawn upon by Landlord, but is not used
or applied by Landlord, shall be held by Landlord and deemed a security deposit
(the "L-C SECURITY DEPOSIT"). If any portion of the L-C is drawn upon, Tenant
shall, within five (5) days after written demand therefor, either (i) deposit
cash with Landlord (which cash shall be applied by Landlord to the L-C Security
Deposit) in an amount sufficient to cause the sum of the L-C Security Deposit
and the amount of the remaining L-C to be equivalent to the amount of the L-C
then required under this Lease or (ii) reinstate the L-C to the amount then
required under this Lease, and if any portion of the L-C Security Deposit is
used or applied, Tenant shall, within five (5) days after written demand
therefor, deposit cash with Landlord (which cash shall be applied by Landlord to
the L-C Security Deposit) in an amount sufficient to restore the L-C Security
Deposit to the amount then required under this Lease, and Tenant's failure to do
so shall be a default under this Lease. Tenant acknowledges that Landlord has
the right to transfer or mortgage its interest in the Real Property and the
Project and in this Lease and Tenant agrees that in the event of any such
transfer or mortgage, Landlord shall have the right to transfer or assign the
L-C Security Deposit and/or the L-C to the transferee or mortgagee, and in the
event of such transfer, Tenant shall look solely to such transferee or mortgagee
for the return of the L-C Security Deposit and/or the L-C provided that Tenant
is given advance written notice of such transfer and such transferee or
mortgagee agrees to be bound by the terms of the L-C and this Section 21.2.
Tenant shall, within five (5) days of request by Landlord, execute such further
instruments or assurances as Landlord may reasonably deem necessary to evidence
or confirm Landlord's transfer or assignment of the L-C Security Deposit and/or
the L-C to such transferee or mortgagee. If Tenant shall fully and faithfully
perform every provision of this Lease to be performed by it, the L-C Security
Deposit and/or the L-C, or any balance thereof, shall be returned to Tenant
within thirty (30) days following the expiration of the Lease Term. The L-C
shall provide that the amount of the L-C Security Deposit shall be reduced to
$1,394,985 if Tenant maintains the "Minimum Financial Requirements," as that
term is defined below, for four (4) consecutive financial quarters, and shall be
reduced to $0.00 if Tenant maintains the Minimum Financial Requirements for
eight (8) consecutive financial quarters. For purposes of this Lease, the
"MINIMUM FINANCIAL REQUIREMENTS" shall mean: (A) Gross Revenue (on an annualized
basis) of not less than $50,000,000; (B) Net Income (on an annualized basis) of
not less than $6,000,000 per year; (C) a Net Worth of no less than $40,000,000;
and (D) a ratio of then current assets to then-current liabilities of no less
than 2:1.


                                   ARTICLE 22

                          TELECOMMUNICATIONS EQUIPMENT


                                      -49-
<PAGE>


     At any time during the Lease Term, subject to the terms and conditions of
this Article 22 and Article 8 of this Lease, Tenant may install, at Tenant's
sole cost and expense, but without the payment of any Rent or a license or any
fee or charge, a satellite or microwave dish, antennae or other communications,
HVAC or other equipment servicing the business conducted by Tenant from within
the Premises (all such equipment, including non-telecommunication equipment is,
for the sake of convenience, defined collectively as the "TELECOMMUNICATIONS
EQUIPMENT") upon the roof of the Building. The physical appearance and the size
of the Telecommunications Equipment shall be subject to Landlord's reasonable
approval, the location of any such installation of the Telecommunications
Equipment shall be designated by Tenant subject to Landlord's reasonable
approval and Landlord may require Tenant to install screening around such
Telecommunications Equipment, at Tenant's sole cost and expense, as reasonably
designated by Landlord. Tenant shall maintain such Telecommunications Equipment,
at Tenant's sole cost and expense. In the event Tenant elects to exercise its
right to install the Telecommunication Equipment, then Tenant shall give
Landlord prior notice thereof. Tenant shall reimburse to Landlord the actual
costs as defined in Section 6.2 reasonably incurred by Landlord in approving
such Telecommunications Equipment. Tenant shall remove such Telecommunications
Equipment upon the expiration or earlier termination of this Lease. Such
Telecommunications Equipment shall be installed pursuant to plans and
specifications approved by Landlord, which approval will not be unreasonably
withheld. Such Telecommunications Equipment shall, in all instances, comply with
applicable governmental laws, codes, rules and regulations. The rights contained
in this Article 22 shall be personal to the Original Tenant and its Affiliates
and may only be exercised by the Original Tenant or an Affiliate (and not any
assignee, subleasee or other transferee of the Original Tenant's interest in
this Lease) if the Original Tenant and/or an Affiliate occupies at least
one-half (1/2) of a floor in the Building. Tenant's right to place
Telecommunications Equipment on the roof of the Building pursuant to this
Article 22 shall be exclusive; provided, however, Landlord shall retain the
right to install rooftop communications equipment for Landlord's internal use;
provided Landlord shall not unreasonably interfere with Tenant's
Telecommunications Equipment and Landlord shall be responsible for any damage
caused thereby.

                                   ARTICLE 23

                                      SIGNS

     23.1 FULL FLOORS. Tenant, at its sole cost and expense, may install
identification signage anywhere in the Premises including in the elevator lobby
and corridors of the Premises and the Building Parking Structure. The lobby and
corridor signage rights in the Building and all signage in the Building Parking
Structure shall be exclusive to Tenant.

     23.2 INTENTIONALLY OMITTED.

     23.3 PROHIBITED SIGNAGE AND OTHER ITEMS. Any signs, notices, logos,
pictures, names or advertisements which are installed and that have not been
separately approved by Landlord may be removed without notice by Landlord at the
sole expense of Tenant. Except as provided in this Article 23 below, Tenant may
not install any signs on the exterior or roof of the Project or the Common
Areas.


                                      -50-
<PAGE>


     23.4 TENANT'S SIGNAGE.

         23.4.1 TENANT'S SIGNAGE RIGHTS. For purposes of this Lease, "Tenant's
Signage" shall mean the "Building Signage" as that term is defined below;
provided, however, Tenant's Signage is personal to Original Tenant and its
Affiliates, is non-transferable, and is conditioned upon the Original Tenant and
its Affiliates being in occupancy of at least sixty percent (60%) of the
Premises. Tenant shall be entitled to install the following signage in
connection with Tenant's lease of the Initial Premises (collectively, the
"BUILDING SIGNAGE"):

                (i) Two (2) signs identifying Tenant's name and logo located at
the top of, or on the eyebrow of, the Building;

                (ii) One (1) monument sign located adjacent to the main entrance
point into the Project (the "BUILDING MONUMENT SIGN"); provided, however, that
in any event the Landlord originally named in this Lease and its Affiliates
(collectively, "KILROY") shall be able to locate its standard identification
signage, in a size to be mutually and reasonably determined, on the Building
Monument Sign (with lowest/least prominent position); and

                (iii) One (1) strip (with highest/most prominent position and
consisting of no less than sixty percent (60%) of the total signage) on a
monument located on the Mira Mesa, Genetic Center Drive corner of the Project,
as set forth on the Project Site Plan attached hereto as Exhibit A-1 (the
"PROJECT MONUMENT SIGN"); provided, however, such Project Monument Sign may, in
addition to Tenant's one (1) strip, may only identify (A) General Instrument
Corporation with signage comprising approximately twenty-five percent (25%) of
such Project Monument Sign, and (B) Kilroy by its standard identification
signage, in a size to be mutually and reasonably determined (but in no event
consisting of more than fifteen percent (15%) of such Project Monument Sign). An
approximate diagram of the Project Monument Sign is attached hereto as Exhibit
A-3.

         23.4.2 SPECIFICATIONS AND PERMITS. Tenant's Signage shall set forth
Tenant's name and logo as determined by Tenant in its sole discretion; provided,
however, in no event shall Tenant's Signage include an "Objectionable Name," as
that term is defined in Section 23.4.3, of this Lease. The graphics, materials,
color, design, lettering, lighting, size, illumination, specifications and exact
location of Tenant's Signage (collectively, the "SIGN SPECIFICATIONS") shall be
subject to the prior written approval of Landlord, which approval shall not be
unreasonably withheld, conditioned or delayed, and shall be consistent and
compatible with the quality and nature of the Project and the Building Standard
Signage Specifications. Provided, however, that with respect to the sign(s) at
the top of the Building, Tenant may have the maximum signage available by
Applicable Law and the CC&R's. In the preceding sentence, the reference to
"name" shall mean name and/or logo. In addition, Tenant's Signage shall be
subject to Tenant's receipt of all required governmental permits and approvals
and shall be subject to all Applicable Law and to any covenants, conditions and
restrictions affecting the Project. Landlord shall use commercially reasonable
efforts to assist Tenant in obtaining all necessary governmental permits and
approvals for Tenant's Signage. Tenant hereby acknowledges that, notwithstanding
Landlord's approval of Tenant's Signage, Landlord has made no representation or
warranty to Tenant with respect to the probability of obtaining all necessary
governmental approvals and permits for Tenant's Signage. In the event Tenant
does not receive


                                      -51-
<PAGE>


the necessary governmental approvals and permits for Tenant's Signage, Tenant's
and Landlord's rights and obligations under the remaining terms and conditions
of this Lease shall be unaffected.

         23.4.3 OBJECTIONABLE NAME. To the extent Original Tenant or its
Affiliates desires to change the name and/or logo set forth on Tenant's Signage,
such name and/or logo shall not have a name which relates to an entity which is
of a character or reputation, or is associated with a political faction or
orientation, which is inconsistent with a first-class project, or which would
otherwise reasonably offend a landlord of the Comparable Buildings (an
"OBJECTIONABLE NAME").

         23.4.4 COST AND MAINTENANCE. The costs of the actual signs comprising
Tenant's Signage and the installation, design, construction, and any and all
other costs associated with Tenant's Signage, including, without limitation,
utility charges and hook-up fees, permits, and maintenance and repairs, shall,
subject to the terms and conditions of this Lease, be the sole responsibility of
Tenant; provided that Landlord shall install the Project Monument Sign(s), at
Landlord's sole cost and expense, and Tenant shall be responsible for the cost
of Tenant's sign on the Project Monument Sign(s), but Landlord shall maintain
all monument signs set forth in this Article 23 in good condition and repair,
the cost of which in connection with the Project Monument Sign(s) shall be
included in Operating Expenses. Should Tenant's Signage require repairs and/or
maintenance, as determined in Landlord's reasonable judgment, Landlord shall
have the right to provide Notice thereof to Tenant and Tenant (except as set
forth above) shall cause such repairs and/or maintenance to be performed within
thirty (30) days after receipt of such Notice from Landlord, at Tenant's sole
cost and expense; provided, however, if such repairs and/or maintenance are
reasonably expected to require longer than thirty (30) days to perform, Tenant
shall commence such repairs and/or maintenance within such thirty (30) day
period and shall diligently prosecute such repairs and maintenance to
completion. Should Tenant fail to perform such repairs and/or maintenance within
the periods described in the immediately preceding sentence, Landlord shall have
the right to cause such work to be performed and to charge Tenant as Additional
Rent for the actual cost of such work plus interest at the Interest Rate from
the date of Landlord's payment of such actual costs to the date of Tenant's
reimbursement to Landlord. Upon the expiration or earlier termination of this
Lease, Tenant shall, at Tenant's sole cost and expense, cause Tenant's Signage
to be removed and shall cause the areas in which such Tenant's Signage was
located to be restored to the condition existing immediately prior to the
placement of such Tenant's Signage. If Tenant fails to timely remove such
Tenant's Signage or to restore the areas in which such Tenant's Signage was
located, as provided in the immediately preceding sentence, then Landlord may
perform such work, and all actual costs incurred by Landlord in so performing,
plus interest at the Interest Rate from the date of Landlord's payment of such
costs to the date of Tenant's reimbursement to Landlord, shall be reimbursed by
Tenant to Landlord within ten (10) days after Tenant's receipt of an invoice
therefor. The terms and conditions of this Section 23.4.4 shall survive the
expiration or earlier termination of this Lease.

                                   ARTICLE 24

                               COMPLIANCE WITH LAW


                                      -52-
<PAGE>


     Tenant shall not do anything or suffer anything to be done in or about the
Premises or the Project which will in any way conflict with any law, statute,
ordinance, decrees, codes, common law, judgments, orders, rulings, awards or
other governmental or quasi-governmental rule, regulation or requirement now in
force or which may hereafter be enacted or promulgated including any
"Environmental Laws" as that term is defined in Section 29.33 of this Lease
("APPLICABLE LAW"). At its sole cost and expense, Tenant shall promptly comply
with all such governmental measures to the extent that such governmental
measures relate to Tenant's particular manner of use of the Premises for other
than general office purposes (which general office purposes shall include
engineering, customer support and service and telemarketing), the Tenant
Improvements located in the Premises, or any Alterations thereof. Should any
standard or regulation now or hereafter be imposed on Landlord or Tenant by a
state, federal or local governmental body charged with the establishment,
regulation and enforcement of occupational, health or safety standards for
employers, employees, landlords or tenants, then Tenant agrees, at its sole cost
and expense, to comply promptly with such standards or regulations to the extent
such standards or regulations relate to Tenant's particular manner of use of the
Premises for other than general office purposes (which general office purposes
shall include engineering, customer support and service and telemarketing), the
Tenant Improvements located in the Premises, or any Alterations thereof;
provided that Landlord shall comply with any standards or regulations which
relate to the Base Building or the Building Systems, unless such compliance
obligations are triggered by the Tenant Improvements or the Alterations in the
Premises, in which event such compliance obligations shall be at Tenant's sole
cost and expense; provided further, and notwithstanding the foregoing, that
Tenant shall not be required to make any repair to, modification of, or addition
to the Base Building or the Building Systems except and to the extent required
because of Tenant's use of the Premises for other than normal and customary
business office operations (which normal and customary business office
operations shall include engineering, customer support and service and
telemarketing. The judgment of any court of competent jurisdiction or the
admission by either party hereto in any judicial action, regardless of whether
this other party is a party thereto, that such party has violated any of said
governmental measures, shall be conclusive of that fact as between Landlord and
Tenant. Landlord shall comply with all Applicable Laws relating to the Project,
Base Building and Building Systems, provided that compliance with such
Applicable Laws is not the responsibility of Tenant under this Lease, and
provided further that Landlord's failure to comply therewith would prohibit
Tenant from obtaining or maintaining a certificate of occupancy for the
Premises, or would unreasonably and materially affect the safety of Tenant's
Parties or create a significant health hazard for Tenant's Parties or otherwise
materially interfere with or materially affect Tenant's Permitted Use and
enjoyment of the Premises. Landlord shall be permitted to include in Operating
Expenses any costs or expenses incurred by Landlord under this Article 24 to the
extent consistent with, and amortized to the extent required by, the terms and
conditions of Section 4.2.4 of this Lease.

                                   ARTICLE 25

                                  LATE CHARGES

         If any installment of Rent or any other sum due from Tenant shall not
be received by Landlord or Landlord's designee within five (5) business days
following written notice that said amount was not paid when due, then Tenant
shall pay to Landlord a late charge equal to five


                                      -53-
<PAGE>


percent (5%) of the overdue amount. The late charge shall be deemed Additional
Rent and the right to require it shall be in addition to all of Landlord's other
rights and remedies hereunder or at law and shall not be construed as liquidated
damages or as limiting Landlord's remedies in any manner. In addition to the
late charge described above, any Rent or other amounts owing hereunder which are
not paid within ten (10) days after the date they are due shall bear interest
from the date when due until paid at a rate per annum equal to the lesser of (i)
the annual "BANK PRIME LOAN" rate cited in the Federal Reserve Statistical
Release Publication G.13(415), published on the first Tuesday of each calendar
month (or such other comparable index as Landlord and Tenant shall reasonably
agree upon if such rate ceases to be published) plus four (4) percentage points,
and (ii) the highest rate permitted by applicable law.

                                   ARTICLE 26

              LANDLORD'S RIGHT TO CURE DEFAULT; PAYMENTS BY TENANT

     26.1 LANDLORD'S CURE. All covenants and agreements to be kept or performed
by Tenant under this Lease shall be performed by Tenant at Tenant's sole cost
and expense and without any reduction of Rent, except to the extent, if any,
otherwise expressly provided herein. If Tenant shall fail to perform any
obligation under this Lease, and such failure shall continue in excess of the
time allowed under Section 19.1.2, above, unless a specific time period is
otherwise stated in this Lease, Landlord may, but shall not be obligated to,
make any such payment or perform any such act on Tenant's part without waiving
its rights based upon any default of Tenant and without releasing Tenant from
any obligations hereunder.

     26.2 TENANT'S REIMBURSEMENT. Except as may be specifically provided to the
contrary in this Lease, Tenant shall pay to Landlord, upon delivery by Landlord
to Tenant of statements therefor: (i) sums equal to expenditures reasonably made
and obligations reasonably incurred by Landlord in connection with the remedying
by Landlord of Tenant's defaults pursuant to the provisions of Section 26.1;
(ii) sums equal to all losses, costs, liabilities, damages and expenses referred
to in Article 10 of this Lease; and (iii) sums equal to all expenditures made
and obligations incurred by Landlord in collecting or attempting to collect the
Rent or in enforcing or attempting to enforce any rights of Landlord under this
Lease or pursuant to law, including, without limitation, all legal fees and
other amounts so expended. Tenant's obligations under this Section 26.2 shall
survive the expiration or sooner termination of the Lease Term.


                                      -54-
<PAGE>


                                   ARTICLE 27

                                ENTRY BY LANDLORD

     Landlord reserves the right during normal business hours, when accompanied
by a representative of Tenant and upon no less than forty-eight (48) hours prior
notice to Tenant (except in the case of an emergency), and in compliance with
Tenant's reasonable security measures, to enter the Premises to (i) inspect
them; (ii) show the Premises to prospective purchasers, mortgagees or tenants,
or to current or prospective mortgagees, ground or underlying lessors or
insurers; (iii) post notices of nonresponsibility; or (iv) alter, improve or
repair the Premises or the Building, or for structural alterations, repairs or
improvements to the Building or the Building's systems and equipment.
Notwithstanding anything to the contrary contained in this Article 27, Landlord
may enter the Premises at any time to (A) perform services required of Landlord,
including janitorial service; (B) take possession due to any breach of this
Lease in the manner provided herein; and (C) perform any covenants of Tenant
which Tenant fails to perform. Except as provided otherwise in this Lease,
Landlord may make any such entries without the abatement of Rent and may take
such reasonable steps as required to accomplish the stated purposes. Tenant
hereby waives any claims (except with respect to damage to Tenant's personal
property or the amount of any physical injury, but only to the extent caused by
the gross negligence or willful misconduct of Landlord) for damages or for any
injuries or inconvenience to or interference with Tenant's business, lost
profits, any loss of occupancy or quiet enjoyment of the Premises, and any other
loss occasioned thereby. For each of the above purposes, Landlord shall at all
times have a key with which to unlock all the doors in the Premises, excluding
Tenant's vaults, safes and special security areas designated in advance by
Tenant. In an emergency, Landlord shall have the right to use any means that
Landlord may deem proper to open the doors in and to the Premises. Except as
provided otherwise in this Lease, any entry into the Premises by Landlord in the
manner hereinbefore described shall not be deemed to be a forcible or unlawful
entry into, or a detainer of, the Premises, or an actual or constructive
eviction of Tenant from any portion of the Premises. No provision of this Lease
shall be construed as obligating Landlord to perform any repairs, alterations or
decorations except as otherwise expressly agreed to be performed by Landlord
herein.

                                   ARTICLE 28

                                 TENANT PARKING

         Commencing on the Lease Commencement Date, and continuing throughout
the Lease Term (including any Option Term(s)), Landlord shall provide to Tenant,
at no additional cost to Tenant, with no less than nine hundred (900) parking
spaces on a monthly basis throughout the Lease Term (including any Option
Term(s)), which parking spaces shall be located on the land and in the Building
Parking Structure. Tenant shall be responsible for the full amount of any taxes
imposed by any governmental authority in connection with the renting of such
parking spaces by Tenant or the use of the Building Parking Structure by Tenant.
Tenant's continued right to use the parking spaces is conditioned upon Tenant
abiding by all reasonable rules and regulations which are prescribed from time
to time by Landlord for the safe operation and use of the Building Parking
Structure. Tenant shall have the sole and exclusive use of the parking


                                      -55-
<PAGE>


spaces identified herein, shall have the sole right to designate reserved
parking spaces, and Tenant shall have reasonable approval rights with regard to
the parking plan and layout and no more than the legally required number of
parking spaces shall be "compact" spaces.

                                   ARTICLE 29

                            MISCELLANEOUS PROVISIONS

     29.1 TERMS; CAPTIONS. The words "Landlord" and "Tenant" as used herein
shall include the plural as well as the singular. The necessary grammatical
changes required to make the provisions hereof apply either to corporations or
partnerships or individuals, men or women, as the case may require, shall in all
cases be assumed as though in each case fully expressed. The captions of
Articles and Sections are for convenience only and shall not be deemed to limit,
construe, affect or alter the meaning of such Articles and Sections.

     29.2 BINDING EFFECT. Subject to all other provisions of this Lease, each of
the covenants, conditions and provisions of this Lease shall extend to and
shall, as the case may require, bind or inure to the benefit not only of
Landlord and of Tenant, but also of their respective heirs, personal
representatives, successors or assigns, provided this clause shall not permit
any assignment by Tenant contrary to the provisions of Article 14 of this Lease.

     29.3 NO AIR RIGHTS. Except for Tenant's rights regarding Telecommunications
Equipment set forth in Article 22, no rights to any view or to light or air over
any property, whether belonging to Landlord or any other person, are granted to
Tenant by this Lease. If at any time any windows of the Premises are temporarily
darkened or the light or view therefrom is obstructed by reason of any repairs,
improvements, maintenance or cleaning in or about the Project, the same shall be
without liability to Landlord and without any reduction or diminution of
Tenant's obligations under this Lease.

     29.4 MODIFICATION OF LEASE. Should any prospective mortgagee or ground
lessor for the Building or Project require a modification of this Lease, which
modification will not directly or indirectly cause an increased cost or expense
to Tenant or in connection with Tenant's business operations or have any
negative economic impact or in any other way materially adversely change the
rights and obligations of Tenant hereunder, then and in such event, Tenant
agrees that this Lease may be so modified, at Landlord's sole cost and expense
(including Tenant's reasonable attorneys' fees for review of the same), and
agrees to execute whatever documents are reasonably required therefor and to
deliver the same to Landlord within thirty (30) days following a request
therefor. Thereafter, at the request of either party, the other party agrees to
execute a short form of Lease and deliver the same to the requesting party
within ten (10) days following the request therefor, which the requesting party
may thereafter record.

     29.5 TRANSFER OF LANDLORD'S INTEREST. Tenant acknowledges that Landlord has
the right to transfer all or any portion of its interest in the Project or
Building and in this Lease so long as such transfer is not a subterfuge to avoid
Landlord's obligations under this Lease, and Tenant agrees that in the event of
any such transfer, and if the transferee assumes the applicable obligations,
Landlord shall automatically be released from all liability (to the extent such
obligations are assumed by the transferee) under this Lease not accrued as of
the date of the


                                      -56-
<PAGE>


transfer and Tenant agrees to look solely to such transferee for the performance
of Landlord's obligations hereunder after the date of transfer upon agreement by
such transferee to fully assume and be liable for all obligations of this Lease
to be performed by Landlord which first accrue or arise after the date of the
conveyance (and including the return of any Security Deposit), and Tenant shall
attorn to such transferee. Tenant further acknowledges that Landlord may assign
its interest in this Lease to a mortgage lender as additional security. Such
transfer shall not release Landlord from its obligations hereunder and that
Tenant shall continue to look to Landlord for the performance of its obligations
hereunder. Notwithstanding anything to the contrary set forth in this Section
29.5 above, Landlord may not, without Tenant's prior written approval, transfer
all or any portion of its interest in the Project or Building and in this Lease
until all of Landlord's obligations to fund the Tenant Improvement Allowance
have been satisfied and all of Landlord's Work under the Tenant Work Letter has
been completed.

     29.6 PROHIBITION AGAINST RECORDING. Except as provided in Section 29.4 and
this Section 29.6 of this Lease, neither this Lease, nor any memorandum,
affidavit or other writing with respect thereto, shall be recorded by Landlord
or Tenant or by anyone acting through, under or on behalf of either party.
Notwithstanding the foregoing, at the request of Tenant, Landlord agrees to
execute a short form of Lease in a form reasonably designated by Landlord and
deliver the same to Tenant within ten (10) days following the request therefor,
which Tenant may thereafter record.

     29.7 LANDLORD'S TITLE. Landlord's title is and always shall be paramount to
the title of Tenant. Nothing herein contained shall empower Tenant to do any act
which can, shall or may encumber the title of Landlord.

     29.8 RELATIONSHIP OF PARTIES. Nothing contained in this Lease shall be
deemed or construed by the parties hereto or by any third party to create the
relationship of principal and agent, partnership, joint venturer or any
association between Landlord and Tenant.

     29.9 APPLICATION OF PAYMENTS. Landlord shall have the right to apply
payments received from Tenant pursuant to this Lease, regardless of Tenant's
designation of such payments, to satisfy any obligations of Tenant hereunder, in
such order and amounts as Landlord, in its sole and absolute discretion, may
elect.

     29.10 TIME OF ESSENCE. Time is of the essence with respect to the
performance of every provision of this Lease in which time of performance is a
factor.

     29.11 PARTIAL INVALIDITY. If any term, provision or condition contained in
this Lease shall, to any extent, be invalid or unenforceable, the remainder of
this Lease, or the application of such term, provision or condition to persons
or circumstances other than those with respect to which it is invalid or
unenforceable, shall not be affected thereby, and each and every other term,
provision and condition of this Lease shall be valid and enforceable to the
fullest extent possible permitted by law.

     29.12 NO WARRANTY. In executing and delivering this Lease, Tenant has not
relied on any representations (except as specifically set forth in this Lease),
including, but not limited to, any representation as to the amount of any item
comprising Additional Rent or the amount of the


                                      -57-
<PAGE>


Additional Rent in the aggregate or that Landlord is furnishing the same
services to other tenants, at all, on the same level or on the same basis, or
any warranty or any statement of Landlord which is not set forth herein or in
one or more of the exhibits attached hereto.

     29.13 LANDLORD EXCULPATION. The liability of the Landlord Parties to Tenant
for any default by Landlord under this Lease or arising in connection herewith
or with Landlord's operation, management, leasing, repair, renovation,
alteration or any other matter relating to the Project or the Premises shall be
limited solely and exclusively to an amount which is equal to (1) to the extent
such liability arises prior to the Lease Commencement Date, the interest of
Landlord in the Building (including any insurance proceeds which Landlord
receives), or (2) to the extent such liability arises after the Lease
Commencement Date, the lesser of (a) the interest of Landlord in the Building
(including any insurance, condemnation or sales proceeds which Landlord
receives), or (b) the equity interest Landlord would have in the Building if the
Building were encumbered by third-party debt in an amount equal to eighty
percent (80%) of the value of the Building (as such value is determined by
Landlord); provided, however, that except as specifically stated above with
regard to the calculation of Landlord's interests, in no event shall such
liability extend to any sales or insurance proceeds received by the Landlord
Parties in connection with the Project, Building or Premises. None of the
Landlord Parties shall have any personal liability therefor, and Tenant hereby
expressly waives and releases such personal liability on behalf of itself and
all persons claiming by, through or under Tenant. The limitations of liability
contained in this Section 29.13 shall inure to the benefit of the Landlord
Parties' present and future partners, beneficiaries, officers, directors,
trustees, shareholders, agents and employees, and their respective partners,
heirs, successors and assigns. Under no circumstances shall any present or
future partner of Landlord (if Landlord is a partnership), or trustee or
beneficiary (if Landlord or any partner of Landlord is a trust), have any
liability for the performance of Landlord's obligations under this Lease.
Notwithstanding any contrary provision herein, the Landlord Parties shall not be
liable under any circumstances for injury or damage to, or interference with,
Tenant's business, including but not limited to, loss of profits, loss of rents
or other revenues, loss of business opportunity, loss of goodwill or loss of
use, in each case, however occurring.

     The provisions of the preceding Section 29.13 are subject to the following
restrictions:

          (a)  This Section shall not apply until all of Landlord's obligations
               to fund the Tenant Improvement Allowance have been satisfied and
               all of Landlord's Work under the Tenant Work Letter has been
               completed; and

          (b)  This Section shall have no effect on Tenant's rights to withhold
               or set-off rents as specifically provided for elsewhere in this
               Lease.

     29.14 ENTIRE AGREEMENT. It is understood and acknowledged that there are no
oral agreements between the parties hereto affecting this Lease and this Lease
constitutes the parties' entire agreement with respect to the leasing of the
Premises and supersedes and cancels any and all previous negotiations,
arrangements, brochures, agreements and understandings, if any, between the
parties hereto or displayed by Landlord to Tenant with respect to the subject
matter thereof, and none thereof shall be used to interpret or construe this
Lease. None of the terms,


                                      -58-
<PAGE>


covenants, conditions or provisions of this Lease can be modified, deleted or
added to except in writing signed by the parties hereto.

     29.15 INTENTIONALLY OMITTED.

     29.16 FORCE MAJEURE. Any prevention, delay or stoppage due to strikes,
lockouts, labor disputes, acts of God, inability to obtain services, labor, or
materials or reasonable substitutes therefor, governmental actions, civil
commotions, fire or other casualty, and other causes beyond the reasonable
control of the party obligated to perform, except with respect to the
obligations imposed with regard to Rent and other charges to be paid pursuant to
this Lease and except as to Tenant's obligations under Section 5.1 and Article
24 of this Lease (collectively, a "FORCE MAJEURE"), notwithstanding anything to
the contrary contained in this Lease, shall excuse the performance of such party
for a period equal to any such prevention, delay or stoppage and, therefore, if
this Lease specifies a time period for performance of an obligation of either
party, that time period shall be extended by the period of any delay in such
party's performance caused by a Force Majeure; provided, however, to the extent
such Force Majeure precludes Tenant's satisfaction of Article 24 of this Lease,
such Force Majeure shall toll Tenant's time for compliance therewith.

     29.17 WAIVER OF REDEMPTION BY TENANT. Tenant hereby waives, for Tenant and
for all those claiming under Tenant, any and all rights now or hereafter
existing to redeem by order or judgment of any court or by any legal process or
writ, Tenant's right of occupancy of the Premises after any termination of this
Lease.

     29.18 NOTICES. All notices, demands, statements, designations, approvals or
other communications (collectively, "NOTICES") given or required to be given by
either party to the other hereunder or by law shall be in writing, shall be (A)
sent by United States certified or registered mail, postage prepaid, return
receipt requested ("MAIL"), (B) transmitted by telecopy, if such telecopy is
promptly followed by a Notice sent by Mail, (C) delivered by a nationally
recognized overnight courier, or (D) delivered personally. Any Notice shall be
sent, transmitted, or delivered, as the case may be, to Tenant at the
appropriate address set forth in Section 10 of the Summary, or to such other
place as Tenant may from time to time designate in a Notice to Landlord, or to
Landlord at the addresses set forth below, or to such other places as Landlord
may from time to time designate in a Notice to Tenant. Any Notice will be deemed
given (i) three (3) days after the date it is posted if sent by Mail, (ii) the
date the telecopy is transmitted, (iii) the date the overnight courier delivery
is made, or (iv) the date personal delivery is made. If Tenant is notified of
the identity and address of Landlord's mortgagee or ground or underlying lessor,
Tenant shall give to such mortgagee or ground or underlying lessor written
notice of any default by Landlord under the terms of this Lease by registered or
certified mail, and such mortgagee or ground or underlying lessor shall be given
a reasonable opportunity to cure such default prior to Tenant's exercising any
remedy available to Tenant. As of the date of this Lease, any Notices to
Landlord must be sent, transmitted, or delivered, as the case may be, to the
following addresses:


                                      -59-
<PAGE>


                       Kilroy Realty Corporation
                       2250 East Imperial Highway
                       Suite 1200
                       El Segundo, California  90245
                       Attention:  Legal Department

                       with copies to:

                       Kilroy Realty Corporation
                       12348 High Bluff Drive, Suite 110
                       San Diego, California  92130
                       Attention:  Ms. Lisa Irvin

                       and

                       Allen, Matkins, Leck, Gamble & Mallory
                       1999 Avenue of the Stars, Suite 1800
                       Los Angeles, California 90067
                       Attention:  Anton N. Natsis, Esq.

     29.19 JOINT AND SEVERAL. If there is more than one Tenant, the obligations
imposed upon Tenant under this Lease shall be joint and several.

     29.20 AUTHORITY. If Tenant is a corporation, trust or partnership, each
individual executing this Lease on behalf of Tenant hereby represents and
warrants that Tenant is a duly formed and existing entity qualified to do
business in California and that Tenant has full right and authority to execute
and deliver this Lease and that each person signing on behalf of Tenant is
authorized to do so. In such event, Tenant shall, within ten (10) days after
execution of this Lease, deliver to Landlord satisfactory evidence of such
authority and, if a corporation, upon demand by Landlord, also deliver to
Landlord satisfactory evidence of (i) good standing in Tenant's state of
incorporation and (ii) qualification to do business in California.

     29.21 ATTORNEYS' FEES. In the event that either Landlord or Tenant should
bring suit for the possession of the Premises, for the recovery of any sum due
under this Lease, or because of the breach of any provision of this Lease or for
any other relief against the other, then all costs and expenses, including
reasonable attorneys' fees, incurred by the prevailing party therein shall be
paid by the other party, which obligation on the part of the other party shall
be deemed to have accrued on the date of the commencement of such action and
shall be enforceable whether or not the action is prosecuted to judgment.

     29.22 GOVERNING LAW; WAIVER OF TRIAL BY JURY. This Lease shall be construed
and enforced in accordance with the laws of the State of California. IN ANY
ACTION OR PROCEEDING ARISING HEREFROM, LANDLORD AND TENANT HEREBY CONSENT TO (I)
THE JURISDICTION OF ANY COMPETENT COURT WITHIN THE STATE OF CALIFORNIA, (II)
SERVICE OF PROCESS BY ANY MEANS AUTHORIZED BY CALIFORNIA LAW, AND (III) IN THE
INTEREST OF SAVING TIME AND EXPENSE, TRIAL WITHOUT A JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM


                                      -60-
<PAGE>


BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE OTHER OR THEIR SUCCESSORS IN
RESPECT OF ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS LEASE, THE
RELATIONSHIP OF LANDLORD AND TENANT, TENANT'S USE OR OCCUPANCY OF THE PREMISES,
AND/OR ANY CLAIM FOR INJURY OR DAMAGE, OR ANY EMERGENCY OR STATUTORY REMEDY. IN
THE EVENT LANDLORD COMMENCES ANY SUMMARY PROCEEDINGS OR ACTION FOR NONPAYMENT OF
BASE RENT OR ADDITIONAL RENT, TENANT SHALL NOT INTERPOSE ANY COUNTERCLAIM OF ANY
NATURE OR DESCRIPTION (UNLESS SUCH COUNTERCLAIM SHALL BE MANDATORY) IN ANY SUCH
PROCEEDING OR ACTION, BUT SHALL BE RELEGATED TO AN INDEPENDENT ACTION AT LAW.

     29.23 SUBMISSION OF LEASE. Submission of this instrument for examination or
signature by Tenant does not constitute a reservation of, option for or option
to lease, and it is not effective as a lease or otherwise until execution and
delivery by both Landlord and Tenant.

     29.24 BROKERS. Landlord and Tenant hereby warrant to each other that they
have had no dealings with any real estate broker or agent in connection with the
negotiation of this Lease, excepting only the real estate brokers or agents
specified in Section 12 of the Summary (the "BROKERS"), and that they know of no
other real estate broker or agent who is entitled to a commission in connection
with this Lease. Each party agrees to indemnify and defend the other party
against and hold the other party harmless from any and all claims, demands,
losses, liabilities, lawsuits, judgments, costs and expenses (including without
limitation reasonable attorneys' fees) with respect to any leasing commission or
equivalent compensation alleged to be owing on account of any dealings with any
real estate broker or agent, other than the Brokers, occurring by, through, or
under the indemnifying party.

     29.25 INDEPENDENT COVENANTS. This Lease shall be construed as though the
covenants herein between Landlord and Tenant are independent and not dependent
and Tenant hereby expressly waives the benefit of any statute to the contrary
and agrees that if Landlord fails to perform its obligations set forth herein,
Tenant shall not, except as expressly provided in this Lease to the contrary, be
entitled to make any repairs or perform any acts hereunder at Landlord's expense
or to any setoff of the Rent or other amounts owing hereunder against Landlord;
provided, however, that the foregoing shall in no way impair the right of Tenant
to commence a separate action against Landlord for any violation by Landlord of
the provisions hereof so long as, to the extent required in this Lease, notice
is first given to Landlord and an opportunity is granted to Landlord to correct
such violations as provided in Section 19.6, above.

     29.26 PROJECT OR BUILDING NAME AND SIGNAGE. Landlord shall have the right
at any time to install, affix and maintain any and all of its standard
identification signs on the exterior and on the interior of the Project or
Building pursuant to Article 23 hereof.

     29.27 COUNTERPARTS. This Lease may be executed in counterparts with the
same effect as if both parties hereto had executed the same document. Both
counterparts shall be construed together and shall constitute a single lease.

     29.28 CONFIDENTIALITY. Landlord and Tenant each hereby acknowledge that the
contents of this Lease and any related documents are confidential information.
Each of the parties shall


                                      -61-
<PAGE>


keep such confidential information strictly confidential and shall not disclose
such confidential information to any person or entity other than Landlord's or
Tenant's partners, administrators, consultants, financial, legal, and space
planning consultants, a prospective or current purchaser, mortgagee, or ground
or underlying lessor of the Building or the Project, a prospective Transferee,
and except as required by Applicable Law or in connection with a dispute or
litigation hereunder or as required by subpoena.

     29.29 TRANSPORTATION MANAGEMENT. Tenant shall fully comply with all present
or future programs required by applicable law (provided Landlord provides Tenant
with sufficient prior notice of such program's requirements) which are intended
to manage parking, transportation or traffic in and around the Building, and in
connection therewith, Tenant shall take responsible action for the
transportation planning and management of all employees located at the Premises
by working directly with Landlord, any governmental transportation management
organization or any other transportation-related committees or entities.

     29.30 BUILDING RENOVATIONS. It is specifically understood and agreed that
Landlord has made no representation or warranty to Tenant and has no obligation
and has made no promises to alter, remodel, improve, renovate, repair or
decorate the Premises, Building, or any part thereof and that no representations
respecting the condition of the Premises or the Building have been made by
Landlord to Tenant except as specifically set forth herein or in the Tenant Work
Letter. However, Tenant hereby acknowledges that, subject to the terms and
conditions of this Lease (specifically including Article 7), Landlord is
currently renovating or may during the Lease Term renovate, improve, alter, or
modify (collectively, the "RENOVATIONS") the Project, the Building and/or the
Premises including without limitation the parking structure, common areas,
systems and equipment, roof, and structural portions of the same, which
Renovations may include, without limitation, (i) installing sprinklers in the
Building common areas and tenant spaces, (ii) modifying the common areas and
tenant spaces to comply with applicable laws and regulations, including
regulations relating to the physically disabled, seismic conditions, and
building safety and security, and (iii) installing new floor covering, lighting,
and wall coverings in the Building common areas, and in connection with any
Renovations, Landlord may, among other things, erect scaffolding or other
necessary structures in the Building, limit or eliminate access to portions of
the Project, including portions of the common areas, or perform work in the
Building, which work may create noise, dust or leave debris in the Building.
Tenant hereby agrees that such Renovations and Landlord's actions in connection
with such Renovations shall in no way constitute a constructive eviction of
Tenant nor entitle Tenant to any abatement of Rent unless Tenant is reasonably
prevented from, and does not, use the Premises or a significant portion thereof.
Landlord shall have no responsibility or for any reason be liable to Tenant for
any direct or indirect injury to or interference with Tenant's business arising
from the Renovations, nor shall Tenant be entitled to any compensation or
damages from Landlord for loss of the use of the whole or any part of the
Premises or of Tenant's personal property or improvements resulting from the
Renovations or Landlord's actions in connection with such Renovations, or for
any inconvenience or annoyance occasioned by such Renovations or Landlord's
actions provided such Renovations do not materially adversely impact Tenant's
use or occupancy of the Premises or the Project.

     29.31 NO VIOLATION. Landlord and Tenant hereby warrants and represents that
neither its execution of nor performance under this Lease shall cause either
party to be in violation of


                                      -62-
<PAGE>


any agreement, instrument, contract, law, rule or regulation by which it is
bound, and each party shall protect, defend, indemnify and hold the other party
harmless against any claims, demands, losses, damages, liabilities, costs and
expenses, including, without limitation, reasonable attorneys' fees and costs,
arising from Tenant's breach of this warranty and representation.

     29.32 COMMUNICATIONS AND COMPUTER LINES. Tenant may install, maintain,
replace, remove or use any communications or computer wires and cables
(collectively, the "LINES") at the Project in or serving the Premises, provided
that (i) Tenant shall obtain Landlord's prior written consent, use an
experienced and qualified contractor approved in writing by Landlord, and comply
with all of the other provisions of Articles 7 and 8 of this Lease, (ii) an
acceptable number of spare Lines and space for additional Lines shall be
maintained for existing and future occupants of the Project, as determined in
Landlord's reasonable opinion, (iii) the Lines therefor (including riser cables)
shall be appropriately insulated to prevent excessive electromagnetic fields or
radiation, and shall be surrounded by a protective conduit reasonably acceptable
to Landlord, (iv) any new or existing Lines servicing the Premises shall comply
with all applicable governmental laws and regulations, (v) as a condition to
permitting the installation of new Lines, Landlord may require that Tenant
remove existing Lines located in or serving the Premises and repair any damage
in connection with such removal, and (vi) Tenant shall pay all costs in
connection therewith. Landlord reserves the right to require that Tenant remove
any Lines located in or serving the Premises which are installed in violation of
these provisions, or which are at any time in violation of any laws or represent
a dangerous or potentially dangerous condition.

     29.33 HAZARDOUS SUBSTANCES.

           29.33.1 DEFINITIONS. For purposes of this Lease, the following
definitions shall apply: "HAZARDOUS MATERIAL(S)" shall mean any substance or
material that is described as a toxic or hazardous substance, waste, material,
pollutant, contaminant or infectious waste, or any matter that in certain
specified quantities would be injurious to the public health or welfare, or
words of similar import, in any of the "Environmental Laws," as that term is
defined below in this Section 29.33.1, or any other words which are intended to
define, list or classify substances by reason of deleterious properties such as
ignitability, corrosivity, reactivity, carcinogenicity, toxicity or reproductive
toxicity and includes, without limitation, asbestos, petroleum (including crude
oil or any fraction thereof, natural gas, natural gas liquids, liquefied natural
gas, or synthetic gas usable for fuel, or any mixture thereof), petroleum
products, polychlorinated biphenyls, urea formaldehyde, radon gas, radioactive
matter, medical waste, and chemicals which may cause cancer or reproductive
toxicity. "ENVIRONMENTAL LAWS" shall mean all federal, state, local and
quasi-governmental laws (whether under common law, statute or otherwise),
ordinances, decrees, codes, rulings, awards, rules, regulations and guidance
documents now or hereafter be enacted or promulgated as amended from time to
time, in any way relating to or regulating Hazardous Materials.

           29.33.2 COMPLIANCE WITH ENVIRONMENTAL LAWS. Landlord covenants that
during the Lease Term, Landlord shall comply with all Environmental Laws in
accordance with, and as required by, the terms and conditions of Article 24 of
this Lease; provided, however, such compliance is not the responsibility of
Tenant under this Lease, and provided further that Landlord's failure to comply
therewith would prohibit Tenant from obtaining or maintaining a


                                      -63-
<PAGE>


certificate of occupancy for the Premises, or would unreasonably and materially
affect the safety of Tenant's Parties or create a significant health hazard for
Tenant's Parties or otherwise materially interfere with or materially affect
Tenant's Permitted Use and enjoyment of the Premises.

           29.33.3 INDEMNIFICATIONS. Landlord agrees to indemnify, defend,
protect and hold harmless the Tenant Parties from any and all claims of
liability asserted against Tenant or any Tenant Parties by a third party,
including without limitation any agency or instrumentality of the federal, state
or local government, for bodily injury, including death, physical damage to or
loss of use of property or cleanup activities to the extent required by
applicable law (remedial or removal), arising from any Hazardous Materials
(collectively, "HAZARDOUS MATERIALS CLAIMS") to the extent placed in, on, under
or about the Project by Landlord Parties. Tenant agrees to indemnify, defend,
protect and hold harmless the Landlord Parties from any and all Hazardous
Materials Claims arising from any Hazardous Materials to the extent placed in,
on, under or about the Premises or the Project by Tenant or Tenant Parties.

         29.34 REASONABLENESS AND GOOD FAITH. Except for determinations
expressly described as being in the "absolute discretion" of the applicable
party, neither Landlord nor Tenant shall unreasonably withhold or delay any
consent, approval or other determination provided for hereunder, and
determinations subject to absolute discretion shall not be unreasonably delayed.

         29.35 TENANT RIGHT OF FIRST OFFER TO PURCHASE BUILDING. Landlord hereby
grants to the Original Tenant and its Affiliates a right of first offer with
respect to purchasing the Project, but only to the extent Landlord chooses to
sell the Building on an individual, single-building basis, and provided that
Tenant is not then in Default under this Lease (beyond any applicable notice and
cure periods). Landlord shall notify Tenant (the "First Offer Notice") in the
event Landlord desires to sell the Project on such an individual,
single-building basis, and shall notify Tenant of the material price, terms
(both monetary and non-monetary) and conditions pursuant to which it is willing
to sell the Project. Tenant shall, during the fifteen (15) day period after
Tenant's receipt of such First Offer Notice (the "Exclusive Negotiation
Period"), have an exclusive opportunity to agree with Landlord upon such price,
terms and conditions. If Tenant does not agree to such price, terms and
conditions within the Exclusive Negotiation Period, Landlord shall have no
obligation to sell the Building to Tenant and Landlord shall be free to
negotiate and enter into a purchase agreement for the Building to anyone whom it
desires on any price, terms and conditions it may agree; provided, however, such
price and monetary terms shall be no more than three (3%) percent more favorable
to such purchaser than the price and monetary terms offered to Tenant in the
First Offer Notice. The rights contained in this Section 29.35 shall be personal
to the Original Tenant and its Affiliates and may only be exercised by the
Original Tenant or an Affiliate (and not any assignee, subleasee or other
transferee of the Original Tenant's interest in this Lease) if the Original
Tenant and/or an Affiliate occupies the entire Premises.


                                      -64-
<PAGE>


         IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be
executed the day and date first above written.

                                                  "LANDLORD":

                                         KILROY REALTY, L.P.,
                                         a Delaware limited partnership

                                         By: Steve Scott
                                            ----------------------------------

                                              Its: Senior Vice President
                                                   ---------------------------

                                         By: Jeffrey C. Hawken
                                            ----------------------------------

                                              Its: Executive Vice President,
                                                   Chief Operation Officer
                                                   ---------------------------

                                                   "TENANT":

                                         NEWGEN RESULTS CORPORATION,
                                         a Delaware corporation

                                         By: Sam Simkin
                                            ----------------------------------

                                              Its:  Senior Vice President, CFO
                                                   ---------------------------

                                         By: Gerald Benowitz
                                            ----------------------------------

                                              Its: Chief Executive Officer
                                                   ---------------------------


                                      -65-
<PAGE>


                                   EXHIBIT A-1


                                 SORRENTO RIM II

                               OUTLINE OF PREMISES

                                   [ATTACHED]






                                  EXHIBIT A-1
                                      -1-
<PAGE>


                                   EXHIBIT A-2


                                 SORRENTO RIM II

                                LEGAL DESCRIPTION


                                   [ATTACHED]






                                  EXHIBIT A-2
                                      -1-
<PAGE>


                                   EXHIBIT A-3


                                 SORRENTO RIM II

                              PROJECT MONUMENT SIGN

                                   [ATTACHED]






                                  EXHIBIT A-3
                                      -1-
<PAGE>


                                    EXHIBIT B


                                 SORRENTO RIM II

                               TENANT WORK LETTER

                                   [ATTACHED]








                                  EXHIBIT B-1
                                      -1-
<PAGE>


                                    EXHIBIT C


                                 SORRENTO RIM II

                           NOTICE OF LEASE TERM DATES


To:
         -----------------------

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

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

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

         Re:      Office Lease dated ____________, 2000 between
                  ____________________, a _____________________ ("Landlord"),
                  and _______________________, a _______________________
                  ("Tenant") concerning Suite ______ on floor(s) __________ of
                  the office building located at ____________________________,
                  Sorrento, California.

Gentlemen:

         In accordance with the Office Lease (the "Lease"), we wish to advise
you and/or confirm as follows:

         1.       The Lease Term shall commence on or has commenced on
                  ______________ for a term of __________________ ending on
                  __________________.

         2.       Rent commenced to accrue on __________________, in the amount
                  of ________________.

         3.       If the Lease Commencement Date is other than the first day of
                  the month, the first billing will contain a pro rata
                  adjustment. Each billing thereafter, with the exception of the
                  final billing, shall be for the full amount of the monthly
                  installment as provided for in the Lease.

         4.       Your rent checks should be made payable to __________________
                  at ___________________.

         5.       The exact number of rentable/usable square feet within the
                  Premises is ____________ square feet.


                                      -1-
<PAGE>


         6.       Tenant's Share as adjusted based upon the exact number of
                  usable square feet within the Premises is ________%.

                                                "Landlord":

                                                -----------------------------
                                                a
                                                 ----------------------------


                                                By:
                                                   --------------------------
                                                        Its:
                                                            -----------------

Agreed to and Accepted
as of ____________, 200__.

"Tenant":

-----------------------------
a
 ----------------------------


By:
   --------------------------
        Its:
            -----------------


                                      -2-
<PAGE>


                                    EXHIBIT D


                                 SORRENTO RIM II

                              RULES AND REGULATIONS

     Tenant shall faithfully observe and comply with the following Rules and
Regulations. Landlord shall not be responsible to Tenant for the nonperformance
of any of said Rules and Regulations by or otherwise with respect to the acts or
omissions of any other tenants or occupants of the Project. In the event of any
conflict between the Rules and Regulations and the other provisions of this
Lease, the latter shall control.

     1. Tenant shall bear the cost of any lock changes or repairs required by
Tenant. Two keys will be furnished by Landlord for the Premises, and any
additional keys required by Tenant must be obtained from Landlord at a
reasonable cost to be established by Landlord. Upon the termination of this
Lease, Tenant shall restore to Landlord all keys of stores, offices, and toilet
rooms, either furnished to, or otherwise procured by, Tenant and in the event of
the loss of keys so furnished, Tenant shall pay to Landlord the cost of
replacing same or of changing the lock or locks opened by such lost key if
Landlord shall deem it necessary to make such changes.

     2. Landlord shall have the right to prescribe the weight, size and position
of all safes and other heavy property brought into the Building and also the
times and manner of moving the same in and out of the Building. Safes and other
heavy objects shall, if considered necessary by Landlord, stand on supports of
such thickness as is necessary to properly distribute the weight. Landlord will
not be responsible for loss of or damage to any such safe or property in any
case. Any damage to any part of the Building, its contents, occupants or
visitors by moving or maintaining any such safe or other property shall be the
sole responsibility and expense of Tenant.

     3. The requirements of Tenant will be attended to only upon application at
the management office for the Project or at such office location designated by
Landlord. Employees of Landlord shall not perform any work or do anything
outside their regular duties unless under special instructions from Landlord.

     4. No sign, advertisement, notice or handbill shall be exhibited,
distributed, painted or affixed by Tenant on any part of the Premises or the
Building without the prior written consent of the Landlord. Tenant shall not
disturb, solicit, peddle, or canvass any occupant of the Project and shall
cooperate with Landlord and its agents of Landlord to prevent same.

     5. The toilet rooms, urinals, wash bowls and other apparatus shall not be
used for any purpose other than that for which they were constructed, and no
foreign substance of any kind whatsoever shall be thrown therein. The expense of
any breakage, stoppage or damage resulting from the violation of this rule shall
be borne by the tenant who, or whose servants, employees, agents, visitors or
licensees shall have caused same.


                                   EXHIBIT D
                                      -1-
<PAGE>


     6. Tenant shall not overload the floor of the Premises, nor mark, drive
nails or screws, or drill into the partitions, woodwork or drywall or in any way
deface the Premises or any part thereof without Landlord's prior written
consent.

     7. Except for vending machines intended for the sole use of Tenant's
employees and invitees, no vending machine or machines other than fractional
horsepower office machines shall be installed, maintained or operated upon the
Premises without the written consent of Landlord.

     8. Tenant shall not use or keep in or on the Premises, the Building, or the
Project any kerosene, gasoline, explosive material, corrosive material, material
capable of emitting toxic fumes, or other inflammable or combustible fluid
chemical, substitute or material, except in compliance with applicable law.
Tenant shall provide material safety data sheets for any Hazardous Material used
or kept on the Premises.

     9. Tenant shall not use, keep or permit to be used or kept, any foul or
noxious gas or substance in or on the Premises. Tenant shall not throw anything
out of doors, windows or skylights or down passageways.

     10. Except with respect to an approved "Deli Operator," no cooking shall be
done or permitted on the Premises, nor shall the Premises be used for lodging or
for any improper, objectionable or immoral purposes. Notwithstanding the
foregoing, Underwriters' laboratory-approved equipment and microwave ovens may
be used in the Premises for heating food and brewing coffee, tea, hot chocolate
and similar beverages for employees and visitors, provided that such use is in
accordance with all applicable federal, state, county and city laws, codes,
ordinances, rules and regulations.

     11. The Premises shall not be used for manufacturing or for the storage of
merchandise except as such storage may be incidental to the Permitted Use
provided for in the Summary. Tenant shall not occupy or permit any portion of
the Premises to be occupied as an office for a messenger-type operation or
dispatch office, public stenographer or typist, or for the manufacture or sale
of liquor, narcotics, or tobacco in any form, or as a medical office, or as a
barber or manicure shop, or as an employment bureau without the express prior
written consent of Landlord. Tenant shall not engage or pay any employees on the
Premises except those actually working for such tenant on the Premises nor
advertise for laborers giving an address at the Premises.

     12. Tenant shall store all its trash and garbage within the interior of the
Premises. No material shall be placed in the trash boxes or receptacles if such
material is of such nature that it may not be disposed of in the ordinary and
customary manner of removing and disposing of trash and garbage in San Diego,
California without violation of any law or ordinance governing such disposal. If
the Premises is or becomes infested with vermin as a result of the use or any
misuse or neglect of the Premises by Tenant, its agents, servants, employees,
contractors, visitors or licensees, Tenant shall forthwith, at Tenant's expense,
cause the Premises to be exterminated from time to time to the satisfaction of
Landlord and shall employ such licensed exterminators as shall be approved in
writing in advance by Landlord.


                                      -2-
<PAGE>


     13. Tenant shall comply with all safety, fire protection and evacuation
procedures and regulations established by any governmental agency.

     14. No awnings or other projection shall be attached to the outside walls
of the Building without the prior written consent of Landlord (which shall not
be unreasonably withheld or delayed), and no curtains, blinds, shades or screens
shall be attached to or hung in, or used in connection with, any window or door
of the Premises other than Landlord standard window and door coverings unless
otherwise consented to in writing by Landlord. All electrical ceiling fixtures
hung in the Premises or spaces along the perimeter of the Building must be
fluorescent and/or of a quality, type, design and a warm white bulb color
approved in advance in writing by Landlord. Neither the interior nor exterior of
any windows shall be coated or otherwise sunscreened without the prior written
consent of Landlord. Tenant shall be responsible for any damage to the window
film on the exterior windows of the Premises and shall promptly repair any such
damage at Tenant's sole cost and expense. Tenant shall keep its window coverings
closed during any period of the day when the sun is shining directly on the
windows of the Premises.

     15. Tenant must comply with requests by the Landlord concerning the
informing of their employees of items of importance to the Landlord.

     16. Tenant must comply with any applicable "NO-SMOKING" Ordinances. If
Tenant is required under the ordinance to adopt a written smoking policy, a copy
of said policy shall be on file in the office of the Building. Additionally,
Tenant must provide at least one area within the Premises in which its
employees, invitees and visitors may smoke, to the extent such area is required
by law.

     17. Tenant hereby acknowledges that Landlord shall have no obligation to
provide guard service or other security measures for the benefit of the
Premises, the Building or the Project. Tenant hereby assumes all responsibility
for the protection of Tenant and its agents, employees, contractors, invitees
and guests, and the property thereof, from acts of third parties, including
keeping doors locked and other means of entry to the Premises closed, whether or
not Landlord, at its option, elects to provide security protection for the
Project or any portion thereof. Tenant further assumes the risk that any safety
and security devices, services and programs which Landlord elects, in its sole
discretion, to provide may not be effective, or may malfunction or be
circumvented by an unauthorized third party, and Tenant shall, in addition to
its other insurance obligations under this Lease, obtain its own insurance
coverage to the extent Tenant desires protection against losses related to such
occurrences. Tenant shall cooperate in any reasonable safety or security program
developed by Landlord or required by law.

     18. Tenant shall not use in any space or in the public halls of the
Building, any hand trucks except those equipped with rubber tires and rubber
side guards.

     19. No auction, liquidation, fire sale, going-out-of-business or bankruptcy
sale shall be conducted in the Premises without the prior written consent of
Landlord.

     20. No tenant shall use or permit the use of any portion of the Premises
for living quarters, sleeping apartments or lodging rooms.


                                      -3-
<PAGE>


     21. Tenant shall install and maintain, at Tenant's sole cost and expense,
an adequate, visibly marked and properly operational fire extinguisher next to
any duplicating or photocopying machines or similar heat producing equipment,
which may or may not contain combustible material, in the Premises.

     Landlord reserves the right at any time to change or rescind any one or
more of these Rules and Regulations, or to make such other and further
reasonable Rules and Regulations as in Landlord's judgment may from time to time
be necessary (relative to a building occupied solely by one tenant) for the
management, safety, care and cleanliness of the Premises, Building, the Common
Areas and the Project, and for the preservation of good order therein, as well
as for the convenience of other occupants and tenants therein. Landlord may
waive any one or more of these Rules and Regulations for the benefit of any
particular tenants, but no such waiver by Landlord shall be construed as a
waiver of such Rules and Regulations in favor of any other tenant, nor prevent
Landlord from thereafter enforcing any such Rules or Regulations against any or
all tenants of the Project. Tenant shall be deemed to have read these Rules and
Regulations and to have agreed to abide by them as a condition of its occupancy
of the Premises.


                                      -4-
<PAGE>


                                    EXHIBIT E


                                 SORRENTO RIM II

                      FORM OF TENANT'S ESTOPPEL CERTIFICATE

     The undersigned as Tenant under that certain Office Lease (the "Lease")
made and entered into as of ___________, 2000 by and between _______________ as
Landlord, and the undersigned as Tenant, for Premises on the ______________
floor(s) of the office building located at ______________, Sorrento, California
____________, certifies as follows:

     1. Attached hereto as Exhibit A is a true and correct copy of the Lease and
all amendments and modifications thereto. The documents contained in Exhibit A
represent the entire agreement between the parties as to the Premises.

     2. The undersigned currently occupies the Premises described in the Lease,
the Lease Term commenced on __________, and the Lease Term expires on
___________, and the undersigned has no option to terminate or cancel the Lease
or to purchase all or any part of the Premises, the Building and/or the Project.

     3. Base Rent became payable on ____________.

     4. The Lease is in full force and effect and has not been modified,
supplemented or amended in any way except as provided in Exhibit A.

     5. Tenant has not transferred, assigned, or sublet any portion of the
Premises nor entered into any license or concession agreements with respect
thereto except as follows:






     6. Tenant shall not modify the documents contained in Exhibit A without the
prior written consent of Landlord's mortgagee.

     7. All monthly installments of Base Rent, all Additional Rent and all
monthly installments of estimated Additional Rent have been paid when due
through ___________. The current monthly installment of Base Rent is
$____________________.

     8. All conditions of the Lease to be performed by Landlord necessary to the
enforceability of the Lease have been satisfied and Landlord is not in default
thereunder. In addition, the undersigned has not delivered any notice to
Landlord regarding a default by Landlord thereunder.

     9. No rental has been paid more than thirty (30) days in advance and no
security has been deposited with Landlord except as provided in the Lease.


                                   EXHIBIT E
                                      -1-
<PAGE>


     10. As of the date hereof, there are no existing defenses or offsets, or,
to the undersigned's knowledge, claims or any basis for a claim, that the
undersigned has against Landlord.

     11. If Tenant is a corporation or partnership, each individual executing
this Estoppel Certificate on behalf of Tenant hereby represents and warrants
that Tenant is a duly formed and existing entity qualified to do business in
California and that Tenant has full right and authority to execute and deliver
this Estoppel Certificate and that each person signing on behalf of Tenant is
authorized to do so.

     12. There are no actions pending against the undersigned under the
bankruptcy or similar laws of the United States or any state.

     13. Other than in compliance with all applicable laws and incidental to the
ordinary course of the use of the Premises, the undersigned has not used or
stored any hazardous substances in the Premises.

     14. To the undersigned's knowledge, all tenant improvement work to be
performed by Landlord under the Lease has been completed in accordance with the
Lease and has been accepted by the undersigned and all reimbursements and
allowances due to the undersigned under the Lease in connection with any tenant
improvement work have been paid in full.

     The undersigned acknowledges that this Estoppel Certificate may be
delivered to Landlord or to a prospective mortgagee or prospective purchaser,
and acknowledges that said prospective mortgagee or prospective purchaser will
be relying upon the statements contained herein in making the loan or acquiring
the property of which the Premises are a part and that receipt by it of this
certificate is a condition of making such loan or acquiring such property.

         Executed at ______________ on the ____ day of ___________, 200__.

                                            "Tenant":

                                                                         ,
                                     -----------------------------------
                                     a
                                      ----------------------------------

                                     By:
                                        --------------------------------
                                             Its:
                                                 -----------------------

                                     By:
                                        --------------------------------
                                             Its:
                                                 -----------------------


                                      -2-
<PAGE>


                                   EXHIBIT F-1


                         SUBSTANTIALLY COMPLETE COPY OF
              DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS
                                       FOR
                           SORRENTO RIM BUSINESS PARK

                                   [ATTACHED]








                                  EXHIBIT F-1
                                      -1-
<PAGE>


                                   EXHIBIT F-2


                                  KILROY REALTY

RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:

ALLEN, MATKINS, LECK, GAMBLE
         & MALLORY LLP
1999 Avenue of the Stars
18th Floor
Los Angeles, California 90067
Attention:  Anton N. Natsis, Esq.

================================================================================

                            RECOGNITION OF COVENANTS,
                          CONDITIONS, AND RESTRICTIONS

     This Recognition of Covenants, Conditions, and Restrictions (this
"AGREEMENT") is entered into as of the __ day of ________, 200__, by and between
__________________ ("Landlord"), and ________________ ("Tenant"), with reference
to the following facts:

     A. Landlord and Tenant entered into that certain Office Lease Agreement
dated _____, 2000 (the "Lease"). Pursuant to the Lease, Landlord leased to
Tenant and Tenant leased from Landlord space (the "PREMISES") located in an
office building on certain real property described in EXHIBIT "A" attached
hereto and incorporated herein by this reference (the "PROPERTY").

     B. The Premises are located in an office building located on real property
which is part of an area owned by Landlord containing approximately ___(__)
acres of real property located in the City of ____________, California (the
"PROJECT"), as more particularly described in EXHIBIT "B" attached hereto and
incorporated herein by this reference.

     C. Landlord, as declarant, has previously recorded, or proposes to record
concurrently with the recordation of this Agreement, a Declaration of Covenants,
Conditions, and Restrictions (the "DECLARATION"), dated ________________, 200__,
in connection with the Project.

     D. Tenant is agreeing to recognize and be bound by the terms of the
Declaration, and the parties hereto desire to set forth their agreements
concerning the same.

     NOW, THEREFORE, in consideration of (a) the foregoing recitals and the
mutual agreements hereinafter set forth, and (b) for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows,


                                  EXHIBIT F-2
                                      -1-
<PAGE>


 1.      TENANT'S RECOGNITION OF DECLARATION. Notwithstanding that the Lease has
been executed prior to the recordation of the Declaration, Tenant agrees to
recognize and be bound by all of the terms and conditions of the Declaration.

 2.      MISCELLANEOUS.

         2.1 This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective heirs, estates, personal
representatives, successors, and assigns.

         2.2 This Agreement is made in, and shall be governed, enforced and
construed under the laws of, the State of California.

         2.3 This Agreement constitutes the entire understanding and agreements
of the parties with respect to the subject matter hereof, and shall supersede
and replace all prior understandings and agreements, whether verbal or in
writing. The parties confirm and acknowledge that there are no other promises,
covenants, understandings, agreements, representations, or warranties with
respect to the subject matter of this Agreement except as expressly set forth
herein.

         2.4 This Agreement is not to be modified, terminated, or amended in any
respect, except pursuant to any instrument in writing duly executed by both of
the parties hereto.

         2.5 In the event that either party hereto shall bring any legal action
or other proceeding with respect to the breach, interpretation, or enforcement
of this Agreement, or with respect to any dispute relating to any transaction
covered by this Agreement, the losing party in such action or proceeding shall
reimburse the prevailing party therein for all reasonable costs of litigation,
including reasonable attorneys' fees, in such amount as may be determined by the
court or other tribunal having jurisdiction, including matters on appeal.

         2.6 All captions and heading herein are for convenience and ease of
reference only, and shall not be used or referred to in any way in connection
with the interpretation or enforcement of this Agreement.

         2.7 If any provision of this Agreement, as applied to any party or to
any circumstance, shall be adjudged by a court of competent jurisdictions to be
void or unenforceable for any reason, the same shall not affect any other
provision of this Agreement, the application of such provision under
circumstances different form those adjudged by the court, or the validity or
enforceability of this Agreement as a whole.

         2.8 Time is of the essence of this Agreement.

         2.9 The Parties agree to execute any further documents, and take any
further actions, as may be reasonable and appropriate in order to carry out the
purpose and intent of this Agreement.


                                  EXHIBIT F-2
                                      -2-
<PAGE>


         2.10 As used herein, the masculine, feminine or neuter gender, and the
singular and plural numbers, shall each be deemed to include the others whenever
and whatever the context so indicates.






                                  EXHIBIT F-2
                                      -3-
<PAGE>


                        SIGNATURE PAGE OF RECOGNITION OF

                     COVENANTS, CONDITIONS AND RESTRICTIONS

         IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.

                                   "Landlord":

                                   -------------------------,
                                   a
                                     ------------------------
                                   By:
                                      -----------------------
                                          Its:
                                              ---------------


                                   "Tenant":


                                   -------------------------,
                                   a
                                     ------------------------
                                   By:
                                      -----------------------
                                          Its:
                                              ---------------
                                   By:
                                      -----------------------
                                           Its:
                                              ---------------




                                  EXHIBIT F-2
                                      -4-
<PAGE>


                                    EXHIBIT G

                                 SORRENTO RIM II


                            FORM OF LETTER OF CREDIT

                       (Letterhead of a money center bank
                           acceptable to the Landlord)

                              ______________, 200__


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

Gentlemen:

         We hereby establish our Irrevocable Letter of Credit and authorize you
to draw on us at sight for the account of _____________________, a
_____________________, the aggregate amount of _____________________ and No/100
Dollars ($_________).

         Funds under this Letter of Credit are available to the beneficiary
hereof as follows:

         Any or all of the sums hereunder may be drawn down at any time and from
time to time from and after the date hereof by _____________________
("Beneficiary") when accompanied by this Letter of Credit and a written
statement signed by __________________________, certifying that such moneys are
due and owing to Beneficiary, together with a certificate of incumbency executed
by ___________________ certifying the position and signature of the officer
signing the statement, and a sight draft executed and endorsed by _____________,
as a ________________ of Beneficiary.

         This Letter of Credit is transferable in its entirety. Should a
transfer be desired, such transfer will be subject to the return to us of this
advice, together with written instructions.

         The amount of each draft must be endorsed on the reverse hereof by the
negotiating bank. We hereby agree that this Letter of Credit shall be duly
honored upon presentation and delivery of the certification specified above.

         This Letter of Credit shall expire on ______________, 200__.

         Notwithstanding the above expiration date of this Letter of Credit, the
term of this Letter of Credit shall be automatically renewed for successive,
additional one (1) year periods unless, at least thirty (30) days prior to any
such date of expiration, the undersigned shall give written notice to Holder, by
certified mail, return receipt requested and at the address set forth above or


<PAGE>


at such other address as may be given to the undersigned by Holder, that this
Letter of Credit will not be renewed.

         This Letter of Credit is governed by the Uniform Customs and Practice
for Documentary Credits (1983 Revision), International Chamber of Commerce
Publication 400.

         This Letter of Credit is governed by the Uniform Customs and Practice
for Documentary Credits (1983 Revision). International Chamber of Commerce
Publication 400.

                                Very truly yours.

                                (Name of Issuing Bank)


                                 By:____________________________




                                      -6-
<PAGE>










                                  OFFICE LEASE

                                  KILROY REALTY

                                 SORRENTO RIM II









                              KILROY REALTY, L.P.,

                         a Delaware limited partnership,

                                  as Landlord,

                                       and

                           NEWGEN RESULTS CORPORATION,

                             a Delaware corporation,

                                    as Tenant



<PAGE>


                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

                                                                                                              PAGE
                                                                                                              ----
<S>                                                                                                           <C>
ARTICLE 1 PREMISES, BUILDING, PROJECT, AND COMMON AREAS.........................................................4

ARTICLE 2 INITIAL LEASE TERM; OPTION TERM.......................................................................8

ARTICLE 3 BASE RENT............................................................................................13

ARTICLE 4 ADDITIONAL RENT......................................................................................14

ARTICLE 5 USE OF PREMISES......................................................................................22

ARTICLE 6 SERVICES AND UTILITIES...............................................................................23

ARTICLE 7 REPAIRS..............................................................................................25

ARTICLE 8 ADDITIONS AND ALTERATIONS............................................................................27

ARTICLE 9 COVENANT AGAINST LIENS...............................................................................29

ARTICLE 10 INSURANCE...........................................................................................30

ARTICLE 11 DAMAGE AND DESTRUCTION..............................................................................34

ARTICLE 12 NONWAIVER...........................................................................................36

ARTICLE 13 CONDEMNATION........................................................................................36

ARTICLE 14 ASSIGNMENT AND SUBLETTING...........................................................................37

ARTICLE 15 SURRENDER OF PREMISES; OWNERSHIP AND  REMOVAL OF TRADE FIXTURES.....................................42

ARTICLE 16 HOLDING OVER........................................................................................43

ARTICLE 17 ESTOPPEL CERTIFICATES...............................................................................44

ARTICLE 18 SUBORDINATION.......................................................................................44

ARTICLE 19 DEFAULTS; REMEDIES..................................................................................45

ARTICLE 20 COVENANT OF QUIET ENJOYMENT.........................................................................48

ARTICLE 21 SECURITY DEPOSIT....................................................................................48

ARTICLE 22 TELECOMMUNICATIONS EQUIPMENT........................................................................49

ARTICLE 23 SIGNS...............................................................................................50

</TABLE>

                                      (i)
<PAGE>


<TABLE>

<S>                                                                                                           <C>
ARTICLE 24 COMPLIANCE WITH LAW.................................................................................52

ARTICLE 25 LATE CHARGES........................................................................................53

ARTICLE 26 LANDLORD'S RIGHT TO CURE DEFAULT; PAYMENTS BY TENANT................................................54

ARTICLE 27 ENTRY BY LANDLORD...................................................................................55

ARTICLE 28 TENANT PARKING......................................................................................55

ARTICLE 29 MISCELLANEOUS PROVISIONS............................................................................56

</TABLE>


                                      (ii)
<PAGE>


                                      INDEX

<TABLE>
<CAPTION>

                                                                                                             PAGE(s)
                                                                                                             -------
<S>                                                                                                           <C>
Abatement Event................................................................................................14
Accountant.....................................................................................................22
Additional Rent................................................................................................14
Adjustment Month Index.........................................................................................34
Advocate Arbitrators...........................................................................................11
Affiliate......................................................................................................41
Alterations....................................................................................................27
Award..........................................................................................................11
Bank Prime Loan................................................................................................54
Base Building..................................................................................................28
Base Month Index...............................................................................................34
Base Rent......................................................................................................13
BOMA............................................................................................................5
Brokers........................................................................................................61
BS/BS Exception................................................................................................25
Builder's All Risk.............................................................................................28
Building Monument Sign.........................................................................................51
Building Signage...............................................................................................51
Building Structure.............................................................................................25
Building Systems...............................................................................................25
CC&Rs..........................................................................................................23
CGCC...........................................................................................................41
Claims.........................................................................................................30
Comparable Area................................................................................................10
Comparable Buildings...........................................................................................10
Comparable Deals................................................................................................9
Comparable Term................................................................................................10
Direct Expenses................................................................................................14
Eligibility Period.............................................................................................14
Environmental Laws.............................................................................................63
Estimate.......................................................................................................21
Estimate Statement.............................................................................................21
Estimated Direct Expenses......................................................................................21
Exclusive Negotiation Period...................................................................................64
Exercise Notice................................................................................................10
Expense Year...................................................................................................14
Failure to Agree Notice.........................................................................................6
First Offer Notice.............................................................................................64
Food Service Operator..........................................................................................42
Force Majeure..................................................................................................59
Hazardous Material(s)..........................................................................................63
Holdover Notice................................................................................................43
HVAC...........................................................................................................23
HVAC Notice....................................................................................................24

</TABLE>


                                     (iii)
<PAGE>


<TABLE>

<S>                                                                                                           <C>
Index..........................................................................................................34
Initial NB Delivery Date........................................................................................6
Kilroy.........................................................................................................51
Landlord........................................................................................................1
Landlord Parties...............................................................................................30
Landlord Repair Notice.........................................................................................34
Landlord Response Notice.......................................................................................10
Landlord's Option Rent Calculation.............................................................................11
L-C Security Deposit...........................................................................................49
Lease...........................................................................................................1
Lease Commencement Date.........................................................................................8
Lease Expiration Date...........................................................................................8
Lease Term......................................................................................................8
Lease Year......................................................................................................8
Lines..........................................................................................................63
Mail...........................................................................................................59
Market Rent.....................................................................................................9
Net Worth......................................................................................................41
Neutral Arbitrator.............................................................................................11
New Building....................................................................................................6
New Building Amendment..........................................................................................7
New Building Commencement Date..................................................................................8
New Building Demand Notice......................................................................................6
New Building Lease..............................................................................................7
New Building Option.............................................................................................6
New Building Rent...............................................................................................7
New Building Rent Meeting.......................................................................................7
New Building Right Trigger Date.................................................................................7
New Building Term...............................................................................................8
New Building Terms Notice.......................................................................................6
New Building TI Construction Period.............................................................................8
Nondisturbance Agreement.......................................................................................44
Notices........................................................................................................59
Objectionable Name.............................................................................................52
Operating Expenses.............................................................................................14
Option Rent.....................................................................................................9
Option Term.....................................................................................................9
Option Term TI Allowance.......................................................................................10
Original Improvements..........................................................................................32
Original Tenant.................................................................................................9
Outside Agreement Date.........................................................................................11
Permitted Holdover Term........................................................................................43
Premises........................................................................................................4
Project Monument Sign..........................................................................................51
Proposition 13.................................................................................................19

</TABLE>


                                      (iv)
<PAGE>


<TABLE>

<S>                                                                                                           <C>
Renovations....................................................................................................62
Rent Concessions................................................................................................9
Rent...........................................................................................................14
Sign Specifications............................................................................................51
Statement......................................................................................................20
Subject Space..................................................................................................38
Summary.........................................................................................................1
Tax Expenses...................................................................................................19
Telecommunications Equipment...................................................................................50
Tenant..........................................................................................................1
Tenant Designated HVAC Hours...................................................................................24
Tenant Parties.................................................................................................30
Tenant Work Letter..............................................................................................4
Tenant's Option Rent Calculation...............................................................................10
Tenant's Share.................................................................................................20
Tenant's Signage...............................................................................................51
Termination Date...............................................................................................12
Termination Fee................................................................................................12
Termination Notice.............................................................................................12
Transfer.......................................................................................................40
Transfer Notice................................................................................................38
Transfer Premium...............................................................................................39
Transferee.....................................................................................................38
Transfers......................................................................................................38
Unavailability Notice...........................................................................................6
Unusable Area..................................................................................................14

</TABLE>




                                      (v)
<PAGE>


                                    EXHIBIT B

                                 SORRENTO RIM II

                               TENANT WORK LETTER


                                    PREAMBLE

         This Tenant Work Letter sets forth the terms and conditions relating to
the construction of the Premises. This Tenant Work Letter is essentially
organized chronologically and specifically addresses the issues of the
construction of the Premises, in sequence, as such issues will arise during the
actual construction of the Premises. All references in this Tenant Work Letter
to Articles or Sections of "this Lease" shall mean the relevant portions of
Articles 1 through 29 of the Office Lease to which this Tenant Work Letter is
attached as EXHIBIT B, and all references in this Tenant Work Letter to Sections
of this "Tenant Work Letter" shall mean the relevant portions of Sections 1
through 5 of this Tenant Work Letter. Except as defined to the contrary, all
defined terms used in the Tenant Work Letter shall have the same meaning as the
terms defined in the Lease.

                                    SECTION 1

                   DELIVERY OF THE PREMISES AND BASE BUILDING

         1.1 BASE BUILDING. In accordance with the terms and conditions of this
Lease, Landlord shall deliver to Tenant the Base Building and the Building
Parking Facility, which (i) shall be materially consistent with the site plan
attached to the Lease as EXHIBIT A-1, and (ii) shall materially comply with and
include the items and matters set forth on SCHEDULE 1 attached to this EXHIBIT
B, at Landlord's sole cost and expense and without deduction from the Tenant
Improvement Allowance. The Base Building and Building Parking Facility shall be
in good condition and working order and shall comply with Applicable Laws,
applicable building codes and other governmental laws, ordinances and
regulations which were enacted prior to the Lease Commencement Date and
applicable to new construction for unoccupied space to the extent required to
obtain a certificate of occupancy (collectively, the "CODE") and Tenant shall,
except as otherwise set forth in this Lease or in this Tenant Work Letter,
accept the Premises, Base Building and Building Parking Facility from Landlord
in their then existing, "as-is" condition as of the date the same are in their
"Final Delivery Condition," as that term is set forth in Section 1.2 of this
Tenant Work Letter, subject to the terms of this Section 1; provided, however,
the "as-is" condition shall be first-class and fully operable.

         1.2 COMPLETION OF BASE BUILDING. Landlord shall use its commercially
reasonable efforts to provide the "Contractor," as that term is defined in
Section 4.1 of this Tenant Work letter, with access to the Initial Premises on
or before November 1, 2000 (the "ACCESS DATE"). On or before February 1, 2001
(the "INITIAL BASE BUILDING DELIVERY DATE"), Landlord shall deliver to Tenant
the Building in the "Initial Delivery Condition," as that term is defined,
below; provided, however, such Initial Base Building Delivery Date shall be
subject to extension caused by Force Majeure and any delays in the construction
and design of the Base Building (or


<PAGE>


Building Parking Facility) caused by Tenant (a "TENANT DELAY," and any delays in
the construction and design of the Tenant Improvements caused by Tenant which
actually cause a delay in the construction and design of the Base
Building/Building Parking Facility shall also be a Tenant Delay). For purposes
of this Tenant Work Letter, the "INITIAL DELIVERY CONDITION" shall mean
completion of the items set forth on SCHEDULE 1. On or before the Lease
Commencement Date, Landlord shall, subject to punch list items and Tenant
Delays, cause the Base Building and Building Parking Facility to be
substantially completed (the "FINAL DELIVERY CONDITION").

                                    SECTION 2

                               TENANT IMPROVEMENTS

         2.1 TENANT IMPROVEMENT ALLOWANCE. Tenant shall be entitled to a
one-time tenant improvement allowance (the "TENANT IMPROVEMENT ALLOWANCE") in
the amount of Thirty and No/100 Dollars ($30.00) per rentable square foot of the
Building for the costs relating to the initial design and construction of
Tenant's improvements and any other improvements to the Building above the level
of the Base Building, which are permanently affixed to the Premises (the "TENANT
IMPROVEMENTS"). In no event shall Landlord be obligated to make disbursements
pursuant to this Tenant Work Letter in a total amount which exceeds the Tenant
Improvement Allowance.

         2.2      DISBURSEMENT OF THE TENANT IMPROVEMENT ALLOWANCE.

                  2.2.1 TENANT IMPROVEMENT ALLOWANCE ITEMS. Except as otherwise
set forth in this Tenant Work Letter, the Tenant Improvement Allowance shall be
disbursed by Landlord only for the following items and costs (collectively the
"Tenant Improvement Allowance Items"):

                           2.2.1.1 Payment of the fees of the "Architect" and
the "Engineers," as those terms are defined in SECTION 3.1 of this Tenant Work
Letter, and payment of the third party fees reasonably incurred by Landlord, and
the cost of documents and materials supplied to Landlord and Landlord's
consultants in connection with the preparation and review of the "Construction
Drawings," as that term is defined in SECTION 3.1 of this Tenant Work Letter;

                           2.2.1.2 The payment of plan check, permit and license
fees relating to construction of the Tenant Improvements;

                           2.2.1.3 The cost of construction of the Tenant
Improvements, including, without limitation, testing and inspection costs,
hoisting and trash removal costs, and contractors' fees and general conditions;

                           2.2.1.4 The cost of any changes in the Base Building
and/or the Building Parking Facility (including hard and soft costs directly
attributable to such changes) when such changes are required by the Construction
Drawings;

                           2.2.1.5 The cost of any changes to the Construction
Drawings or Tenant Improvements required by all applicable building codes (the
"CODE");


                                      -2-
<PAGE>


                           2.2.1.6 The cost of the "Landlord Supervision Fee,"
as that term is defined in SECTION 4.2.2 of this Tenant Work Letter;

                           2.2.1.7 Sales and use taxes;

                           2.2.1.8 The cost of delivering, installing and
purchasing Tenant's security systems, telephone switch, and communications
equipment and cabling and Tenant's work stations, furniture, fixtures and
equipment (collectively, "FF&E"), provided that the reimbursement for such costs
does not, in the aggregate, exceed Five and No/100 Dollars ($5.00) per rentable
square foot of the Premises (the "FF&E ALLOWANCE CAP"); and

                           2.2.1.9 All other costs to be expended by Landlord in
connection with the construction of the Tenant Improvements.

                  2.2.2 DISBURSEMENT OF TENANT IMPROVEMENT ALLOWANCE. During the
construction of the Tenant Improvements, Landlord shall make monthly
disbursements of the Tenant Improvement Allowance for Tenant Improvement
Allowance Items for the benefit of Tenant and shall authorize the release of
monies for the benefit of Tenant as follows.

                           2.2.2.1 MONTHLY DISBURSEMENTS. On or before the day
of each calendar month, as determined by Landlord, during the construction of
the Tenant Improvements (or such other date as Landlord may designate), Tenant
shall deliver to Landlord: (i) a request for payment of the "Contractor," as
that term is defined in SECTION 4.1 of this Tenant Work Letter, approved by
Tenant, in a form to be provided by Landlord, showing the schedule, by trade, of
percentage of completion of the Tenant Improvements in the Premises, detailing
the portion of the work completed and the portion not completed; (ii) invoices
from all of "Tenant's Agents," as that term is defined in SECTION 4.1.2 of this
Tenant Work Letter, for labor rendered and materials delivered to the Premises;
(iii) executed mechanic's lien releases from all of Tenant's Agents which shall
comply with the appropriate provisions, as reasonably determined by Landlord, of
California Civil Code Section 3262(d); and (iv) all other information reasonably
requested by Landlord. Tenant's request for payment shall be deemed Tenant's
acceptance and approval of the work furnished and/or the materials supplied as
set forth in Tenant's payment request. Thereafter, Landlord shall deliver a
check to Tenant made jointly payable to Contractor and Tenant in payment of the
lesser of: (A) the amounts so requested by Tenant, as set forth in this SECTION
2.2.2.1, above, less a ten percent (10%) retention (the aggregate amount of such
retentions to be known as the "FINAL RETENTION"), and (B) the balance of any
remaining available portion of the Tenant Improvement Allowance (not including
the Final Retention), provided that Landlord does not dispute any request for
payment based on non-compliance of any work with the "Final Working Drawings,"
as that term is defined in SECTION 3.3 below, or due to any substandard work, or
for any other reason. Landlord's payment of such amounts shall not be deemed
Landlord's approval or acceptance of the work furnished or materials supplied as
set forth in Tenant's payment request.

                           2.2.2.2 FINAL RETENTION. Subject to the provisions of
this Tenant Work Letter, a check for the Final Retention payable jointly to
Tenant and Contractor shall be delivered by Landlord to Tenant following the
completion of construction of the Premises, provided that (i) Tenant delivers to
Landlord properly executed mechanics lien releases in


                                      -3-
<PAGE>


compliance with both California Civil Code Section 3262(d)(2) and either Section
3262(d)(3) or Section 3262(d)(4), (ii) Landlord has determined that no
substandard work exists which adversely affects the mechanical, electrical,
plumbing, heating, ventilating and air conditioning, life-safety or other
systems of the Building, the curtain wall of the Building, the structure or
exterior appearance of the Building, or any other tenant's use of such other
tenant's leased premises in the Building and (iii) Architect delivers to
Landlord a certificate, in a form reasonably acceptable to Landlord, certifying
that the construction of the Tenant Improvements in the Premises has been
substantially completed.

                           2.2.2.3 OTHER TERMS. Landlord shall only be obligated
to make disbursements from the Tenant Improvement Allowance to the extent costs
are incurred by Tenant for Tenant Improvement Allowance Items. All Tenant
Improvement Allowance Items for which the Tenant Improvement Allowance has been
made available shall be deemed Landlord's property under the terms of this
Lease.

         2.3 STANDARD TENANT IMPROVEMENT PACKAGE. Landlord has established
specifications (the "BUILDING STANDARD TENANT IMPROVEMENTS") for the Building
standard components to be used in the construction of the Tenant Improvements in
the Premises, a copy of which are attached as SCHEDULE 3 to this EXHIBIT B. The
quality of Tenant Improvements shall be equal to or of greater quality than the
quality of the Building Standard Tenant Improvements, provided that Landlord
may, at Landlord's option, require the Tenant Improvements to comply with
certain Building Standard Tenant Improvements. Landlord may make changes to the
Specifications for the Standard Improvement Package from time to time.

         2.4 REMOVAL OF ABOVE BUILDING STANDARD TENANT IMPROVEMENTS. "ABOVE
STANDARD TENANT IMPROVEMENTS" shall mean (a) any part of the Tenant Improvements
which do not constitute Building Standard Tenant Improvements, including, but
not limited to, plumbing and millwork; (b) any changes in or additions to the
Tenant Improvements made at the request of Tenant or due to any other act or
omission on the part of Tenant; and (c) a configuration of the Tenant
Improvements which is not usual and customary for normal occupancy; provided,
however, such Above Standard Tenant Improvements shall be limited to only the
deli, gym and computer room portions of the Premises which are not included in
SCHEDULE 3 to this EXHIBIT B; provided, however, that to the extent the gym
portion of the Premises is located on the second (2nd) floor of the Premises,
such gym shall be deemed to constitute an Above Standard Tenant Improvement.
Notwithstanding anything to the contrary set forth in the preceding sentence, to
the extent the Lease naturally expires on the Lease Expiration Date or the last
day of any exercised Option Term (as opposed to earlier expiration or
termination of the Lease), such gym shall be deemed to constitute Building
Standard Tenant Improvements. If so directed by Landlord prior to the end of the
Term of this Lease, Tenant, at its sole cost and expense, shall remove from the
Premises any Above Standard Tenant Improvements designated by Landlord in
accordance with Sections 8.1 and 8.5 of the Lease. Such removal of Above
Standard Tenant Improvements shall be performed promptly and shall be completed
by Tenant on or before the end of the Term of this Lease if notice of removal is
given at least thirty (30) days prior to the end of the Term, and if Tenant
fails to remove and/or replace any Above Standard Tenant Improvements, Landlord
may do so and Tenant shall reimburse Landlord for the cost of such removal
and/or replacement.


                                      -4-
<PAGE>


         2.5 FAILURE TO DISBURSE TENANT IMPROVEMENT ALLOWANCE AND OTHER
ALLOWANCES. If Landlord fails to timely fulfill its obligation to fund any
portion of the Tenant Improvement Allowance, Tenant shall be entitled to deliver
Notice ("PAYMENT NOTICE") thereof to Landlord and to any mortgage or trust deed
holder of the Building whose identity and address have been previously provided
to Tenant. If Landlord still fails to fulfill any such obligation within twenty
(20) business days after Landlord's receipt of the Payment Notice from Tenant
and if Landlord fails to deliver Notice to Tenant within such twenty (20)
business day period explaining Landlord's good-faith reasons that Landlord
believes that the amounts described in Tenant's Payment Notice are not due and
payable by Landlord ("REFUSAL NOTICE"), Tenant shall be entitled to fund such
portion of the Tenant Improvement Allowance as defined above in Section 2.1 of
this Tenant Work Letter and to offset the amount so funded, together with
interest at the Interest Rate from the date of funding until the date of offset,
against Tenant's next obligations to pay Rent. However, if Tenant is in Default
under Section 19.1.1 of this Lease at the time that such offset would otherwise
be applicable, Tenant shall not be entitled to such offset until such Default is
cured. If, however, Landlord so delivers a Refusal Notice to Tenant, then Tenant
shall not be entitled to such deduction from Rent, but as Tenant's sole remedy,
Tenant may proceed to claim a default by Landlord under the Lease; provided that
under no circumstances shall Tenant be allowed to terminate the Lease based upon
a such default by Landlord; provided further, however, the notice and cure
periods otherwise required pursuant to SECTION 19.6 of the Lease shall be deemed
to have been satisfied upon completion of the procedure specified in this
SECTION 2.5.

                                    SECTION 3

                              CONSTRUCTION DRAWINGS

         3.1 SELECTION OF ARCHITECT/CONSTRUCTION DRAWINGS. Tenant has selected
Pacific Cornerstone Architects as the architect/space planner (the "ARCHITECT")
to prepare the "Construction Drawings" as that term is defined in this SECTION
3.1. Tenant shall provide Landlord with a list of potential engineering/design
build consultants for Landlord's pre-approval, from which Tenant shall
thereafter select the engineering/design build consultants (the "ENGINEERS") to
prepare all plans and engineering working drawings relating to the structural,
mechanical, electrical, plumbing, HVAC, lifesafety, and sprinkler work in the
Premises, which work is not part of the Base Building. The plans and drawings to
be prepared by Architect and the Engineers hereunder shall be known collectively
as the "CONSTRUCTION DRAWINGS." All Construction Drawings shall comply with the
drawing format and specifications determined by Landlord, and shall be subject
to Landlord's approval. Architect shall verify, in the field, the dimensions and
conditions as shown on the relevant portions of the base building plans, and
Architect shall be solely responsible for the same, and Landlord and Tenant
shall have no responsibility in connection therewith. Landlord's review of the
Construction Drawings as set forth in this SECTION 3, shall be for its sole
purpose and shall not imply Landlord's review of the same, or obligate Landlord
to review the same, for quality, design, Code compliance or other like matters.
Accordingly, notwithstanding that any Construction Drawings are reviewed by
Landlord or its space planner, architect, engineers and consultants, and
notwithstanding any advice or assistance which may be rendered to Tenant by
Landlord or Landlord's space planner, architect, engineers, and consultants,
Landlord shall have no liability whatsoever in connection therewith and shall
not be responsible for any omissions or errors contained in the Construction


                                      -5-
<PAGE>


Drawings, and Tenant's waiver and indemnity set forth in this Lease shall
specifically apply to the Construction Drawings. While the Architect and
Engineers shall be retained by Landlord, Teannt is hereby designated as a third
party beneficiary of all contracts entered into by Landlord with the Architect
and Engineers with respect to the Tenant Improvements.

         3.2 FINAL SPACE PLAN. On or before the date set forth in SCHEDULE 2,
attached hereto, Tenant and the Architect shall prepare the final space plan for
Tenant Improvements in the Premises (collectively, the "FINAL SPACE PLAN"),
which Final Space Plan shall include a layout and designation of all offices,
rooms and other partitioning, their intended use, and equipment to be contained
therein, and shall deliver the Final Space Plan to Landlord for Landlord's
approval. Landlord shall advise Tenant within five (5) business days after
Landlord's receipt of the Final Space Plan for the Premises if the same is
unsatisfactory or incomplete in any respect (based upon a commercially
reasonable standard. If Tenant is so advised, Tenant shall promptly cause the
Final Space Plan to be revised to correct any deficiencies or other matters
Landlord may reasonably require, and immediately thereafter re-submitted to
Landlord for its approval. Such procedure shall continue until the Final Space
Plan is approved by Landlord.

         3.3 FINAL WORKING DRAWINGS. On or before the date set forth in SCHEDULE
2, Tenant, the Architect and the Engineers shall complete the architectural and
engineering drawings for the Premises, and the final architectural working
drawings in a form which is complete to allow subcontractors to bid on the work
and to obtain all applicable permits (collectively, the "FINAL WORKING
DRAWINGS") and shall submit the same to Landlord for Landlord's approval.
Landlord shall advise Tenant within five (5) business days after Landlord's
receipt of the Final Working Drawings for the Premises if the same is
unsatisfactory or incomplete in any respect; provided, however, that Landlord
may only disapprove or condition its approval of the Final Working Drawings due
to (i) an adverse effect on the Building Systems or the Building Structure, (ii)
non-compliance with Applicable Laws, or (iii) an adverse affect on the exterior
appearance of the Building (individually or collectively, a "DESIGN PROBLEM").
If Tenant is so advised, Tenant shall promptly cause the Final Working Drawings
to be revised to correct such Design Problem(s), and immediately thereafter
re-submitted to Landlord for its approval. Such procedure shall continue until
the Final Working Drawings are approved by Landlord.

         3.4 PERMITS. The Final Working Drawings shall be approved by Landlord
(the "Approved Working Drawings") prior to the commencement of the construction
of the Tenant Improvements. Tenant shall immediately submit the Approved Working
Drawings to the appropriate municipal authorities for all applicable building
permits necessary to allow "Contractor," as that term is defined in SECTION 4.1,
below, to commence and fully complete the construction of the Tenant
Improvements (the "PERMITS"), and, in connection therewith, Tenant shall
coordinate with Landlord in order to allow Landlord, at its option, to take part
in all phases of the permitting process and shall supply Landlord, as soon as
possible, with all plan check numbers and dates of submittal and obtain the
Permits on or before the date set forth in SCHEDULE 2. Notwithstanding anything
to the contrary set forth in this SECTION 3.4, Tenant hereby agrees that neither
Landlord nor Landlord's consultants shall be responsible for obtaining any
building permit or certificate of occupancy for the Tenant Improvements in the
Premises (as opposed to the Base Building), and that the obtaining of the same
shall be Tenant's responsibility; provided however that Landlord shall, in any
event, cooperate with Tenant in executing permit applications and performing
other ministerial acts reasonably necessary to


                                      -6-
<PAGE>


enable Tenant to obtain any such permit or certificate of occupancy. No changes,
modifications or alterations in the Approved Working Drawings may be made
without the prior written consent of Landlord, provided that Landlord may
withhold its consent, in its sole discretion, only to the extent such change,
modification or alteration would create a Design Problem.

         3.5 TIME DEADLINES. Tenant shall use its best, good faith, efforts and
all due diligence to cooperate with the Architect, the Engineers, and Landlord
to complete all phases of the Construction Drawings and the permitting process
and to receive the permits, and with Contractor for approval of the "Cost
Proposal," as that term is defined in SECTION 4.2 of this Tenant Work Letter, as
soon as possible after the execution of the Lease, and, in that regard, shall
meet with Landlord on a scheduled basis to be determined by Landlord, to discuss
Tenant's progress in connection with the same. The applicable dates for approval
of items, plans and drawings as described in this SECTION 3, SECTION 4, below,
and in this Tenant Work Letter are set forth and further elaborated upon in
SCHEDULE 2 (the "TIME DEADLINES"), attached hereto. Tenant agrees to comply with
the Time Deadlines. In the event that Tenant requests any material changes to
the Approved Working Drawings ("CHANGES"), Landlord shall not unreasonably
withhold or condition its consent to any such Changes, and shall grant its
consent to such Changes within five (5) business days after Landlord's receipt
of Tenant's request for the same, provided the proposed Change does not create a
Design Problem.

                                    SECTION 4

                     CONSTRUCTION OF THE TENANT IMPROVEMENTS

         4.1  TENANT'S SELECTION OF CONTRACTORS.

                  4.1.1 THE CONTRACTOR. TFW Construction ("CONTRACTOR") shall be
retained by Tenant as the general contractor to construct the Tenant
Improvements, which Contractor has been approved by Landlord.

                  4.1.2 TENANT'S AGENTS. All subcontractors, laborers,
materialmen, and suppliers used by Tenant (such subcontractors, laborers,
materialmen, and suppliers, and the Contractor to be known collectively as
"TENANT'S AGENTS") must be approved in writing by Landlord, which approval shall
not be unreasonably withheld or delayed. If Landlord does not approve any of
Tenant's proposed subcontractors, laborers, materialmen or suppliers, Tenant
shall submit other proposed subcontractors, laborers, materialmen or suppliers
for Landlord's written approval.

         4.2  CONSTRUCTION OF TENANT IMPROVEMENTS BY TENANT'S AGENTS.

                  4.2.1 CONSTRUCTION CONTRACT; COST BUDGET. Prior to Tenant's
execution of the construction contract and general conditions with Contractor
(the "CONTRACT"), Tenant shall submit the Contract to Landlord for its approval,
which approval shall not be unreasonably withheld or delayed. Prior to the
commencement of the construction of the Tenant Improvements, and after Tenant
has accepted all bids for the Tenant Improvements, Tenant shall provide Landlord
with a detailed breakdown, by trade, of the final costs to be incurred or which
have been incurred, as set forth more particularly in SECTIONS 2.2.1.1 THROUGH
2.2.1.9, above, in


                                      -7-
<PAGE>


connection with the design and construction of the Tenant Improvements to be
performed by or at the direction of Tenant or the Contractor, which costs form a
basis for the amount of the Contract (the "FINAL COSTS"). Prior to the
commencement of construction of the Tenant Improvements, Tenant shall supply
Landlord with cash in an amount (the "OVER-ALLOWANCE AMOUNT") equal to the
difference between the amount of the Final Costs and the amount of the Tenant
Improvement Allowance (less any portion thereof already disbursed by Landlord,
or in the process of being disbursed by Landlord, on or before the commencement
of construction of the Tenant Improvements). The Over-Allowance Amount shall be
disbursed by Landlord prior to the disbursement of any of the then remaining
portion of the Tenant Improvement Allowance, and such disbursement shall be
pursuant to the same procedure as the Tenant Improvement Allowance. In the event
that, after the Final Costs have been delivered by Tenant to Landlord, the costs
relating to the design and construction of the Tenant Improvements shall change,
any additional costs necessary to such design and construction in excess of the
Final Costs, shall be paid by Tenant to Landlord immediately as an addition to
the Over-Allowance Amount or at Landlord's option, Tenant shall make payments
for such additional costs out of its own funds, but Tenant shall continue to
provide Landlord with the documents described in SECTIONS 2.2.2.1 (i), (ii),
(iii) AND (iv) of this Tenant Work Letter, above, for Landlord's approval, prior
to Tenant paying such costs.

                  4.2.2    TENANT'S AGENTS.

                           4.2.2.1 LANDLORD'S GENERAL CONDITIONS FOR TENANT'S
AGENTS AND TENANT IMPROVEMENT Work. Tenant's and Tenant's Agent's construction
of the Tenant Improvements shall comply with the following: (i) the Tenant
Improvements shall be constructed in strict accordance with the Approved Working
Drawings; (ii) Tenant's Agents shall submit schedules of all work relating to
the Tenant's Improvements to Contractor and Contractor shall, within five (5)
business days of receipt thereof, inform Tenant's Agents of any changes which
are necessary thereto, and Tenant's Agents shall adhere to such corrected
schedule; and (iii) Tenant shall abide by all rules made by Landlord's Building
manager with respect to the use of freight, loading dock and service elevators,
storage of materials, coordination of work with the contractors of other
tenants, and any other matter in connection with this Tenant Work Letter,
including, without limitation, the construction of the Tenant Improvements.
Tenant shall pay a logistical coordination fee (the "LANDLORD SUPERVISION FEE")
to Landlord in an amount equal to the product of (i) one percent (1%) and (ii)
the sum of (A) that portion of the Tenant Improvement Allowance attributable to
hard costs of construction of the Tenant Improvements, (B) the Over-Allowance
Amount (as such Over-Allowance Amount may increase pursuant to the terms of this
Tenant Work Letter) attributable to hard costs of construction of the Tenant
Improvements, and (C) any other amounts expended by Tenant in connection with
the construction of the Tenant Improvements.

                           4.2.2.2 INDEMNITY. Tenant's indemnity of Landlord as
set forth in this Lease shall also apply with respect to any and all costs,
losses, damages, injuries and liabilities related in any way to any act or
omission of Tenant or Tenant's Agents, or anyone directly or indirectly employed
by any of them, or in connection with Tenant's non-payment of any amount arising
out of the Tenant Improvements and/or Tenant's disapproval of all or any portion
of any request for payment. Such indemnity by Tenant, as set forth in this
Lease, shall also apply with respect to any and all costs, losses, damages,
injuries and liabilities related in any way to


                                      -8-
<PAGE>


Landlord's performance of any ministerial acts reasonably necessary (i) to
permit Tenant to complete the Tenant Improvements, and (ii) to enable Tenant to
obtain any building permit or certificate of occupancy for the Premises.

                           4.2.2.3 REQUIREMENTS OF TENANT'S AGENTS. Each of
Tenant's Agents shall guarantee to Tenant and for the benefit of Landlord that
the portion of the Tenant Improvements for which it is responsible shall be free
from any defects in workmanship and materials for a period of not less than one
(1) year from the date of completion thereof. Each of Tenant's Agents shall be
responsible for the replacement or repair, without additional charge, of all
work done or furnished in accordance with its contract that shall become
defective within one (1) year after the later to occur of (i) completion of the
work performed by such contractor or subcontractors and (ii) the Lease
Commencement Date. The correction of such work shall include, without additional
charge, all additional expenses and damages incurred in connection with such
removal or replacement of all or any part of the Tenant Improvements, and/or the
Building and/or common areas that may be damaged or disturbed thereby. All such
warranties or guarantees as to materials or workmanship of or with respect to
the Tenant Improvements shall be contained in the Contract or subcontract and
shall be written such that such guarantees or warranties shall inure to the
benefit of both Landlord and Tenant, as their respective interests may appear,
and can be directly enforced by either. Tenant covenants to give to Landlord any
assignment or other assurances which may be necessary to effect such right of
direct enforcement.

                           4.2.2.4  INSURANCE REQUIREMENTS.

                                    4.2.2.4.1 GENERAL COVERAGES. All of Tenant's
Agents shall carry worker's compensation insurance covering all of their
respective employees, and shall also carry public liability insurance, including
property damage, all with limits, in form and with companies as are required to
be carried by Tenant as set forth in this Lease.

                                    4.2.2.4.2 SPECIAL COVERAGES. Tenant shall
carry "Builder's All Risk" insurance in an amount approved by Landlord covering
the construction of the Tenant Improvements, and such other insurance as
Landlord may require, it being understood and agreed that the Tenant
Improvements shall be insured by Tenant pursuant to this Lease immediately upon
completion thereof. Such insurance shall be in amounts and shall include such
extended coverage endorsements as may be reasonably required by Landlord
including, but not limited to, the requirement that all of Tenant's Agents shall
carry excess liability and Products and Completed Operation Coverage insurance,
each in amounts not less than $500,000 per incident, $1,000,000 in aggregate,
and in form and with companies as are required to be carried by Tenant as set
forth in this Lease.

                                    4.2.2.4.3 GENERAL TERMS. Certificates for
all insurance carried pursuant to this SECTION 4.2.2.4 shall be delivered to
Landlord before the commencement of construction of the Tenant Improvements and
before the Contractor's equipment is moved onto the site. All such policies of
insurance must contain a provision that the company writing said policy will
give Landlord thirty (30) days prior written notice of any cancellation or lapse
of the effective date or any reduction in the amounts of such insurance. In the
event that the Tenant Improvements are damaged by any cause during the course of
the construction thereof, Tenant shall immediately repair the same at Tenant's
sole cost and expense. Tenant's Agents shall


                                      -9-
<PAGE>


maintain all of the foregoing insurance coverage in force until the Tenant
Improvements are fully completed and accepted by Landlord, except for any
Products and Completed Operation Coverage insurance required by Landlord, which
is to be maintained for ten (10) years following completion of the work and
acceptance by Landlord and Tenant. All policies carried under this SECTION
4.2.2.4 shall insure Landlord and Tenant, as their interests may appear, as well
as Contractor and Tenant's Agents. All insurance, except Workers' Compensation,
maintained by Tenant's Agents shall preclude subrogation claims by the insurer
against anyone insured thereunder. Such insurance shall provide that it is
primary insurance as respects the owner and that any other insurance maintained
by owner is excess and noncontributing with the insurance required hereunder.
The requirements for the foregoing insurance shall not derogate from the
provisions for indemnification of Landlord by Tenant under SECTION 4.2.2.2 of
this Tenant Work Letter. Landlord may, in its discretion, require Tenant to
obtain a lien and completion bond or some alternate form of security
satisfactory to Landlord in an amount sufficient to ensure the lien-free
completion of the Tenant Improvements and naming Landlord as a co-obligee.

                  4.2.3 GOVERNMENTAL COMPLIANCE. The Tenant Improvements shall
comply in all respects with the following: (i) the Code and other state,
federal, city or quasi-governmental laws, codes, ordinances and regulations, as
each may apply according to the rulings of the controlling public official,
agent or other person; (ii) applicable standards of the American Insurance
Association (formerly, the National Board of Fire Underwriters) and the National
Electrical Code; and (iii) building material manufacturer's specifications.

                  4.2.4 INSPECTION BY LANDLORD. Landlord shall have the right to
inspect the Tenant Improvements at all times, provided however, that Landlord's
failure to inspect the Tenant Improvements shall in no event constitute a waiver
of any of Landlord's rights hereunder nor shall Landlord's inspection of the
Tenant Improvements constitute Landlord's approval of the same. Should Landlord
disapprove any portion of the Tenant Improvements, Landlord shall notify Tenant
in writing of such disapproval and shall specify the items disapproved. Any
defects or deviations in, and/or disapproval by Landlord of, the Tenant
Improvements shall be rectified by Tenant at no expense to Landlord, provided
however, that in the event Landlord determines that a defect or deviation exists
or disapproves of any matter in connection with any portion of the Tenant
Improvements and such defect, deviation or matter might adversely affect the
mechanical, electrical, plumbing, heating, ventilating and air conditioning or
life-safety systems of the Building, the structure or exterior appearance of the
Building or any other tenant's use of such other tenant's leased premises,
Landlord may, take such action as Landlord deems necessary, at Tenant's expense
and without incurring any liability on Landlord's part, to correct any such
defect, deviation and/or matter, including, without limitation, causing the
cessation of performance of the construction of the Tenant Improvements until
such time as the defect, deviation and/or matter is corrected to Landlord's
satisfaction.

                  4.2.5 MEETINGS. Commencing upon the execution of this Lease,
Tenant shall hold weekly meetings at a reasonable time, with the Architect and
the Contractor regarding the progress of the preparation of Construction
Drawings and the construction of the Tenant Improvements, which meetings shall
be held at a location designated by Landlord, and Landlord and/or its agents
shall receive prior notice of, and shall have the right to attend, all such
meetings, and, upon Landlord's request, certain of Tenant's Agents shall attend
such meetings. In addition, minutes shall be taken at all such meetings, a copy
of which minutes shall be


                                      -10-
<PAGE>


promptly delivered to Landlord. One such meeting each month shall include the
review of Contractor's current request for payment.

                  4.2.6 NO CHARGEBACKS. To the extent that Landlord has
performed, or will perform, any extra or other work in or for the benefit of the
Premises which is not specifically called for by the Approved Working Drawings,
except in the case where such work is not required hereunder to be performed by
Landlord and Tenant requests Landlord to perform such work, such work shall not
be charged to Tenant or deducted from the Tenant Improvement Allowance. Unless
otherwise approved in writing by Tenant, neither Tenant nor Contractor shall be
required to use any materials or supplies prestocked or otherwise furnished by
Landlord.

                  4.2.7 PRESENCE OF HAZARDOUS MATERIALS. Throughout the period
(the "CONSTRUCTION PERIOD") commencing with the date of this Lease and ending
with the completion of the Tenant Improvements, Landlord shall comply with the
provisions of SECTION 29.33 of the Lease.

                  4.2.8 BONDING. Notwithstanding any provision to the contrary
set forth in this Tenant Work Letter or the Lease, neither Contractor nor Tenant
shall be required to obtain or provide any completion, performance or other bond
in connection with the Tenant Improvements.

         4.3 NOTICE OF COMPLETION; COPY OF RECORD SET OF PLANS. Within ten (10)
days after completion of construction of the Tenant Improvements, Tenant shall
cause a Notice of Completion to be recorded in the office of the Recorder of the
county in which the Building is located in accordance with Section 3093 of the
Civil Code of the State of California or any successor statute, and shall
furnish a copy thereof to Landlord upon such recordation. If Tenant fails to do
so, Landlord may execute and file the same on behalf of Tenant as Tenant's agent
for such purpose, at Tenant's sole cost and expense. At the conclusion of
construction, (i) Tenant shall cause the Architect and Contractor (A) to update
the Approved Working Drawings as necessary to reflect all changes made to the
Approved Working Drawings during the course of construction, (B) to certify to
the best of their knowledge that the "record-set" of as-built drawings are true
and correct, which certification shall survive the expiration or termination of
this Lease, and (C) to deliver to Landlord two (2) sets of copies of such record
set of drawings within ninety (90) days following issuance of a certificate of
occupancy for the Premises, and (ii) Tenant shall deliver to Landlord a copy of
all warranties, guaranties, and operating manuals and information relating to
the improvements, equipment, and systems in the Premises.

         4.4  LEASE COMMENCEMENT DATE DELAY.

                  4.4.1 DEFINITIONS. The term "COMMENCEMENT DATE DELAY" shall
mean only (A) a "Landlord Caused Delay," as that term is defined below in this
Section 4.4.1 of this Tenant Work Letter, or (B) a delay caused by a Force
Majeure. As used in this Tenant Work Letter, "LANDLORD CAUSED DELAY" shall mean
actual delays to the extent resulting from the following acts or omissions of
Landlord: (i) failure of Landlord to timely approve or disapprove any
Construction Drawings; (ii) material and unreasonable interference by Landlord,
its agents or Landlord Parties (except as otherwise allowed under this Tenant
Work Letter) with the Substantial Completion of the Tenant Improvements and
which objectively preclude or delay the


                                      -11-
<PAGE>


construction of tenant improvements in the Building by any person, which
interference relates to access by Tenant, or Tenant's Agents to the Building or
any Building facilities (including loading docks and freight elevators) or
service (including temporary power and parking areas as provided herein) during
normal construction hours, or the use thereof during normal construction hours;
(iii) failure of the Landlord to deliver the Building in the Initial Delivery
Condition on or before February 17, 2001; (iv) delays due to the acts or
failures to act of Landlord, its agents or contractors with respect to payment
of the Tenant Improvement Allowance and/or any cessation of work upon the Tenant
Improvements as a result thereof, and (v) failure of Landlord to progress with
Landlord's Work in accordance with a mutually approved schedule therefore such
that the failure delays or interferes with construction of the Tenant
Improvements. For purposes of this Section 4.4, "SUBSTANTIAL COMPLETION OF THE
TENANT IMPROVEMENTS" shall mean completion of construction of the Tenant
Improvements in the Premises pursuant to the Approved Construction Drawings,
with the exception of any punch list items.

                  4.4.2 DETERMINATION OF LEASE COMMENCEMENT DATE DELAY. If
Tenant contends that a Lease Commencement Date Delay has occurred, Tenant shall
notify Landlord in writing (the "DELAY NOTICE") of the event which constitutes
such Lease Commencement Date Delay. If such actions, inaction or circumstance
described in the Delay Notice are not cured by Landlord within one (1) business
day of Landlord's receipt of the Delay Notice and if such action, inaction or
circumstance otherwise qualify as a Lease Commencement Date Delay, then a Lease
Commencement Date Delay shall be deemed to have occurred commencing as of the
date of Landlord's receipt of the Delay Notice and ending as of the date such
delay ends.

         4.5 GOVERNMENTAL COMPLIANCE. Landlord and Tenant hereby acknowledge
that it is their intent that the Tenant Improvements comply in all respects with
the following: (i) the Code and other state, federal, city or quasi-governmental
laws, codes, ordinances and regulations, as each may apply according to the
rulings of the controlling public official, agent or other person; (ii)
applicable standards of the American Insurance Association (formerly, the
National Board of Fire Underwriters) and the National Electrical Code; and (iii)
building material manufacturer's specifications.

         4.6 CONTRACTOR'S INSURANCE. Landlord shall require Contractor (and
subcontractors) to maintain customary and prudent types and amounts of insurance
with regard to the construction of the Tenant Improvements, specifically
including, but not limited to, worker's compensation insurance and public
liability insurance. In addition, Landlord shall maintain "Builder's All Risk"
insurance in customary and prudent amounts with regard to the construction of
the Tenant Improvements.

                                    SECTION 5

                                  MISCELLANEOUS

         5.1 TENANT'S ENTRY INTO THE PREMISES PRIOR TO SUBSTANTIAL COMPLETION.
Provided that Tenant and its agents do not interfere with Contractor's work in
the Building and the Premises, Contractor shall allow Tenant access to the
Premises prior to the Substantial Completion of the Premises for the purpose of
Tenant installing overstandard equipment or fixtures (including Tenant's data,
telephone and security equipment) in the Premises. Prior to Tenant's entry into
the


                                      -12-
<PAGE>


Premises as permitted by the terms of this SECTION 5.1, Tenant shall submit a
schedule to Landlord and Contractor, for their approval, which schedule shall
detail the timing and purpose of Tenant's entry. Tenant shall hold Landlord
harmless from and indemnify, protect and defend Landlord against any loss or
damage to the Building or Premises and against injury to any persons caused by
Tenant's actions pursuant to this SECTION 6.1.

         5.2 TENANT'S REPRESENTATIVE. Tenant has designated Mr. Kurt Gilliland
and Mr. Chris Clark as its sole representative with respect to the matters set
forth in this Tenant Work Letter, who shall have full authority and
responsibility to act on behalf of the Tenant as required in this Tenant Work
Letter. Mr. Gilliland shall be the Project Manager with regard to the Tenant
Improvements.

         5.3 LANDLORD'S REPRESENTATIVE. Landlord has designated Mr. Steve Stock
as "Project Manager" who shall be responsible for the implementation of all
Tenant Improvements to be performed by Landlord in the Premises. With regard to
all matters involving such Tenant Improvements, Tenant shall communicate with
the Project Manager rather than with the Contractor. Landlord shall not be
responsible for any statement, representation or agreement made between Tenant
and the Contractor or any subcontractor. It is hereby expressly acknowledged by
Tenant that such Contractor is not Landlord's agent and has no authority
whatsoever to enter into agreements on Landlord's behalf or otherwise bind
Landlord. The Project Manager will furnish Tenant with notices of substantial
completion, cost estimates for Above Standard Tenant Improvements, Landlord's
approvals or disapprovals of all documents to be prepared by Tenant pursuant to
this Tenant Work Letter and changes thereto.

         5.4 INTENTIONALLY OMITTED.

         5.5 TIME OF THE ESSENCE IN THIS TENANT WORK LETTER. Unless otherwise
indicated, all references herein to a "number of days" shall mean and refer to
calendar days. If any item requiring approval is timely disapproved by Landlord,
the procedure for preparation of the document and approval thereof shall be
repeated until the document is approved by Landlord.

         5.6 TENANT'S LEASE DEFAULT. Notwithstanding any provision to the
contrary contained in this Lease, if an event of default as described in the
Lease or this Tenant Work Letter has occurred at any time on or before the
Substantial Completion of the Premises, then (i) in addition to all other rights
and remedies granted to Landlord pursuant to this Lease, Landlord shall have the
right to withhold payment of all or any portion of the Tenant Improvement
Allowance and/or Landlord may cause Contractor to cease the construction of the
Premises (in which case, Tenant shall be responsible for any delay in the
substantial completion of the Premises caused by such work stoppage), and (ii)
all other obligations of Landlord under the terms of this Tenant Work Letter
shall be forgiven until such time as such default is cured pursuant to the terms
of this Lease (in which case, Tenant shall be responsible for any delay in the
substantial completion of the Premises caused by such inaction by Landlord).

         5.7 MISCELLANEOUS CHARGES. Landlord shall provide to Tenant, at no
additional cost to Tenant, hoists, security and similar items to the extent such
items are then being used by Landlord in the construction of Landlord's Work and
so long as the same does not interfere with


                                      -13-
<PAGE>


the performance of Landlord's Work and no fees are imposed upon Landlord in
connection therewith.

         5.8 CLEAN UP. Prior to the delivery to Tenant of the Building, Landlord
shall remove all rubbish and debris therefrom provided that Landlord shall not
be responsible for the removal of rubbish or debris resulting from Tenant's move
into the Premises.

         5.9 GOVERNMENTAL COMPLIANCE. Landlord and Tenant hereby acknowledge
that it is their intent that the Tenant Improvements comply in all respects with
the following: (i) the Code and other state, federal, city or quasi-governmental
laws, codes, ordinances and regulations, as each may apply according to the
rulings of the controlling public official, agent or other person; (ii)
applicable standards of the American Insurance Association (formerly, the
National Board of Fire Underwriters) and the National Electrical Code; and (iii)
building material manufacturer's specifications.

         5.10 PUNCH LIST ITEMS. Within thirty (30) days of the Lease
Commencement Date, Tenant shall provide Landlord a punch list which relates to
Base Building, which punch list shall consist of those decorative and minor
mechanical type adjustments which do not materially interfere with Tenant's use
of the Premises (collectively, the "Punch List Items"). Upon receipt of the
punch list, Landlord shall, at Landlord's sole cost and expense proceed to
diligently remedy all such Punch List Items. If Landlord fails to cure any Punch
List Item which can reasonably be cured within thirty (30) days of receipt of
the punch list, Tenant may remedy such uncured item and seek reimbursement for
such remedy from the Tenant Improvement Allowance, and as to any other Punch
List Item that cannot reasonably be cured within such thirty (30) day period,
Tenant may only cure and seek reimbursement if Landlord does not cure within a
reasonable time given the nature of such Punch List Item.

         5.11 STAGING AREA STORAGE SPACE. Beginning sixty (60) days prior to the
Lease Commencement Date and subject to availability, as reasonably determined by
Landlord, Tenant shall have the right, without the obligation to pay rent, to
use at Tenant's sole risk the empty space in the Building designated by Landlord
for the purposes of storing and staging Tenant's property. With respect to such
free storage space, Tenant shall provide all insurance and any necessary fencing
or other protective facilities and Tenant shall not interfere with completion of
Landlord's Work. Any property of Tenant stored in the Premises pursuant to this
Section 5.10 shall be stored at Tenant's sole risk. Tenant shall hold Landlord
harmless and indemnify Landlord from and against any and all loss, liability or
cost arising out of or in connection with use of this storage space by Tenant,
except to the extent caused by the willful misconduct of Landlord.


                                      -14-
<PAGE>


                             SCHEDULE 1 TO EXHIBIT B


                                  BASE BUILDING

                                   [ATTACHED]



                                 SCHEDULE 1 TO
                                   EXHIBIT B
                                      -1-
<PAGE>


                             SCHEDULE 2 TO EXHIBIT B


                                 TIME DEADLINES

         Preparation and approval of the Space Plans, Final Plans and the Work
Cost Statement shall proceed as indicated below.

<TABLE>
<CAPTION>

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

                            ACTION                                 RESPONSIBILITY                DUE DATE
---------------------------------------------------------------- -------------------- --------------------------------
<S>                                                              <C>                  <C>
(i)      Submission of the Space Plans                                 Tenant         30 days following the date the
                                                                                      Lease is fully executed and
                                                                                      delivered by and between
                                                                                      Landlord and Tenant.
---------------------------------------------------------------- -------------------- --------------------------------

(ii)     Delivery of written notice approving or disapproving         Landlord        5 days after (i), above.
         Space Plans
---------------------------------------------------------------- -------------------- --------------------------------

(iii)    Submission, if necessary, of redesign of Space Plans          Tenant         10 days after (ii), above.
---------------------------------------------------------------- -------------------- --------------------------------

(iv)     Delivery of written notice of final approval                 Landlord        5 days after (iii), above.
         of Space Plans (if (iii) was necessary)
---------------------------------------------------------------- -------------------- --------------------------------

(v)      Submission of Final Plans to Landlord                         Tenant         50 days after Landlord's
                                                                                      approval of Space Plans.
---------------------------------------------------------------- -------------------- --------------------------------

(vi)     Delivery of written notice approving or disapproving         Landlord        5 days after (v), above.
         Final Plans
---------------------------------------------------------------- -------------------- --------------------------------

(vii)    Submission, if necessary, of redesign of Space Plans          Tenant         10 days after (vi), above.
---------------------------------------------------------------- -------------------- --------------------------------

(viii)   Delivery of written notice of final approval                 Landlord        3 days after (vii), above.
         of Space Plans (if (vii) was necessary)
---------------------------------------------------------------- -------------------- --------------------------------

(ix)     Submission of Work Cost estimate to Landlord                   Tenant        20 days after approval of
                                                                                      Final Plans.
---------------------------------------------------------------- -------------------- --------------------------------

(x)      Delivery of written notice of final approval                   Tenant        5 days after (ix), above.
         of Work Cost Statement and any additions
         or deletions to the scope of work by Tenant
         to be required to balance costs against the
         allowance
---------------------------------------------------------------- -------------------- --------------------------------

</TABLE>


                                 SCHEDULE 2 TO
                                   EXHIBIT B
                                      -1-
<PAGE>


                             SCHEDULE 3 TO EXHIBIT B


                      BUILDING STANDARD TENANT IMPROVEMENTS

                                   [ATTACHED]










                                 SCHEDULE 3 TO
                                   EXHIBIT B
                                      -1-