<PAGE>   1
                                                                   EXHIBIT 10.20



                                 LEASE AGREEMENT

                                 BY AND BETWEEN

                          AETNA LIFE INSURANCE COMPANY,
                            A CONNECTICUT CORPORATION

                                   AS LANDLORD

                                       AND

                           ARCXEL TECHNOLOGIES, INC.,
                            A CALIFORNIA CORPORATION

                                    AS TENANT

                             DATED NOVEMBER 1, 1997

<PAGE>   2

                                 LEASE AGREEMENT

                             BASIC LEASE INFORMATION

                  Lease Date:  November 1, 1997


                    Landlord:  AETNA LIFE INSURANCE COMPANY,
                               a Connecticut corporation


          Landlord's Address:  c/o Allegis Realty Investors LLC
                               455 Market Street, Suite 1540
                               San Francisco, CA  94105

                               All notices sent to Landlord under this Lease
                               shall be sent to the above address, with copies
                               to:

                               Lincoln Property Company Management
                               Services, Inc.
                               Attn: Vice President, Leasing & operations
                               30 Executive Park, Suite 100
                               Irvine, CA 92614

                      Tenant:  Arcxel Technologies, Inc.
                               a California corporation


     Tenant's Contact Person:  Jay O'Donald, CEO


         Tenant's Address and  2691 Richter #106
            Telephone Number:  Irvine, CA 92606
                               (714) 475-4350

     Premises Square Footage:  Approximately Thirteen Thousand Three Hundred
                               Ninety-Six (13,396) rentable square feet

            Premises Address:  15245 Alton Parkway, Suite 100
                               Irvine, California

                     Project:  Alton Plaza,
                               together with the land on which the Project is
                               situated and all



                                      (1)
<PAGE>   3

                               Common Areas


 Building (if not the same as
                the Project):  Intentionally Omitted

 Tenant's Proportionate Share
                  of Project:  6.27%

 Tenant's Proportionate Share
                 of Building:  Intentionally Omitted

              Length of Term:  Sixty (60) months


 Estimated Commencement Date:  December 1, 1997


   Estimated Expiration Date:  November 30, 2002

<TABLE>
<CAPTION>
           Monthly Base Rent:                                Monthly Base
                                  Months         Sq. Ft.         Rate        Monthly Base Rent
<S>                            <C>            <C>            <C>            <C>
                                   1-12          13.396      x  $1.05       =    $14,066.00
                                   13-24         13,396      x $1.092       x    $14,628.00
                                   25-36         13,396      x $1.136       x    $15,218.00
                                   37.48         13,396      x $ 1.18       x    $15,807.00
                                   49-60         13,396      x $ 1.23       x    $16,477.00
</TABLE>

                 Escalations:  Intentionally Omitted

                Prepaid Rent:  Fourteen Thousand Sixty-Six and 00/100 Dollars
                               ($14,066.00)

     Prepaid Additional Rent:  Intentionally Omitted

  Month to which Prepaid Base
     Rent and Additional Rent
             will be Applied:   First (1st) month of the Term



                                      (2)
<PAGE>   4

            Security Deposit:  Eighty-Four Thousand Three Hundred Ninety-Six and
                               00/100 Dollars ($84,396.00)

               Permitted Use:  General office use, research and development,
                               light manufacturing, assembly and warehouse
                               storage for a fiber channel company..............

   Unreserved Parking Spaces:  Forty-six (46) nonexclusive and undesignated
                               parking spaces

           Listing Broker(s):  Gregg Haly/David Bolt, CB Commercial
                               24422 Avenida de la Carlota, Suite 100
                               Laguna Hills, CA 92653

         Procuring Broker(s):  Carol Trapani/Omar Davod
                               CB Commercial
                               3501 Jamboree Road, Suite 100
                               Newport Beach, CA 92660-2940

          Tenant Improvements
                   Allowance:  Intentionally Omitted

    Tenant Improvements Loan:  Intentionally Omitted

                   Architect:  Intentionally Omitted ...........................



                                      (3)
<PAGE>   5

                                 LEASE AGREEMENT

     THIS LEASE AGREEMENT is made and entered into by and between Landlord and
Tenant on the Lease Date. The defined terms used in this Lease which are defined
in the Basic Lease Information attached to this Lease Agreement ("Basic Lease
Information") shall have the meaning and definition given them in the Basic
Lease Information. The Basic Lease Information, the exhibits, the addendum or
addenda described in the Basic Lease Information, and this Lease Agreement are
and shall be construed as a single instrument and are referred to herein as the
"Lease".

1.   DEMISE

     In consideration for the rents and all other charges and payments payable
by Tenant, and for the agreements, terms and conditions to be performed by
Tenant in this Lease, LANDLORD DOES HEREBY LEASE TO TENANT, AND TENANT DOES
HEREBY HIRE AND TAKE FROM LANDLORD, the Premises described below (the
"Premises"), upon the agreements, terms and conditions of this Lease for the
Term hereinafter stated.

2.   PREMISES

     The Premises demised by this Lease is located in that certain building (the
"Building") specified in the Basic Lease Information, which Building is located
in that certain real estate development (the "Project") specified in the Basic
Lease Information. The Premises has the address and contains the square footage
specified in the Basic Lease Information. The location and dimensions of the
Premises are depicted on Exhibit A, which is attached hereto and incorporated
herein by this reference. Tenant shall have the non-exclusive right (in common
with the other tenants, Landlord and any other person granted use by Landlord)
to use the Common Areas (as hereinafter defined), except that, with respect to
parking, Tenant shall have only a license to use the number of non-exclusive and
undesignated parking spaces set forth in the Basic Lease Information in the
Project's parking areas (the "Parking Areas"); provided, however, that Landlord
shall not be required to enforce Tenant's right to use such parking spaces; and,
provided further, that the number of parking spaces allocated to Tenant
hereunder shall be reduced on a proportionate basis in the event any of the
parking spaces in the Parking Areas are taken or otherwise eliminated as a
result of any Condemnation (as hereinafter defined) or casualty event affecting
such Parking Areas. No easement for light or air is incorporated in the
Premises. For purposes of this Lease, the term "Common Areas" shall mean all
areas and facilities outside the Premises and within the exterior boundary line
of the Project that are provided and designated by Landlord for the
non-exclusive use of Landlord, Tenant and other tenants of the Project and their
respective employees, guests and invitees.

<PAGE>   6

     Tenant understands and agrees that the Premises shall be leased by Tenant
in its as-is condition without any improvements or alterations by Landlord
unless Landlord has expressly agreed to make such improvements or alterations in
a tenant improvement work agreement attached hereto, if at all, as Exhibit B. If
Landlord has agreed to make any such improvements or alterations, then the
Premises demised by this Lease shall include any Tenant Improvements (as that
term is defined in the aforesaid tenant improvement work agreement) to be
constructed by Landlord within the interior of the Premises. Landlord shall
construct any Tenant Improvements on the terms and conditions set forth in
Exhibit B, if attached hereto. Landlord and Tenant agree to and shall be bound
by the terms and conditions of Exhibit B, if any.

     Landlord has the right, in its sole discretion, from time to time, to: (a)
make changes to the Common Areas, including, without limitation, changes in the
location, size, shape and number of driveways, entrances, parking spaces,
parking areas, ingress, egress, direction of driveways, entrances, corridors and
walkways; (b) close temporarily any of the Common Areas for maintenance purposes
so long as reasonable access to the Premises remains available; (c) add
additional buildings and improvements to the Common Areas or remove existing
buildings or improvements therefrom; (d) use the Common Areas while engaged in
making additional improvements, repairs or alterations to the Project or any
portion thereof; and (e) do and perform any other acts or make any other changes
in, to or with respect to the Common Areas and the Project as Landlord may, in
its sole discretion, deem to be appropriate.

3.   TERM

     The term of this Lease (the "Term") shall be for the period of months
specified in the Basic Lease Information, commencing on the earliest to occur of
the following dates (the "Commencement Date"):

     (a) The date the Tenant Improvements are approved by the appropriate
governmental agency as being in accordance with its building code and the
building permit issued for such improvements, as evidenced by the issuance of a
final building inspection approval; or

     (b) The date Landlord's architect and general contractor have both
certified in writing to Tenant that the Tenant Improvements have been
substantially completed in accordance with the plans and specifications
therefor; or

     (c) The date Tenant commences occupancy of the Premises.

     In the event the actual Commencement Date, as determined pursuant to the
foregoing, is a date other than the Estimated Commencement Date, then Landlord
and Tenant shall promptly execute a Commencement and Expiration Date Memorandum
in the form attached hereto as Exhibit C, wherein the parties shall specify the



                                       2
<PAGE>   7

Commencement Date, the date on which the Term expires (the "Expiration Date")
and the date on which Tenant is to commence paying Rent.

4.   RENT

     (a) BASE RENT. Tenant shall pay to Landlord, in advance on the first day of
each month, without further notice or demand and without offset or deduction,
the monthly installments of rent specified in the Basic Lease Information (the
"Base Rent").

     Upon execution of this Lease, Tenant shall pay to Landlord the Prepaid Rent
and first monthly installment of estimated Additional Rent (as hereinafter
defined) specified in the Basic Lease Information to be applied toward Base Rent
and Additional Rent for the month of the Term specified in the Basic Lease
Information.

     (b) ADDITIONAL RENT. This Lease is intended to be a triple-net Lease with
respect to Landlord; and subject to Paragraph 13(b) below, the Base Rent owing
hereunder is (1) to be paid by Tenant absolutely net of all costs and expenses
relating to Landlord's ownership and operation of the Project and the Building,
and (2) not to be reduced, offset or diminished, directly or indirectly, by any
cost, charge or expense payable hereunder by Tenant or by others in connection
with the Premises, the Building and/or the Project or any part thereof. The
provisions of this Paragraph 4(b) for the payment of Tenant's Proportionate
Share(s) of Expenses (as hereinafter defined) are intended to pass on to Tenant
its share of all such costs and expenses. In addition to the Base Rent, Tenant
shall pay to Landlord, in accordance with this Paragraph 4, Tenant's
Proportionate Share(s) of all costs and expenses paid or incurred by Landlord in
connection with the ownership, operation, maintenance, management and repair of
the Premises, the Building and/or the Project or any part thereof (collectively,
the "Expenses"), including, without limitation, all the following items (the
"Additional Rent"):

          (1) Taxes and Assessments. All real estate taxes and assessments,
which shall include any form of tax, assessment, fee, license fee, business
license fee, levy, penalty (if a result of Tenant's delinquency), or tax (other
than net income, estate, succession, inheritance, transfer or franchise taxes),
imposed by any authority having the direct or indirect power to tax, or by any
city, county, state or federal government or any improvement or other district
or division thereof, whether such tax is (i) determined by the area of the
Premises, the Building and/or the Project or any part thereof, or the Rent and
other sums payable hereunder by Tenant or by other tenants, including, but not
limited to, any gross income or excise tax levied by any of the foregoing
authorities with respect to receipt of Rent and/or other sums due under this
Lease; (ii) upon any legal or equitable interest of Landlord in the Premises,
the Building and/or the Project or any part thereof; (iii) upon this transaction
or any document to which Tenant is a party creating or transferring any interest
in the Premises, the Building and/or the Project; (iv) levied or assessed in
lieu of, in substitution for, or in addition to, existing or additional taxes
against the Premises, the Building and/or the Project, whether or not now
customary or



                                       3
<PAGE>   8

within the contemplation of the parties; or (v) surcharged against the parking
area. Tenant and Landlord acknowledge that Proposition 13 was adopted by the
voters of the State of California in the June, 1978 election and that
assessments, taxes, fees, levies and charges may be imposed by governmental
agencies for such purposes as fire protection, street, sidewalk, road, utility
construction and maintenance, refuse removal and for other governmental services
which may formerly have been provided without charge to property owners or
occupants. It is the intention of the parties that all new and increased
assessments, taxes, fees, levies and charges due to any cause whatsoever are to
be included within the definition of real property taxes for purposes of this
Lease. "Taxes and assessments" shall also include legal and consultants' fees,
costs and disbursements incurred in connection with proceedings to contest,
determine or reduce taxes, Landlord specifically reserving the right, but not
the obligation, to contest by appropriate legal proceedings the amount or
validity of any taxes.

          (2) Insurance. All insurance premiums for the Building and/or the
Project or any part thereof, including premiums for "all risk" fire and extended
coverage insurance, commercial general liability insurance, rent loss or
abatement insurance, earthquake insurance, flood or surface water coverage, and
other insurance as Landlord deems necessary in its sole discretion, and any
deductibles paid under policies of any such insurance.

          (3) Utilities. The cost of all Utilities (as hereinafter defined)
serving the Premises, the Building and the Project that are not separately
metered to Tenant, any assessments or charges for Utilities or similar purposes
included within any tax bill for the Building or the Project, including without
limitation, entitlement fees, allocation unit fees, and/or any similar fees or
charges and any penalties (if a result of Tenant's delinquency) related thereto,
and any amounts, taxes, charges, surcharges, assessments or impositions levied,
assessed or imposed upon the Premises, the Building or the Project or any part
thereof, or upon Tenant's use and occupancy thereof, as a result of any
rationing of Utility services or restriction on Utility use affecting the
Premises, the Building and/or the Project, as contemplated in Paragraph 5 below
(collectively, "Utility Expenses").

          (4) Common Area Expenses. All costs to operate, maintain, repair,
replace, supervise, insure and administer the Common Areas, including supplies,
materials, labor and equipment used in or related to the operation and
maintenance of the Common Areas, including parking areas (including, without
limitation, all costs of resurfacing and restriping parking areas), signs and
directories on the Building and/or the Project, landscaping (including
maintenance contracts and fees payable to landscaping consultants), amenities,
sprinkler systems, sidewalks, walkways, driveways, curbs, lighting systems and
security services, if any, provided by Landlord for the Common Areas, and any
charges, assessments, costs or fees levied by any association or entity of which
the Project or any part thereof is a member or to which the Project or any part
thereof is subject.



                                       4
<PAGE>   9

          (5) Parking Charges. Any parking charges or other costs levied,
assessed or imposed by, or at the direction of, or resulting from statutes or
regulations, or interpretations thereof, promulgated by any governmental
authority or insurer in connection with the use or occupancy of the Building or
the Project.

          (6) Maintenance and Repair Costs. Except for costs which are the
responsibility of Landlord pursuant to Paragraph 13(b) below, all costs to
maintain, repair, and replace the Premises, the Building and/or the Project or
any part thereof, including without limitation, (i) all costs paid under
maintenance, management and service agreements such as contracts for janitorial,
security and refuse removal, (ii) all costs to maintain, repair and replace the
roof coverings of the Building or the Project or any part thereof, (iii) all
costs to maintain, repair and replace the heating, ventilating, air
conditioning, plumbing, sewer, drainage, electrical, fire protection, life
safety and security systems and other mechanical and electrical systems and
equipment serving the Premises, the Building and/or the Project or any part
thereof (collectively, the "Systems").

          (7) Life Safety Costs. All costs to install, maintain, repair and
replace all life safety systems, including, without limitation, all fire alarm
systems, serving the Premises, the Building and/or the Project or any part
thereof (including all maintenance contracts and fees payable to life safety
consultants) whether such systems are or shall be required by Landlord's
insurance carriers, Laws (as hereinafter defined) or otherwise.

          (8) Management and Administration. All costs for management and
administration of the Premises, the Building and/or the Project or any part
thereof, including, without limitation, a property management fee, accounting,
auditing, billing, postage, salaries and benefits for clerical and supervisory
employees, whether located on the Project or off-site, payroll taxes and legal
and accounting costs and fees for licenses and permits related to the ownership
and operation of the Project.

          Notwithstanding anything in this Section 4(b) to the contrary, with
respect to all sums payable by Tenant as Additional Rent under this Section 4(b)
for the repair or replacement of any item or the construction of any new item in
connection with the physical operation of the Premises, the Building or the
Project (i.e., HVAC, roof membrane or coverings and parking area) which is a
capital item the repair or replacement of which properly would be capitalized
under generally accepted accounting principles, Tenant shall be required to pay
only the pro rata share of the cost of the item falling due within the Term
(including any Renewal Term) based upon the amortization of the same over the
useful life of such item, as reasonably determined by Landlord.

     (c)  PAYMENT OF ADDITIONAL RENT.

          (1) Upon commencement of this Lease, Landlord shall submit to Tenant
an estimate of monthly Additional Rent for the period between the Commencement
Date



                                       5
<PAGE>   10

and the following December 31 and Tenant shall pay such estimated Additional
Rent on a monthly basis, in advance, on the first day of each month. Tenant
shall continue to make said monthly payments until notified by Landlord of a
change therein. By April 1 of each calendar year, Landlord shall endeavor to
provide to Tenant a statement showing the actual Additional Rent due to Landlord
for the prior calendar year, to be prorated during the first year from the
Commencement Date. If the total of the monthly payments of Additional Rent that
Tenant has made for the prior calendar year is less than the actual Additional
Rent chargeable to Tenant for such prior calendar year, then Tenant shall pay
the difference in a lump sum within ten (10) days after receipt of such
statement from Landlord. Any overpayment by Tenant of Additional Rent for the
prior calendar year shall be credited towards the Additional Rent next due.

          (2) Landlord's then-current annual operating and capital budgets for
the Building and the Project or the pertinent part thereof shall be used for
purposes of calculating Tenant's monthly payment of estimated Additional Rent
for the current year, subject to adjustment as provided above. Landlord shall
make the final determination of Additional Rent for the year in which this Lease
terminates as soon as possible after termination of such year. Even though the
Term has expired and Tenant has vacated the Premises, Tenant shall remain liable
for payment of any amount due to Landlord in excess of the estimated Additional
Rent previously paid by Tenant, and, conversely, Landlord shall promptly return
to Tenant any overpayment. Failure of Landlord to submit statements as called
for herein shall not be deemed a waiver of Tenant's obligation to pay Additional
Rent as herein provided.

          (3) With respect to Expenses which Landlord allocates to the Building,
Tenant's "Proportionate Share" shall be the percentage set forth in the Basic
Lease Information as Tenant's Proportionate Share of the Building, as adjusted
by Landlord from time to time for a remeasurement of or changes in the physical
size of the Premises or the Building, whether such changes in size are due to an
addition to or a sale or conveyance of a portion of the Building or otherwise.
With respect to Expenses which Landlord allocates to the Project as a whole or
to only a portion of the Project, Tenant's "Proportionate Share" shall be, with
respect to Expenses which Landlord allocates to the Project as a whole, the
percentage set forth in the Basic Lease Information as Tenant's Proportionate
Share of the Project and, with respect to Expenses which Landlord allocates to
only a portion of the Project, a percentage calculated by Landlord from time to
time in its sole discretion and furnished to Tenant in writing, in either case
as adjusted by Landlord from time to time for a remeasurement of or changes in
the physical size of the Premises or the Project, whether such changes in size
are due to an addition to or a sale or conveyance of a portion of the Project or
otherwise. Notwithstanding the foregoing, Landlord may equitably adjust Tenant's
Proportionate Share(s) for all or part of any item of expense or cost
reimbursable by Tenant that relates to a repair, replacement, or service that
benefits only the Premises or only a portion of the Building and/or the Project
or that varies with the occupancy of the Building and/or the Project.



                                       6
<PAGE>   11

Without limiting the generality of the foregoing, Tenant understands and agrees
that Landlord shall have the right to adjust Tenant's Proportionate Share(s) of
any Utility Expenses based upon Tenant's use of the Utilities or similar
services as reasonably estimated and determined by Landlord based upon factors
such as size of the Premises and intensity of use of such Utilities by Tenant
such that Tenant shall pay the portion of such charges reasonably consistent
with Tenant's use of such Utilities and similar services. If Tenant disputes any
such estimate or determination of Utility Expenses, then Tenant shall either pay
the estimated amount or cause the Premises to be separately metered at Tenant's
sole expense.

     (d) GENERAL PAYMENT TERMS. The Base Rent, Additional Rent and all other
sums payable by Tenant to Landlord hereunder, including, without limitation,
payments of principal and interest on the Tenant Improvements Loan (as defined
in Exhibit B hereto), if any, any late charges assessed pursuant to Paragraph 6
below and any interest assessed pursuant to Paragraph 45 below, are referred to
as the "Rent". All Rent shall be paid without deduction, offset or abatement in
lawful money of the United States of America. Checks are to be made payable to
Aetna Life Insurance Company and shall be mailed to: Lincoln Property Company
Management Services, Inc., 30 Executive Park, Suite 100, Irvine, CA 92614 or to
such other person or place as Landlord may, from time to time, designate to
Tenant in writing. The Rent for any fractional part of a calendar month at the
commencement or termination of the Lease term shall be a prorated amount of the
Rent for a full calendar month based upon a thirty (30) day month.

5.   UTILITY EXPENSES

     (a) Tenant shall pay the cost of all water, sewer use, sewer discharge fees
and permit costs and sewer connection fees, gas, heat, electricity, refuse
pick-up, janitorial service, telephone and all materials and services or other
utilities (collectively, "Utilities") billed or metered separately to the
Premises and/or Tenant, together with all taxes, assessments, charges and
penalties added to or included within such cost. Tenant acknowledges that the
Premises, the Building and/or the Project may become subject to the rationing of
Utility services or restrictions on Utility use as required by a public utility
company, governmental agency or other similar entity having jurisdiction
thereof. Tenant acknowledges and agrees that its tenancy and occupancy hereunder
shall be subject to such rationing or restrictions as may be imposed upon
Landlord, Tenant, the Premises, the Building and/or the Project, and Tenant
shall in no event be excused or relieved from any covenant or obligation to be
kept or performed by Tenant by reason of any such rationing or restrictions.
Tenant agrees to comply with energy conservation programs implemented by
Landlord by reason of rationing, restrictions or Laws.

     (b) Landlord shall not be liable for any loss, injury or damage to property
caused by or resulting from any variation, interruption, or failure of Utilities
due to any cause whatsoever, or from failure to make any repairs or perform any
maintenance. No temporary interruption or failure of such services incident to
the making of repairs,



                                       7
<PAGE>   12

alterations, improvements, or due to accident, strike, or conditions or other
events shall be deemed an eviction of Tenant or relieve Tenant from any of its
obligations hereunder. In no event shall Landlord be liable to Tenant for any
damage to the Premises or for any loss, damage or injury to any property therein
or thereon occasioned by bursting, rupture, leakage or overflow of any plumbing
or other pipes (including, without limitation, water, steam, and/or refrigerant
lines), sprinklers, tanks, drains, drinking fountains or washstands, or other
similar cause in, above, upon or about the Premises, the Building, or the
Project.

6.   LATE CHARGE

     Notwithstanding any other provision of this Lease, Tenant hereby
acknowledges that late payment to Landlord of Rent, or other amounts due
hereunder will cause Landlord to incur costs not contemplated by this Lease, the
exact amount of which will be extremely difficult to ascertain. If any Rent or
other sums due from Tenant are not received by Landlord or by Landlord's
designated agent within three (3) days after their due date, then Tenant shall
pay to Landlord a late charge equal to ten percent (10%) of such overdue amount,
plus any costs and reasonable attorneys' fees incurred by Landlord by reason of
Tenant's failure to pay Rent and/or other charges when due hereunder. Landlord
and Tenant hereby agree that such late charges represent a fair and reasonable
estimate of the cost that Landlord will incur by reason of Tenant's late payment
and shall not be construed as a penalty. Landlord's acceptance of such late
charges shall not constitute a waiver of Tenant's default with respect to such
overdue amount or estop Landlord from exercising any of the other rights and
remedies granted under this Lease.

                    Initials: Landlord  /s/ CDS        Tenant /s/ Jay
                                            ------                ------

7.   SECURITY DEPOSIT

     Concurrently with Tenant's execution of the Lease, Tenant shall deposit
with Landlord the Security Deposit specified in the Basic Lease Information as
security for the full and faithful performance of each and every term, covenant
and condition of this Lease. Landlord may use, apply or retain the whole or any
part of the Security Deposit as may be reasonably necessary (a) to remedy
Tenant's default in the payment of any Rent, (b) to repair damage to the
Premises caused by Tenant, (c) to clean the Premises upon termination of this
Lease, (d) to reimburse Landlord for the payment of any amount which Landlord
may reasonably spend or be required to spend by reason of Tenant's default, or
(e) to compensate Landlord for any other loss or damage which Landlord may
suffer by reason of Tenant's default. Provided that no Default (as hereinafter
defined) is continuing and no event or circumstance, which with the passage of
time or the giving of notice would constitute a Default, is continuing,, within
thirty (30) days following the expiration of the Term, the Security Deposit or
any balance thereof shall be returned to Tenant or, at the option of Landlord,
to the last assignee of Tenant's interest in this Lease.



                                       8
<PAGE>   13
Landlord shall not be required to keep the Security Deposit separate from its
general funds and Tenant shall not be entitled to any interest on such deposit.
If Landlord so uses or applies all or any portion of said deposit, within five
(5) days after written demand therefor Tenant shall deposit cash with Landlord
in an amount sufficient to restore the Security Deposit to the full extent of
the above amount, and Tenant's failure to do so shall be a default under this
Lease. In the event Landlord transfers its interest in this Lease, Landlord
shall transfer the then remaining amount of the Security Deposit to Landlord's
successor in interest, and thereafter Landlord shall have no further liability
to Tenant with respect to such Security Deposit.

8.   POSSESSION

     (a) TENANT'S RIGHT OF POSSESSION. Subject to Paragraph 8(b), Tenant shall
be entitled to possession of the Premises upon commencement of the Term.

     (b) DELAY IN DELIVERING POSSESSION. If for any reason whatsoever, Landlord
cannot deliver possession of the Premises to Tenant on or before the Estimated
Commencement Date, this Lease shall not be void or voidable, nor shall Landlord,
or Landlord's agents, advisors, employees, partners, shareholders, directors,
invitees or independent contractors (collectively, "Landlord's Agents"), be
liable to Tenant for any loss or damage resulting therefrom. Tenant shall not be
liable for Rent until Landlord delivers possession of the Premises to Tenant.
The Expiration Date shall be extended by the same number of days that Tenant's
possession of the Premises was delayed beyond the Estimated Commencement Date.

9.   USE OF PREMISES

     (a) PERMITTED USE. The use of the Premises by Tenant and Tenant's agents,
advisors, employees, partners, shareholders, directors, invitees and independent
contractors (collectively, "Tenant's Agents") shall be solely for the Permitted
Use specified in the Basic Lease Information and for no other use. Tenant shall
not permit any objectionable or unpleasant odor, smoke, dust, gas, noise or
vibration to emanate from or near the Premises. The Premises shall not be used
to create any nuisance or trespass, for any illegal purpose, for any purpose not
permitted by Laws, for any purpose that would invalidate the insurance or
increase the premiums for insurance on the Premises, the Building or the Project
or for any purpose or in any manner that would interfere with other tenants' use
or occupancy of the Project. Tenant agrees to pay to Landlord, as Additional
Rent, any increases in premiums on policies resulting from Tenant's Permitted
Use or any other use or action by Tenant or Tenant's Agents which increases
Landlord's premiums or requires additional coverage by Landlord to insure the
Premises. Tenant agrees not to overload the floor(s) of the Building.

     (b) COMPLIANCE WITH GOVERNMENTAL REGULATIONS AND PRIVATE RESTRICTIONS.
Subject to Paragraph 52(a) below, Tenant and Tenant's Agents shall, at Tenant's
expense,



                                       9
<PAGE>   14

faithfully observe and comply with (1) all municipal, state and federal laws,
statutes, codes, rules, regulations, ordinances, requirements, and orders
(collectively, "Laws"), now in force or which may hereafter be in force
pertaining to the Premises or Tenant's use of the Premises, the Building or the
Project, whether substantial in cost or otherwise, provided, however, that
except as provided in Paragraph 9(c) below, Tenant shall not be required to make
or, except as provided in Paragraph 4 above, pay for, structural changes to the
Premises or the Building imposed by Laws or Private Restrictions (as hereinafter
defined) not related to Tenant's specific use of the Premises unless the
requirement for such changes is imposed as a result of any improvements or
additions made or proposed to be made at Tenant's request; (2) all recorded
covenants, conditions and restrictions affecting the Project ("Private
Restrictions") now in force or which may hereafter be in force; and (3) any and
all rules and regulations set forth in Exhibit D and any other rules and
regulations now or hereafter promulgated by Landlord related to parking or the
operation of the Premises, the Building and/or the Project (collectively, the
"Rules and Regulations"). The judgment of any court of competent jurisdiction,
or the admission of Tenant in any action or proceeding against Tenant, whether
Landlord be a party thereto or not, that Tenant has violated any such Laws or
Private Restrictions, shall be conclusive of that fact as between Landlord and
Tenant.

     (c) COMPLIANCE WITH AMERICANS WITH DISABILITIES ACT. Landlord and Tenant
hereby agree and acknowledge that the Premises, the Building and/or the Project
may be subject to, among other Laws, the requirements of the Americans with
Disabilities Act, a federal law codified at 42 U.S.C. 12101 et seq., including,
but not limited to Title III thereof, and all regulations and guidelines related
thereto, together with any and all laws, rules, regulations, ordinances, codes
and statutes now or hereafter enacted by local or state agencies having
jurisdiction thereof, including all requirements of Title 24 of the State of
California, as the same may be in effect on the date of this Lease and may be
hereafter modified, amended or supplemented (collectively, the "ADA"). Any
Tenant Improvements to be constructed hereunder shall be in compliance with the
requirements of the ADA, and all costs incurred for purposes of compliance
therewith shall be a part of and included in the costs of the Tenant
Improvements. Tenant shall be solely responsible for conducting its own
independent investigation of this matter and for ensuring that the design of all
Tenant Improvements strictly complies with all requirements of the ADA. Subject
to reimbursement pursuant to Paragraph 4 above, if any barrier removal work or
other work is required to the Building, the Common Areas or the Project under
the ADA, then such work shall be the responsibility of Landlord; provided, if
such work is required under the ADA as a result of Tenant's use of the Premises
or any work or Alteration (as hereinafter defined) made to the Premises by or on
behalf of Tenant, then such work shall be performed by Landlord at the sole cost
and expense of Tenant. Except as otherwise expressly provided in this provision,
Tenant shall be responsible at its sole cost and expense for fully and
faithfully complying with all applicable requirements of the ADA, including
without limitation, not discriminating against any disabled persons in the
operation of Tenant's business in or about the Premises, and offering or
otherwise



                                       10
<PAGE>   15

providing auxiliary aids and services as, and when, required by the ADA. Within
ten (10) days after receipt, Tenant shall advise Landlord in writing, and
provide Landlord with copies of (as applicable), any notices alleging violation
of the ADA relating to any portion of the Premises, the Building or the Project;
any claims made or threatened orally or in writing regarding noncompliance with
the ADA and relating to any portion of the Premises, the Building, or the
Project; or any governmental or regulatory actions or investigations instituted
or threatened regarding noncompliance with the ADA and relating to any portion
of the Premises, the Building or the Project. Tenant shall and hereby agrees to
protect, defend (with counsel acceptable to Landlord) and hold Landlord and
Landlord's Agents harmless and indemnify Landlord and Landlord's Agents from and
against all liabilities, damages, claims, losses, penalties, judgments, charges
and expenses (including reasonable attorneys' fees, costs of court and expenses
necessary in the prosecution or defense of any litigation including the
enforcement of this provision) arising from or in any way related to, directly
or indirectly, Tenant's or Tenant's Agents' violation or alleged violation of
the ADA. Tenant agrees that the obligations of Tenant set forth in this
Paragraph 9 to protect, defend, hold harmless and indemnify Landlord and
Landlord's Agents shall survive the expiration or earlier termination of this
Lease

10.  ACCEPTANCE OF PREMISES

     By entry hereunder, Tenant accepts the Premises as suitable for Tenant's
intended use and as being in good and sanitary operating order, condition and
repair, AS IS, and without representation or warranty by Landlord as to the
condition, use or occupancy which may be made thereof. Any exceptions to the
foregoing must be by written agreement executed by Landlord and Tenant.

11.  SURRENDER

    Tenant agrees that on the last day of the Term, or on the sooner termination
of this Lease, Tenant shall surrender the Premises to Landlord (a) in good
condition and repair (damage by acts of God, fire, and normal wear and tear
excepted), but with all interior walls painted or cleaned so they appear
painted, any carpets cleaned, all floors cleaned and waxed, all non-working
light bulbs and ballasts replaced and all roll-up doors and plumbing fixtures in
good condition and working order, and (b) otherwise in accordance with Paragraph
32(h). Normal wear and tear shall not include any damage or deterioration to the
floors of the Premises arising from the use of forklifts in, on or about the
Premises (including, without limitation, any marks or stains on any portion of
the floors), and any damage or deterioration that would have been prevented by
proper maintenance by Tenant, or Tenant otherwise performing all of its
obligations under this Lease. On or before the expiration or sooner termination
of this Lease, (i) Tenant shall remove all of Tenant's Property (as hereinafter
defined) and Tenant's signage from the Premises, the Building and the Project
and repair any damage caused by such removal, and (ii) Landlord may, by notice
to Tenant given not later than ninety (90) days prior to



                                       11
<PAGE>   16

the Expiration Date (except in the event of a termination of this Lease prior to
the scheduled Expiration Date, in which event no advance notice shall be
required), require Tenant at Tenant's expense to remove any or all Alterations
and/or the initial Tenant Improvements constructed and installed pursuant to
Exhibit B hereto, and to repair any damage caused by such removal. Any of
Tenant's Property not so removed by Tenant as required herein shall be deemed
abandoned and may be stored, removed, and disposed of by Landlord at Tenant's
expense, and Tenant waives all claims against Landlord for any damages resulting
from Landlord's retention and disposition of such property; provided, however,
that Tenant shall remain liable to Landlord for all costs reasonably incurred in
storing and disposing of such abandoned property of Tenant. All Tenant
Improvements and Alterations except those which Landlord requires Tenant to
remove shall remain in the Premises as the property of Landlord. If the Premises
are not surrendered at the end of the Term or sooner termination of this Lease,
and in accordance with the provisions of this Paragraph 11 and Paragraph 32(h)
below, without limitation upon Landlord's other remedies, Tenant shall continue
to be responsible for the payment of Rent (as the same may be increased pursuant
to Paragraph 35 below) until the Premises are so surrendered in accordance with
said Paragraphs; provided, however that if the Premises are surrendered at the
end of the Term or sooner termination of this Lease but not in accordance with
said Paragraphs, without limitation upon Landlord's other remedies or Tenant's
liability for failure to surrender the Premises in accordance with said
Paragraphs, Tenant shall continue to be responsible for the payment of Rent (as
the same may be increased pursuant to Paragraph 35 below) until the earlier of
(i) the first anniversary of the surrender of the Premises and (ii) until the
Premises are so surrendered in accordance with said Paragraphs. Tenant shall
indemnify, defend and hold Landlord harmless from and against any and all loss
or liability resulting from delay by Tenant in so surrendering the Premises
including, without limitation, any loss or liability resulting from any claim
against Landlord made by any succeeding tenant or prospective tenant founded on
or resulting from such delay and losses to Landlord due to lost opportunities to
lease any portion of the Premises to any such succeeding tenant or prospective
tenant, together with, in each case, reasonable attorneys' fees and costs.

12   ALTERATIONS AND ADDITIONS

     (a) Tenant shall not make, or permit to be made, any alteration, addition
or improvement (hereinafter referred to individually as an "Alteration" and
collectively as the "Alterations") or series of Alterations collectively
exceeding a cost of Five Thousand Dollars ($5,000) to the Premises or any part
thereof without the prior written consent of Landlord, which consent shall not
be unreasonably withheld and which consent shall either be given or withheld
within three (3) business days after Landlord's receipt of Tenant's written
request and such other information concerning the request as Landlord may
reasonably request (the "Alteration Request") if such Alterations or series of
Alterations do not collectively exceed a cost of Ten Thousand Dollars ($10,000)
or within fifteen (15) business days after Landlord's receipt of the Alteration
Request if such



                                       12
<PAGE>   17

Alterations or series of Alteration collectively exceed a cost of Ten Thousand
Dollars ($10,000); provided, however, that Landlord shall have the right in its
sole and absolute discretion to consent or to withhold its consent to any
Alteration which affects the structural portions of the Premises, the Building
or the Project or the Systems serving the Premises, the Building and/or the
Project or any portion thereof.

     (b) Any Alteration to the Premises shall be at Tenant's sole cost and
expense, in compliance with all applicable Laws and all requirements requested
by Landlord, including, without limitation, the requirements of any insurer
providing coverage for the Premises or the Project or any part thereof, and in
accordance with plans and specifications approved in writing by Landlord, and
shall be constructed and installed by a contractor approved in writing by
Landlord. As a further condition to giving consent, Landlord may require Tenant
to provide Landlord, at Tenant's sole cost and expense, a payment and
performance bond in form acceptable to Landlord, in a principal amount not less
than one and one-half times the estimated costs of such Alterations, to ensure
Landlord against any liability for mechanic's and materialmen's liens and to
ensure completion of work. Before Alterations may begin, valid building permits
or other permits or licenses required must be furnished to Landlord, and, once
the Alterations begin, Tenant will diligently and continuously pursue their
completion. Landlord may monitor construction of the Alterations and Tenant
shall reimburse Landlord for its costs (including, without limitation, the costs
of any construction manager retained by Landlord) in reviewing plans and
documents and in monitoring construction. Tenant shall maintain during the
course of construction, at its sole cost and expense, builders' risk insurance
for the amount of the completed value of the Alterations on an all-risk
non-reporting form covering all improvements under construction, including
building materials, and other insurance in amounts and against such risks as
Landlord shall reasonably require in connection with the Alterations. In
addition to and without limitation on the generality of the foregoing, Tenant
shall ensure that its contractor(s) procure and maintain in full force and
effect during the course of construction a "broad form" commercial general
liability and property damage policy of insurance naming Landlord, Tenant and
Landlord's lenders as additional insureds. The minimum limit of coverage of the
aforesaid policy shall be in the amount of not less than Three Million Dollars
($3,000,000.00) for injury or death of one person in any one accident or
occurrence and in the amount of not less than Three Million Dollars
($3,000,000.00) for injury or death of more than one person in any one accident
or occurrence, and shall contain a severability of interest clause or a cross
liability endorsement. Such insurance shall further insure Landlord and Tenant
against liability for property damage of at least One Million Dollars
($1,000,000.00). Notwithstanding the foregoing, if the cost of the Alteration in
question is less than Five Thousand Dollars ($5,000), Tenant shall ensure that
its contractor maintains such insurance; provided, however, that such insurance
need not (i) include coverages which exceed the greater of (y) those amounts
which are required by law and (z) those amounts which are reasonably appropriate
with respect to



                                       13
<PAGE>   18

the nominal cost and the nature of such Alterations or (ii) name Landlord,
Landlord's lenders or Tenant as additional insureds.

     (c) All Alterations, including, but not limited to, heating, lighting,
electrical, air conditioning, fixed partitioning, drapery, wall covering and
paneling, built-in cabinet work and carpeting installations made by Tenant,
together with all property that has become an integral part of the Premises or
the Building, shall at once be and become the property of Landlord, and shall
not be deemed trade fixtures or Tenant's Property. If requested by Landlord,
such Alterations shall be demolished and the Premises and the Building shall be
returned to its condition prior to such Alterations, all at Tenant's sole cost
and expense.

     (d) All telephone systems and/or other related computer or
telecommunications equipment or lines must be installed within the Premises and,
at the request of Landlord made at any time prior to the expiration of the Term,
removed upon the expiration or sooner termination of this Lease and the Premises
restored to the same condition as before such installation. In no event shall
such systems or equipment be installed on the exterior of the Building or in any
of the Common Areas nor shall the installation of such systems or equipment
penetrate the exterior of the Building.

     (e) Notwithstanding anything herein to the contrary, before installing any
equipment or lights which generate an undue amount of heat in the Premises, or
if Tenant plans to use any high-power usage equipment in the Premises, Tenant
shall obtain the written permission of Landlord. Landlord may refuse to grant
such permission unless Tenant agrees to pay the costs to Landlord for
installation of supplementary air conditioning capacity or electrical systems
necessitated by such equipment.

     (f) Tenant agrees not to proceed to make any Alterations, notwithstanding
consent from Landlord to do so, until Tenant notifies Landlord in writing of the
date Tenant desires to commence construction or installation of such Alterations
and Landlord has approved such date in writing, in order that Landlord may post
appropriate notices to avoid any liability to contractors or material suppliers
for payment for Tenant's improvements. Tenant will at all times permit such
notices to be posted and to remain posted until the completion of work.

13   MAINTENANCE AND REPAIRS OF PREMISES

     (a) MAINTENANCE BY TENANT. Throughout the Term, Tenant shall, at its sole
expense, (1) keep and maintain in good order and condition the Premises, and
repair and replace every part thereof, including glass, windows, window frames,
window casements, skylights, interior and exterior doors, door frames and door
closers; interior lighting (including, without limitation, light bulbs and
ballasts), the plumbing and electrical systems exclusively serving the Premises,
all communications systems serving the Premises, Tenant's signage, interior
demising walls and partitions, equipment, interior



                                       14
<PAGE>   19

painting and interior walls and floors, and the roll-up doors, ramps and dock
equipment, including, without limitation, dock bumpers, dock plates, dock seals,
dock levelers and dock lights located in or on the Premises (excepting only
those portions of the Building or the Project to be maintained by Landlord, as
provided in Paragraph 13(b) below), (2) furnish all expendables, including light
bulbs, paper goods and soaps, used in the Premises, and (3) keep and maintain in
good order and condition, repair and replace all of Tenant's security systems in
or about or serving the Premises. Tenant shall not do nor shall Tenant allow
Tenant's Agents to do anything to cause any damage, deterioration or
unsightliness to the Premises, the Building or the Project.

     (b) MAINTENANCE BY LANDLORD. Subject to the provisions of Paragraphs 13(a),
22 and 23, and further subject to Tenant's obligation under Paragraph 4 to
reimburse Landlord, in the form of Additional Rent, for Tenant's Proportionate
Share(s) of the cost and expense of the following items, Landlord agrees to
repair and maintain the following items: the roof coverings (provided that
Tenant installs no additional air conditioning or other equipment on the roof
that damages the roof coverings, in which event Tenant shall pay all costs
resulting from the presence of such additional equipment); the Systems serving
the Premises and the Building, excluding the plumbing and electrical systems
exclusively serving the Premises; and the Parking Areas, pavement, landscaping,
sprinkler systems, sidewalks, driveways, curbs, and lighting systems in the
Common Areas. Subject to the provisions of Paragraphs 13(a), 22 and 23,
Landlord, at its own cost and expense, agrees to repair and maintain the
following items: the structural portions of the roof (specifically excluding the
roof coverings), the foundation, the footings, the floor slab, and the load
bearing walls and exterior walls of the Building (excluding any glass and any
routine maintenance, including, without limitation, any painting, sealing,
patching and waterproofing of such walls). Notwithstanding anything in this
Paragraph 13 to the contrary, Landlord shall have the right to either repair or
to require Tenant to repair any damage to any portion of the Premises, the
Building and/or the Project caused by or created due to any act, omission,
negligence or willful misconduct of Tenant or Tenant's Agents and to restore the
Premises, the Building and/or the Project, as applicable, to the condition
existing prior to the occurrence of such damage; provided, however, that in the
event Landlord elects to perform such repair and restoration work, Tenant shall
reimburse Landlord upon demand for all costs and expenses incurred by Landlord
in connection therewith. Landlord's obligation hereunder to repair and maintain,
other than with respect to periodic, routine maintenance (e.g., lawn mowing), is
subject to the condition precedent that Landlord shall have received actual
notice of the need for such repairs and maintenance and a reasonable time to
perform such repair and maintenance. Tenant shall promptly report in writing to
Landlord any defective condition known to it which Landlord is required to
repair.

     (c) TENANT'S WAIVER OF RIGHTS. Tenant hereby expressly waives all rights to
make repairs at the expense of Landlord or to terminate this Lease, as provided
for in California



                                       15
<PAGE>   20

Civil Code Sections 1941 and 1942, and 1932(1), respectively, and any similar or
successor statute or law in effect or any amendment thereof during the Term.

14   LANDLORD'S INSURANCE

     Landlord shall purchase and keep in force fire, extended coverage and "all
risk" insurance covering the Building and the Project. Tenant shall, at its sole
cost and expense, comply with any and all reasonable requirements pertaining to
the Premises, the Building and the Project of any insurer necessary for the
maintenance of reasonable fire and commercial general liability insurance,
covering the Building and the Project. Landlord, at Tenant's cost, may maintain
"Loss of Rents" insurance, insuring that the Rent will be paid in a timely
manner to Landlord for a period of at least twelve (12) months if the Premises,
the Building or the Project or any portion thereof are destroyed or rendered
unusable or inaccessible by any cause insured against under this Lease. If
Landlord receives reimbursement of the premiums for such "Loss of Rents"
insurance as Additional Rent, the foregoing shall not permit Landlord to seek a
second reimbursement of such premiums for "Loss of Rents" insurance from Tenant.

15   TENANT'S INSURANCE

     (a) COMMERCIAL GENERAL LIABILITY INSURANCE. Tenant shall, at Tenant's
expense, secure and keep in force a "broad form" commercial general liability
insurance and property damage policy covering the Premises, insuring Tenant, and
naming Landlord and its lenders as additional insureds, against any liability
arising out of the ownership, use, occupancy or maintenance of the Premises. The
minimum limit of coverage of such policy shall be in the amount of not less than
Two Million Dollars ($2,000,000.00) for injury or death of one person in any one
accident or occurrence and in the amount of not less than Two Million Dollars
($2,000,000.00) for injury or death of more than one person in any one accident
or occurrence, shall include an extended liability endorsement providing
contractual liability coverage (which shall include coverage for Tenant's
indemnification obligations in this Lease), and shall contain a severability of
interest clause or a cross liability endorsement. Such insurance shall further
insure Landlord and Tenant against liability for property damage of at least Two
Million Dollars ($2,000,000.00). Landlord may from time to time require
reasonable increases in any such limits if Landlord believes that additional
coverage is necessary or desirable. The limit of any insurance shall not limit
the liability of Tenant hereunder. No policy maintained by Tenant under this
Paragraph 15(a) shall contain a deductible greater than five thousand dollars
($5,000.00). No policy shall be cancelable or subject to reduction of coverage
without thirty (30) days prior written notice to Landlord, and loss payable
clauses shall be subject to Landlord's approval. Such policies of insurance
shall be issued as primary policies and not contributing with or in excess of
coverage that Landlord may carry, by an insurance company authorized to do
business in the State of



                                       16
<PAGE>   21

California for the issuance of such type of insurance coverage and rated A:XIII
or better in Best's Key Rating Guide.

     (b) PERSONAL PROPERTY INSURANCE. Tenant shall maintain in full force and
effect on all of its personal property, furniture, furnishings, trade or
business fixtures and equipment (collectively, "Tenant's Property") on the
Premises, a policy or policies of fire and extended coverage insurance with
standard coverage endorsement to the extent of the full replacement cost
thereof. No such policy shall contain a deductible greater than five thousand
dollars ($5,000.00). During the term of this Lease the proceeds from any such
policy or policies of insurance shall be used for the repair or replacement of
the fixtures and equipment so insured. Landlord shall have no interest in the
insurance upon Tenant's equipment and fixtures and will sign all documents
reasonably necessary in connection with the settlement of any claim or loss by
Tenant. Landlord will not carry insurance on Tenant's possessions.

     (c) WORKER'S COMPENSATION INSURANCE; EMPLOYER'S LIABILITY INSURANCE. Tenant
shall, at Tenant's expense, maintain in full force and effect worker's
compensation insurance with not less than the minimum limits required by law,
and employer's liability insurance with a minimum limit of coverage of One
Million Dollars ($1,000,000).

     (d) EVIDENCE OF COVERAGE. Tenant shall deliver to Landlord certificates of
insurance and true and complete copies of any and all endorsements required
herein for all insurance required to be maintained by Tenant hereunder at the
time of execution of this Lease by Tenant. Tenant shall, at least fifteen (15)
days prior to expiration of each policy, furnish Landlord with certificates of
renewal or "binders" thereof. Each certificate shall expressly provide that such
policies shall not be cancellable or otherwise subject to modification except
after fifteen (15) days prior written notice to Landlord and the other parties
named as additional insureds as required in this Lease (except for cancellation
for nonpayment of premium, in which event cancellation shall not take effect
until at least ten (10) days notice has been given to Landlord).

16   INDEMNIFICATION

     (a) OF LANDLORD. Tenant shall indemnify and hold harmless Landlord and
Landlord's Agents against and from any and all claims, liabilities, judgments,
costs, demands, causes of action and expenses (including, without limitation,
reasonable attorneys' fees) arising from (1) the use of the Premises, the
Building or the Project by Tenant or Tenant's Agents, or from any activity done,
permitted or suffered by Tenant or Tenant's Agents in or about the Premises, the
Building or the Project, and (2) any act, neglect, fault, willful misconduct or
omission of Tenant or Tenant's Agents, or from any breach or default in the
terms of this Lease by Tenant or Tenant's Agents, and (3) any action or
proceeding brought on account of any matter in items (1) or (2). If any action
or proceeding is brought against Landlord by reason of any such claim, upon
notice from Landlord, Tenant shall defend the same at Tenant's expense by
counsel reasonably



                                       17
<PAGE>   22

satisfactory to Landlord. As a material part of the consideration to Landlord,
Tenant hereby releases Landlord and Landlord's Agents from responsibility for,
waives its entire claim of recovery for and assumes all risk of (i) damage to
property or injury to persons in or about the Premises, the Building or the
Project from any cause whatsoever (except that which is caused by the gross
negligence or willful misconduct of Landlord or Landlord's Agents or by the
failure of Landlord to observe any of the terms and conditions of this Lease, if
such failure has persisted for an unreasonable period of time after written
notice of such failure), or (ii) loss resulting from business interruption or
loss of income at the Premises. The obligations of Tenant under this Paragraph
16 shall survive any termination of this Lease.

     (b) OF TENANT. Landlord shall indemnify and hold harmless Tenant and
Tenant's Agents against and from any and all claims, liabilities, judgments,
costs, demands, causes of action and expenses (including, without limitation,
reasonable attorneys' fees) arising from any gross negligence or willful
misconduct of Landlord or Landlord's Agents and any action or proceeding brought
on account of such gross negligence or wilful misconduct. If any action or
proceeding is brought against Tenant by reason of any such claim, upon notice
from Tenant, Landlord shall defend the same at Tenant's expense by counsel
reasonably satisfactory to Tenant. The obligations of Landlord under this
Paragraph 16 shall survive any termination of this Lease.

     (b) NO IMPAIRMENT OF INSURANCE. The foregoing indemnity shall not relieve
any insurance carrier of its obligations under any policies required to be
carried by either party pursuant to this Lease, to the extent that such policies
cover the peril or occurrence that results in the claim that is subject to the
foregoing indemnity.

17   SUBROGATION

     Landlord and Tenant hereby mutually waive any claim against the other and
its Agents for any loss or damage to any of their property located on or about
the Premises, the Building or the Project that is caused by or results from
perils covered by property insurance carried by the respective parties, to the
extent of the proceeds of such insurance actually received with respect to such
loss or damage, whether or not due to the negligence of the other party or its
Agents. Because the foregoing waivers will preclude the assignment of any claim
by way of subrogation to an insurance company or any other person, each party
now agrees to immediately give to its insurer written notice of the terms of
these mutual waivers and shall have their insurance policies endorsed to prevent
the invalidation of the insurance coverage because of these waivers. Nothing in
this Paragraph 17 shall relieve a party of liability to the other for failure to
carry insurance required by this Lease.



                                       18
<PAGE>   23

18   SIGNS

     Tenant shall not place or permit to be placed in, upon, or about the
Premises, the Building or the Project any exterior lights, decorations,
balloons, flags, pennants, banners, advertisements or notices, or erect or
install any signs, windows or door lettering, placards, decorations, or
advertising media of any type which can be viewed from the exterior the Premises
without obtaining Landlord's prior written consent or without complying with
Landlord's signage criteria specified on Exhibit E hereto, as the same may be
modified by Landlord from time to time, and with all applicable Laws, and will
not conduct, or permit to be conducted, any sale by auction on the Premises or
otherwise on the Project. Tenant shall remove any sign, advertisement or notice
placed on the Premises, the Building or the Project by Tenant upon the
expiration of the Term or sooner termination of this Lease, and Tenant shall
repair any damage or injury to the Premises, the Building or the Project caused
thereby, all at Tenant's expense. If any signs are not removed, or necessary
repairs not made, Landlord shall have the right to remove the signs and repair
any damage or injury to the Premises, the Building or the Project at Tenant's
sole cost and expense.

19   FREE FROM LIENS

     Tenant shall keep the Premises, the Building and the Project free from any
liens arising out of any work performed, material furnished or obligations
incurred by or for Tenant. In the event that Tenant shall not, within twenty
(20) days following the imposition of any such lien, cause the lien to be
released of record by payment or posting of a proper bond, Landlord shall have
in addition to all other remedies provided herein and by law the right but not
the obligation to cause same to be released by such means as it shall deem
proper, including payment of the claim giving rise to such lien. All such sums
paid by Landlord and all expenses incurred by it in connection therewith
(including, without limitation, reasonable attorneys' fees) shall be payable to
Landlord by Tenant upon demand. Landlord shall have the right at all times to
post and keep posted on the Premises any notices permitted or required by law or
that Landlord shall deem proper for the protection of Landlord, the Premises,
the Building and the Project, from mechanics' and materialmen's liens. Tenant
shall give to Landlord at least five (5) business days' prior written notice of
commencement of any repair or construction on the Premises.



                                       19
<PAGE>   24

20   ENTRY BY LANDLORD

     Tenant shall permit Landlord and Landlord's Agents to enter into and upon
the Premises at all reasonable times, upon reasonable notice (except in the case
of an emergency, for which no notice shall be required), and subject to Tenant's
reasonable security arrangements, for the purpose of inspecting the same or
showing the Premises to prospective purchasers, lenders or tenants or to alter,
improve, maintain and repair the Premises or the Building as required or
permitted of Landlord under the terms hereof, or for any other business purpose,
without any rebate of Rent and without any liability to Tenant for any loss of
occupation or quiet enjoyment of the Premises thereby occasioned (except for
actual damages resulting from the gross negligence or willful misconduct of
Landlord); and Tenant shall permit Landlord to post notices of
non-responsibility and ordinary "for sale" or "for lease" signs. No such entry
shall be construed to be a forcible or unlawful entry into, or a detainer of,
the Premises, or an eviction of Tenant from the Premises. Landlord may
temporarily close entrances, doors, corridors, elevators or other facilities
without liability to Tenant by reason of such closure in the case of an
emergency and when Landlord otherwise deems such closure necessary.

21   DESTRUCTION AND DAMAGE

     (a) If the Premises are damaged by fire or other perils covered by extended
coverage insurance, Landlord shall, at Landlord's option:

          (1) In the event of total destruction (which shall mean destruction or
damage in excess of twenty-five percent (25%) of the full insurable value
thereof) of the Premises, elect either to commence promptly to repair and
restore the Premises and prosecute the same diligently to completion, in which
event this Lease shall remain in full force and effect; or not to repair or
restore the Premises, in which event this Lease shall terminate. Landlord shall
give Tenant written notice of its intention within sixty (60) days after the
date (the "Casualty Discovery Date") Landlord obtains actual knowledge of such
destruction. If Landlord elects not to restore the Premises, this Lease shall be
deemed to have terminated as of the date of such total destruction.

          (2) In the event of a partial destruction (which shall mean
destruction or damage to an extent not exceeding twenty-five percent (25%) of
the full insurable value thereof) of the Premises for which Landlord will
receive insurance proceeds sufficient to cover the cost to repair and restore
such partial destruction and, if the damage thereto is such that the Premises
may be substantially repaired or restored to its condition existing immediately
prior to such damage or destruction within one hundred eighty (180) days from
the Casualty Discovery Date, Landlord shall commence and proceed diligently with
the work of repair and restoration, in which event the Lease shall continue in
full force and effect. If such repair and restoration requires longer than one
hundred eighty (180) days or if the insurance proceeds therefor (plus any
amounts Tenant may elect or is obligated to contribute) are not sufficient to
cover the cost of such repair and restoration,



                                       20
<PAGE>   25

Landlord may elect either to so repair and restore, in which event the Lease
shall continue in full force and effect, or not to repair or restore, in which
event the Lease shall terminate. In either case, Landlord shall give written
notice to Tenant of its intention within sixty (60) days after the Casualty
Discovery Date. If Landlord elects not to restore the Premises, this Lease shall
be deemed to have terminated as of the date of such partial destruction.

          (3) Notwithstanding anything to the contrary contained in this
Paragraph, in the event of material damage to the Premises occurring during the
last twelve (12) months of the Term, Landlord or, if such damage is not caused,
in whole or in part, by the actions or inactions of Tenant or Tenant's Agents
and if Landlord receives rental abatement insurance proceeds for the balance of
the Term (provided, however, that such rental abatement insurance proceeds
condition shall not apply if Landlord fails to procure available rental
abatement insurance), Tenant may elect to terminate this Lease by written notice
of such election given to the other within thirty (30) days after the Casualty
Discovery Date.

     (b) If the Premises are damaged by any peril not covered by extended
coverage insurance, and the cost to repair such damage exceeds any amount Tenant
may agree to contribute, Landlord may elect either to commence promptly to
repair and restore the Premises and prosecute the same diligently to completion,
in which event this Lease shall remain in full force and effect; or not to
repair or restore the Premises, in which event this Lease shall terminate.
Landlord shall give Tenant written notice of its intention within sixty (60)
days after the Casualty Discovery Date. If Landlord elects not to restore the
Premises, this Lease shall be deemed to have terminated as of the date on which
Tenant surrenders possession of the Premises to Landlord, except that if the
damage to the Premises materially impairs Tenant's ability to continue its
business operations in the Premises, then this Lease shall be deemed to have
terminated as of the date such damage occurred.

     (c) Notwithstanding anything to the contrary in this Paragraph 22, Landlord
shall have the option to terminate this Lease, exercisable by notice to Tenant
within sixty (60) days after the Casualty Discovery Date, in each of the
following instances:

          (1) If more than twenty-five percent (25%) of the full insurable value
of the Building or the Project is damaged or destroyed, regardless of whether or
not the Premises are destroyed.

          (2) If the Building or the Project or any portion thereof is damaged
or destroyed and the repair and restoration of such damage requires longer than
one hundred eighty (180) days from the Casualty Discovery Date.



                                       21
<PAGE>   26

          (3) If the Building or the Project or any portion thereof is damaged
or destroyed and the insurance proceeds therefor are not sufficient to cover the
costs of repair and restoration.

          (4) If the Building or the Project or any portion thereof is
materially damaged or destroyed during the last twelve (12) months of the Term.

     (d) In the event of material damage or destruction and during the repair
and restoration as herein provided of such material damage or destruction, the
monthly installments of Base Rent shall be abated proportionately in the ratio
which Tenant's use of the Premises is impaired during the period of such repair
or restoration, but only to the extent of rental abatement insurance proceeds
received by Landlord; provided, however, if Landlord fails to procure available
rental abatement insurance, the foregoing limitation on rental abatement shall
not apply; and further provided, however, that Tenant shall not be entitled to
such abatement to the extent that such damage or destruction resulted from the
acts or inaction of Tenant or Tenant's Agents. Except as expressly provided in
the immediately preceding sentence with respect to abatement of Base Rent,
Tenant shall have no claim against Landlord for, and hereby releases Landlord
and Landlord's Agents from responsibility for and waives its entire claim of
recovery for any cost, loss or expense suffered or incurred by Tenant as a
result of any damage to or destruction of the Premises, the Building or the
Project or the repair or restoration thereof, including, without limitation, any
cost, loss or expense resulting from any loss of use of the whole or any part of
the Premises, the Building or the Project and/or any inconvenience or annoyance
occasioned by such damage, repair or restoration.

     (e) If Landlord is obligated to or elects to repair or restore as herein
provided, Landlord shall repair or restore only the initial tenant improvements,
if any, constructed by Landlord in the Premises pursuant to the terms of this
Lease, substantially to their condition existing immediately prior to the
occurrence of the damage or destruction; and Tenant shall promptly repair and
restore, at Tenant's expense, Tenant's Alterations which were not constructed by
Landlord.

     (f) Tenant hereby waives the provisions of California Civil Code Section
1932(2) and Section 1933(4) which permit termination of a lease upon destruction
of the leased premises, and the provisions of any similar law now or hereinafter
in effect, and the provisions of this Paragraph 22 shall govern exclusively in
case of such destruction.



                                       22
<PAGE>   27

22   CONDEMNATION

     (a) If twenty-five percent (25%) or more of either the Premises, the
Building or the Project or the parking areas for the Building or the Project is
taken for any public or quasi-public purpose by any lawful governmental power or
authority, by exercise of the right of appropriation, inverse condemnation,
condemnation or eminent domain, or sold to prevent such taking (each such event
being referred to as a "Condemnation"), Landlord may, at its option, terminate
this Lease as of the earlier of the date title vests in the condemning party and
the date possession is denied Tenant by the condemning party. If twenty-five
percent (25%) or more of the Premises is taken and if the Premises remaining
after such Condemnation and any repairs by Landlord would be untenantable for
the conduct of Tenant's business operations, Tenant shall have the right to
terminate this Lease as of the earlier of the date title vests in the condemning
party and the date possession is denied Tenant by the condemning party. If
either party elects to terminate this Lease as provided herein, such election
shall be made by written notice to the other party given within thirty (30) days
after the nature and extent of such Condemnation have been finally determined.
If neither Landlord nor Tenant elects to terminate this Lease to the extent
permitted above, Landlord shall promptly proceed to restore the Premises, to the
extent of any Condemnation award received by Landlord, to substantially the same
condition as existed prior to such Condemnation, allowing for the reasonable
effects of such Condemnation, and a proportionate abatement shall be made to the
Base Rent corresponding to the time during which, and to the portion of the
floor area of the Premises (adjusted for any increase thereto resulting from any
reconstruction) of which, Tenant is deprived on account of such Condemnation and
restoration, as reasonably determined by Landlord. Except as expressly provided
in the immediately preceding sentence with respect to abatement of Base Rent,
Tenant shall have no claim against Landlord for, and hereby releases Landlord
and Landlord's Agents from responsibility for and waives its entire claim of
recovery for any cost, loss or expense suffered or incurred by Tenant as a
result of any Condemnation or the repair or restoration of the Premises, the
Building or the Project or the parking areas for the Building or the Project
following such Condemnation, including, without limitation, any cost, loss or
expense resulting from any loss of use of the whole or any part of the Premises,
the Building, the Project or the parking areas and/or any inconvenience or
annoyance occasioned by such Condemnation, repair or restoration. The provisions
of California Code of Civil Procedure Section 1265.130, which allows either
party to petition the Superior Court to terminate the Lease in the event of a
partial taking of the Premises, the Building or the Project or the parking areas
for the Building or the Project, and any other applicable law now or hereafter
enacted, are hereby waived by Tenant.

     (b) Landlord shall be entitled to any and all compensation, damages,
income, rent, awards, or any interest therein whatsoever which may be paid or
made in connection with any Condemnation, and Tenant shall have no claim against
Landlord for the value of any unexpired term of this Lease or otherwise;
provided, however, that Tenant shall be



                                       23
<PAGE>   28

entitled to receive any award separately allocated by the condemning authority
to Tenant for Tenant's relocation expenses or the value of Tenant's Property
(specifically excluding fixtures, Alterations and other components of the
Premises which under this Lease or by law are or at the expiration of the Term
will become the property of Landlord), provided that such award does not reduce
any award otherwise allocable or payable to Landlord.

23   ASSIGNMENT AND SUBLETTING

     (a) Tenant shall not voluntarily or by operation of law, (1) mortgage,
pledge, hypothecate or encumber this Lease or any interest herein, (2) assign or
transfer this Lease or any interest herein, sublease the Premises or any part
thereof, or any right or privilege appurtenant thereto, or allow any other
person (the employees and invitees of Tenant excepted) to occupy or use the
Premises, or any portion thereof, without first obtaining the written consent of
Landlord, which consent shall not be withheld unreasonably provided that (i)
Tenant is not then in Default under this Lease nor is any event then occurring
which with the giving of notice or the passage of time, or both, would
constitute a Default hereunder, and (ii) Tenant has not previously assigned or
transferred this Lease or any interest herein or subleased the Premises or any
part thereof. When Tenant requests Landlord's consent to such assignment or
subletting, it shall notify Landlord in writing of the name and address of the
proposed assignee or subtenant and the nature and character of the business of
the proposed assignee or subtenant and shall provide current and prior financial
statements for the proposed assignee or subtenant prepared in accordance with
generally accepted accounting principles. Tenant shall also provide Landlord
with a copy of the proposed sublease or assignment agreement, including all
material terms and conditions thereof. Landlord shall have the option, to be
exercised within thirty (30) days of receipt of the foregoing, to (1) terminate
this Lease as of the commencement date stated in the proposed sublease or
assignment, (2) sublease or take an assignment, as the case may be, from Tenant
of the interest in this Lease and/or the Premises that Tenant proposes to assign
or sublease, on the same terms and conditions as stated in the proposed sublet
or assignment agreement, (3) consent to the proposed assignment or sublease, or
(4) refuse its consent to the proposed assignment or sublease, providing that
such consent shall not be unreasonably withheld so long as Tenant is not then in
Default under this Lease nor is any event then occurring which with the giving
of notice or the passage of time, or both, would constitute a Default hereunder;
provided, however, that if Landlord makes the election set forth in the
foregoing clause (2), Tenant may revoke it request for consent by notifying
Landlord, within five (5) days after receiving notice of Landlord's election
under the foregoing clause (2), of Tenant's election to revoke its request, and,
in such event, it shall be deemed that Tenant never made such request for
consent. In the event Landlord elects to terminate this Lease` or sublease or
take an assignment from Tenant of the interest in the Lease and/or the Premises
that Tenant proposes to assign or sublease as provided in the foregoing clauses
(1) and (2), respectively, then Landlord shall have the additional right to
negotiate directly with Tenant's proposed assignee or subtenant and to enter
into a direct lease or



                                       24
<PAGE>   29

occupancy agreement with such party on such terms as shall be acceptable to
Landlord in its sole and absolute discretion, and Tenant hereby waives any
claims against Landlord related thereto, including, without limitation, any
claims for any compensation or profit related to such lease or occupancy
agreement.

     (b) Without otherwise limiting the criteria upon which Landlord may
withhold its consent, Landlord shall be entitled to consider all reasonable
criteria including, but not limited to, the following: (1) whether or not the
proposed subtenant or assignee is engaged in a business which, and the use of
the Premises will be in an manner which, is in keeping with the then character
and nature of all other tenancies in the Project, (2) whether the use to be made
of the Premises by the proposed subtenant or assignee will conflict with any
so-called "exclusive" use then in favor of any other tenant of the Building or
the Project, and whether such use would be prohibited by any other portion of
this Lease, including, but not limited to, any rules and regulations then in
effect, or under applicable Laws, and whether such use imposes a greater load
upon the Premises and the Building and Project services then imposed by Tenant,
(3) the business reputation of the proposed individuals who will be managing and
operating the business operations of the assignee or subtenant, and the
long-term financial and competitive business prospects of the proposed assignee
or subtenant, and (4) the creditworthiness and financial stability of the
proposed assignee or subtenant in light of the responsibilities involved. In any
event, Landlord may withhold its consent to any assignment or sublease, if (i)
the actual use proposed to be conducted in the Premises or portion thereof
conflicts with the provisions of Paragraph 9(a) or (b) above or with any other
lease which restricts the use to which any space in the Building or the Project
may be put, or (ii) the proposed assignment or sublease requires alterations,
improvements or additions to the Premises or portions thereof which would
otherwise require Landlord's consent.

     (c) If Landlord approves an assignment or subletting as herein provided,
Tenant shall pay to Landlord, as Additional Rent, the difference, if any,
between (1) the Base Rent plus Additional Rent allocable to that part of the
Premises affected by such assignment or sublease pursuant to the provisions of
this Lease, and (2) the rent and any additional rent payable by the assignee or
sublessee to Tenant, less reasonable and customary market-based leasing
commissions, if any, incurred by Tenant in connection with such assignment or
sublease. The assignment or sublease agreement, as the case may be, after
approval by Landlord, shall not be amended without Landlord's prior written
consent, and shall contain a provision directing the assignee or subtenant to
pay the rent and other sums due thereunder directly to Landlord upon receiving
written notice from Landlord that Tenant is in default under this Lease with
respect to the payment of Rent. In the event that, notwithstanding the giving of
such notice, Tenant collects any rent or other sums from the assignee or
subtenant, then Tenant shall hold such sums in trust for the benefit of Landlord
and shall immediately forward the same to Landlord. Landlord's collection of
such rent and other sums shall not constitute an acceptance by Landlord of
attornment by such assignee or subtenant. A consent to one assignment,



                                       25
<PAGE>   30

subletting, occupation or use shall not be deemed to be a consent to any other
or subsequent assignment, subletting, occupation or use, and consent to any
assignment or subletting shall in no way relieve Tenant of any liability under
this Lease. Any assignment or subletting without Landlord's consent shall be
void, and shall, at the option of Landlord, constitute a Default under this
Lease.

     (d) Notwithstanding any assignment or subletting, Tenant and any guarantor
or surety of Tenant's obligations under this Lease shall at all times remain
fully responsible and liable for the payment of the Rent and for compliance with
all of Tenant's other obligations under this Lease (regardless of whether
Landlord's approval has been obtained for any such assignment or subletting).

     (e) Tenant shall pay Landlord's reasonable fees not to exceed $1,500
(including, without limitation, the fees of Landlord's counsel), incurred in
connection with Landlord's review and processing of documents regarding any
proposed assignment or sublease.

     (f) Notwithstanding anything in this Lease to the contrary, in the event
Landlord consents to an assignment or subletting by Tenant in accordance with
the terms of this Paragraph 24, Tenant's assignee or subtenant shall have no
right to further assign this Lease or any interest therein or thereunder or to
further sublease all or any portion of the Premises. In furtherance of the
foregoing, Tenant acknowledges and agrees on behalf of itself and any assignee
or subtenant claiming under it (and any such assignee or subtenant by accepting
such assignment or sublease shall be deemed to acknowledge and agree) that no
sub-subleases or further assignments of this Lease shall be permitted at any
time.

     (g) Tenant acknowledges and agrees that the restrictions, conditions and
limitations imposed by this Paragraph 24 on Tenant's ability to assign or
transfer this Lease or any interest herein, to sublet the Premises or any part
thereof, to transfer or assign any right or privilege appurtenant to the
Premises, or to allow any other person to occupy or use the Premises or any
portion thereof, are, for the purposes of California Civil Code Section 1951.4,
as amended from time to time, and for all other purposes, reasonable at the time
that the Lease was entered into, and shall be deemed to be reasonable at the
time that Tenant seeks to assign or transfer this Lease or any interest herein,
to sublet the Premises or any part thereof, to transfer or assign any right or
privilege appurtenant to the Premises, or to allow any other person to occupy or
use the Premises or any portion thereof.

     (h) Notwithstanding anything in this Lease to the contrary, an assignment
or sublet of this Lease shall not include (i) any initial or subsequent public
stock offering by Tenant or (ii) if Tenant is a public company, any sale or
transfer of capital stock of Tenant.



                                       26
<PAGE>   31

24   TENANT'S DEFAULT

     The occurrence of any one of the following events shall constitute an event
of default on the part of Tenant ("Default"):

     (a) The vacation or abandonment of the Premises by Tenant for a period of
ten (10) consecutive days or any vacation or abandonment of the Premises by
Tenant which would cause any insurance policy to be invalidated or otherwise
lapse, or the failure of Tenant to continuously operate Tenant's business in the
Premises, in each of the foregoing cases irrespective of whether or not Tenant
is then in monetary default under this Lease. With respect to this clause (a),
Tenant agrees to notice and service of notice as provided for in this Lease and
waives any right to any other or further notice or service of notice which
Tenant may have under any statute or law now or hereafter in effect;

     (b) Failure to pay any installment of Rent or any other monies due and
payable hereunder, said failure continuing for a period of five (5) days after
the same is due;

     (c) A general assignment by Tenant or any guarantor or surety of Tenant's
obligations hereunder (collectively, "Guarantor") for the benefit of creditors;

     (d) The filing of a voluntary petition in bankruptcy by Tenant or any
Guarantor, the filing by Tenant or any Guarantor of a voluntary petition for an
arrangement, the filing by or against Tenant or any Guarantor of a petition,
voluntary or involuntary, for reorganization, or the filing of an involuntary
petition by the creditors of Tenant or any Guarantor, said involuntary petition
remaining undischarged for a period of sixty (60) days;

     (e) Receivership, attachment, or other judicial seizure of substantially
all of Tenant's assets on the Premises, such attachment or other seizure
remaining undismissed or undischarged for a period of sixty (60) days after the
levy thereof;

     (f) Death or disability of Tenant or any Guarantor, if Tenant or such
Guarantor is a natural person, or the failure by Tenant or any Guarantor to
maintain its legal existence, if Tenant or such Guarantor is a corporation,
partnership, limited liability company, trust or other legal entity;

     (g) Failure of Tenant to execute and deliver to Landlord any estoppel
certificate, subordination agreement, or lease amendment within the time periods
and in the manner required by Paragraphs 30 or 31 or 42;

     (h) An assignment or sublease, or attempted assignment or sublease, of this
Lease or the Premises by Tenant contrary to the provision of Paragraph 24,
unless such assignment or sublease is expressly conditioned upon Tenant having
received Landlord's consent thereto;



                                       27
<PAGE>   32

     (i) Failure of Tenant to restore the Security Deposit to the amount and
within the time period provided in Paragraph 7 above;

     (j) Failure in the performance of any of Tenant's covenants, agreements or
obligations hereunder (except those failures specified as events of Default in
subparagraphs (b), (l) or (m) of this Paragraph 24 or any other subparagraphs of
this Paragraph 24, which shall be governed by such other Paragraphs), which
failure continues for ten (10) days after written notice thereof from Landlord
to Tenant, provided that, if Tenant has exercised reasonable diligence to cure
such failure and such failure cannot be cured within such ten (10) day period
despite reasonable diligence, Tenant shall not be in default under this
subparagraph so long as Tenant thereafter diligently and continuously prosecutes
the cure to completion and actually completes such cure within sixty (60) days
after the giving of the aforesaid written notice. With respect to this clause
(j), Tenant agrees to notice and service of notice as provided for in this Lease
and waives any right to any other or further notice or service of notice which
Tenant may have under any statute or law now or hereafter in effect;

     (k) Chronic delinquency by Tenant in the payment of Rent, or any other
periodic payments required to be paid by Tenant under this Lease. "Chronic
delinquency" shall mean failure by Tenant to pay Rent, or any other payments
required to be paid by Tenant under this Lease within three (3) days after
written notice thereof for any three (3) months (consecutive or nonconsecutive)
during any period of twelve (12) months. In the event of a Chronic Delinquency,
in addition to Landlord's other remedies for Default provided in this Lease, at
Landlord's option, Landlord shall have the right to require that Rent be paid by
Tenant quarterly, in advance;

     (l) Chronic overuse by Tenant or Tenant's Agents of the number of
undesignated parking spaces set forth in the Basic Lease Information. "Chronic
Overuse" shall mean use by Tenant or Tenant's Agents of a number of parking
spaces greater than the number of parking spaces set forth in the Basic Lease
Information more than three (3) times during the Term after written notice by
Landlord;

     (m) Any insurance required to be maintained by Tenant pursuant to this
Lease shall be canceled or terminated or shall expire or be reduced or
materially changed, except as permitted in this Lease; and

     (n) Any failure by Tenant to discharge any lien or encumbrance placed on
the Project or any part thereof arising out of any work performed, material
furnished, or obligations incurred by or for Tenant within Twenty (20) days
after the date such lien or encumbrance is filed or recorded against the Project
or any part thereof.

     Tenant agrees that any notice given by Landlord pursuant to Paragraph
25(j), (k) or (l) above shall satisfy the requirements for notice under
California Code of Civil



                                       28
<PAGE>   33

Procedure Section 1161, and Landlord shall not be required to give any
additional notice in order to be entitled to commence an unlawful detainer
proceeding.

25   LANDLORD'S REMEDIES

     (a) TERMINATION. In the event of any Default by Tenant, then in addition to
any other remedies available to Landlord at law or in equity and under this
Lease, Landlord shall have the immediate option to terminate this Lease and all
rights of Tenant hereunder by giving written notice of such intention to
terminate. In the event that Landlord shall elect to so terminate this Lease
then Landlord may recover from Tenant:

          (1) the worth at the time of award of any unpaid Rent and any other
sums due and payable which have been earned at the time of such termination;
plus

          (2) the worth at the time of award of the amount by which the unpaid
Rent and any other sums due and payable which would have been earned after
termination until the time of award exceeds the amount of such rental loss
Tenant proves could have been reasonably avoided; plus

          (3) the worth at the time of award of the amount by which the unpaid
Rent and any other sums due and payable for the balance of the term of this
Lease after the time of award exceeds the amount of such rental loss that Tenant
proves could be reasonably avoided; plus

          (4) 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 would be likely to result
therefrom, including, without limitation, (A) any costs or expenses incurred by
Landlord (1) in retaking possession of the Premises; (2) in maintaining,
repairing, preserving, restoring, replacing, cleaning, altering, remodeling or
rehabilitating the Premises or any affected portions of the Building or the
Project, including such actions undertaken in connection with the reletting or
attempted reletting of the Premises to a new tenant or tenants; (3) for leasing
commissions, advertising costs and other expenses of reletting the Premises; or
(4) in carrying the Premises, including taxes, insurance premiums, utilities and
security precautions; (B) any unearned brokerage commissions paid in connection
with this Lease; (C) reimbursement of any previously waived or abated Base Rent
or Additional Rent or any free rent or reduced rental rate granted hereunder;
and (D) any concession made or paid by Landlord to the benefit of Tenant in
consideration of this Lease including, but not limited to, any moving
allowances, contributions, payments or loans by Landlord for tenant improvements
or build-out allowances (including without limitation, any unamortized portion
of the Tenant Improvement Allowance (such Tenant Improvement Allowance to be
amortized over the Term in the manner reasonably determined by Landlord), if
any, and any outstanding balance (principal and accrued interest) of the



                                       29
<PAGE>   34

Tenant Improvement Loan, if any), or assumptions by Landlord of any of Tenant's
previous lease obligations; plus

          (5) such reasonable attorneys' fees incurred by Landlord as a result
of a Default, and costs in the event suit is filed by Landlord to enforce such
remedy; and plus

          (6) 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.

As used in subparagraphs (1) and (2) above, the "worth at the time of award" is
computed by allowing interest at an annual rate equal to twelve percent (12%)
per annum or the maximum rate permitted by law, whichever is less. As used in
subparagraph (3) above, the "worth at the time of award" is 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%). Tenant waives redemption
or relief from forfeiture under California Code of Civil Procedure Sections 1174
and 1179, or under any other pertinent present or future Law, in the event
Tenant is evicted or Landlord takes possession of the Premises by reason of any
Default of Tenant hereunder.

     (b) CONTINUATION OF LEASE. In the event of any Default by Tenant, then in
addition to any other remedies available to Landlord at law or in equity and
under this Lease, Landlord shall have the remedy described in California Civil
Code Section 1951.4 (Landlord may continue this Lease in effect after Tenant's
Default and abandonment and recover Rent as it becomes due, provided Tenant has
the right to sublet or assign, subject only to reasonable limitations). In
addition, but without limitation upon Landlord's statutory obligation to
mitigate damages, Landlord shall not be liable in any way whatsoever for its
failure or refusal to relet the Premises. For purposes of this Paragraph 26(b),
the following acts by Landlord will not constitute the termination of Tenant's
right to possession of the Premises:

          (1) Acts of maintenance or preservation or efforts to relet the
Premises, including, but not limited to, alterations, remodeling, redecorating,
repairs, replacements and/or painting as Landlord shall consider advisable for
the purpose of reletting the Premises or any part thereof; or

          (2) The appointment of a receiver upon the initiative of Landlord to
protect Landlord's interest under this Lease or in the Premises.

     (c) RE-ENTRY. In the event of any Default by Tenant, Landlord shall also
have the right, with or without terminating this Lease, in compliance with
applicable law, to re-enter the Premises and remove all persons and property
from the Premises; such property may be removed and stored in a public warehouse
or elsewhere at the cost of and for the account of Tenant.



                                       30
<PAGE>   35

     (d) RELETTING. In the event of the abandonment of the Premises by Tenant or
in the event that Landlord shall elect to re-enter as provided in Paragraph
26(c) or shall take possession of the Premises pursuant to legal proceeding or
pursuant to any notice provided by law, then if Landlord does not elect to
terminate this Lease as provided in Paragraph 26(a), Landlord may from time to
time, without terminating this Lease, relet the Premises or any part thereof for
such term or terms and at such rental or rentals and upon such other terms and
conditions as Landlord in its sole discretion may deem advisable with the right
to make alterations and repairs to the Premises in Landlord's sole discretion.
In the event that Landlord shall elect to so relet, then rentals received by
Landlord from such reletting shall be applied in the following order: (1) to
reasonable attorneys' fees incurred by Landlord as a result of a Default and
costs in the event suit is filed by Landlord to enforce such remedies; (2) to
the payment of any indebtedness other than Rent due hereunder from Tenant to
Landlord; (3) to the payment of any costs of such reletting; (4) to the payment
of the costs of any reasonable alterations and repairs to the Premises; (5) to
the payment of Rent due and unpaid hereunder; and (6) the residue, if any, shall
be held by Landlord and applied in payment of future Rent and other sums payable
by Tenant hereunder as the same may become due and payable hereunder. Should
that portion of such rentals received from such reletting during any month,
which is applied to the payment of Rent hereunder, be less than the Rent payable
during the month by Tenant hereunder, then Tenant shall pay such deficiency to
Landlord. Such deficiency shall be calculated and paid monthly. Tenant shall
also pay to Landlord, as soon as ascertained, any costs and expenses incurred by
Landlord in such reletting or in making such alterations and repairs not covered
by the rentals received from such reletting.

     (e) TERMINATION. No re-entry or taking of possession of the Premises by
Landlord pursuant to this Paragraph 26 shall be construed as an election to
terminate this Lease unless a written notice of such intention is given to
Tenant or unless the termination thereof is decreed by a court of competent
jurisdiction. Notwithstanding any reletting without termination by Landlord
because of any Default by Tenant, Landlord may at any time after such reletting
elect to terminate this Lease for any such Default.

     (f) CUMULATIVE REMEDIES. The remedies herein provided are not exclusive and
Landlord shall have any and all other remedies provided herein or by law or in
equity.

     (g) NO SURRENDER. No act or conduct of Landlord, whether consisting of the
acceptance of the keys to the Premises, or otherwise, shall be deemed to be or
constitute an acceptance of the surrender of the Premises by Tenant prior to the
expiration of the Term, and such acceptance by Landlord of surrender by Tenant
shall only flow from and must be evidenced by a written acknowledgment of
acceptance of surrender signed by Landlord. The surrender of this Lease by
Tenant, voluntarily or otherwise, shall not work a merger unless Landlord elects
in writing that such merger take place, but shall operate as an assignment to
Landlord of any and all existing subleases, or Landlord may, at its



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<PAGE>   36

option, elect in writing to treat such surrender as a merger terminating
Tenant's estate under this Lease, and thereupon Landlord may terminate any or
all such subleases by notifying the sublessee of its election so to do within
five (5) days after such surrender.

26.  LANDLORD'S RIGHT TO PERFORM TENANT'S OBLIGATIONS

     (a) Without limiting the rights and remedies of Landlord contained in
Paragraph 26 above, if Tenant shall be in Default in the performance of any of
the terms, provisions, covenants or conditions to be performed or complied with
by Tenant pursuant to this Lease, then Landlord may at Landlord's option,
without any obligation to do so, and without notice to Tenant perform any such
term, provision, covenant, or condition, or make any such payment and Landlord
by reason of so doing shall not be liable or responsible for any loss or damage
thereby sustained by Tenant or anyone holding under or through Tenant or any of
Tenant's Agents.

     (b) Without limiting the rights of Landlord under Paragraph 26(a) above,
Landlord shall have the right at Landlord's option, without any obligation to do
so, to perform any of Tenant's covenants or obligations under this Lease without
notice to Tenant in the case of an emergency, as determined by Landlord in its
sole and absolute judgment, or if Landlord otherwise determines in its sole
discretion that such performance is necessary or desirable for the proper
management and operation of the Building or the Project or for the preservation
of the rights and interests or safety of other tenants of the Building or the
Project.

     (c) If Landlord performs any of Tenant's obligations hereunder in
accordance with this Paragraph 26, the full amount of the cost and expense
incurred or the payment so made or the amount of the loss so sustained shall
immediately be owing by Tenant to Landlord, and Tenant shall promptly pay to
Landlord upon demand, as Additional Rent, the full amount thereof with interest
thereon from the date of payment by Landlord at the lower of (1) ten percent
(10%) per annum, or (2) the highest rate permitted by applicable law.

27.  ATTORNEY'S FEES

     (a) If either party hereto fails to perform any of its obligations under
this Lease or if any dispute arises between the parties hereto concerning the
meaning or interpretation of any provision of this Lease, then the defaulting
party or the party not prevailing in such dispute, as the case may be, shall pay
any and all costs and expenses incurred by the other party on account of such
default and/or in enforcing or establishing its rights hereunder, including,
without limitation, court costs and reasonable attorneys' fees and
disbursements. Any such attorneys' fees and other expenses incurred by either
party in enforcing a judgment in its favor under this Lease shall be recoverable
separately from and in addition to any other amount included in such judgment,
and such attorneys' fees



                                       32
<PAGE>   37

obligation is intended to be severable from the other provisions of this Lease
and to survive and not be merged into any such judgment.

     (b) Without limiting the generality of Paragraph 27(a) above, if Landlord
utilizes the services of an attorney for the purpose of collecting any Rent due
and unpaid by Tenant or in connection with any other breach of this Lease by
Tenant, Tenant agrees to pay Landlord reasonable attorneys' fees as determined
by Landlord for such services, regardless of the fact that no legal action may
be commenced or filed by Landlord.

28.  TAXES

     Tenant shall be liable for and shall pay, prior to delinquency, all taxes
levied against Tenant's Property. If any Alteration installed by Tenant pursuant
to Paragraph 11 or any of Tenant's Property is assessed and taxed with the
Project or Building, Tenant shall pay such taxes to Landlord within ten (10)
days after delivery to Tenant of a statement therefor.

29.  EFFECT OF CONVEYANCE

     The term "Landlord" as used in this Lease means, from time to time, the
then current owner of the Building or the Project containing the Premises, so
that, in the event of any sale of the Building or the Project, Landlord shall be
and hereby is entirely freed and relieved of all covenants and obligations of
Landlord hereunder, and it shall be deemed and construed, without further
agreement between the parties and the purchaser at any such sale, that the
purchaser of the Building or the Project has assumed and agreed to carry out any
and all covenants and obligations of Landlord hereunder.

30.  TENANT'S ESTOPPEL CERTIFICATE

     From time to time, upon written request of Landlord, Tenant shall execute,
acknowledge and deliver to Landlord or its designee, a written certificate
stating (a) the date this Lease was executed, the Commencement Date of the Term
and the date the Term expires; (b) the date Tenant entered into occupancy of the
Premises; (c) the amount of Rent and the date to which such Rent has been paid;
(d) that this Lease is in full force and effect and has not been assigned,
modified, supplemented or amended in any way (or, if assigned, modified,
supplemented or amended, specifying the date and terms of any agreement so
affecting this Lease); (e) that this Lease represents the entire agreement
between the parties with respect to Tenant's right to use and occupy the
Premises (or specifying such other agreements, if any); (f) that all obligations
under this Lease to be performed by Landlord as of the date of such certificate
have been satisfied (or specifying those as to which Tenant claims that Landlord
has yet to perform); (g) that all required contributions by Landlord to Tenant
on account of Tenant's improvements have been received (or stating exceptions
thereto); (h) that on such date there exist no defenses or



                                       33
<PAGE>   38

offsets that Tenant has against the enforcement of this Lease by Landlord (or
stating exceptions thereto); (i) that no Rent or other sum payable by Tenant
hereunder has been paid more than one (1) month in advance (or stating
exceptions thereto); (j) that security has been deposited with Landlord, stating
the original amount thereof and any increases thereto; and (k) any other matters
evidencing the status of this Lease that may be required either by a lender
making a loan to Landlord to be secured by a deed of trust covering the Building
or the Project or by a purchaser of the Building or the Project. Any such
certificate delivered pursuant to this Paragraph 30 may be relied upon by a
prospective purchaser of Landlord's interest or a mortgagee of Landlord's
interest or assignee of any mortgage upon Landlord's interest in the Premises.
If Tenant shall fail to provide such certificate within ten (10) days of receipt
by Tenant of a written request by Landlord as herein provided, such failure
shall, at Landlord's election, constitute a Default under this Lease, and Tenant
shall be deemed to have given such certificate as above provided without
modification and shall be deemed to have admitted the accuracy of any
information supplied by Landlord to a prospective purchaser or mortgagee.

31.  SUBORDINATION

     Landlord shall have the right to cause this Lease to be and remain subject
and subordinate to any and all mortgages, deeds of trust and ground leases, if
any ("Encumbrances") that are now or may hereafter be executed covering the
Premises, or any renewals, modifications, consolidations, replacements or
extensions thereof, for the full amount of all advances made or to be made
thereunder and without regard to the time or character of such advances,
together with interest thereon and subject to all the terms and provisions
thereof; provided only, that in the event of termination of any such ground
lease or upon the foreclosure of any such mortgage or deed of trust, so long as
Tenant is not in default, the holder thereof ("Holder") shall agree to recognize
Tenant's rights under this Lease as long as Tenant shall pay the Rent and
observe and perform all the provisions of this Lease to be observed and
performed by Tenant. Within ten (10) days after Landlord's written request,
Tenant shall execute, acknowledge and deliver any and all reasonable documents
required by Landlord or the Holder to effectuate such subordination. If Tenant
fails to do so, such failure shall constitute a Default by Tenant under this
Lease. Notwithstanding anything to the contrary set forth in this Paragraph 31,
Tenant agrees to attorn to any person or entity purchasing or otherwise
acquiring the Premises at any sale or other proceeding or pursuant to the
exercise of any other rights, powers or remedies under such Encumbrance;
provided, however, that if the Lease is subject and subordinate to such
Encumbrance, Tenant's agreement to attorn shall be subject to the agreement of
such person or entity to recognize Tenant's rights under this Lease as long as
Tenant shall pay the Rent and observe and perform all the provisions of this
Lease to be observed and performed by Tenant.



                                       34
<PAGE>   39

32.  ENVIRONMENTAL COVENANTS

     (a) Prior to executing this Lease, Tenant has completed, executed and
delivered to Landlord a Hazardous Materials Disclosure Certificate ("Initial
Disclosure Certificate"), a fully completed copy of which is attached hereto as
Exhibit F and incorporated herein by this reference. Tenant covenants,
represents and warrants to Landlord that the information on the Initial
Disclosure Certificate is true and correct and accurately describes the
Hazardous Materials which will be manufactured, treated, used or stored on or
about the Premises by Tenant or Tenant's Agents. Tenant shall, on each
anniversary of the Commencement Date and at such other times as Tenant desires
to manufacture, treat, use or store on or about the Premises new or additional
Hazardous Materials which were not listed on the Initial Disclosure Certificate,
complete, execute and deliver to Landlord an updated Disclosure Certificate
(each, an "Updated Disclosure Certificate") describing Tenant's then current and
proposed future uses of Hazardous Materials on or about the Premises, which
Updated Disclosure Certificates shall be in the same format as that which is set
forth in Exhibit F or in such updated format as Landlord may require from time
to time. Tenant shall deliver an Updated Disclosure Certificate to Landlord not
less than thirty (30) days prior to the date Tenant intends to commence the
manufacture, treatment, use or storage of new or additional Hazardous Materials
on or about the Premises, and Landlord shall have the right to approve or
disapprove such new or additional Hazardous Materials in its sole and absolute
discretion. Tenant shall make no use of Hazardous Materials on or about the
Premises except as described in the Initial Disclosure Certificate or as
otherwise approved by Landlord in writing in accordance with this Paragraph
32(a).

     (b) As used in this Lease, the term "Hazardous Materials" shall mean and
include any substance that is or contains (1) any "hazardous substance" as now
or hereafter defined in Section 101(14) of the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended ("CERCLA") (42
U.S.C. Section 9601 et seq.) or any regulations promulgated under CERCLA; (2)
any "hazardous waste" as now or hereafter defined in the Resource Conservation
and Recovery Act, as amended ("RCRA") (42 U.S.C. Section 6901 et seq.) or any
regulations promulgated under RCRA; (3) any substance now or hereafter regulated
by the Toxic Substances Control Act, as amended ("TSCA") (15 U.S.C. Section 2601
et seq.) or any regulations promulgated under TSCA; (4) petroleum, petroleum
by-products, gasoline, diesel fuel, or other petroleum hydrocarbons; (5)
asbestos and asbestos-containing material, in any form, whether friable or
non-friable; (6) polychlorinated biphenyls; (7) lead and lead-containing
materials; or (8) any additional substance, material or waste (A) the presence
of which on or about the Premises requires reporting, investigation or
remediation under any Environmental Laws (as hereinafter defined), or (B) which
is now or is hereafter classified or considered to be hazardous or toxic under
any Environmental Laws.



                                       35
<PAGE>   40

     (c) As used in this Lease, the term "Environmental Laws" shall mean and
include (1) CERCLA, RCRA and TSCA; and (2) any other federal, state or local
laws, ordinances, statutes, codes, rules, regulations, orders or decrees now or
hereinafter in effect relating to (A) pollution, (B) the protection or
regulation of human health, natural resources or the environment, (C) the
treatment, storage or disposal of Hazardous Materials, or (D) the emission,
discharge, release or threatened release of Hazardous Materials into the
environment.

     (d) Tenant agrees that during its use and occupancy of the Premises it will
(1) not (A) permit Hazardous Materials to be present on or about the Premises
except in a manner and quantity necessary for the ordinary performance of
Tenant's business or (B) release, discharge or dispose of any Hazardous
Materials on, in, at, under, or emanating from, the Premises, the Building or
the Project; (2) comply with all Environmental Laws relating to the Premises and
the use of Hazardous Materials on or about the Premises and not engage in or
permit others to engage in any activity at the Premises in violation of any
Environmental Laws; and (3) immediately notify Landlord of (A) any inquiry,
test, investigation or enforcement proceeding by any governmental agency or
authority against Tenant, Landlord or the Premises, Building or Project relating
to any Hazardous Materials or under any Environmental Laws or (B) the occurrence
of any event or existence of any condition that would cause a breach of any of
the covenants set forth in this Paragraph 32.

     (e) If Tenant's use of Hazardous Materials on or about the Premises results
in a release, discharge or disposal of Hazardous Materials on, in, at, under, or
emanating from, the Premises, the Building or the Project, Tenant agrees to
investigate, clean up, remove or remediate such Hazardous Materials in full
compliance with (1) the requirements of (A) all Environmental Laws and (B) any
governmental agency or authority responsible for the enforcement of any
Environmental Laws; and (2) any additional requirements of Landlord that are
reasonably necessary to protect the value of the Premises, the Building or the
Project.

     (f) Provided that Landlord reasonably believes that there may exist on or
about the Premises and surrounding areas any Hazardous Material or other
condition or activity that may be in violation of the requirements of this Lease
or any Environmental Laws, upon reasonable notice to Tenant, Landlord may
inspect the Premises and surrounding areas for the purpose of determining
whether there exists on or about the Premises any Hazardous Material or other
condition or activity that is in violation of the requirements of this Lease or
of any Environmental Laws. Such inspections may include, but are not limited to,
entering the Premises or adjacent property with drill rigs or other machinery
for the purpose of obtaining laboratory samples. Landlord shall not be limited
in the number of such inspections during the Term of this Lease. In the event
(1) such inspections reveal the presence of any such Hazardous Material or other
condition or activity in violation of the requirements of this Lease or of any
Environmental Laws, or



                                       36
<PAGE>   41

(2) Tenant or its Agents contribute or knowingly consent to the presence of any
Hazardous Materials in, on, under, through or about the Premises, the Building
or the Project or exacerbate the condition of or the conditions caused by any
Hazardous Materials in, on, under, through or about the Premises, the Building
or the Project, Tenant shall reimburse Landlord for the cost of such inspections
within ten (10) days of receipt of a written statement therefor. Tenant will
supply to Landlord such historical and operational information from and after
the Commencement Date regarding the Premises and surrounding areas as may be
reasonably requested to facilitate any such inspection and will make available
for meetings appropriate personnel having knowledge of such matters. Tenant
agrees to give Landlord at least sixty (60) days' prior notice of its intention
to vacate the Premises so that Landlord will have an opportunity to perform such
an inspection prior to such vacation. The right granted to Landlord herein to
perform inspections shall not create a duty on Landlord's part to inspect the
Premises, or liability on the part of Landlord for Tenant's use, storage,
treatment or disposal of Hazardous Materials, it being understood that Tenant
shall be solely responsible for all liability in connection therewith.

     (g) Landlord shall have the right, but not the obligation, prior or
subsequent to a Default, without in any way limiting Landlord's other rights and
remedies under this Lease, to enter upon the Premises, or to take such other
actions as it deems necessary or advisable, to investigate, clean up, remove or
remediate any Hazardous Materials or contamination by Hazardous Materials
present on, in, at, under, or emanating from, the Premises, the Building or the
Project in violation of Tenant's obligations under this Lease or under any
Environmental Laws. Notwithstanding any other provision of this Lease, Landlord
shall also have the right, at its election, to negotiate, defend, approve and
appeal, at Tenant's expense, any action taken or order issued by any
governmental agency or authority with regard to any such Hazardous Materials or
contamination by Hazardous Materials. If any such inspection reveals any
Hazardous Material or other condition or activity on or about the Premises that
is in violation of the requirements of this Lease or of any Environmental Laws,
all costs and expenses paid or incurred by Landlord in the exercise of the
rights set forth in this Paragraph 32 shall be payable by Tenant upon demand.

     (h) Tenant shall surrender the Premises to Landlord upon the expiration or
earlier termination of this Lease free of debris, waste or Hazardous Materials
placed on, about or near the Premises by Tenant or Tenant's Agents, and in a
condition which complies with all Environmental Laws and any additional
reasonable requirements of Landlord that are reasonably necessary to protect the
value of the Premises, the Building or the Project, including, without
limitation, the obtaining of any closure permits or other governmental permits
or approvals related to Tenant's use of Hazardous Materials in or about the
Premises. Tenant's obligations and liabilities pursuant to the provisions of
this Paragraph 32 shall survive the expiration or earlier termination of this
Lease. If it is determined by Landlord that the condition of all or any portion
of the Premises, the



                                       37
<PAGE>   42

Building, and/or the Project is not in compliance with the provisions of this
Lease with respect to Hazardous Materials as a result of a breach or default by
Tenant of its representations, warranties and covenants under this Lease with
respect to Hazardous Materials, including, without limitation, all Environmental
Laws, at the expiration or earlier termination of this Lease, then at Landlord's
sole option, Landlord may require Tenant to hold over possession of the Premises
until Tenant can surrender the Premises to Landlord in the condition in which
the Premises existed as of the Commencement Date and prior to the appearance of
such Hazardous Materials except for normal wear and tear, including, without
limitation, the conduct or performance of any closures as required by any
Environmental Laws. The burden of proof hereunder shall be upon Tenant. For
purposes hereof, the term "normal wear and tear" shall not include any
deterioration in the condition or diminution of the value of any portion of the
Premises, the Building, and/or the Project in any manner whatsoever related to
directly, or indirectly, Hazardous Materials. Any such holdover by Tenant will
be with Landlord's consent, will not be terminable by Tenant in any event or
circumstance and will otherwise be subject to the provisions of Paragraph 35 of
this Lease.

     (i) Tenant agrees to indemnify and hold harmless Landlord from and against
any and all claims, losses (including, without limitation, loss in value of the
Premises, the Building or the Project, liabilities and expenses (including
reasonable attorney's fees)) sustained by Landlord attributable to (1) any
Hazardous Materials placed on or about the Premises, the Building or the Project
by Tenant or Tenant's Agents, or (2) Tenant's breach of any provision of this
Paragraph 32.

     (j) The provisions of this Paragraph 32 shall survive the expiration or
earlier termination of this Lease.

33.  NOTICES

     All notices and demands which are required or may be permitted to be given
to either party by the other hereunder shall be in writing and shall be sent by
United States mail, postage prepaid, certified, or by personal delivery or
overnight courier, addressed to the addressee at Tenant's Address or Landlord's
Address as specified in the Basic Lease Information, or to such other place as
either party may from time to time designate in a notice to the other party
given as provided herein. Copies of all notices and demands given to Landlord
shall additionally be sent to Landlord's property manager at the address
specified in the Basic Lease Information or at such other address as Landlord
may specify in writing from time to time. Notice shall be deemed given upon
actual receipt (or attempted delivery if delivery is refused ), if personally
delivered, or one (1) business day following deposit with a reputable overnight
courier that provides a receipt, or on the third (3rd) day following deposit in
the United States mail in the manner described above.



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<PAGE>   43

34.  WAIVER

     The waiver of any breach of any term, covenant or condition of this Lease
shall not be deemed to be a waiver of such term, covenant or condition or of any
subsequent breach of the same or any other term, covenant or condition herein
contained. The subsequent acceptance of Rent by Landlord shall not be deemed to
be a waiver of any preceding breach by Tenant, other than the failure of Tenant
to pay the particular rental so accepted, regardless of Landlord's knowledge of
such preceding breach at the time of acceptance of such Rent. No delay or
omission in the exercise of any right or remedy of Landlord in regard to any
Default by Tenant shall impair such a right or remedy or be construed as a
waiver. Any waiver by Landlord of any Default must be in writing and shall not
be a waiver of any other Default concerning the same or any other provisions of
this Lease.

35.  HOLDING OVER

     Any holding over after the expiration of the Term, without the express
written consent of Landlord, shall constitute a Default and, without limiting
Landlord's remedies provided in this Lease, such holding over shall be construed
to be a tenancy at sufferance, at a rental rate of one hundred fifty percent
(150%) of the Base Rent last due in this Lease, plus Additional Rent, and shall
otherwise be on the terms and conditions herein specified, so far as applicable;
provided, however, in no event shall any renewal or expansion option or other
similar right or option contained in this Lease be deemed applicable to any such
tenancy at sufferance. If the Premises are not surrendered at the end of the
Term or sooner termination of this Lease, and in accordance with the provisions
of Paragraphs 11 and 32(h), Tenant shall indemnify, defend and hold Landlord
harmless from and against any and all loss or liability resulting from delay by
Tenant in so surrendering the Premises including, without limitation, any loss
or liability resulting from any claim against Landlord made by any succeeding
tenant or prospective tenant founded on or resulting from such delay and losses
to Landlord due to lost opportunities to lease any portion of the Premises to
any such succeeding tenant or prospective tenant, together with, in each case,
reasonable attorneys' fees and costs.

36.  SUCCESSORS AND ASSIGNS

     The terms, covenants and conditions of this Lease shall, subject to the
provisions as to assignment, apply to and bind the heirs, successors, executors,
administrators and assigns of all of the parties hereto. If Tenant shall consist
of more than one entity or person, the obligations of Tenant under this Lease
shall be joint and several.



                                       39
<PAGE>   44

37.  TIME

     Time is of the essence of this Lease and each and every term, condition and
provision herein.

38.  BROKERS

     Landlord and Tenant each represents and warrants to the other that neither
it nor its officers or agents nor anyone acting on its behalf has dealt with any
real estate broker except the Broker(s) specified in the Basic Lease Information
in the negotiating or making of this Lease, and each party agrees to indemnify
and hold harmless the other from any claim or claims, and costs and expenses,
including reasonable attorneys' fees, incurred by the indemnified party in
conjunction with any such claim or claims of any other broker or brokers to a
commission in connection with this Lease as a result of the actions of the
indemnifying party.

39.  LIMITATION OF LIABILITY

     Tenant agrees that, in the event of any default or breach by Landlord with
respect to any of the terms of the Lease to be observed and performed by
Landlord (1) Tenant shall look solely to the then current landlord's interest in
the Building for the satisfaction of Tenant's remedies for the collection of a
judgment (or other judicial process) requiring the payment of money by Landlord;
(2) no other property or assets of Landlord, its partners, shareholders,
officers, directors or any successor in interest shall be subject to levy,
execution or other enforcement procedure for the satisfaction of Tenant's
remedies; (3) no personal liability shall at any time be asserted or enforceable
against Landlord's partners or successors in interest (except to the extent
permitted in (1) above), or against Landlord's shareholders, officers or
directors, or their respective partners, shareholders, officers, directors or
successors in interest; and (4) no judgment will be taken against any partner,
shareholder, officer or director of Landlord. The provisions of this section
shall apply only to the Landlord and the parties herein described, and shall not
be for the benefit of any insurer nor any other third party.

40.  FINANCIAL STATEMENTS

     Within ten (10) days after Landlord's request, Tenant shall deliver to
Landlord the most recent (but in no event older than 12 months) financial
statements of Tenant (including interim periods following the end of the last
fiscal year for which annual statements are available), prepared or compiled by
a certified public accountant, including a balance sheet and profit and loss
statement for the most recent prior year, all prepared in accordance with
generally accepted accounting principles consistently applied.



                                       40
<PAGE>   45

41.  RULES AND REGULATIONS

     Tenant agrees to comply with such reasonable rules and regulations as
Landlord may adopt from time to time for the orderly and proper operation of the
Building and the Project. Such rules may include but shall not be limited to the
following: (a) restriction of employee parking to a limited, designated area or
areas; and (b) regulation of the removal, storage and disposal of Tenant's
refuse and other rubbish at the sole cost and expense of Tenant. The then
current rules and regulations shall be binding upon Tenant upon delivery of a
copy of them to Tenant. Landlord shall not be responsible to Tenant for the
failure of any other person to observe and abide by any of said rules and
regulations. Landlord's current rules and regulations are attached to this Lease
as Exhibit D.

42.  MORTGAGEE PROTECTION

     (a) MODIFICATIONS FOR LENDER. If, in connection with obtaining financing
for the Project or any portion thereof, Landlord's lender shall request
reasonable modifications to this Lease as a condition to such financing, Tenant
shall not unreasonably withhold, delay or defer its consent to such
modifications, provided such modifications do not materially adversely affect
Tenant's rights or increase Tenant's obligations under this Lease.

     (b) RIGHTS TO CURE. Tenant agrees to give to any trust deed or mortgage
holder ("Holder"), by registered mail, at the same time as it is given to
Landlord, a copy of any notice of default given to Landlord, provided that prior
to such notice Tenant has been notified, in writing, (by way of notice of
assignment of rents and leases, or otherwise) of the address of such Holder.
Tenant further agrees that if Landlord shall have failed to cure such default
within the time provided for in this Lease, then the Holder shall have an
additional twenty (20) days after expiration of such period, or after receipt of
such notice from Tenant (if such notice to the Holder is required by this
Paragraph 42(b)), whichever shall last occur within which to cure such default
or if such default cannot be cured within that time, then such additional time
as may be necessary if within such twenty (20) days, any Holder has commenced
and is diligently pursuing the remedies necessary to cure such default
(including but not limited to commencement of foreclosure proceedings, if
necessary to effect such cure), in which event this Lease shall not be
terminated.

43.  ENTIRE AGREEMENT

     This Lease, including the Exhibits and any Addenda attached hereto, which
are hereby incorporated herein by this reference, contains the entire agreement
of the parties hereto, and no representations, inducements, promises or
agreements, oral or otherwise, between the parties, not embodied herein or
therein, shall be of any force and effect.



                                       41
<PAGE>   46

44.  INTEREST

     Any installment of Rent and any other sum due from Tenant under this Lease
which is not received by Landlord within ten (10) days from when the same is due
shall bear interest from the date such payment was originally due under this
Lease until paid at an annual rate equal to ten percent (10%). Payment of such
interest shall not excuse or cure any Default by Tenant. In addition, Tenant
shall pay all costs and reasonable attorneys' fees incurred by Landlord in
collection of such amounts.

45.  CONSTRUCTION

     This Lease shall be construed and interpreted in accordance with the laws
of the State of California. The parties acknowledge and agree that no rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall be employed in the interpretation of this Lease, including
the Exhibits and any Addenda attached hereto. All captions in this Lease are for
reference only and shall not be used in the interpretation of this Lease.
Whenever required by the context of this Lease, the singular shall include the
plural, the masculine shall include the feminine, and vice versa. If any
provision of this Lease shall be determined to be illegal or unenforceable, such
determination shall not affect any other provision of this Lease and all such
other provisions shall remain in full force and effect.

46.  REPRESENTATIONS AND WARRANTIES OF TENANT

     Tenant hereby makes the following representations and warranties, each of
which is material and being relied upon by Landlord, is true in all respects as
of the date of this Lease, and shall survive the expiration or termination of
the Lease.

     (a) If Tenant is an entity, Tenant is duly organized, validly existing and
in good standing under the laws of the state of its organization and the persons
executing this Lease on behalf of Tenant have the full right and authority to
execute this Lease on behalf of Tenant and to bind Tenant without the consent or
approval of any other person or entity. Tenant has full power, capacity,
authority and legal right to execute and deliver this Lease and to perform all
of its obligations hereunder. This Lease is a legal, valid and binding
obligation of Tenant, enforceable in accordance with its terms.

     (b) Tenant has not (1) made a general assignment for the benefit of
creditors, (2) filed any voluntary petition in bankruptcy or suffered the filing
of an involuntary petition by any creditors, (3) suffered the appointment of a
receiver to take possession of all or substantially all of its assets, (4)
suffered the attachment or other judicial seizure of all or substantially all of
its assets, (5) admitted in writing its inability to pay its debts as they come
due, or (6) made an offer of settlement, extension or composition to its
creditors generally.



                                       42
<PAGE>   47

47.  SECURITY

     (a) Tenant acknowledges and agrees that, while Landlord may engage security
personnel to patrol the Building or the Project, Landlord is not providing any
security services with respect to the Premises, the Building or the Project and
that Landlord shall not be liable to Tenant for, and Tenant waives any claim
against Landlord with respect to, any loss by theft or any other damage suffered
or incurred by Tenant in connection with any unauthorized entry into the
Premises or any other breach of security with respect to the Premises, the
Building or the Project.

     (b) Tenant hereby agrees to the exercise by Landlord and Landlord's Agents,
within their sole discretion, of such security measures as, but not limited to,
the evacuation of the Premises, the Building or the Project for cause, suspected
cause or for drill purposes, the denial of any access to the Premises, the
Building or the Project and other similarly related actions that it deems
necessary to prevent any threat of property damage or bodily injury. The
exercise of such security measures by Landlord and Landlord's Agents, and the
resulting interruption of service and cessation of Tenant's business, if any,
shall not be deemed an eviction or disturbance of Tenant's use and possession of
the Premises, or any part thereof, or render Landlord or Landlord's Agents
liable to Tenant for any resulting damages or relieve Tenant from Tenant's
obligations under this Lease.

48.  JURY TRIAL WAIVER

     Tenant hereby waives any right to trial by jury with respect to any action
or proceeding (i) brought by Landlord, Tenant or any other party, relating to
(A) this Lease and/or any understandings or prior dealings between the parties
hereto, or (B) the Premises, the Building or the Project or any part thereof, or
(ii) to which Landlord is a party. Tenant hereby agrees that this Lease
constitutes a written consent to waiver of trial by jury pursuant to the
provisions of California Code of Civil Procedure Section 631, and Tenant does
hereby constitute and appoint Landlord its true and lawful attorney-in-fact,
which appointment is coupled with an interest, and Tenant does hereby authorize
and empower Landlord, in the name, place and stead of Tenant, to file this Lease
with the clerk or judge of any court of competent jurisdiction as a statutory
written consent to waiver of trial by jury.



                                       43
<PAGE>   48

49.  SECURITY DEPOSIT

     Tenant shall pay a Security Deposit of Eighty-Four Thousand Three Hundred
Ninety-Six and 00/100 Dollars ($84,396.00) which shall be in the form of a
Letter of Credit issued by Silicon Valley Bank and which form shall be
acceptable to Landlord in Landlord's sole discretion. At the end of the
thirtieth (30th) month of the term, Landlord shall review Tenant's current
financial condition and credit and, at Landlord's sole election, Landlord may
reduce Tenant's Security Deposit to Thirty-Two Thousand Two Hundred Eighty-Four
and 00/100 Dollars ($32,284.00).

50.  EARLY OCCUPANCY

     Tenant shall have the right to enter the Premises fifteen (15) days prior
to the estimated commencement date, provided that Tenant shall have first
executed the Lease, delivered to Landlord a certificate of insurance as required
under the Lease and delivered to Landlord all monies owing under the Lease.
Tenant's entry upon the premises pursuant to this paragraph 50 shall be subject
to all of the terms and conditions of the Lease, excepting only the covenant to
pay rent.

51.  RENEWAL OPTION

     Tenant shall have one (1) option (the "Renewal Option") to extend the Term
for a period of five (5) years beyond the Expiration Date (the "Renewal Term").
The Renewal Option shall be effective only if Tenant is not in Default under
this Lease, nor has any event occurred which with the giving of notice or the
passage of time, or both, would constitute a Default hereunder, either at the
time of exercise of the Renewal Option or the time of commencement of the
Renewal Term. The Renewal Option must be exercised, if at all, by written notice
(the "Election Notice") from Tenant to Landlord given not more than eight (8)
months nor less than six (6) months prior to the expiration of the initial Term.
Except as hereinafter provided in this Paragraph 51, any such notice given by
Tenant to Landlord shall be irrevocable. If Tenant fails to exercise the Renewal
Option in a timely manner as provided for above, the Renewal Option shall be
void. The Renewal Term shall be upon the same terms and conditions as the
initial Term, except that the annual Base Rent during the Renewal Term shall be
equal to the prevailing market rate for space in well located, high visibility
buildings in Irvine, California comparable to the Premises in location, size,
condition, quality and type, and with a comparable landlord (taking into
account, among other things, the availability of tenant improvement dollars) at
the commencement of the Renewal Term. As used herein, the term "prevailing
market rate" shall mean the base annual rental for such comparable space, taking
into account any additional rental and all other payments and escalations
payable hereunder and by tenants under leases of such comparable space. Landlord
shall notify Tenant in writing (such notice being hereinafter referred to as the
"Renewal Rate Notice") of the prevailing market rate for the Renewal Term within
thirty (30) days after Landlord's receipt of the



                                       44
<PAGE>   49

Election Notice. Tenant shall have ten (10) days after receipt of the Renewal
Rate Notice (the "Response Period") to advise Landlord whether or not Tenant
agrees with Landlord's determination of the prevailing market rate. If Tenant
agrees with Landlord's determination, then Landlord and Tenant shall promptly
enter into an amendment to this Lease providing for the lease of the Premises by
Tenant during the Renewal Term upon the terms stated in the Renewal Rate Notice.
If Tenant disputes Landlord's determination of the prevailing market rate,
Tenant shall have the right to rescind its Election Notice in writing within the
Response Period and neither party shall have any further rights or obligations
under this paragraph 51. If Tenant fails to provide Landlord with written notice
of rescission prior to the expiration of the Response Period, then Tenant shall
be deemed to have accepted Landlord's determination of the prevailing market
rate.

52.  LIMITATIONS ON TENANT'S RESPONSIBILITY

     (a) Notwithstanding anything to the contrary set forth in this Lease other
than the provisions of Paragraph 32 of this Lease, Tenant shall not be
responsible for the cost (other than as an item of Expense covered by the
Additional Rent to be paid by Tenant hereunder, but subject to the express
exclusions therefrom) of any repairs to the Premises, nor be obligated to
perform any alterations, improvements or repairs to the Premises, which are
required to cause the Premises to comply with applicable Laws. Notwithstanding
the preceding sentence, Tenant shall be responsible for any such repairs,
alterations or improvements as are required by reason of (A) damage to the
Premises caused by Tenant or by Tenant's employees, agents or contractors, or
(B) Tenant's particular use of and operations within the Premises (as opposed to
any such repairs, alterations, or improvements which would be generally required
under applicable Laws with respect to any tenant or occupant of the Premises),
or (C) alterations or improvements to the Premises made by or on behalf of
Tenant. For the purposes of this paragraph, "Laws" shall include Private
Restrictions.

     (b) Notwithstanding anything in Paragraph 32 of the Lease, Tenant shall not
be responsible for the clean up or remediation of , and shall not be required to
indemnify Landlord against, any costs or liabilities attributable to, Hazardous
Materials placed on or about the Premises (i) prior to the date upon which
Tenant occupied the Premises, by third parties not related to Tenant or Tenant's
Agents, or (ii) by Landlord at any time, except in either case to the extent
that Tenant or its Agents have contributed to or exacerbated the presence of
such Hazardous Materials.



                                       45
<PAGE>   50

     Landlord and Tenant have executed and delivered this Lease as of the Lease
Date specified in the Basic Lease Information.

LANDLORD:                                    TENANT:

AETNA LIFE INSURANCE COMPANY,                ARCXEL TECHNOLOGIES, INC.,
a Connecticut corporation                    a California corporation

By:  Allegis Realty Investors LLC            By: /s/ Jay O'Donald
     Its Investment Advisor and Agent            -------------------------------
                                             Print Name: Jay O'Donald
                                             Its:            CEO

     By:     /s/ Cynthia Stevenin
         -----------------------------
              Cynthia Stevenin               By:
               Vice President                    -------------------------------
                                             Print Name:
                                                         -----------------------
                                             Its:
                                                  ------------------------------



                                       46
<PAGE>   51

                                    EXHIBIT A

                             DIAGRAM OF THE PREMISES

<PAGE>   52

                                    EXHIBIT B

                              INTENTIONALLY OMITTED



                                       1.
<PAGE>   53

                                   EXHIBIT B-1

                              INTENTIONALLY OMITTED



                                        1
<PAGE>   54

                                    EXHIBIT C
                   COMMENCEMENT AND EXPIRATION DATE MEMORANDUM

                   LANDLORD:  AETNA LIFE INSURANCE COMPANY

                     TENANT:  ARCXEL TECHNOLOGIES, INC.

                 LEASE DATE:  November 1, 1997

                   PREMISES:  Located at 15245 Alton Parkway, Irvine, California

     Tenant hereby accepts the Premises as being in the condition required under
the Lease, with all Tenant Improvements completed (except for minor punchlist
items which Landlord agrees to complete).

     The Commencement Date of the Lease is hereby established as December 1,
1997 and the Expiration Date is November 30, 2002.

                                        TENANT:  ARCXEL TECHNOLOGIES, INC.,
                                        a California corporation

                                        By:  /s/ Jay O'Donald
                                            ------------------------------------
                                        Print Name: Jay O'Donald
                                        Its: CEO

                                        By: ____________________________________
                                        Print Name: ____________________________
                                        Its: ___________________________________


Approved and Agreed:

LANDLORD:

AETNA LIFE INSURANCE COMPANY,
a Connecticut corporation

By:  Allegis Realty Investors LLC
     Its Investment Advisor and Agent


     By:  /s/ Cynthia Stevenin
         ------------------------------
                Cynthia Stevenin
                 Vice President

<PAGE>   55

                                    EXHIBIT D

                              RULES AND REGULATIONS


     This exhibit, entitled "Rules and Regulations," is and shall constitute
Exhibit D to the Lease Agreement, dated as of the Lease Date, by and between
landlord and Tenant for the Premises. The terms and conditions of this Exhibit D
are hereby incorporated into and are made a part of the Lease. Capitalized terms
used, but not otherwise defined, in this Exhibit D have the meanings ascribed to
such terms in the Lease.

     1. Tenant shall not use any method of heating or air conditioning other
than that supplied by Landlord without the consent of Landlord.

     2. All window coverings installed by Tenant and visible from the outside of
the building require the prior written approval of Landlord.

     3. Tenant shall not use, keep or permit to be used or kept any foul or
noxious gas or substance or any flammable or combustible materials on or around
the Premises, except to the extent that Tenant is permitted to use the same
under the terms of Paragraph 32 of the Lease.

     4. Tenant shall not alter any lock or install any new locks or bolts on any
door at the Premises without the prior consent of Landlord.

     5. Tenant shall not make any duplicate keys without the prior consent of
Landlord.

     6. Tenant shall park motor vehicles in parking areas designated by Landlord
except for loading and unloading. During those periods of loading and unloading,
Tenant shall not unreasonably interfere with traffic flow around the Building or
the Project and loading and unloading areas of other tenants. Tenant shall not
park motor vehicles in designated parking areas after the conclusion of normal
daily business activity.

     7. Tenant shall not disturb, solicit or canvas any tenant or other occupant
of the Building or Project and shall cooperate to prevent same.

     8. No person shall go on the roof without Landlord's permission.

     9. Business machines and mechanical equipment belonging to Tenant which
cause noise or vibration that may be transmitted to the structure of the
Building, to such a degree as to be objectionable to Landlord or other tenants,
shall be placed and maintained by Tenant, at Tenant's expense, on vibration
eliminators or in noise-dampening housing or other devices sufficient to
eliminate noise or vibration.

     10. All goods, including material used to store goods, delivered to the
Premises of Tenant shall be immediately moved into the Premises and shall not be
left in parking or



                                       1
<PAGE>   56

receiving areas overnight.

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

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

     13. Tenant is responsible for the storage and removal of all trash and
refuse. All such trash and refuse shall be contained in suitable receptacles
stored behind screened enclosures at locations approved by Landlord.

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

     15. Tenant shall not permit any animals, including but not limited to, any
household pets, to be brought or kept in or about the Premises, the Building,
the Project or any of the common areas.



INITIALS:

TENANT:  /s/ Jay
       ------------

LANDLORD: /s/ DS
          ---------



                                       2
<PAGE>   57

                                    EXHIBIT E

                                  SIGN CRITERIA


                                  See Attached

<PAGE>   58

                                    EXHIBIT F

                   HAZARDOUS MATERIALS DISCLOSURE CERTIFICATE

     Your cooperation in this matter is appreciated. Initially, the information
provided by you in this Hazardous Materials Disclosure Certificate is necessary
for the Landlord to evaluate your proposed uses of the premises (the "Premises")
and to determine whether to enter into a lease agreement with you as tenant. If
a lease agreement is signed by you and the Landlord (the "Lease Agreement"), on
an annual basis in accordance with the provisions of Paragraph 32 of the Lease
Agreement, you are to provide an update to the information initially provided by
you in this certificate. Any questions regarding this certificate should be
directed to, and when completed, the certificate should be delivered to:

Landlord:      c/o Allegis Realty Investors LLC
               1740 Technology Drive, Suite 600
               San Jose, California  95110
               Attention: Cynthia Stevenin
               Phone: (408) 437-5451

Name of (Prospective) Tenant: Arcxel Technologies, Inc., a California
corporation

Mailing Address: 2691 Richter, #106, Irvine, California 92606

Contact Person, Title and Telephone Number(s): Jay O'Donald, CEO; (714) 475-4350

Contact Person for Hazardous Waste Materials Management and Manifests and
Telephone Number(s):____________________________________________________________

Address of (Prospective) Premises: 15425 Alton Parkway, Suite 100, Irvine,
California

Length of (Prospective) initial Term: Sixty (60) Months



                                       1
<PAGE>   59

1.      GENERAL INFORMATION:

           Describe the proposed operations to take place in, on, or about the
        Premises, including, without limitation, principal products processed,
        manufactured or assembled, and services and activities to be provided or
        otherwise conducted. Existing tenants should describe any proposed
        changes to on-going operations.

        General office use, research & development, light manufacturing
        ------------------------------------------------------------------------
        warehouse storage
        ------------------------------------------------------------------------
2.      USE, STORAGE AND DISPOSAL OF HAZARDOUS MATERIALS:

        2.1    Will any Hazardous Materials (as hereinafter defined) be used,
               generated, treated, stored or disposed of in, on or about the
               Premises? Existing tenants should describe any Hazardous
               Materials which continue to be used, generated, treated, stored
               or disposed of in, on or about the Premises.

              Wastes                                       Yes [ ]       No [X]


              Chemical Products                            Yes [ ]       No [X]


              Other                                        Yes [ ]       No [X]


               If Yes is marked, please explain:________________________________
               _________________________________________________________________
               _________________________________________________________________

        2.2    If Yes is marked in Section 2.1, attach a list of any Hazardous
               Materials to be used, generated, treated, stored or disposed of
               in, on or about the Premises, including the applicable hazard
               class and an estimate of the quantities of such Hazardous
               Materials to be present on or about the Premises at any given
               time; estimated annual throughput; the proposed location(s) and
               method of storage (excluding nominal amounts of ordinary
               household cleaners and janitorial supplies which are not
               regulated by any Environmental Laws, as hereinafter defined); and
               the proposed location(s) and method(s) of treatment or disposal
               for each Hazardous Material, including, the estimated frequency,
               and the proposed contractors or subcontractors. Existing tenants
               should attach a list setting forth the information requested
               above and such list should include actual data from on-going
               operations and the identification of any variations in such
               information from the prior year's certificate.



                                       2
<PAGE>   60

3.      STORAGE TANKS AND SUMPS

        3.1    Is any above or below ground storage or treatment of gasoline,
               diesel, petroleum, or other Hazardous Materials in tanks or sumps
               proposed in, on or about the Premises? Existing tenants should
               describe any such actual or proposed activities.

               Yes [ ]                No [X]

               If yes, please explain:__________________________________________
               _________________________________________________________________
               _________________________________________________________________

4.      WASTE MANAGEMENT

        4.1    Has your company been issued an EPA Hazardous Waste Generator
               I.D. Number? Existing tenants should describe any additional
               identification numbers issued since the previous certificate.

               Yes [ ]                No [X]

        4.2    Has your company filed a biennial or quarterly reports as a
               hazardous waste generator? Existing tenants should describe any
               new reports filed.

               Yes [ ]                No [X]

               If yes, attach a copy of the most recent report filed.

5.      WASTEWATER TREATMENT AND DISCHARGE

        5.1 Will your company discharge wastewater or other wastes to:

                    storm drain?                   sewer?
              -----                          -----
                    surface water?             X   no wastewater or other wastes
              -----                          ----- discharged.




                                       3
<PAGE>   61

               Existing tenants should indicate any actual discharges. If so,
               describe the nature of any proposed or actual discharge(s).
               _________________________________________________________________
               _________________________________________________________________


        5.2    Will any such wastewater or waste be treated before discharge?

               Yes [ ]                No [ ]    N/A

               If yes, describe the type of treatment proposed to be conducted.
               Existing tenants should describe the actual treatment conducted.
               _________________________________________________________________
               _________________________________________________________________


6.      AIR DISCHARGES

        6.1    Do you plan for any air filtration systems or stacks to be used
               in your company's operations in, on or about the Premises that
               will discharge into the air; and will such air emissions be
               monitored? Existing tenants should indicate whether or not there
               are any such air filtration systems or stacks in use in, on or
               about the Premises which discharge into the air and whether such
               air emissions are being monitored.

               Yes [ ]                No [X]

               If yes, please describe:_________________________________________
               _________________________________________________________________
               _________________________________________________________________

        6.2    Do you propose to operate any of the following types of
               equipment, or any other equipment requiring an air emissions
               permit? Existing tenants should specify any such equipment being
               operated in, on or about the Premises.

               _____ Spray booth(s)          _____ Incinerator(s)

               _____ Dip tank(s)             _____ Other (Please describe)
                                               X
              _____ Drying oven(s)           _____  No Equipment Requiring Air
                                                    Permits



                                       4
<PAGE>   62

               If yes, please describe:_________________________________________
               _________________________________________________________________
               _________________________________________________________________

        6.3    Please describe (and submit copies of with this Hazardous
               Materials Disclosure Certificate) any reports you have filed in
               the past [thirty-six] months with any governmental or
               quasi-governmental agencies or authorities related to air
               discharges or clean air requirements and any such reports which
               have been issued during such period by any such agencies or
               authorities with respect to you or your business operations.

7.      HAZARDOUS MATERIALS DISCLOSURES

        7.1    Has your company prepared or will it be required to prepare a
               Hazardous Materials management plan ("Management Plan") or
               Hazardous Materials Business Plan and Inventory ("Business Plan")
               pursuant to Fire Department or other governmental or regulatory
               agencies' requirements? Existing tenants should indicate whether
               or not a Management Plan is required and has been prepared.

               Yes [ ]                No [X]

               If yes, attach a copy of the Management Plan or Business Plan.
               Existing tenants should attach a copy of any required updates to
               the Management Plan or Business Plan.



                                       5
<PAGE>   63

        7.2    Are any of the Hazardous Materials, and in particular chemicals,
               proposed to be used in your operations in, on or about the
               Premises listed or regulated under Proposition 65? Existing
               tenants should indicate whether or not there are any new
               Hazardous Materials being so used which are listed or regulated
               under Proposition 65.

               Yes [ ]                No [X]

               If yes, please explain:__________________________________________
               _________________________________________________________________
               _________________________________________________________________

8.      ENFORCEMENT ACTIONS AND COMPLAINTS

        8.1    With respect to Hazardous Materials or Environmental Laws, has
               your company ever been subject to any agency enforcement actions,
               administrative orders, or consent decrees or has your company
               received requests for information, notice or demand letters, or
               any other inquiries regarding its operations? Existing tenants
               should indicate whether or not any such actions, orders or
               decrees have been, or are in the process of being, undertaken or
               if any such requests have been received.

               Yes [ ]                No [X]


               If yes, describe the actions, orders or decrees and any
               continuing compliance obligations imposed as a result of these
               actions, orders or decrees and also describe any requests,
               notices or demands, and attach a copy of all such documents.
               Existing tenants should describe and attach a copy of any new
               actions, orders, decrees, requests, notices or demands not
               already delivered to Landlord pursuant to the provisions of
               Paragraph 32 of the Lease Agreement.
               _________________________________________________________________
               _________________________________________________________________
               _________________________________________________________________

        8.2    Have there ever been, or are there now pending, any lawsuits
               against your company regarding any environmental or health and
               safety concerns?

               Yes [ ]                No [X]



                                       6
<PAGE>   64

               If yes, describe any such lawsuits and attach copies of the
               complaint(s), cross-complaint(s), pleadings and other documents
               related thereto as requested by Landlord. Existing tenants should
               describe and attach a copy of any new complaint(s),
               cross-complaint(s), pleadings and other related documents not
               already delivered to Landlord pursuant to the provisions of
               Paragraph 32 of the Lease Agreement.
               _________________________________________________________________
               _________________________________________________________________
               _________________________________________________________________

        8.3    Have there been any problems or complaints from adjacent tenants,
               owners or other neighbors at your company's current facility with
               regard to environmental or health and safety concerns? Existing
               tenants should indicate whether or not there have been any such
               problems or complaints from adjacent tenants, owners or other
               neighbors at, about or near the Premises and the current status
               of any such problems or complaints.

               Yes [ ]                No [X]

               If yes, please describe. Existing tenants should describe any
               such problems or complaints not already disclosed to Landlord
               under the provisions of the signed Lease Agreement and the
               current status of any such problems or complaints.
               _________________________________________________________________
               _________________________________________________________________
               _________________________________________________________________



                                       7
<PAGE>   65

9.      PERMITS AND LICENSES

        9.1    Attach copies of all permits and licenses issued to your company
               with respect to its proposed operations in, on or about the
               Premises, including, without limitation, any Hazardous Materials
               permits, wastewater discharge permits, air emissions permits, and
               use permits or approvals. Existing tenants should attach copies
               of any new permits and licenses as well as any renewals of
               permits or licenses previously issued.

     As used herein, "Hazardous Materials" shall mean and include any substance
that is or contains (a) any "hazardous substance" as now or hereafter defined in
Section 101(14) of the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended ("CERCLA") (42 U.S.C. Section 9601 et seq.) or
any regulations promulgated under CERCLA; (b) any "hazardous waste" as now or
hereafter defined in the Resource Conservation and Recovery Act, as amended
("RCRA") (42 U.S.C. Section 6901 et seq.) or any regulations promulgated under
RCRA; (c) any substance now or hereafter regulated by the Toxic Substances
Control Act, as amended ("TSCA") (15 U.S.C. Section 2601 et seq.) or any
regulations promulgated under TSCA; (d) petroleum, petroleum by-products,
gasoline, diesel fuel, or other petroleum hydrocarbons; (e) asbestos and
asbestos-containing material, in any form, whether friable or non-friable; (f)
polychlorinated biphenyls; (g) lead and lead-containing materials; or (h) any
additional substance, material or waste (A) the presence of which on or about
the Premises requires reporting, investigation or remediation under any
Environmental Laws (as hereinafter defined), or (B) which is now or is hereafter
classified or considered to be hazardous or toxic under any Environmental Laws;
and "Environmental Laws" shall mean and include (a) CERCLA, RCRA and TSCA; and
(b) any other federal, state or local laws, ordinances, statutes, codes, rules,
regulations, orders or decrees now or hereinafter in effect relating to (i)
pollution, (ii) the protection or regulation of human health, natural resources
or the environment, (iii) the treatment, storage or disposal of Hazardous
Materials, or (iv) the emission, discharge, release or threatened release of
Hazardous Materials into the environment.

     The undersigned hereby acknowledges and agrees that this Hazardous
Materials Disclosure Certificate is being delivered to Landlord in connection
with the evaluation of a Lease Agreement and, if such Lease Agreement is
executed, will be attached thereto as an exhibit. The undersigned further
acknowledges and agrees that if such Lease Agreement is executed, this Hazardous
Materials Disclosure Certificate will be updated from time to time in accordance
with Paragraph 32 of the Lease Agreement. The undersigned further acknowledges
and agrees that the Landlord and its partners, lenders and representatives may,
and will, rely upon the statements, representations, warranties, and
certifications made herein and the truthfulness thereof in entering into the
Lease Agreement and the continuance thereof throughout the term, and any
renewals thereof, of the Lease Agreement. I [print name] Jay O'Donald, acting
with full authority



                                        i
<PAGE>   66

to bind the (proposed) Tenant and, not personally, but in such capacity on
behalf of the (proposed) Tenant, certify, represent and warrant that the
information contained in this certificate is true and correct.

(PROSPECTIVE TENANT: ARCXEL TECHNOLOGIES, INC.

By: /s/ Jay R. O'Donald
   ----------------------------

Title:  President, CEO
      -------------------------

Date:   11/17/97
     --------------------------

INITIALS:

TENANT:   /s/ Jay
       ------------------------

LANDLORD: /s/ CDS
         ----------------------


                                       ii
<PAGE>   67

                                TABLE OF CONTENTS



<TABLE>
<CAPTION>
                                                                           PAGE
                                                                           ----
<S>                                                                        <C>

Demise........................................................................1

Premises......................................................................1

Term .........................................................................2

Rent .........................................................................3

Utility Expenses..............................................................7

Late Charge...................................................................7

Security Deposit..............................................................8

Possession....................................................................8

Use of Premises...............................................................9

Acceptance of Premises.......................................................11

Surrender....................................................................11

Alterations and Additions....................................................12

Maintenance and Repairs of Premises..........................................14

Landlord's Insurance.........................................................15

Tenant's Insurance...........................................................15

Indemnification..............................................................16

Subrogation..................................................................17

Signs........................................................................18

Free from Liens..............................................................18

Entry by Landlord............................................................18

Destruction and Damage.......................................................19

Condemnation.................................................................21
</TABLE>



                                       iii
<PAGE>   68

<TABLE>
<S>                                                                        <C>

Assignment and Subletting....................................................22

Tenant's Default.............................................................25

Landlord's Remedies..........................................................27

Landlord's Right to Perform Tenant's Obligations.............................30

Attorney's Fees..............................................................30

Taxes........................................................................31

Effect of Conveyance.........................................................31

Tenant's Estoppel Certificate................................................31

Subordination................................................................32

Environmental Covenants......................................................32

Notices......................................................................36

Waiver.......................................................................36

Holding over.................................................................36

Successors and Assigns.......................................................37

Time ........................................................................37

Brokers......................................................................37

Limitation of Liability......................................................37

Financial Statements.........................................................38

Rules and Regulations........................................................38

Mortgagee Protection.........................................................38

Entire Agreement.............................................................39

Interest.....................................................................39

Construction.................................................................39

Representations and Warranties of Tenant.....................................39

Security.....................................................................40
</TABLE>



                                       iv
<PAGE>   69

<TABLE>
<S>                                                                        <C>

Jury Trial Waiver............................................................40

Security Deposit.............................................................41

Early Occupancy..............................................................41

Renewal Option...............................................................41

Limitations on Tenant's Responsibility.......................................42
</TABLE>



                                       v
<PAGE>   70

Exhibit

A         Diagram of the Premises

B         Intentionally Omitted

B-1       Intentionally Omitted

C         Commencement and Expiration Date Memorandum

D         Rules and Regulations

E         Sign Criteria

F         Hazardous Materials Disclosure Certificate

G         Intentionally Omitted


Addenda

None



                                       vi
<PAGE>   71

                              ASSIGNMENT OF LEASE

     Arcxel Technologies, Inc., a California corporation ("Assignor"), hereby
grants, assigns, transfers, conveys, and delivers to Vixel Corporation, a
Delaware corporation ("Assignee"), all of Assignor's right, title, and interest
in and to that certain Lease Agreement dated as of November 1, 1997 (the
"Lease"), by and between Aetna Life Insurance Company, a Connecticut
corporation, as Landlord, and Assignor, as Tenant, for that certain real
property commonly known as 15245 Alton Parkway, Suite 100, Irvine, California,
as more particularly described in the Lease. Assignee hereby accepts such
assignment and agrees to timely discharge, pay, perform, and be bound by all of
the obligations imposed in connection with the Lease arising from and after the
date hereof to the same extent as if Assignee had been an original party
thereto.

     This Assignment of Lease shall not release Assignor from its obligation to
pay rent and to perform all of its other obligations under the Lease.

     IN WITNESS WHEREOF, the parties hereto have executed this Assignment of
Lease as of July __, 1998.


"Assignor"                                   "Assignee"

Arcxel Technologies, Inc.,                   Vixel Corporation,
a California corporation                     a Delaware corporation

By: /s/ JAY O'DONALD                         By: /s/ GREGORY R. OLBRIGHT
   --------------------------                   -----------------------------
Name: Jay O'Donald                           Name: Greg Olbright
     ------------------------                     ---------------------------
Its: CEO                                     Its: CEO
    -------------------------                    ----------------------------

By: /s/ KAY CHURCH                           By: /s/ KAREN HOWARD
   --------------------------                   -----------------------------
Name: Kay Church                             Name: Karen Howard
     ------------------------                     ---------------------------
Its: Controller                              Its: Human Resources
    -------------------------                    ----------------------------





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

<PAGE>   72

                             CONSENT TO ASSIGNMENT

THIS AGREEMENT (the "Agreement") is made as of the 24th day of August, 1998, by
and between Aetna Life Insurance Company, a Connecticut corporation
("Landlord"), Arxcel Technologies, Inc., a California corporation ("Tenant"),
and Vixel Corporation, a Delaware corporation ("Assignee"), with reference to
the following facts:

A.   Landlord and Tenant entered into that certain Lease Agreement dated
     November 1, 1997 (the "Lease"), relating to certain premises commonly
     known as 15245 Alton Parkway, Suite 100, Irvine, California ("Premises").

B.   Tenant and Assignee have entered into an Assignment dated as of July, 1998
     (the "Assignment Agreement") pursuant to which Tenant has assigned to
     Assignee and Assignee has assumed Tenant's entire right, title and interest
     in and to the Lease.

C.   Tenant has requested that Landlord consent to the assignment of the Lease
     to Assignee pursuant to the Assignment Agreement. Landlord has agreed to
     consent to the assignment of the Lease on the following terms and
     conditions.

NOW, THEREFORE, in consideration of the foregoing, and in consideration of the
mutual agreements and covenants hereinafter set forth, Landlord, Tenant and
Assignee agree as follows:

1.   DEFINITIONS

     Unless otherwise defined in this Agreement, all defined terms used in this
     Agreement shall have the same meaning and definition given them in the
     Lease.

2.   ASSUMPTION OF OBLIGATIONS

     Notwithstanding anything to the contrary contained in the Assignment
     Agreement, Assignee agrees to perform all of the covenants of Tenant
     contained in the Lease, whether arising prior to, concurrently with or
     after the execution of the Assignment Agreement. In furtherance of the
     foregoing, Assignee understands and agrees that it shall be fully liable
     to Landlord for the performance of all covenants, duties, agreements and
     obligations of Tenant under the Lease to the same degree as if Assignee
     were the original signatory to the Lease. Without limiting the generality
     of the foregoing, Assignee agrees to pay rent and all other sums due under
     the Lease directly to Landlord and Tenant shall have no right or claim to
     or interest in any such sums. Tenant hereby absolutely and irrevocably
     assigns and transfers to Landlord Tenant's rights under the Assignment
     Agreement to all rentals and other sums due Tenant thereunder.

3.   CONSENT OF LANDLORD

     Landlord hereby consents to the assignment of the Lease to Assignee
     pursuant to the terms of the Assignment Agreement. Landlord's consent
     shall not release Tenant of any of its obligations under the Lease or
     release or alter the liability of Tenant to pay rent and all other sums
     due under the Lease and to perform and comply with all other obligations
     of Tenant under the Lease, all as such Lease may be modified from time to
     time by Landlord and Assignee with or without the consent of Tenant. As
     between Landlord and Tenant, the assignment of the Lease to Assignee shall
     not alter, amend or otherwise modify any provisions of the Lease. Landlord
     shall have no obligations to any party in connection with the Premises
     other than those obligations set forth in the Lease.

4.   INDEMNIFICATION

     Tenant shall indemnify and hold harmless Landlord and its Agents, against
     and from any and all claims, losses, liabilities, judgments, costs,
     demands, causes of action and expenses (including, without limitation,
     attorneys' fees and consultants' fees) (collectively, "Claims") arising
     from or related to the following: Assignee's use of the Premises or any
     activity done, permitted or suffered by Assignee in, on or about the
     Premises, the Building, or the Property; (b) any act or omission by
     Assignee or its Agents in connection with or related to the Assignment
     Agreement, the Premises, the Building, or the Property; (c) any Hazardous
     Material used, stored, released, disposed, generated, or transported by
     Assignee or its Agents in, on or about the Premises, including without
     limitation, any Claims arising from or related to any Hazardous Material
     investigations, monitorings, cleanup or other remedial action; and (d) any
     action or proceeding brought on account of any matter referred to in items
     (a), (b), and/or (c). If any action or proceeding is brought against
     Landlord by reason of any such Claims, upon notice from Landlord, Tenant
     shall defend the same at Tenant's expense with counsel reasonably
     satisfactory to Landlord. The obligations of Tenant under this Section 5.1
     shall survive and termination of the Assignment Agreement or the Lease.

5.   MISCELLANEOUS PROVISIONS

     (a)  Tenant shall pay to Landlord, upon Landlord's demand, Landlord's fees
          incurred in connection with Landlord's review and processing of
          documents relating to the assignment of the Lease to Assignee.

     (b)  Tenant and Assignee agree not to amend, modify, supplement, or
          otherwise change in any respect the Assignment Agreement except with
          the prior written consent of Landlord.

<PAGE>   73
     (c)  This Agreement, together with the provisions of the Lease relating to
          assigning, contains the entire agreement between the parties hereto
          regarding the matters which are the subject of this Agreement. The
          terms, covenants and conditions of this Agreement shall apply to and
          bind the heirs, successors, executors and administrators and
          permitted assigns of all the parties hereto; provided, however, that
          neither Tenant nor Assignee shall assign any of its rights or
          obligations hereunder without the prior written consent of Landlord.
          The parties acknowledge and agree that no rule or construction, to
          the effect that any ambiguities are to be resolved against the
          drafting party, shall be employed in the interpretation of this
          Agreement. If any provision of this Agreement is determined to be
          illegal or unenforceable, such determination shall not affect any
          other provisions of this Agreement, and all such other provisions
          shall remain in full force and effect.

     (d)  If any party hereto fails to perform any of its obligations under
          this Agreement or if any dispute arises between the parties hereto
          concerning the meaning or interpretation of any provision of this
          Agreement, then the defaulting party(ies) or the party(ies) not
          prevailing in such dispute, as the case may be, shall pay any and all
          costs and expenses incurred by the other party(ies) on account of such
          default and/or in enforcing or establishing its (their) rights
          hereunder, including, without limitation, court costs and reasonable
          attorneys' fees and disbursements. Any such attorneys' fees and other
          expenses incurred by any party in enforcing a judgment in its favor
          under this Agreement shall be recoverable separately from and in
          addition to any other amount included in such judgment, and such
          attorneys' fees obligation is intended to be severable from the other
          provisions of this Agreement and to survive and not be merged into
          any such judgment.

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

     LANDLORD:  Aetna Life Insurance Company,
                a Connecticut corporation

                By:  Allegis Realty Investors LLC,
                     Its Investment Advisor and Agent

                     By: /s/  CYNTHIA STEVENIN
                         ------------------------------
                         Cynthia Stevenin
                         Vice President

     TENANT:    Arxcel Technologies, Inc.,
                a California corporation

                By: /s/ JAY R. O'DONALD
                    -----------------------------------

                Title: CEO
                       --------------------------------

                Date: 9/2/98
                      ---------------------------------


                By: /s/ KAY CHURCH
                    -----------------------------------

                Title: Controller
                       --------------------------------

                Date: 9/2/98
                      ---------------------------------

     ASSIGNEE:  Vixel Corporation
                a Delaware corporation

                By: /s/ GREGORY R. OLBRIGHT
                    -----------------------------------

                Title: CEO
                       --------------------------------

                Date: 9/2/98
                      ---------------------------------

                By: /s/ KAREN L. HOWARD
                    -----------------------------------

                Title: VP Human Resources
                       --------------------------------

                Date: Sept. 2-98
                      ---------------------------------