<PAGE>   1


                                                                EXHIBIT 10.65



As of December 9, 1999



The Kushner-Locke Company
11601 Wilshire Boulevard, 21st floor
Los Angeles, California  90025

Dear Sirs:

Reference is hereby made to that certain Credit, Security, Guaranty and Pledge
Agreement, dated as of June 19, 1996 (as the same has been, and may be, amended,
supplemented or otherwise modified, renewed or replaced from time to time, the
"Credit Agreement"), among The Kushner-Locke Company (the "Borrower"), the
Guarantors referred to therein, the Lenders referred to therein, and The Chase
Manhattan Bank (formerly known as Chemical Bank), as Agent. Capitalized terms
used herein and not otherwise defined are used herein as defined in the Credit
Agreement.

You have requested that the Required Lenders waive compliance with Section 6.17
(Overhead Expenses) of the Credit Agreement solely with respect to the
requirement for fiscal year 1999.

Each of the undersigned hereby waives the Credit Parties' non-compliance with
Section 6.17 of the Credit Agreement solely with respect to the requirement for
fiscal year 1999.

By its execution hereof, the Credit Parties hereby represents and warrants that
as of the date hereof, there exists no Default or Event of Default.

This waiver may be executed in counterparts, each of which shall constitute an
original, but all of which when taken together, shall constitute one and the
same instrument.

This waiver shall become effective when the Agent shall have received
executed counterparts of this waiver which, when taken together, bear the
signatures of the Required Lenders and all the Credit Parties.

This waiver shall not be construed as extending to any other matter, similar or
dissimilar, or entitling the Credit Parties to any future waivers regarding
similar matters or otherwise.

Except to the extent expressly set forth above, this letter does not constitute
a waiver or modification of any provision of the Credit Agreement or a waiver of
any Default or Event of Default, whether or not known to the Agent or the
Lenders. Except as expressly modified herein, all terms of the Credit Agreement
remain in full force and effect.

THIS WAIVER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK.



                                  Very truly yours,

                                  THE CHASE MANHATTAN BANK, individually
                                  and as Agent



<PAGE>   2

                                  By: /s/  CONSTANCE M. COLEMAN
                                     --------------------------------------
                                  Name:  Constance M. Coleman
                                  Title:  Vice President


                                  DE NATIONALE INVESTERINGSBANK N.V.


                                  By: /s/   ERIC SNATERSE
                                     --------------------------------------
                                  Name: Eric Snaterse
                                  Title: Senior Vice President


                                  By: /s/   H. Rynberg
                                     --------------------------------------
                                  Name: H. Rynberg
                                  Title: Vice President


                                  COMERICA BANK -- CALIFORNIA


                                  By: /s/  D. JEFFREY ANDRICK
                                     -------------------------------------
                                  Name:  D. Jeffrey Andrick
                                  Title: First Vice President


                                  FAR EAST NATIONAL BANK


                                  By: /s/   CHARLES H. AVIS
                                     ------------------------------------
                                  Name:  Charles H. Avis
                                  Title: Regional Vice President



AGREED TO BY:

THE KUSHNER-LOCKE COMPANY
KL PRODUCTIONS, INC.
KL INTERNATIONAL, INC.
ACME PRODUCTIONS, INC.
KUSHNER-LOCKE PRODUCTIONS, INC.
THE RELATIVES COMPANY
POST AND PRODUCTION SERVICES, INC.
L-K ENTERTAINMENT, INC.
INTERNATIONAL COURTROOM NEWS SERVICE
FAMILY PICTURES, INC.
TROPICAL HEAT, INC.
KL SYNDICATION, INC.
ANDRE PRODUCTIONS, INC.
TKLC NO. 2, INC.
TWILIGHT ENTERTAINMENT, INC.
KLC FILMS, INC.
KL FEATURES, INC.



<PAGE>   3

KLF GUILD CO.
KLF DEVELOPMENT CO.
KLTV GUILD CO.
KLTV DEVELOPMENT CO.
KUSHNER-LOCKE INTERNATIONAL, INC.
KL INTERACTIVE MEDIA, INC.
DAYTON WAY PICTURES, INC.
DAYTON WAY PICTURES II, INC.
DAYTON WAY PICTURES III, INC.
DAYTON WAY PICTURES IV, INC.
FW COLD CO., INC.


By /s/   BRUCE LILLISTON
  ------------------------------------
Name:  Bruce Lilliston
Title: President and Chief Operating Officer


KLC/NEW CITY
By its General Partner
THE KUSHNER-LOCKE COMPANY


By /s/  BRUCE LILLISTON
  ------------------------------------
Name:  Bruce Lilliston
Title: President and Chief Operating Officer


<PAGE>   4
                                                                 Exhibit 10.12.2


                          STANDARD OFFICE LEASE

                              BY AND BETWEEN

                      ARDEN REALTY LIMITED PARTNERSHIP,
                        Maryland limited partnership

                               AS LANDLORD,

                                   AND

                         THE KUSHNER-LOCKE COMPANY,
                          a California corporation,

                                 AS TENANT

                           SUITES 2030 and 2100
                           WORLD SAVINGS CENTER


                             TABLE OF CONTENTS
                                                                  PAGES
ARTICLE 1  BASIC LEASE PROVISIONS                                     1
ARTICLE 2  TERM/PREMISES                                              2
ARTICLE 3  RENTAL                                                     2
       (a)  Basic Rental                                              2
       (b)  Increase in Direct Costs                                  2
       (c)  Definitions                                               2
        d)  Determination of Payment                                  5
ARTICLE 4  SECURITY DEPOSIT                                           7
ARTICLE 5  HOLDING OVER                                               7
ARTICLE 6  PERSONAL PROPERTY TAXES                                    7
ARTICLE 7  USE                                                        8
ARTICLE 8  CONDITION OF PREMISES                                      8
ARTICLE 9  REPAIRS AND ALTERATIONS                                    9
ARTICLE 10  LIENS                                                    10
ARTICLE 11  PROJECT SERVICES                                         10
ARTICLE 12  RIGHTS OF LANDLORD                                       12
ARTICLE 13  INDEMNITY; EXEMPTION OF LANDLORD FROM LIABILITY          12
            (a)  Indemnity                                           12
            (b)  Exemption of Landlord from Liability                13
ARTICLE 14  INSURANCE                                                13
            (a)  Tenant's Insurance                                  13
            (b)  Form of Policies                                    13




<PAGE>   5

            (c)  Landlord's Insurance                                14
            (d)  Waiver of Subrogation                               14
            (e)  Compliance with Law                                 14
ARTICLE 15  ASSIGNMENT AND SUBLETTING                                15
ARTICLE 16  DAMAGE OR DESTRUCTION                                    17
ARTICLE 17  SUBORDINATION                                            19
ARTICLE 18  EMINENT DOMAIN                                           19
ARTICLE 19  DEFAULT                                                  20
            (a)  Tenant's Default                                    20
            (b)  Landlord's Default                                  20
ARTICLE 20  REMEDIES                                                 20
ARTICLE 21  TRANSFER OF LANDLORD'S INTEREST                          21
ARTICLE 22  BROKER                                                   22
ARTICLE 23  PARKING                                                  22
ARTICLE 24  WAIVER                                                   23
ARTICLE 25  ESTOPPEL CERTIFICATE                                     23
ARTICLE 26  LIABILITY OF LANDLORD                                    23
ARTICLE 27  INABILITY TO PERFORM                                     24
ARTICLE 28  HAZARDOUS WASTE                                          24
ARTICLE 29  SURRENDER OF PREMISES; REMOVAL OF PROPERTY               25
ARTICLE 30  MISCELLANEOUS                                            25
           (a)  Severability; Entire Agreement                       25
           (b)  Attorneys' Fees; Waiver of Jury Trial                26
           (c)  Time of Essence                                      26
           (d)  Headings; Joint and Several                          26
           (e)  Reserved Area                                        26
           (f)  No Option                                            26
           (g)  Use of Project Name; Improvements                    26
           (h)  Rules and Regulations                                26
           (i)  Quiet Possession                                     27
           (j)  Rent                                                 27
           (k)  Successors and Assigns                               27
           (l)  Notices                                              27
           (m)  Intentionally Omitted                                27
           (n)  Right of Landlord to Perform                         27
           (o)  Access, Changes in Project, Facilities, Name         27
           (p)  Signing Authority                                    28
           (q)  Intentionally Omitted                                28
           (r)  Substitute Premises                                  28
           (s)  Survival of Obligations                              28
           (t)  Reasonable Consent                                   28
           (u)  Governing Law                                        28
           (v)  Exhibits and Addendum                                29
ARTICLE 31  OPTION TO EXTEND                                         29
           (a)  Option Right                                         29
           (b)  Option Rent                                          29
           (c)  Exercise of Option                                   29
           (d)  Determination of Market Rent                         30
ARTICLE 32  RIGHT OF FIRST OFFER                                     31
ARTICLE 33  SIGNAGE                                                  32
ARTICLE 34  STORAGE SPACE                                            32
           (a)  Monthly Storage Rent.                                33
           (b)  Indemnification.                                     33
           (c)  Use of Storage Space                                 33
           (d)  Incorporation of Lease Provisions.                   33
Exhibit "A"  Premises
Exhibit "B"  Rules and Regulations




<PAGE>   6

Exhibit "C"  Notice of Lease Term Dates and Tenant's Proportionate
             Share
Exhibit "D"  Tenant Work Letter


                         INDEX OF DEFINED TERMS
DEFINED TERMS                                                      PAGE
Abatement Event                                                      11
Abatement Notice                                                     11
ADA                                                                   4
Additional Rent                                                       2
Affiliate                                                            16
Affiliated Assignee                                                  16
Alterations                                                           9
Annual Storage Rent                                                  33
Approved Working Drawings                                     Exhibit D
Architect                                                     Exhibit D
Base Year                                                             1
Base, Shell and Core                                          Exhibit D
Basic Rental                                                          1
Brokers                                                               1
Claims                                                               12
Code                                                          Exhibit D
Commencement Date                                                     1
Construction Drawings                                         Exhibit D
Contemplated Effective Date                                          17
Contemplated Term                                                    17
Contemplated Transfer Space                                          17
Contractor                                                    Exhibit D
Control                                                              16
Co-Producers                                                         17
Cosmetic Alterations                                                  9
Damage Repair Estimate                                               17
Direct Costs                                                          2
Economic Terms                                                       31
Eligibility Period                                                   12
Engineers                                                     Exhibit D
Estimate                                                              5
Estimate Statement                                                    5
Estimated Excess                                                      6
Event of Default                                                     20
Excess                                                                5
Exercise Notice                                                      29
Expiration Date                                                       1
Final Retention                                               Exhibit D
Final Space Plan                                              Exhibit D
Final Working Drawings                                        Exhibit D
First Offer Notice                                                   31
First Offer Space                                                    31
Force Majeure                                                        24
Hazardous Material                                                   24
Improvement Allowance                                         Exhibit D
Improvement Allowance Items                                   Exhibit D
Intention to Transfer Notice                                         17
Interest Notice                                                      30
Landlord                                                              1
Landlord Coordination Fee                                     Exhibit D




<PAGE>   7

Laws                                                                 25
Lease                                                                 1
Lease Year                                                            2
Market Rent                                                          29
Miscellaneous Items                                           Exhibit D
Objectionable Name                                                   32
Operating Costs                                                       3
Option                                                               29
Option Rent                                                          29
Option Rent Notice                                                   30
Option Term                                                          29
Original Tenant                                                      29
Outside Agreement Date                                               30
Parking Passes                                                        2
Permits                                                       Exhibit D
Permitted Use                                                         1
Premises                                                              1
Project                                                               1
Real Property                                                         3
Reassessment                                                          3
Representative                                                       23
Review Period                                                         6
RSF                                                                  32
Second Chance Notice                                                 31
Security Deposit                                                      1
Six Month Period                                                     17
Specifications                                                Exhibit D
Square Footage                                                        1
Standard Improvement Package                                  Exhibit D
Statement                                                             6
Storage Space                                                        32
Superior Leases                                                      31
Superior Rights                                                      31
Tax Costs                                                             3
Tax Increase                                                          3
Tenant                                                                1
Tenant's Acceptance                                                  30
Tenant Improvements                                                   8
Tenant's Agents                                               Exhibit D
Tenant's Proportionate Share                                          1
Tenant's Signage                                                     32
Term                                                                  1
Transfer                                                             15
Transfer Premium                                                     16
Transferee                                                           16



                             STANDARD OFFICE LEASE
     This Standard Office Lease ("Lease") is made and entered into as of the
13th day of August, 1999, by and between ARDEN REALTY LIMITED PARTNERSHIP, a
Maryland limited partnership ("Landlord"), and THE KUSHNER-LOCKE COMPANY, a
California corporation ("Tenant").

     Landlord hereby leases to Tenant and Tenant hereby leases from Landlord the
premises described as Suites 2030 and 2100, as designated on the plans attached
hereto and incorporated herein as Exhibit "A"




<PAGE>   8

("Premises"), of the project ("Project" ") now known as World Savings Center
whose address is 11601 Wilshire Boulevard, Los Angeles, California 90025 for the
Term and upon the terms and conditions hereinafter set forth, and Landlord and
Tenant hereby agree as follows:

                               ARTICLE 1
                          BASIC LEASE PROVISIONS

A. Term:              Suite 2100:  Five (5) years and three (3) months.
                      Suite 2030:  Twenty-one (21) months, subject to
                      extension pursuant to Article 31 below.

   Commencement Date: April 1, 2000.

   Expiration Date:   Suite 2100:  June 30, 2005.
                      Suite 2030:  December 31, 2001.

B.  Square Footage:   23,132 rentable (21,695 usable) square feet, of
                      which 3,774 rentable (3,306 usable) square feet
                      comprise Suite 2030 and the remainder of which
                      comprises Suite 2100.


C.  Basic Rental:


                  Annual         Monthly         Monthly Basic Rental
Lease Month    Basic Rental    Basic Rental    Per Rentable Square Foot


    1-3        $527,409.60      $43,950.80                $1.90
   4-33        $804,993.60*     $67,082.80*               $2.90
  34-63        $860,510.40*     $71,709.20*               $3.10

Subject to decrease in the event Tenant elects not to exercise its option(s) to
extend the Term as to Suite 2030.


D.  Base Year:                 2000

E.  Tenant's Proportionate:    4.93%, based on a total Project rentable
                               square footage of 469,115.

F.  Security Deposit:          $43,950.80 in accordance with Article 4
                               of the  Lease.

G.  Permitted:                 General office use

H.  Brokers:                   Travers Realty.

I.  Parking Passes:            Tenant shall have the use of fifty-six
                               (56) unreserved parking passes and
                               fourteen (14) reserved parking passes




<PAGE>   9

                               for use in the Project's parking
                               facility, at the rate provided in
                               Article 23 hereof (which shall be
                               decreased on a pro rata  basis in the
                               event Tenant does not exercise its
                               Suite 2030 Option(s) pursuant to Article
                               31 below).


                               ARTICLE 2
                             TERM/PREMISES

     The Term of this Lease shall commence on the Commencement Date as set forth
in Article 1.A. of the Basic Lease Provisions and shall end on the Expiration
Date set forth in Article 1.A. of the Basic Lease Provisions. For purposes of
this Lease, the term "Lease Year" shall mean each consecutive twelve (12) month
period during the Lease Term, with the first Lease Year commencing on the
Commencement Date. Landlord and Tenant hereby stipulate that the Premises
contains the number of square feet specified in Article 1.B. of the Basic Lease
Provisions. Landlord may deliver to Tenant a Commencement Letter in a form
substantially similar to that attached hereto as Exhibit "C", which Tenant shall
execute and return to Landlord within five (5) days of receipt thereof. Failure
of Tenant to timely execute and deliver the Commencement Letter shall constitute
acknowledgment by Tenant that the statements included in such notice in good
faith are true and correct, without exception.

                               ARTICLE 3
                                RENTAL

     (a) Basic Rental. Tenant agrees to pay to Landlord during the Term hereof,
at Landlord's office or to such other person or at such other place as directed
from time to time by written notice to Tenant from Landlord, the initial monthly
and annual sums as set forth in Article 1.C of the Basic Lease Provisions,
payable in advance on the first day of each calendar month, without demand,
setoff or deduction, except as expressly provided in this Lease.

     (b) Increase in Direct Costs" Increase in Direct Costs. The term "Base
Year" means the calendar year set forth in Article 1.D. of the Basic Lease
Provisions. If, in any calendar year during the Term of this Lease, the "Direct
Costs" (as hereinafter defined) paid or incurred by Landlord shall be higher
than the Direct Costs for the Base Year, Tenant shall pay an additional sum for
such and each subsequent calendar year equal to the product of the amount set
forth in Article 1.E. of the Basic Lease Provisions multiplied by such increased
amount of "Direct Costs." In the event either the Premises and/or the Project is
expanded, then Tenant's Proportionate Share shall be appropriately adjusted, and
as to the calendar year in which such change occurs, Tenant's Proportionate
Share for such year shall be determined on the basis of the number of days
during that particular calendar year that such Tenant's Proportionate Share was
in effect. In the event this Lease shall terminate on any date other than the
last day of a calendar year, the additional sum payable hereunder by Tenant
during the calendar year in which this Lease terminates shall be prorated on the
basis of the relationship which the number of days which have elapsed



<PAGE>   10

from the commencement of said calendar year to and including said date on which
this Lease terminates bears to three hundred sixty-five (365). Any and all
amounts due and payable by Tenant pursuant to Article 3(b),(c) and (d) hereof
shall be deemed "Additional Rent" and Landlord shall be entitled to exercise the
same rights and remedies upon default in these payments as Landlord is entitled
to exercise with respect to defaults in monthly Basic Rental payments.

(c) Definitions" As used herein the term "Direct Costs" shall mean the sum of
the following:

       (i) "Tax Costs", which shall mean any and all real estate taxes and other
similar charges on real property or improvements, assessments, water and sewer
charges, and all other charges assessed, reassessed or levied upon the Project
and appurtenances thereto and the parking or other facilities thereof, or the
real property thereunder (collectively the "Real Property") or attributable
thereto or on the rents, issues, profits or income received or derived therefrom
which are assessed, reassessed or levied by the United States, the State of
California or any local government authority or agency or any political
subdivision thereof, and shall include Landlord's reasonable legal fees, costs
and disbursements incurred in connection with proceedings for reduction of Tax
Costs or any part thereof; provided, however, if at any time after the date of
this Lease the methods of taxation now prevailing shall be altered so that in
lieu of or as a supplement to or a substitute for the whole or any part of any
Tax Costs, there shall be assessed, reassessed or levied (a) a tax, assessment,
reassessment, levy, imposition or charge wholly or partially on the rents, or
(b) a tax, assessment, reassessment, levy (including but not limited to any
municipal, state or federal levy), imposition or charge measured by or based in
whole or in part upon the Real Property and imposed upon Landlord, or (c) a
license fee measured by the rent payable under this Lease, then all such taxes,
assessments, reassessments or levies or the part thereof so measured or based,
shall be deemed to be included in the term "Direct Costs." In no event shall Tax
Costs included in Direct Costs for any year subsequent to the Base Year be less
than the amount of Tax Costs included in Direct Costs for the Base Year. In
addition, when calculating Tax Costs for the Base Year, special assessments
shall only be deemed included in Tax Costs for the Base Year to the extent that
such special assessments are included in Tax Costs for the applicable subsequent
calendar year during the Term. Notwithstanding anything to the contrary
contained in this Section 3(c)(i), there shall be excluded from Tax Costs (i)
all excess profits taxes, franchise taxes, gift taxes, capital stock taxes,
inheritance and succession taxes, estate taxes, federal and state income taxes,
and other taxes to the extent applicable to Landlord's general or net income (as
opposed to rents or receipts attributable to operations at the Project), (ii)
any items included as Operating Costs, (iii) any items paid by Tenant under
Article 6 of this Lease, and (iv) any assessments on other leasehold
improvements in the Project to the extent such assessment is attributable to a
level of improvement for which Tenant would be directly responsible pursuant to
Article 6 of this Lease. Notwithstanding anything to the contrary contained in
this Lease, in the event that, at any time during the first two (2) Lease Years,
any sale, refinancing, or change in ownership of the Real Property is
consummated, and as a result thereof, and to the extent that in connection
therewith, the Real Property is reassessed (the



<PAGE>   11

"Reassessment") for real estate tax purposes by the appropriate governmental
authority pursuant to the terms of Proposition 13, then the following provisions
shall apply to such Reassessment of the Real Property.

     For purposes of this Section 3(c)(i), the term "Tax Increase " shall mean
that portion of the Tax Costs, as calculated immediately following the
Reassessment, which is attributable solely to the Reassessment. Accordingly, the
term Tax Increase shall not include any portion of the Tax Costs, as calculated
immediately following the Reassessment, which (1) is attributable to the initial
assessment of the value of the Real Property, the Base, Shell and Core of the
Project or the tenant improvements located in the Project, (2) is attributable
to assessments which were pending immediately prior to the Reassessment which
assessments were conducted during, and included in, such Reassessment, or which
assessments were otherwise rendered unnecessary following the Reassessment, or
(3) is attributable to the annual inflationary increase of real estate taxes
permitted to be assessed annually under Proposition 13. During the first two (2)
years of the initial Lease Term, any Tax Increase shall be excluded from Tax
Costs. After the first two (2) years of the initial Lease Term, any Tax Increase
shall be included in Tax Costs.

       (ii) "Operating Costs ", which shall mean all costs and expenses incurred
by Landlord in connection with the maintenance, operation, ownership and repair
of the Project, the equipment, the intrabuilding network cable, adjacent walks,
malls and landscaped and common areas and the parking structure, areas and
facilities of the Project, including, but not limited to, salaries, wages,
medical, surgical and general welfare benefits and pension payments, payroll
taxes, fringe benefits, employment taxes, workers' compensation, uniforms and
dry cleaning thereof for all persons who perform duties connected with the
operation, maintenance and repair of the Project, its equipment, the
intrabuilding network cable and the adjacent walks and landscaped areas,
including janitorial, gardening, security, parking, operating engineer,
elevator, painting, plumbing, electrical, carpentry, heating, ventilation, air
conditioning, window washing, hired services, a reasonable allowance for
depreciation of the cost of acquiring or the rental expense of personal property
used in the maintenance, operation and repair of the Project, accountant's fees
incurred in the preparation of rent adjustment statements, legal fees, real
estate tax consulting fees, personal property taxes on property used in the
maintenance and operation of the Project, fees, costs, expenses or dues payable
pursuant to the terms of any covenants, conditions or restrictions or owners'
association pertaining to the Project, capital expenditures incurred which are
reasonably anticipated to effect economies of operation of the Project in an
amount in excess of the expenditure and capital expenditures required by
government regulations, laws, or ordinances not in effect as of the Commencement
Date; the cost of all charges for electricity, gas, water and other utilities
furnished to the Project, including any taxes thereon; the cost of all charges
for fire and extended coverage, liability and all other insurance for the
Project carried by Landlord; the cost of all building and cleaning supplies and
materials; the cost of all charges for cleaning, maintenance and service
contracts and other services with independent contractors and administration
fees; a commercially reasonable property management fee (which fee may be
imputed if



<PAGE>   12

Landlord has internalized management or otherwise acts as its own property
manager) and license, permit and inspection fees relating to the Project. In the
event, during any calendar year, the Project is less than ninety-five percent
(95%) occupied at all times, Operating Costs shall be adjusted to reflect the
Operating Costs of the Project as though ninety-five percent (95%) were occupied
at all times, and the increase or decrease in the sums owed hereunder shall be
based upon such Operating Costs as so adjusted. Notwithstanding anything to the
contrary set forth in this Article 3, when calculating Operating Costs for the
Base Year, Operating Costs shall exclude (a) market-wide labor-rate increases
due to extraordinary circumstances including, but not limited to, boycotts and
strikes, (b) utility rate increases due to extraordinary circumstances
including, but not limited to, conservation surcharges, boycotts, embargoes or
other shortages, and (c) amortization of any capital items including, but not
limited to, capital improvements, capital repairs and capital replacements
(including such amortized costs where the actual improvement, repair or
replacement was made in prior years).

     Notwithstanding anything above to the contrary, Operating Costs shall not
include (1) the cost of providing any service directly to and paid directly by
any tenant (outside of such tenant's Direct Cost payments); (2) the cost of any
items for which Landlord is reimbursed by insurance proceeds, condemnation
awards, a tenant of the Project, or otherwise to the extent so reimbursed; (3)
any real estate brokerage commissions or other costs incurred in procuring
tenants, or any fee in lieu of commission; (4) depreciation, amortization of
principal and interest on mortgages or ground lease payments (if any); (5) costs
of items considered capital repairs, replacements, improvements and equipment
under generally accepted accounting principles consistently applied except as
expressly included in Operating Costs pursuant to the definition above; (6)
costs incurred by Landlord due to the violation by Landlord or any tenant of the
terms and conditions of any lease of space in the Project or any law, code,
regulation, ordinance or the like; (7) Landlord's general corporate overhead and
general and administrative expenses; (8) any compensation paid to clerks,
attendants or other persons in commercial concessions operated by Landlord
(other than in the parking facility for the Project); (9) costs incurred in
connection with upgrading the Project to comply with disability, life, seismic,
fire and safety codes, ordinances, statutes, or other laws in effect prior to
the Commencement Date, including, without limitation, the Americans with
Disabilities Act ("ADA"), including penalties or damages incurred due to such
non-compliance; (10) bad debt expenses and interest, principal, points and fees
on debts (except in connection with the financing of items which may be included
in Operating Costs) or amortization on any ground lease, mortgage or mortgages
or any other debt instrument encumbering the Project (including the land on
which the Project is situated); (11) marketing costs, including leasing
commissions, attorneys' fees in connection with the negotiation and preparation
of letters, deal memos, letters of intent, leases, subleases and/or assignments,
space planning costs, and other costs and expenses incurred in connection with
lease, sublease and/or assignment negotiations and transactions with present or
prospective tenants or other occupants of the Project, including attorneys' fees
and other costs and expenditures incurred in connection with disputes with
present or prospective tenants or other occupants of the Project; (12) real
estate brokers' leasing commissions; (13) costs,



<PAGE>   13

including permit, license and inspection costs, incurred with respect to the
installation of other tenants' or occupants' improvements made for tenants or
other occupants in the Project or incurred in renovating or otherwise improving,
decorating, painting or redecorating vacant space for tenants or other occupants
in the Project; (14) any costs expressly excluded from Operating Costs elsewhere
in this Lease; (15) costs of any items (including, but not limited to, costs
incurred by Landlord for the repair of damage to the Project) to the extent
Landlord receives reimbursement from insurance proceeds or from a third party
(except that any deductible amount under any insurance policy shall be included
within Operating Costs); (16) rentals and other related expenses for leasing an
HVAC system, elevators, or other items (except when needed in connection with
normal repairs and maintenance of the Project) which if purchased, rather than
rented, would constitute a capital improvement not included in Operating Costs
pursuant to this Lease; (17) depreciation, amortization and interest payments,
except as specifically included in Operating Costs pursuant to the terms of this
Lease and except on materials, tools, supplies and vendor-type equipment
purchased by Landlord to enable Landlord to supply services Landlord might
otherwise contract for with a third party, where such depreciation, amortization
and interest payments would otherwise have been included in the charge for such
third party's services, all as determined in accordance with generally accepted
accounting principles, consistently applied, and when depreciation or
amortization is permitted or required, the item shall be amortized over its
reasonably anticipated useful life; (18) costs incurred by Landlord for
alterations (including structural additions), repairs, equipment and tools which
are of a capital nature and/or which are considered capital improvements or
replacements under generally accepted accounting principles, consistently
applied, except as specifically included in Operating Costs pursuant to the
terms of this Lease; (19) expenses in connection with services or other benefits
which are not offered to Tenant or for which Tenant is charged for directly but
which are provided to another tenant or occupant of the Project, without charge;
(20) electric power costs or other utility costs for which any tenant directly
contracts with the local public service company (but Landlord shall have the
right to "gross up" as if such space was vacant); (21) costs incurred in
connection with the operation of retail stores selling merchandise and
restaurants in the Project to the extent such costs are in excess of the costs
Landlord reasonably estimates would have been incurred had such space been used
for general office use; (22) costs (including in connection therewith all
attorneys' fees and costs of settlement, judgments and/or payments in lieu
thereof) arising from claims, disputes or potential disputes in connection with
potential or actual claims litigation or arbitrations pertaining to Landlord
and/or the Project, other than such claims or disputes respecting any services
or equipment used in the operation of the Building by Landlord; (23) costs
associated with the operation of the business of the partnership which
constitutes Landlord as the same are distinguished from the costs of operation
of the Project; (24) costs incurred in connection with the original construction
of the Project; (25) costs of correcting defects in or inadequacy of the initial
design or construction of the Project; (26) costs incurred to (i) comply with
laws relating to the removal of any "Hazardous Material," as that term is
defined in Article 28 of this Lease, and (ii) remove, remedy, contain, or treat
any Hazardous Material; and (27) any cost incurred in order to correct problems
in the Project resulting from the so called



<PAGE>   14

"year 2000" computer issue. If Landlord does not carry earthquake insurance for
the Project during any part of the Base Year but subsequently obtains earthquake
insurance for the Project during the Lease Term, then from and after the date
upon which Landlord obtains such earthquake insurance and continuing throughout
the period during which Landlord maintains such insurance, Operating Costs for
the Base Year shall be deemed to be increased by the amount of the premium
Landlord reasonably estimates it would have incurred had Landlord maintained
such insurance for the same period of time during the Base Year as such
insurance was maintained by Landlord during such subsequent calendar year.

     (d)  Determination of Payment

       (i) If for any calendar year ending or commencing within the Term,
Tenant's Proportionate Share of Direct Costs for such calendar year exceeds
Tenant's Proportionate Share of Direct Costs for the Base Year, then Tenant
shall pay to Landlord, in the manner set forth in Sections 3(d)(ii) and (iii),
below, and as additional rent, an amount equal to the excess (the "Excess").

       (ii) Landlord shall give Tenant a yearly expense estimate statement (the
"Estimate Statement") which shall set forth Landlord's reasonable estimate (the
"Estimate") of what the total amount of Direct Costs for the then-current
calendar year shall be and the estimated Excess (the "Estimated Excess ") as
calculated by comparing Tenant's Proportionate Share of Direct Costs for such
calendar year, which shall be based upon the Estimate, to Tenant's Proportionate
Share of Direct Costs for the Base Year. The failure of Landlord to timely
furnish the Estimate Statement for any calendar year shall not preclude Landlord
from enforcing its rights to collect any Estimated Excess under this Article 3.
If pursuant to the Estimate Statement an Estimated Excess is calculated for the
then-current calendar year, Tenant shall pay, with its next installment of
Monthly Basic Rental due, a fraction of the Estimated Excess for the
then-current calendar year (reduced by any amounts paid pursuant to the last
sentence of this Section 3(d)(ii)). Such fraction shall have as its numerator
the number of months which have elapsed in such current calendar year to the
month of such payment, both months inclusive, and shall have twelve (12) as its
denominator. Until a new Estimate Statement is furnished, Tenant shall
pay monthly, with the Monthly Basic Rental installments, an amount equal to
one-twelfth (1/12) of the total Estimated Excess set forth in
the previous Estimate Statement delivered by Landlord to Tenant.

       (iii) In addition, Landlord shall endeavor to give to Tenant on or before
the first day of April following the end of each calendar year, a statement (the
"Statement") which shall state the Direct Costs incurred or accrued for such
preceding calendar year, and which shall indicate the amount, if any, of the
Excess. Upon receipt of the Statement for each calendar year during the Term, if
amounts paid by Tenant as Estimated Excess are less than the actual Excess as
specified on the Statement, Tenant shall pay, with its next installment of
Monthly Basic Rental due, the full amount of the Excess for such calendar year,
less the amounts, if any, paid during such calendar year as Estimated Excess.
If, however, the Statement indicates that amounts paid by Tenant as Estimated
Excess are greater than the actual Excess as specified on the Statement, such
overpayment shall be credited



<PAGE>   15

against Tenant's next installments of Estimated Excess. The failure of Landlord
to timely furnish the Statement for any calendar year shall not prejudice
Landlord from enforcing its rights under this Article 3. Even though the Term
has expired and Tenant has vacated the Premises, when the final determination is
made of Tenant's Proportionate Share of the Direct Costs for the calendar year
in which this Lease terminates, if an Excess is present, Tenant shall promptly
pay to Landlord an amount as calculated pursuant to the provisions of this
Article 3(d). The provisions of this Section 3(d)(iii) shall survive the
expiration or earlier termination of the Term.

       (iv) Within one hundred eighty (180) days after receipt of a Statement by
Tenant ("Review Period"), if Tenant disputes the amount set forth in the
Statement, Tenant's employees or an independent certified public accountant
designated by Tenant, may, after reasonable notice to Landlord and at reasonable
times, inspect Landlord's records at Landlord's offices, provided that Tenant is
not then in default after expiration of all applicable cure periods and provided
further that Tenant and such accountant or representative shall, and each of
them shall use their commercially reasonable efforts to cause their respective
agents and employees to, maintain all information contained in Landlord's
records in strict confidence. Notwithstanding the foregoing, Tenant shall only
have the right to review Landlord's records one (1) time during any twelve (12)
month period. Tenant's failure to dispute the amounts set forth in any Statement
within the Review Period shall be deemed to be Tenant's approval of such
Statement and Tenant, thereafter, waives the right or ability to dispute the
amounts set forth in such Statement. If after such inspection, but within thirty
(30) days after the Review Period, Tenant notifies Landlord in writing that
Tenant still disputes such amounts, a certification as to the proper amount
shall be made in accordance with Landlord's standard accounting practices, at
Tenant's expense, by an independent certified public accountant selected by
Landlord and who is a member of a nationally or regionally recognized accounting
firm. Landlord shall cooperate in good faith with Tenant and the accountant to
show Tenant and the accountant the information upon which the certification is
to be based. However, if such certification by the accountant proves that the
Direct Costs set forth in the Statement were overstated by more than five
percent (5%), then the cost of the accountant and the cost of such certification
shall be paid for by Landlord. Promptly following the parties receipt of such
certification, the parties shall make such appropriate payments or
reimbursements, as the case may be, to each other, as are determined to be owing
pursuant to such certification.

                                    ARTICLE 4
                                SECURITY DEPOSIT

     Tenant has previously deposited with Landlord the sum set forth in Article
1.F. of the Basic Lease Provisions in connection with its previous lease of the
Premises. Landlord shall continue to hold said Security Deposit in accordance
with the terms of this Article 4 and as security for the full and faithful
performance of every provision of this Lease to be performed by Tenant. If
Tenant breaches any provision of this Lease, including but not limited to the
payment of rent, Landlord may use such part of this security deposit required
for the payment of any rent or any other sums in default, or to compensate



<PAGE>   16


Landlord for any other loss or damage which Landlord may suffer by reason of
Tenant's default. If any portion of said deposit is so used or applied, Tenant
shall, within fifteen (15) days after written demand therefor, deposit cash with
Landlord in an amount sufficient to restore the security deposit to its original
amount. Tenant agrees that Landlord shall not be required to keep the security
deposit in trust, segregate it or keep it separate from Landlord's general funds
but Landlord may commingle the security deposit with its general funds and
Tenant shall not be entitled to interest on such deposit. At the expiration of
the Lease Term, and provided there exists no default by Tenant hereunder, the
security deposit or any balance thereof shall be returned to Tenant (or, at
Landlord's option, to Tenant's assignee), provided that subsequent to the
expiration of this Lease, Landlord may retain from said security deposit any and
all amounts permitted by law or this Article 4. Tenant hereby waives the
provisions of Section 1950.7 of the California Civil Code and all other
provisions of law, now or hereafter in effect, to the extent the same are
inconsistent with Landlord's right to claim those sums specified in this Article
4 above and/or those sums reasonably necessary to compensate Landlord for any
other loss or damage, foreseeable or unforeseeable, caused by the acts or
omissions of Tenant or any officer, employee, agent, contractor or invitee of
Tenant.

                                    ARTICLE 5
                                  HOLDING OVER

     Should Tenant, without Landlord's written consent, hold over after
termination of this Lease, Tenant shall become a tenant from month to month,
only upon each and all of the terms herein provided as may be applicable to a
month to month tenancy and any such holding over shall not constitute an
extension of this Lease. During such holding over, Tenant shall pay in advance,
monthly, rent at one hundred fifty percent (150%) of the rate in effect for the
last month of the Term of this Lease, in addition to, and not in lieu of, all
other payments required to be made by Tenant hereunder including but not limited
to Tenant's Proportionate Share of any increase in Direct Costs. Nothing
contained in this Article 5 shall be construed as consent by Landlord to any
holding over of the Premises by Tenant, and Landlord expressly reserves the
right to require Tenant to surrender possession of the Premises to Landlord as
provided in this Lease upon the expiration or earlier termination of the Term.
If Landlord notifies Tenant in writing at least thirty (30) days prior to the
Lease Expiration Date that Landlord has signed proposal from a succeeding tenant
to lease the Premises, and if Tenant fails to surrender the Premises upon the
expiration or termination of this Lease, Tenant agrees to indemnify, defend and
hold Landlord harmless from all costs, loss, expense or liability, including
without limitation, claims made by any succeeding tenant and real estate brokers
claims and attorney's fees.

                                    ARTICLE 6
                             PERSONAL PROPERTY TAXES

     Tenant shall pay, prior to delinquency, all taxes assessed against or
levied upon trade fixtures, furnishings, equipment and all other personal
property of Tenant located in the Premises. In the event any or all of Tenant's
trade fixtures, furnishings, equipment and other personal property shall be
assessed and taxed with property of




<PAGE>   17

Landlord, or if the cost or value of any leasehold improvements in the Premises
exceeds the cost or value of a Project-standard buildout as determined by
Landlord and, as a result, real property taxes for the Project are increased,
Tenant shall pay to Landlord its share of such taxes within thirty (30) days
after delivery to Tenant by Landlord of a statement in writing setting forth the
amount of such taxes applicable to Tenant's property or above-standard
improvements and Tenant's receipt of substantiating documentation. Tenant shall
assume and pay to Landlord at the time of paying Basic Rental any excise, sales,
use, rent, occupancy, garage, parking, gross receipts or other taxes (other than
net income taxes) which may be imposed on or on account of letting of the
Premises or the payment of Basic Rental or any other sums due or payable
hereunder, and which Landlord may be required to pay or collect under any law
now in effect or hereafter enacted. Tenant shall pay directly to the party or
entity entitled thereto all business license fees, gross receipts taxes and
similar taxes and impositions which may from time to time be assessed against or
levied upon Tenant, as and when the same become due and before delinquency.
Notwithstanding anything to the contrary contained herein, any sums payable by
Tenant under this Article 6 shall not be included in the computation of "Tax
Costs."

                                    ARTICLE 7
                                       USE

     Tenant shall use and occupy the Premises only for the use set forth in
Article 1.G. of the Basic Lease Provisions and shall not use or occupy the
Premises or permit the same to be used or occupied for any other purpose without
the prior written consent of Landlord, which consent may be given or withheld in
Landlord's sole and absolute discretion, and Tenant agrees that it will use the
Premises in such a manner so as not to unreasonably interfere with or infringe
the rights of other tenants in the Project. Tenant shall, at its sole cost and
expense, promptly comply with all laws, statutes, ordinances and governmental
regulations or requirements now in force or which may hereafter be in force
relating to or affecting (i) the condition, use or occupancy of the Premises or
the Project excluding structural changes to the Project not related to Tenant's
particular use of the Premises, and (ii) improvements installed or constructed
in the Premises by or for the benefit of Tenant. Tenant shall not do or permit
to be done anything which would invalidate or increase the cost of any fire and
extended coverage insurance policy covering the Project and/or the property
located therein and Tenant shall comply with all rules, orders, regulations and
requirements of any organization which sets out standards, requirements or
recommendations commonly referred to by major fire insurance underwriters.
Tenant shall within thirty (30) days after demand reimburse Landlord for any
additional premium charges for any such insurance policy assessed or increased,
to the extent such assessment or increase is attributable to Tenant's failure to
comply with the provisions of this Article after Tenant's receipt of
substantiating documentation. Landlord represents that Landlord has taken or
shall take the necessary steps to comply with what Landlord reasonably believes
are the requirements of ADA in effect as of the date of this Lease as it
pertains to the common areas within the Project. Operating Costs shall not
include any cost incurred by Landlord in connection with upgrading the Project
to comply with the requirements of the ADA that are in effect as of the date of
this




<PAGE>   18

Lease, including penalties or damages incurred due to such noncompliance.

                                   ARTICLE 8
                             CONDITION OF PREMISES

     The Premises shall be renovated as provided in, and subject to, the Tenant
Work Letter attached hereto as Exhibit "D" and made a part hereof. The existing
leasehold improvements in the Premises as of the date of this Lease, together
with the Improvements (as defined in the Tenant Work Letter) may be collectively
referred to herein as the "Tenant Improvements" The taking of possession of the
Premises by Tenant shall conclusively establish that the Premises and the
Project were at such time in satisfactory condition, subject to latent defects.
Tenant hereby waives Sections 1941 and 1942 of the Civil Code of California or
any successor provision of law. So long as none of the following increases
Tenant's obligations or decreases Tenant's rights hereunder (unless the action
is required by law), Landlord reserves the right from time to time, but subject
to payment by and/or reimbursement from Tenant as otherwise provided herein: (i)
to install, use, maintain, repair, replace and relocate for service to the
Premises and/or other parts of the Project pipes, ducts, conduits, wires,
appurtenant fixtures, and mechanical systems, wherever located in the Premises
or the Project, (ii) to alter, close or relocate any facility in the Premises or
the Common Areas or otherwise conduct any of the above activities for the
purpose of complying with a general plan for fire/life safety for the Project or
otherwise and (iii) to comply with any federal, state or local law, rule or
order with respect thereto or the regulation thereof not currently in effect.
Landlord shall attempt to perform any such work with the least inconvenience to
Tenant as possible, and provided Landlord uses commercially reasonable efforts
to do so, in no event shall Tenant be permitted to withhold or reduce Basic
Rental or other charges due hereunder as a result of same or otherwise make
claim against Landlord for interruption or interference with Tenant's business
and/or operations except as provided in Section 11(g) below.

                                    ARTICLE 9
                             REPAIRS AND ALTERATIONS

     Landlord shall maintain the structural portions of the Project including
the foundation, floor/ceiling slabs, roof, curtain wall, exterior glass,
columns, beams, shafts, stairs, stairwells, elevator cabs and common areas and
shall also maintain and repair the basic mechanical, electrical, lifesafety,
plumbing, sprinkler systems and heating, ventilating and air-conditioning
systems. Except as expressly provided as Landlord's obligation in this Article
9, Tenant shall keep the Premises in good condition and repair. All damage or
injury to the Premises or the Project resulting from the act or negligence of
Tenant, its employees, agents or visitors, guests, invitees or licensees or by
the use of the Premises shall be promptly repaired by Tenant, at its sole cost
and expense (to the extent not covered by Landlord's insurance), to the
satisfaction of Landlord; provided, however, that for damage to the Project as a
result of casualty or for any repairs that may impact the mechanical,
electrical, plumbing, heating, ventilation or air-conditioning systems of the
Project, Landlord shall have the right (but not the obligation) to select the
contractor and




<PAGE>   19

oversee all such repairs. Landlord may make any repairs which are not promptly
made by Tenant after Tenant's receipt of written notice and the reasonable
opportunity of Tenant to make said repair within fifteen (15) business days from
receipt of said written notice, and charge Tenant for the cost thereof, which
cost shall be paid by Tenant within five (5) days from invoice from Landlord.
Tenant shall be responsible for the design and function of all non-standard
improvements of the Premises, whether or not installed by Landlord at Tenant's
request. Tenant waives all rights to make repairs at the expense of Landlord, or
to deduct the cost thereof from the rent. Tenant shall make no alterations,
changes or additions in or to the Premises (collectively, "Alterations ")
without Landlord's prior written consent, and then only by contractors or
mechanics approved by Landlord in writing and upon the approval by Landlord in
writing of fully detailed and dimensioned plans and specifications pertaining to
the Alterations in question, to be prepared and submitted by Tenant at its sole
cost and expense. Tenant shall at its sole cost and expense obtain all necessary
approvals and permits pertaining to any Alterations. If Landlord, in approving
any Alterations, specifies a commencement date therefor, Tenant shall not
commence any work with respect to such Alterations prior to such date.
Notwithstanding anything to the contrary contained herein, Tenant may make
strictly cosmetic changes to the finish work in the Premises (the "Cosmetic
Alterations") without Landlord's consent, provided that such alterations do not
(i) require any structural or other substantial modifications to the Premises,
(ii) require any changes to, nor adversely affect, the systems and equipment of
the Project, and (iii) affect the exterior appearance of the Project. Tenant
shall give Landlord at least fifteen (15) days prior notice of such Cosmetic
Alterations, which notice shall be accompanied by reasonably adequate evidence
that such changes meet the criteria contained in this Article 9. Tenant hereby
indemnifies, defends and agrees to hold Landlord free and harmless from all
liens and claims of lien, and all other liability, claims and demands arising
out of any work done or material supplied to the Premises by or at the request
of Tenant in connection with any Alterations. If permitted Alterations are made,
they shall be made at Tenant's sole cost and expense and shall be and become the
property of Landlord, except that Landlord may, by written notice to Tenant
given at the time of Landlord's consent thereto (or if no consent is required,
then within fifteen (15) days after written request by Tenant for such
determination by Landlord), require Tenant at Tenant's expense to remove all
partitions, counters, railings and other Alterations installed by Tenant, and to
repair any damages to the Premises caused by such removal. Any and all costs
attributable to or related to the applicable building codes of the city in which
the Project is located (or any other authority having jurisdiction over the
Project) arising from Tenants plans, specifications, improvements, alterations
or otherwise shall be paid by Tenant at its sole cost and expense. With regard
to repairs, Alterations or any other work arising from or related to this
Article 9 other than Cosmetic Alterations, Landlord shall be entitled to receive
an administrative/supervision fee (which fee shall vary depending upon whether
or not Tenant orders the work directly from Landlord but shall not exceed five
percent (5%)) sufficient to compensate Landlord for all overhead, general
conditions, fees and other costs and expenses arising from Landlord's
involvement with such work. The construction of initial improvements to the
Premises shall be governed by the terms of the Tenant Work Letter and not the
terms of this Article 9.




<PAGE>   20


                                   ARTICLE 10
                                      LIENS

     Tenant shall keep the Premises and the Project free from any mechanics'
liens, vendors liens or any other liens arising out of any work performed,
materials furnished or obligations incurred by Tenant, and agrees to defend,
indemnify and hold harmless Landlord from and against any such lien or claim or
action thereon, together with costs of suit and reasonable attorneys' fees
incurred by Landlord in connection with any such claim or action. Before
commencing any work of alteration, addition or improvement to the Premises,
Tenant shall give Landlord at least ten (10) business days' written notice of
the proposed commencement of such work (to afford Landlord an opportunity to
post appropriate notices of non-responsibility). In the event that there shall
be recorded against the Premises or the Project or the property of which the
Premises is a part any claim or lien arising out of any such work performed,
materials furnished or obligations incurred by Tenant and such claim or lien
shall not be removed or discharged within ten (10) days of filing, Landlord
shall have the right but not the obligation to pay and discharge said lien
without regard to whether such lien shall be lawful or correct or to require
that Tenant deposit with Landlord in cash, lawful money of the United States,
one hundred fifty percent (150%) of the amount of such claim, which sum may be
retained by Landlord until such claim shall have been removed of record or until
judgment shall have been rendered on such claim and such judgment shall have
become final, at which time Landlord shall have the right to apply such deposit
in discharge of the judgment on said claim and any costs, including attorneys'
fees incurred by Landlord, and shall remit the balance thereof to Tenant.

                                   ARTICLE 11
                                PROJECT SERVICES

     (a) Landlord agrees to maintain, operate and repair the Building in a
first-class manner. Landlord agrees to furnish to the Premises, at a cost to be
included in Operating Costs, from 8:00 a.m. to 6:00 p.m. Mondays through Fridays
and 9:00 a.m. to 2:00 p.m. on Saturdays, excepting local and national holidays,
air conditioning and heat all in such reasonable quantities as in the judgment
of Landlord is reasonably necessary for the comfortable occupancy of the
Premises. In addition, Landlord shall provide electric current for normal
lighting and normal office machines, elevator service and water on the same
floor as the Premises for lavatory and drinking purposes in such reasonable
quantities as in the judgment of Landlord is reasonably necessary for general
office use. Janitorial and maintenance services shall be furnished five (5) days
per week, excepting local and national holidays. Tenant shall comply with all
rules and regulations which Landlord may reasonably establish for the proper
functioning and protection of the common area air conditioning, heating,
elevator, electrical intrabuilding network cable and plumbing systems. Except as
provided in Section 11(g) below, Landlord shall not be liable for, and there
shall be no rent abatement as a result of, any stoppage, reduction or
interruption of any such services caused by governmental rules, regulations or
ordinances, riot, strike, labor disputes, breakdowns, accidents, necessary
repairs or other cause. Except as specifically provided in this Article 11,
Tenant agrees to pay for all




<PAGE>   21

utilities and other services utilized by Tenant and additional building services
furnished to Tenant not uniformly furnished to all tenants of the Project at the
rate generally charged by Landlord to tenants of the Project.

     (b) Tenant will not, without the prior written consent of Landlord, use any
apparatus or device in the Premises which will in any way increase the amount of
electricity or water usually furnished or supplied for use of the Premises as
general office space; nor connect any apparatus, machine or device with water
pipes or electric current (except through existing electrical outlets in the
Premises), for the purpose of using electric current or water.

     (c) If Tenant shall require electric current in excess of that which
Landlord is obligated to furnish under Article 11(a) above, Tenant shall first
obtain the written consent of Landlord, which Landlord may refuse in its sole
and absolute discretion, to the use thereof and Landlord may cause an electric
current meter or submeter to be installed in the Premises to measure the amount
of such excess electric current consumed by Tenant in the Premises. The cost of
any such meter and of installation, maintenance and repair thereof shall be paid
for by Tenant and Tenant agrees to pay to Landlord, promptly upon demand
therefor by Landlord, for all such excess electric current consumed by any such
use as shown by said meter at the rates charged for such service by the city in
which the Project is located or the local public utility, as the case may be,
furnishing the same, plus any additional expense incurred by Landlord in keeping
account of the electric current so consumed.

     (d) If any lights, machines or equipment (including but not limited to
computers) are used by Tenant in the Premises which materially affect the
temperature otherwise maintained by the air conditioning system, or generate
substantially more heat in the Premises than would be generated by the building
standard lights and usual office equipment, Landlord shall have the right to
install any machinery and equipment which Landlord reasonably deems necessary to
restore temperature balance, including but not limited to modifications to the
standard air conditioning equipment, and the cost thereof, including the cost of
installation and any additional cost of operation and maintenance occasioned
thereby, shall be paid by Tenant to Landlord upon demand by Landlord. Landlord
shall not be liable under any circumstances for loss of or injury to property,
however occurring, through or in connection with or incidental to failure to
furnish any of the foregoing.

     (e) If Tenant requires heating, ventilation and/or air conditioning during
times other than the times provided in Article 11(a) above, Tenant shall give
Landlord such advance notice as Landlord shall reasonably require and shall pay
Landlord's standard charge for such after-hours use, which standard charge as of
the date of this Lease is $3.29 per hour per sector (with approximately
twenty-five (25) sectors per floor in the Project), provided that any increase
in the charge per hour per sector shall be based upon Landlord's reasonable
estimate of increases in its actual cost of providing such service.

     (f) Landlord may impose a reasonable charge for any utilities or services
(other than electric current and heating, ventilation and/or




<PAGE>   22

air conditioning which shall be governed by Articles 11(c) and (e) above)
utilized by Tenant in excess of the amount or type that Landlord reasonably
determines is typical for general office use.

     (g) An "Abatement Event" shall be defined as an event that prevents Tenant
from using the Premises or any portion thereof, as a result of any failure to
provide services or access to the Premises, where (i) Tenant does not actually
use the Premises or such portion thereof, and (ii) such event is not caused by
the negligence or willful misconduct of Tenant, its agents, employees or
contractors. Tenant shall give Landlord notice ("Abatement Notice") of any such
Abatement Event, and if such Abatement Event continues beyond the "Eligibility
Period" (as that term is defined below), then the Basic Rental and Tenant's
Proportionate Share of Direct Costs and Tenant's obligation to pay for parking
shall be abated entirely or reduced, as the case may be, after expiration of the
Eligibility Period for such time that Tenant continues to be so prevented from
using, and does not use, the Premises or a portion thereof, in the proportion
that the rentable area of the portion of the Premises that Tenant is prevented
from using, and does not use, bears to the total rentable area of the Premises;
provided, however, in the event that Tenant is prevented from using, and does
not use, a portion of the Premises for a period of time in excess of the
Eligibility Period and the remaining portion of the Premises is not sufficient
to allow Tenant to effectively conduct its business therein, and if Tenant does
not conduct its business from such remaining portion, then for such time after
expiration of the Eligibility Period during which Tenant is so prevented from
effectively conducting its business therein, the Basic Rental and Tenant's
Proportionate Share of Direct Costs and Tenant's obligation to pay for parking
for the entire Premises shall be abated entirely for such time as Tenant
continues to be so prevented from using, and does not use, the Premises. If,
however, Tenant reoccupies any portion of the Premises during such period, the
Basic Rental and Tenant's Proportionate Share of Direct Costs allocable to such
reoccupied portion, based on the proportion that the rentable area of such
reoccupied portion of the Premises bears to the total rentable area of the
Premises, shall be payable by Tenant from the date Tenant reoccupies such
portion of the Premises. The term "Eligibility Period" shall mean a period of
five (5) consecutive business days after Landlord's receipt of any Abatement
Notice(s). Such right to abate Basic Rental and Tenant's Proportionate Share of
Direct Costs shall be Tenant's sole and exclusive remedy at law or in equity for
an Abatement Event.

                                   ARTICLE 12
                               RIGHTS OF LANDLORD

     Landlord and its agents shall have the right to enter the Premises at all
reasonable times (upon reasonable prior notice to Tenant except in the case of
emergency or regularly scheduled service (e.g., janitorial service)) for the
purpose of cleaning the Premises, examining or inspecting the same, serving or
posting and keeping posted thereon notices as provided by law, or which Landlord
deems necessary for the protection of Landlord or the Property, showing the same
to prospective tenants (but as to prospective tenants only during the last nine
(9) months of the Term or Option Term, as applicable), lenders or purchasers of
the Project, in the case of an emergency, and for making




<PAGE>   23

such alterations, repairs, improvements or additions to the Premises or to the
Project as Landlord may deem necessary or desirable. Landlord shall provide
Tenant with an opportunity to have a representative of Tenant accompany Landlord
in connection with any such entry (except in the case of an emergency). If
Tenant shall not be personally present to open and permit an entry into the
Premises at any time when such an entry by Landlord is necessary or permitted
hereunder, Landlord may enter by means of a master key or may enter forcibly,
only in the case of an emergency, without liability to Tenant and without
affecting this Lease.

                                   ARTICLE 13
                 INDEMNITY; EXEMPTION OF LANDLORD FROM LIABILITY

     (a) Indemnity. Tenant shall indemnify, defend and hold Landlord harmless
from any and all claims arising from Tenant's use of the Premises or the Project
including Tenant's Signage rights set forth in Article 33 or from the conduct of
its business or from any activity, work or thing which may be permitted or
suffered by Tenant in or about the Premises or the Project and shall further
indemnify, defend and hold Landlord harmless from and against any and all claims
arising from any negligence of Tenant or any of its agents, contractors,
employees or invitees, patrons, customers or members in or about the Project and
from any and all costs, attorneys' fees, expenses and liabilities incurred in
the defense of any claim or any action or proceeding brought thereon, including
negotiations in connection therewith. However, notwithstanding the foregoing,
Tenant shall not be required to indemnify and/or hold Landlord harmless from any
loss, cost, liability, damage or expense, including, but not limited to,
penalties, fines, attorneys' fees or costs (collectively, "Claims"), to any
person, property or entity to the extent resulting from the negligence or
willful misconduct of Landlord or its agents, contractors, or employees (except
for damage to the Improvements and Tenant's personal property, fixtures,
furniture and equipment in the Premises in which case Tenant shall be
responsible to the extent Tenant is required to obtain the requisite insurance
coverage pursuant to this Lease). Landlord hereby indemnifies Tenant and holds
Tenant harmless from any Claims to the extent resulting from the negligence or
willful misconduct of Landlord or its agents, contractors or employees;
provided, however, that because Landlord maintains insurance on the Project and
Tenant compensates Landlord for such insurance as part of Tenant's Proportionate
Share of Direct Costs and because of the existence of waivers of subrogation set
forth in Article 14 of this Lease, Landlord hereby indemnifies and holds Tenant
harmless from any Claims to any property outside of the Premises to the extent
such Claim is covered by such insurance, even if resulting from the negligence
or willful misconduct of Tenant or those of its agents, contractors, or
employees. Similarly, since Tenant must carry insurance pursuant to Article 14
to cover its personal property within the Premises and the Improvements, Tenant
hereby indemnifies and holds Landlord harmless from any Claim to any property
within the Premises, to the extent such Claim is covered by such insurance, even
if resulting from the negligence or willful misconduct of Landlord or those of
its agents, contractors, or employees. Tenant hereby assumes all risk of damage
to property or injury to persons in or about the Premises from any cause, and
Tenant hereby waives all claims in respect thereof against Landlord, excepting
and to the extent the damage is caused by the negligence or willful




<PAGE>   24

misconduct of Landlord, its agents, employees or contractors (in which case
Landlord shall be responsible for such damage to the extent not covered by
insurance required to be carried by Tenant under this Lease or actually carried
by Tenant).

     (b) Exemption of Landlord from Liability. Landlord shall not be liable for
injury to Tenant's business, or loss of income therefrom, or, except in
connection with damage or injury resulting from the negligence or willful
misconduct of Landlord, or its authorized agents, employees or contractors (in
which case Landlord shall be responsible for such damage to the extent not
covered by insurance required to be carried by Tenant under this Lease or
actually carried by Tenant) for damage that may be sustained by the person,
goods, wares, merchandise or property of Tenant, its employees, invitees,
customers, agents, or contractors, or any other person in, on or about the
Premises directly or indirectly caused by or resulting from fire, steam,
electricity, gas, water, or rain which may leak or flow from or into any part of
the Premises, or from the breakage, leakage, obstruction or other defects of the
pipes, sprinklers, wires, appliances, plumbing, air conditioning, light
fixtures, or mechanical or electrical systems or from intrabuilding network
cable, whether such damage or injury results from conditions arising upon the
Premises or upon other portions of the Project or from other sources or places
and regardless of whether the cause of such damage or injury or the means of
repairing the same is inaccessible to Tenant. Landlord shall not be liable to
Tenant for any damages arising from any act or neglect of any other tenant of
the building.

       Landlord shall not be liable for losses due to theft, vandalism, or like
causes.

                                   ARTICLE 14
                                    INSURANCE

     (a) Tenant's Insurance. Tenant, shall at all times during the Term of this
Lease, and at its own cost and expense, procure and continue in force the
following insurance coverage: (i) Commercial General Liability Insurance with a
combined single limit for bodily injury and property damages of not less than
One Million Dollars ($1,000,000) per occurrence and Three Million Dollars
($3,000,000) in the annual aggregate, including products liability coverage if
applicable, covering the insuring provisions of this Lease and the performance
of Tenant of the indemnity and exemption of Landlord from liability agreements
set forth in Article 13 hereof; (ii) a policy of standard fire, extended
coverage and special extended coverage insurance (all risks), including a
vandalism and malicious mischief endorsement, sprinkler leakage coverage and
earthquake sprinkler leakage where sprinklers are provided in an amount equal to
the full replacement value new without deduction for depreciation of all (A)
Tenant Improvements, Alterations, fixtures and other improvements in the
Premises and (B) trade fixtures, furniture, equipment and other personal
property installed by or at the expense of Tenant; (iii) Worker's Compensation
coverage as required by law; and (iv) business interruption, loss of income and
extra expense insurance. Tenant shall carry and maintain during the entire Lease
Term (including any option periods, if applicable), at Tenant's sole cost and
expense, increased amounts of the insurance required to be carried by Tenant
pursuant to




<PAGE>   25

this Article 14 and such other reasonable types of insurance coverage and in
such reasonable amounts covering the Premises and Tenant's operations therein,
as may be reasonably required by Landlord, so long as such increased amounts
and/or other types of insurance coverage are then generally required by
comparable landlords of comparable first-class, institutional quality office
buildings in the vicinity of the Project.

     (b) Form of Policies. The aforementioned minimum limits of policies and
Tenant's procurement and maintenance thereof shall in no event limit the
liability of Tenant hereunder. The Commercial General Liability Insurance policy
shall name Landlord, Landlord's property manager, Landlord's lender(s) and such
other persons or firms as Landlord specifies from time to time, as additional
insureds with an appropriate endorsement to the policy(s). All such insurance
policies carried by Tenant shall be with companies having a rating of not less
than A-VIII in Best's Insurance Guide. Tenant shall furnish to Landlord, from
the insurance companies, or cause the insurance companies to furnish,
certificates of coverage. No such policy shall be cancelable or subject to
reduction of coverage or cancellation except after thirty (30) days prior
written notice to Landlord by the insurer. All such policies shall be endorsed
to agree that Tenant's policy is primary as to Claims arising within the
Premises and that any insurance carried by Landlord is excess and not
contributing with any Tenant insurance requirement hereunder. Tenant shall, at
least twenty (20) days prior to the expiration of such policies, furnish
Landlord with renewals or binders. Tenant agrees that if Tenant does not take
out and maintain such insurance or furnish Landlord with renewals or binders,
Landlord may (but shall not be required to), upon prior notice to Tenant and the
expiration of a five (5) day cure period, procure said insurance on Tenant's
behalf and charge Tenant the cost thereof, which amount shall be payable by
Tenant upon demand with interest (at the rate set forth in Section 20(e) below)
from the date such sums are extended. Tenant shall have the right to provide
such insurance coverage pursuant to blanket policies obtained by Tenant,
provided such blanket policies expressly afford coverage to the Premises and to
Tenant as required by this Lease.

     (c) Landlord's Insurance. Landlord shall, as a cost to be included in
Operating Costs, procure and maintain at all times during the Term of this
Lease, a policy or policies of insurance covering loss or damage to the Project
in the amount of the full replacement costs without deduction for depreciation
thereof (exclusive of Tenant's trade fixtures, inventory, personal property and
equipment), providing protection against all perils included within the
classification of fire and extended coverage, vandalism coverage and malicious
mischief, sprinkler leakage, water damage, and special extended coverage on
building. Additionally, Landlord may (but shall not be required to) carry: (i)
Bodily Injury and Property Damage Liability Insurance and/or Excess Liability
Coverage Insurance; and (ii) Earthquake and/or Flood Damage Insurance; and (iii)
Rental Income Insurance at its election or if required by its lender from time
to time during the Term hereof, in such amounts and with such limits as Landlord
or its lender may deem appropriate. The costs of such insurance shall be
included in Operating Costs. However, notwithstanding the foregoing, Landlord
shall either carry, or shall be deemed to have elected to self-insure, the
Bodily Injury and Property Damage Liability Insurance coverage




<PAGE>   26

described in subsection (i) of the immediately preceding sentence, and if
Landlord elects to self-insure any or all of such coverage, Tenant shall be
deemed to be in the same position it would have been in had Landlord actually
purchased such insurance from a third party carrier.

     (d) Waiver of Subrogation. Landlord and Tenant each agree to have their
respective insurers issuing the insurance described in Sections 14(a)(ii),
14(a)(iv) and the first sentence of Section 14(c) waive any rights of
subrogation that such companies may have against the other party. Tenant hereby
waives any right that Tenant may have against Landlord and Landlord hereby
waives any right that Landlord may have against Tenant as a result of any loss
or damage to the extent such loss or damage is insurable under such policies.

     (e) Compliance with Law. Tenant agrees that it will not, at any time,
during the Term of this Lease, carry any stock of goods or do anything in or
about the Premises that will in any way tend to increase the insurance rates
upon the Project. Tenant agrees to pay Landlord within thirty (30) days after
demand the amount of any increase in premiums for insurance against loss by fire
that may be charged during the Term of this Lease on the amount of insurance to
be carried by Landlord on the Project resulting from the foregoing, or from
Tenant doing any act in or about said Premises that does so increase the
insurance rates, whether or not Landlord shall have consented to such act on the
part of Tenant, so long as Tenant receives substantiating documentation. If
Tenant installs upon the Premises any electrical equipment which constitutes an
overload of electrical lines of the Premises, Tenant shall at its own cost and
expense in accordance with all other Lease provisions, and subject to the
provisions of Article 9, 10 and 11, hereof, make whatever changes are necessary
to comply with requirements of the insurance underwriters and any governmental
authority having jurisdiction thereover, but nothing herein contained shall be
deemed to constitute Landlord's consent to such overloading. Tenant shall, at
its own expense, comply with all requirements of the insurance authority having
jurisdiction over the Project necessary for the maintenance of reasonable fire
and extended coverage insurance for the Premises, including without limitation
thereto, the installation of fire extinguishers or an automatic dry chemical
extinguishing system.

                                   ARTICLE 15
                            ASSIGNMENT AND SUBLETTING

     Tenant shall have no power to, either voluntarily, involuntarily, by
operation of law or otherwise, sell, assign, transfer or hypothecate this Lease,
or sublet the Premises or any part thereof, or permit the Premises or any part
thereof to be used or occupied by anyone other than Tenant or Tenant's employees
without the prior written consent of Landlord which shall not be unreasonably
withheld. Landlord shall grant or deny consent to a proposed Transfer by written
notice to Tenant within ten (10) business days after Landlord's receipt of an
executed duplicate original of the Transfer document together with a completed
lease application by the Transferee and financial information reasonably
requested by Landlord. Landlord's failure to withhold its consent by written
notice to Tenant within said ten (10) business day period shall be deemed to
constitute Landlord's consent to such Transfer. Tenant may transfer its interest
pursuant to this Lease only upon the following express conditions, which
conditions are agreed by




<PAGE>   27

Landlord and Tenant to be reasonable:

     (a) That the proposed transferee shall be subject to the prior written
consent of Landlord, which consent will not be unreasonably withheld but,
without limiting the generality of the foregoing, it shall be reasonable for
Landlord to deny such consent if:

       (i) The use to be made of the Premises by the proposed transferee is (a)
not generally consistent with the character and nature of all other tenancies in
the Project, or (b) a use which conflicts with any so-called "exclusive" then in
favor of, or for any use which is the same as that stated in any percentage rent
lease to, another tenant of the Project or any other buildings which are in the
same complex as the Project, or (c) a use which would be prohibited by any other
portion of this Lease (including but not limited to any Rules and Regulations
then in effect);

       (ii) The financial responsibility of the proposed transferee is not
reasonably satisfactory to Landlord;

       (iii) The proposed transferee is either a governmental agency or
instrumentality thereof; or

       (iv) Either the proposed transferee or any person or entity which
directly or indirectly controls, is controlled by or is under common control
with the proposed transferee is negotiating with Landlord to lease space in the
Project.

     (b) Whether or not Landlord consents to any such transfer, Tenant shall pay
to Landlord Landlord's then standard processing fee and reasonable attorneys'
fees incurred in connection with the proposed transfer up to the aggregate sum
of $1,000.00;

     (c) That the proposed transferee shall execute an agreement pursuant to
which it shall agree to perform faithfully and be bound by all of the terms,
covenants, conditions, provisions and agreements of this Lease applicable to
that portion of the Premises so transferred; and

     (d) That an executed duplicate original of said assignment and assumption
agreement or other transfer on a form reasonably approved by Landlord, shall be
delivered to Landlord within five (5) days after the execution thereof, and that
such transfer shall not be binding upon Landlord until the delivery thereof to
Landlord and the execution and delivery of Landlord's consent thereto. It shall
be a condition to Landlord's consent to any subleasing, assignment or other
transfer of part or all of Tenant's interest in the Premises (hereinafter
referred to as a "Transfer") that (i) upon Landlord's consent to any Transfer,
Tenant shall pay and continue to pay fifty percent (50%) of any "Transfer
Premium" (defined below), received by Tenant from the transferee; (ii) any
sublessee of part or all of Tenant's interest in the Premises shall agree that
in the event Landlord gives such sublessee notice that Tenant is in default
under this Lease, such sublessee shall thereafter make all sublease or other
payments directly to Landlord, which will be received by Landlord without any
liability whether to honor the sublease or otherwise (except to credit such
payments against sums due under this Lease), and any sublessee shall




<PAGE>   28

agree to attorn to Landlord or its successors and assigns at their request
should this Lease be terminated for any reason, except that in no event shall
Landlord or its successors or assigns be obligated to accept such attornment;
(iii) any such Transfer and consent shall be effected on forms supplied by
Landlord and/or its legal counsel; (iv) Landlord may require that Tenant not
then be in default hereunder in any respect; and (v) Tenant or the proposed
subtenant or assignee (collectively, "Transferee") shall agree to pay Landlord,
upon demand, as additional rent, a sum equal to the additional costs, if any,
incurred by Landlord for maintenance and repair as a result of any change in the
nature of occupancy caused by such subletting or assignment. "Transfer Premium"
shall mean all rent, additional rent or other consideration payable by a
Transferee in connection with a Transfer in excess of the rent and Additional
Rent payable by Tenant under this Lease during the term of the Transfer and if
such Transfer is less than all of the Premises, the Transfer Premium shall be
calculated on a rentable square foot basis. In any event, the Transfer Premium
shall be calculated after deducting the reasonable expenses incurred by Tenant
for (1) any changes, alterations and improvements to the Premises paid for by
Tenant in connection with the Transfer, (2) any other out-off-pocket monetary
concessionsprovided by Tenant to the Transferee, (3) any brokerage commissions
paid for by Tenant in connection with the Transfer, (4) advertising costs
incurred in connection with the Transfer, (5) attorneys' fees incurred in
connection with the Transfer, (6) lease takeover costs incurred in connection
with the Transfer, and (7) the unamortized cost of alterations and improvements
made or paid for by Tenant and applicable to the space which is the subject of
the Transfer (amortized on a straight-line basis from date of installation until
the Expiration Date). "Transfer Premium" shall also include, but not be limited
to, key money, bonus money or other cash consideration paid by a transferee to
Tenant in connection with such Transfer, and any payment in excess of fair
market value for services rendered by Tenant to the Transferee and any payment
in excess of fair market value for assets, fixtures, inventory, equipment, or
furniture transferred by Tenant to the Transferee in connection with such
Transfer. Any sale, assignment, hypothecation, transfer or subletting of this
Lease which is not in compliance with the provisions of this Article 15 shall be
voidable at the option of Landlord. In no event shall the consent by Landlord to
an assignment or subletting be construed as relieving Tenant, any assignee, or
sublessee from obtaining the express written consent of Landlord to any further
assignment or subletting, or as releasing Tenant from any liability or
obligation hereunder whether or not then accrued and Tenant shall continue to be
fully liable therefor. No collection or acceptance of rent by Landlord from any
person other than Tenant shall be deemed a waiver of any provision of this
Article 15 or the acceptance of any assignee or subtenant hereunder, or a
release of Tenant (or of any successor of Tenant or any subtenant).
Notwithstanding anything to the contrary in this Lease, if Tenant or any
proposed Transferee claims that Landlord has unreasonably withheld or delayed
its consent under this Article 15 or otherwise has breached or acted
unreasonably under this Article 15, their sole remedies shall be a declaratory
judgment, an injunction for the relief sought and/or monetary damages, and
Tenant hereby waives any right at law or equity to terminate this Lease.

     The term "Affiliate" shall mean (i) any entity that is controlled




<PAGE>   29

by, controls or is under common control with, Tenant or (ii) any entity that
merges with, is acquired by, or acquires Tenant through the purchase of stock or
assets and where the net worth of the surviving entity as of the date such
transaction is completed is not less than the net worth of Tenant as of the date
of this Lease, calculated under generally accepted accounting principles.
Notwithstanding anything to the contrary contained in this Article 15, an
assignment or subletting of all or a portion of the Premises to an Affiliate,
shall not be deemed a Transfer under this Article 15, provided that Tenant
notifies Landlord of any such assignment or sublease and promptly supplies
Landlord with any documents or information requested by Landlord regarding such
assignment or sublease or such affiliate, and further provided that such
assignment or sublease is not a subterfuge by Tenant to avoid its obligations
under this Lease. An assignee of Tenant's entire interest in this Lease pursuant
to the immediately preceding sentence may be referred to herein as an
"Affiliated Assignee" "Control" ," as used in this Article 15, shall mean the
ownership, directly or indirectly, of greater than fifty percent (50%) of the
voting securities of, or possession of the right to vote, in the ordinary
direction of its affairs, of greater than fifty percent (50%) of the voting
interest in, an entity. In addition, notwithstanding anything to the contrary
contained in this Article 15, Landlord and Tenant acknowledge that, from time to
time, without the Premises being separately demised, certain offices within the
Premises may be utilized on a temporary basis by entities or persons
("Co-Producers") with whom Tenant is then working on entertainment-related
projects in the ordinary course of its business as an entertainment production
company. Upon written request of Landlord, Tenant shall from time to time
identify to Landlord in writing the Co-Producers so utilizing the Premises. Such
occupancy by the Co-Producers shall not be deemed an assignment or subletting,
and shall not require Tenant's compliance with the provisions of this Article
15, so long as Tenant is not being compensated for use of such space beyond
reimbursement of Tenant's costs of such space. The amount of all space occupied
at any one time by Co-Producers shall not exceed in the aggregate 8,000 usable
square feet. Co-Producers shall not have any of the rights of Tenant under this
Lease and Landlord shall not be obligated to deal directly with any such
Co-Producer. No signage shall be posted outside the Premises or elsewhere in the
Project naming any of such Co-Producers as occupants of the Premises or the
Project, except as permitted in accordance with Article 33 below. The provisions
of this paragraph shall be solely for the benefit of The Kushner-Locke Company
and shall not apply to its assignees or subtenants, if any.

     Notwithstanding anything to the contrary contained in this Article 15, if
Tenant contemplates a Transfer to other than an Affiliate or Co- Producer, then
Tenant shall give Landlord notice (the "Intention to Transfer Notice") of such
contemplated Transfer (whether or not the contemplated Transferee or the terms
of such contemplated Transfer have been determined). The Intention to Transfer
Notice shall specify the portion of and number of rentable square feet of the
Premises which Tenant intends to Transfer (the "Contemplated Transfer Space"),
the contemplated date of commencement of the contemplated Transfer (the
"Contemplated Effective Date") and the contemplated length of the term of such
contemplated Transfer ("Contemplated Term"). Thereafter, Landlord shall have the
option, by giving written notice to Tenant within ten (10) business days after
Landlord's receipt of the Intention




<PAGE>   30

to Transfer Notice, to recapture the Contemplated Transfer Space effective as of
the Contemplated Effective Date for the Contemplated Term. In the event that
such option is exercised by Landlord, this Lease shall be terminated (or where
appropriate, suspended if the last day of the Contemplated Term is not the last
day of the Term, and at the end of such suspension period the Premises or the
applicable portion thereof, shall be returned to Tenant in the same condition as
when received, reasonable wear and tear excepted) with respect to the
Contemplated Transfer Space effective as of the Contemplated Effective Date
until the last day of the Contemplated Term. In the event of a recapture by
Landlord with respect to less than the entire Premises, the Monthly Basic Rental
reserved herein shall be prorated on the basis of the number of rentable square
feet retained by Tenant in proportion to the number of rentable square feet
contained in the entire Premises, and this Lease as so amended shall continue
thereafter in full force and effect, and upon request of either party, the
parties shall execute written confirmation of the same. If Landlord declines, or
fails to elect in a timely manner to recapture as to the Contemplated Transfer
Space under this Article 15 within such ten (10) business day period, then,
provided Landlord has consented to the proposed Transfer, Tenant shall be
entitled to proceed to transfer the Contemplated Transfer Space to a proposed
Transferee and Landlord shall not have any right to recapture such Contemplated
Transfer Space with respect to any Transfer thereof consummated within a period
of six (6) months (the "Six Month Period") commencing on the expiration of such
ten (10) business day period; provided, however, that any such Transfer shall be
subject to other terms of this Article 15. If such a Transfer is not so
consummated within the Six Month Period (or if a Transfer is so consummated,
then upon the expiration of the term of any Transfer of such Contemplated
Transfer Space consummated within such Six Month Period), Tenant shall again be
required to submit a new Intention to Transfer Notice to Landlord with respect
to any contemplated Transfer, as provided above in this Article 15.

                                   ARTICLE 16
                              DAMAGE OR DESTRUCTION

     Within sixty (60) days after the date Landlord learns of the necessity for
repairs as a result of damage, Landlord shall notify Tenant ("Damage Repair
Estimate") of Landlord's estimated assessment of the period of time in which the
repairs will be completed. If the Project is damaged by fire or other insured
casualty and the insurance proceeds have been made available therefor by the
holder or holders of any mortgages or deeds of trust covering the Premises or
the Project, the damage shall be repaired by Landlord to the extent such
insurance proceeds are available therefor and provided the Damage Repair
Estimate indicates that repairs can be completed within one hundred eighty (180)
days after the necessity for repairs as a result of such damage becomes known to
Landlord without the payment of overtime or other premiums, and until such
repairs are completed rent shall be abated in proportion to the part of the
Premises which is unusable by Tenant in the conduct of its business (but there
shall be no abatement of rent by reason of any portion of the Premises being
unusable for a period equal to one (1) day or less). However, if the damage is
due to the fault or neglect of Tenant, its employees, agents, contractors,
guests, invitees and the like, there shall be no abatement of rent, unless and
to the extent Landlord receives rental income insurance proceeds or would have


<PAGE>   31

received such insurance had Landlord carried standard rental income insurance.
Upon the occurrence of any damage to the Premises, Tenant shall assign to
Landlord (or to any party designated by Landlord) all insurance proceeds payable
to Tenant under Section 14(a)(ii)(A) above; provided, however, that if the cost
of repair of improvements within the Premises by Landlord exceeds the amount of
insurance proceeds received by Landlord from Tenant's insurance carrier, as so
assigned by Tenant, plus proceeds received from Landlord's insurance carrier
allocable to such leasehold improvements, such excess costs shall be paid by
Tenant to Landlord prior to Landlord's repair of such damage. If, however, the
Damage Repair Estimate indicates that repairs cannot be completed within one
hundred eighty (180) days after the necessity for repairs as a result of such
damage becomes known to Landlord without the payment of overtime or other
premiums, Landlord may, at its option, either (i) make them in a reasonable time
and in such event this Lease shall continue in effect and the rent shall be
abated, if at all, in the manner provided in this Article 16, or (ii) elect not
to effect such repairs and instead terminate this Lease, by notifying Tenant in
writing of such termination within sixty (60) days after Landlord learns of the
necessity for repairs as a result of damage, such notice to include a
termination date giving Tenant sixty (60) days to vacate the Premises. In
addition, Landlord may elect to terminate this Lease if the Project shall be
materially damaged by fire or other casualty or cause, whether or not the
Premises are affected, and the damage is not fully covered, except for
deductible amounts, by Landlord's insurance policies. However, if Landlord does
not elect to terminate this Lease pursuant to Landlord's termination right as
provided above, and the Damage Repair Estimate indicates that repairs cannot be
completed within one hundred eighty (180) days after being commenced, Tenant may
elect, not later than thirty (30) days after Tenant's receipt of the Damage
Repair Estimate, to terminate this Lease by written notice to Landlord effective
as of the date specified in Tenant's notice. Finally, if the Premises or the
Project is damaged to any substantial extent during the last twelve (12) months
of the Term, then notwithstanding anything contained in this Article 16 to the
contrary, Landlord shall have the option to terminate this Lease by giving
written notice to Tenant of the exercise of such option within sixty (60) days
after Landlord learns of the necessity for repairs as the result of such damage.
In the event that the Premises or the Project is destroyed or damaged to any
substantial extent during the last twelve (12) months of the Lease Term and if
such damage shall take longer than sixty (60) days to repair and if such damage
is not the result of the negligence or willful misconduct of Tenant or Tenant's
employees, licensees, invitees or agents, then notwithstanding anything in this
Article 16 to the contrary, Tenant shall have the option to terminate this Lease
by written notice to Landlord of the exercise of such option within sixty (60)
days after Tenant learns of the necessity for repairs as the result of such
damage. A total destruction of the Project shall automatically terminate this
Lease. Except as provided in this Article 16, there shall be no abatement of
rent and no liability of Landlord by reason of any injury to or interference
with Tenant's business or property arising from such damage or destruction or
the making of any repairs, alterations or improvements in or to any portion of
the Project or the Premises or in or to fixtures, appurtenances and equipment
therein. Tenant understands that Landlord will not carry insurance of any kind
on Tenant's furniture, furnishings, trade fixtures or equipment, and that
Landlord shall not


<PAGE>   32

be obligated to repair any damage thereto or replace the same. Except for
proceeds relating to Tenant's furniture, furnishings, trade fixtures and
equipment, Tenant acknowledges that Tenant shall have no right to any proceeds
of insurance relating to property damage. With respect to any damage which
Landlord is obligated to repair or elects to repair, Tenant, as a material
inducement to Landlord entering into this Lease, irrevocably waives and releases
its rights under the provisions of Sections 1932 and 1933 of the California
Civil Code.

                               ARTICLE 17
                             SUBORDINATION

     This Lease is subject and subordinate to all ground or underlying leases,
mortgages and deeds of trust which affect the property or the Project, including
all renewals, modifications, consolidations, replacements and extensions
thereof; provided, however, if the lessor under any such lease or the holder or
holders of any such mortgage or deed of trust shall advise Landlord that they
desire or require this Lease to be prior and superior thereto, upon written
request of Landlord to Tenant, Tenant agrees to promptly execute, acknowledge
and deliver any and all documents or instruments which Landlord or such lessor,
holder or holders deem necessary or desirable for purposes thereof. Landlord
shall have the right to cause this Lease to be and become and remain subject and
subordinate to any and all ground or underlying leases, mortgages or deeds of
trust which may hereafter be executed covering the Premises, the Project or the
property 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, however, that a condition precedent to such subordination
shall be that Landlord obtains from the lender or other party in question a
commercially reasonable non-disturbance agreement in favor of Tenant. Tenant
agrees, within twenty (20) days after Landlord's written request therefor, to
execute, acknowledge and deliver upon request any and all documents or
instruments requested by Landlord or necessary or proper to assure the
subordination of this Lease to any such mortgages, deed of trust, or leasehold
estates. Tenant agrees that in the event any proceedings are brought for the
foreclosure of any mortgage or deed of trust or any deed in lieu thereof, to
attorn to the purchaser or any successors thereto upon any such foreclosure sale
or deed in lieu thereof as so requested to do so by such purchaser and to
recognize such purchaser as the lessor under this Lease; Tenant shall, within
fifteen (15) days after request execute such further instruments or assurances
as such purchaser may reasonably deem necessary to evidence or confirm such
attornment. Tenant agrees to provide copies of any notices of Landlord's default
under this Lease to any mortgagee or deed of trust beneficiary whose address has
been provided to Tenant and Tenant shall provide such mortgagee or deed of trust
beneficiary a commercially reasonable time after receipt of such notice within
which to cure any such default. Tenant waives the provisions of any current or
future statute, rule or law which may give or purport to give Tenant any right
or election to terminate or otherwise adversely affect this Lease and the
obligations of the Tenant hereunder in the event of any foreclosure proceeding
or sale.

<PAGE>   33

                                   ARTICLE 18
                                 EMINENT DOMAIN

     If the whole of the Premises or the Project or so much thereof as to render
the balance unusable by Tenant shall be taken under power of eminent domain, or
is sold, transferred or conveyed in lieu thereof, this Lease shall automatically
terminate as of the date of such condemnation, or as of the date possession is
taken by the condemning authority, at Landlord's option. No award for any
partial or entire taking shall be apportioned, and Tenant hereby assigns to
Landlord any award which may be made in such taking or condemnation, together
with any and all rights of Tenant now or hereafter arising in or to the same or
any part thereof; provided, however, that nothing contained herein shall be
deemed to give Landlord any interest in or to require Tenant to assign to
Landlord any award made to Tenant for the taking of personal property and trade
fixtures belonging to Tenant and removable by Tenant at the expiration of the
Term hereof as provided hereunder or for the interruption of, or damage to,
Tenant's business. In the event of a partial taking described in this Article
18, or a sale, transfer or conveyance in lieu thereof, which does not result in
a termination of this Lease, the rent shall be apportioned according to the
ratio that the part of the Premises remaining useable by Tenant bears to the
total area of the Premises. Tenant hereby waives any and all rights it might
otherwise have pursuant to Section 1265.130 of the California Code of Civil
Procedure.

                                   ARTICLE 19
                                     DEFAULT

     (a) Tenant's Default. Each of the following acts or omissions of Tenant or
of any guarantor of Tenant's performance hereunder, or occurrences, shall
constitute an "Event of Default":

       (i) Failure or refusal to pay Basic Rental, Additional Rent or any other
amount to be paid by Tenant to Landlord hereunder within five (5) business days
after notice that the same is due or payable hereunder; said five (5) day period
shall be in addition to, and not in lieu of, the notice requirements of Section
1161 of the California Code of Civil Procedure or any similar or successor law;

       (ii) Except as set forth in items (i) above and (iii) below, failure to
perform or observe any other covenant or condition of this Lease to be performed
or observed within thirty (30) days following written notice to Tenant of such
failure; however, if the nature of such default is such that the same cannot be
reasonably cured within a thirty (30) day period, Tenant shall not be deemed to
be in default if Tenant diligently commences such cure within such period and
thereafter diligently proceeds to rectify and cure said default. Such thirty
(30) day notice shall be in addition to, and not in lieu of, any required under
Section 1161 of the California Code of Civil Procedure or any similar or
successor law; or

       (iii) Tenant's failure to observe or perform according to the provisions
of Articles 17 or 25 within five (5) business days after notice from Landlord.

     (b) Landlord's Default. Notwithstanding anything to the contrary


<PAGE>   34

set forth in this Lease, Landlord shall be in default in the performance of any
obligation required to be performed by Landlord pursuant to this Lease if
Landlord fails to perform such obligation within thirty (30) days after the
receipt of notice from Tenant specifying in detail Landlord's failure to
perform; provided, however, if the nature of Landlord's obligation is such that
more than thirty (30) days are required for its performance, then Landlord shall
not be in default under this Lease if it shall commence such performance within
such thirty (30) day period and thereafter diligently pursue the same to
completion. Upon any such default by Landlord under this Lease, Tenant may,
except as otherwise specifically provided in this Lease to the contrary,
exercise any of its rights provided at law or in equity.

                                   ARTICLE 20
                                    REMEDIES

     (a) Upon the occurrence of an Event of Default under this Lease as provided
in Article 19 hereof, Landlord may exercise all of its remedies as may be
permitted by law, including but not limited to the remedy provided by Section
1951.4 of the California Civil Code, and including without limitation,
terminating this Lease, reentering the Premises and removing all persons and
property therefrom, which property may be stored by Landlord at a warehouse or
elsewhere at the risk, expense and for the account of Tenant. If Landlord elects
to terminate this Lease, Landlord shall be entitled to recover from Tenant the
aggregate of all amounts permitted by law, including but not limited to (i) the
worth at the time of award of the amount of any unpaid rent which had been
earned at the time of such termination; plus (ii) the worth at the time of award
of the amount by which the unpaid rent which would have been earned after
termination until the time of award exceeds the amount of such rental loss that
Tenant proves could have been reasonably avoided; plus (iii) the worth at the
time of award of the amount by which the unpaid rent for the balance of the
Lease Term after the time of award exceeds the amount of such rental loss that
Tenant proves could have been reasonably avoided; plus (iv) any other amount
necessary to compensate Landlord for all the detriment proximately caused by
Tenant's failure to perform its obligations under this Lease or which in the
ordinary course of things would be likely to result therefrom; and (v) at
Landlord's election, such other amounts in addition to or in lieu of the
foregoing as may be permitted from time to time by applicable law. The term
"rent" as used in this Article 20(a) shall be deemed to be and to mean all sums
of every nature required to be paid by Tenant pursuant to the terms of this
Lease, whether to Landlord or to others. As used in items (i) and (ii), above,
the "worth at the time of award" shall be computed by allowing interest at the
rate set forth in item (e), below, but in no case greater than the maxximum
amount of such interestpermitted by law. As used in item (iii), above, the
"worth at the time of award" shall be computed by discounting such amount at the
discount rate of the Federal Reserve Bank of San Francisco at the time of award
plus one percent (1%).

     (b) Nothing in this Article 20 shall be deemed to affect Landlord's right
to indemnification for liability or liabilities arising prior to the termination
of this Lease for personal injuries or property damage under the indemnification
clause or clauses contained


<PAGE>   35

in this Lease.

     (c) Notwithstanding anything to the contrary set forth herein, Landlord's
re-entry to perform acts of maintenance or preservation of or in connection with
efforts to relet the Premises or any portion thereof, or the appointment of a
receiver upon Landlord's initiative to protect Landlord's interest under this
Lease shall not terminate Tenant's right to possession of the Premises or any
portion thereof and, until Landlord does elect to terminate this Lease, this
Lease shall continue in full force and effect and Landlord may enforce all of
Landlord's rights and remedies hereunder including, without limitation, the
remedy described in California Civil Code Section 1951.4 (lessor may continue
lease in effect after lessee's breach and abandonment and recover rent as it
becomes due, if lessee has the right to sublet or assign, subject only to
reasonable limitations). Accordingly, if Landlord does not elect to terminate
this Lease on account of any default by Tenant, Landlord may, from time to time,
without terminating this Lease, enforce all of its rights and remedies under
this Lease, including the right to recover all rent as it becomes due.

     (d) All rights, powers and remedies of Landlord hereunder and under any
other agreement now or hereafter in force between Landlord and Tenant shall be
cumulative and not alternative and shall be in addition to all rights, powers
and remedies given to Landlord by law, and the exercise of one or more rights or
remedies shall not impair Landlord's right to exercise any other right or
remedy.

     (e) Any amount due from Tenant to Landlord hereunder which is not paid
within five (5) days after notice to Tenant the same is due shall bear interest
at the lower of twelve percent (12%) per annum or the maximum lawful rate of
interest from the due date until paid, unless otherwise specifically provided
herein, but the payment of such interest shall not excuse or cure any default by
Tenant under this Lease. In addition to such interest: (i) if Basic Rental is
not paid within ten (10) days after notice to Tenant the same is due, a late
charge equal to five percent (5%) of the amount overdue shall be assessed and
shall accrue for each calendar month or part thereof until such rental,
including the late charge, is paid in full, which late charge Tenant hereby
agrees is a reasonable estimate of the damages Landlord shall suffer as a result
of Tenant's late payment and (ii) an additional charge of $25 shall be assessed
for any check given to Landlord by or on behalf of Tenant which is not honored
by the drawee thereof; which damages include Landlord's additional
administrative and other costs associated with such late payment and unsatisfied
checks and the parties agree that it would be impracticable or extremely
difficult to fix Landlord's actual damage in such event. Such charges for
interest and late payments and unsatisfied checks are separate and cumulative
and are in addition to and shall not diminish or represent a substitute for any
or all of Landlord's rights or remedies under any other provision of this Lease.

                                   ARTICLE 21
                         TRANSFER OF LANDLORD'S INTEREST

     In the event of any transfer or termination of Landlord's interest in the
Premises or the Project by sale, assignment, transfer, foreclosure, deed-in-lieu
of foreclosure or otherwise whether voluntary


<PAGE>   36

or involuntary (and the assumption in writing by the transferee of all of
Landlord's obligations hereunder), Landlord shall be automatically relieved of
any and all obligations and liabilities on the part of Landlord from and after
the date of such transfer or termination, including furthermore without
limitation, the obligation of Landlord under Article 4 and California Civil Code
1950.7 above to return the security deposit, provided said security deposit is
transferred to said transferee. Tenant agrees to attorn to the transferee upon
any such transfer and to recognize such transferee as the lessor under this
Lease and Tenant shall, within five (5) days after request, execute such further
instruments or assurances as such transferee may reasonably deem necessary to
evidence or confirm such attornment.

                                   ARTICLE 22
                                     BROKER

     In connection with this Lease, Landlord and Tenant warrant and represents
that they have had dealings only with firm(s) set forth in Article 1.H. of the
Basic Lease Provisions and that they know of no other person or entity who is or
might be entitled to a commission, finder's fee or other like payment in
connection herewith and do hereby indemnify and agree to hold the other, their
agents, members, partners, representatives, officers, affiliates, shareholders,
employees, successors and assigns harmless from and against any and all loss,
liability and expenses that the other party may incur should such warranty and
representation prove incorrect, inaccurate or false.

                                   ARTICLE 23
                                     PARKING

     Tenant shall have the right, but not the obligation, to rent from Landlord,
commencing on the Commencement Date, the number of parking passes set forth in
Section 1(I) of the Basic Lease Provisions, which parking passes shall pertain
to the Project parking facility. Tenant's reserved parking shall be at locations
within such structure currently utilized by Tenant's under Tenant's existing
lease at the Project, and any additional reserved parking shall be at locations
reasonably designated by Landlord. Tenant shall have the right to vary the
number of parking passes rented by Tenant (up to the maximum set forth in
Section 1(I) of the Basic Lease Provisions); provided, however, if at any time
Tenant elects to rent less than all of the parking passes to which Tenant is
entitled, Tenant shall only have the right to subsequently rent such parking
passes if, at the time Tenant desires to rent such passes, Landlord reasonably
determines that such additional parking passes are available in the Project.
Tenant shall pay to Landlord for automobile parking passes the prevailing rate
charged from time to time at the location of such parking passes, which rates
are currently, as of the date of this Lease, One Hundred Four and 50/100 Dollars
($104.50) per month per unreserved parking pass and One Hundred Sixty-Five
Dollars ($165.00) per month per reserved parking pass and which rates shall
remain in effect throughout calendar year 1999. For each calendar year
thereafter, the maximum parking rates shall be one hundred five percent (105%)
of the maximum rate in effect as of the immediately preceding calendar year
(whether or not such maximum rate is actually charged). In addition to the rates
described above, Tenant shall be responsible for the full amount of any taxes
imposed by any governmental authority in connection with the renting of such
parking


<PAGE>   37

passes by Tenant or the use of the parking facility by Tenant. Tenant's
continued right to use the parking passes is conditioned upon Tenant abiding by
all rules and regulations which are prescribed from time to time for the orderly
operation and use of the parking facility where the parking passes are located,
including any sticker or other identification system established by Landlord,
Tenant's cooperation in seeing that Tenant's employees and visitors also comply
with such rules and regulations, and Tenant not being in default under this
Lease beyond any applicable cure period. Landlord specifically reserves the
right to change the size, configuration, design, layout and all other aspects of
the Project parking facility at any time and Tenant acknowledges and agrees that
Landlord may, without incurring any liability to Tenant and without any
abatement of rent under this Lease, from time to time, to temporarily close-off
or restrict access to the Project parking facility for purposes of permitting or
facilitating any such construction, alteration or improvements. Landlord may
delegate its responsibilities hereunder to a parking operator or a lessee of the
parking facility in which case such parking operator or lessee shall have all
the rights of control attributed hereby to the Landlord. The parking passes
rented by Tenant pursuant to this Article 23 are provided to Tenant solely for
use by Tenant's own personnel and such passes may not be transferred, assigned,
subleased or otherwise alienated by Tenant without Landlord's prior approval.
Tenant may validate visitor parking by such method or methods as the Landlord
may establish, at the validation rate from time to time generally applicable to
visitor parking.

                                   ARTICLE 24
                                     WAIVER

     No waiver by Landlord or Tenant of any provision of this Lease shall be
deemed to be a waiver of any other provision hereof or of any subsequent breach
of the same or any other provision. No provision of this Lease may be waived by
Landlord or Tenant, except by an instrument in writing executed by Landlord and
Tenant. Landlord's consent to or approval of any act by Tenant requiring
Landlord's consent or approval shall not be deemed to render unnecessary the
obtaining of Landlord's consent to or approval of any subsequent act of Tenant,
whether or not similar to the act so consented to or approved. No act or thing
done by Landlord or Landlord's agents during the Term of this Lease shall be
deemed an acceptance of a surrender of the Premises, and no agreement to accept
such surrender shall be valid unless in writing and signed by Landlord. Any
payment by Tenant or receipt by Landlord of an amount less than the total amount
then due hereunder shall be deemed to be in partial payment only thereof and not
a waiver of the balance due or an accord and satisfaction, notwithstanding any
statement or endorsement to the contrary on any check or any other instrument
delivered concurrently therewith or in reference thereto. Accordingly, Landlord
may accept any such amount and negotiate any such check without prejudice to
Landlord's right to recover all balances due and owing and to pursue its other
rights against Tenant under this Lease, regardless of whether Landlord makes any
notation on such instrument of payment or otherwise notifies Tenant that such
acceptance or negotiation is without prejudice to Landlord's rights.

                                   ARTICLE 25
                              ESTOPPEL CERTIFICATE


<PAGE>   38

     Tenant shall, at any time and from time to time, upon not less than twenty
(20) days' prior written notice from Landlord, execute, acknowledge and deliver
to Landlord a statement in writing certifying the following information, (but
not limited to the following information in the event further information is
requested by Landlord): (i) that this Lease is unmodified and in full force and
effect (or, if modified, stating the nature of such modification and certifying
that this Lease, as modified, is in full force and effect); (ii) the dates to
which the rental and other charges are paid in advance, if any; (iii) the amount
of Tenant's security deposit, if any; and (iv) acknowledging that there are not,
to Tenant's knowledge, any uncured defaults on the part of Landlord hereunder,
and no events or conditions then in existence which, with the passage of time or
notice or both, would constitute a default on the part of Landlord hereunder, or
specifying such defaults, events or conditions, if any are claimed. It is
expressly understood and agreed that any such statement may be relied upon by
any prospective purchaser or encumbrancer of all or any portion of the Real
Property. Tenant's failure to deliver such statement within such time shall
constitute an admission by Tenant that all statements contained therein are true
and correct.

                                   ARTICLE 26
                              LIABILITY OF LANDLORD

     Notwithstanding anything in this Lease to the contrary, any remedy of
Tenant for the collection of a judgment (or other judicial process) requiring
the payment of money by Landlord in the event of any default by Landlord
hereunder or any claim, cause of action or obligation, contractual, statutory or
otherwise by Tenant against Landlord concerning, arising out of or relating to
any matter relating to this Lease and all of the covenants and conditions or any
obligations, contractual, statutory, or otherwise set forth herein, shall be
limited solely and exclusively to an amount which is equal to the lesser of (i)
the interest of Landlord in and to the Project, and (ii) the interest Landlord
would have in the Project if the Project were encumbered by third party debt in
an amount equal to eighty percent (80%) of the then current value of the
Project. No other property or assets of Landlord, or any member, officer,
director, shareholder, partner, trustee, agent, servant or employee of Landlord
(the "Representative") shall be subject to levy, execution or other enforcement
procedure for the satisfaction of Tenant's remedies under or with respect to
this Lease, Landlord's obligations to Tenant, whether contractual, statutory or
otherwise, the relationship of Landlord and Tenant hereunder, or Tenant's use or
occupancy of the Premises. Tenant further understands that any liability, duty
or obligation of Landlord to Tenant, shall automatically cease and terminate as
of the date that Landlord or any of Landlord's Representatives no longer have
any right, title or interest in or to the Project.

                                   ARTICLE 27
                              INABILITY TO PERFORM

     This Lease and the obligations of both parties hereunder shall not be
affected or impaired because such party is unable to fulfill any of its
obligations hereunder or is delayed in doing so, if such inability


<PAGE>   39

or delay is caused by reason of any prevention, delay, stoppage due to strikes,
lockouts, acts of God, or any other cause previously, or at such time, beyond
the reasonable control or anticipation of such party (collectively, a "Force
Majeure") and both parties' obligations under this Lease shall be forgiven and
suspended by any such Force Majeure; provided, however, that this Article 27 is
not intended to, and shall not, extend the time period for the payment of any
monetary amounts due (including, without limitation, rent payments from Tenant)
from either party to the other under this Lease nor relieve either party from
their monetary obligations to the other under this Lease.

                                   ARTICLE 28
                                 HAZARDOUS WASTE

     (a) Tenant shall not cause or permit any Hazardous Material (as defined in
Article 28(c) below) to be brought, kept or used in or about the Project by
Tenant, its agents, employees, contractors, or invitees.

     (b) It shall not be unreasonable for Landlord to withhold its consent to
any proposed Transfer if (i) the proposed transferee's anticipated use of the
Premises involves the generation, storage, use, treatment, or disposal of
Hazardous Material; (ii) the proposed Transferee has been required by any prior
landlord, lender, or governmental authority to take remedial action in
connection with Hazardous Material contaminating a property if the contamination
resulted from such Transferee's actions or use of the property in question; or
(iii) the proposed Transferee is subject to an enforcement order issued by any
governmental authority in connection with the use, disposal, or storage of a
Hazardous Material.

     (c) As used herein, the term "Hazardous Material" means any hazardous or
toxic substance, material, or waste which is or becomes regulated by any local
governmental authority, the State of California or the United States Government.
The term "Hazardous Material" includes, without limitation, any material or
substance which is (i) defined as "Hazardous Waste," "Extremely Hazardous
Waste," or "Restricted Hazardous Waste" under Sections 25115, 25117 or 25122.7,
or listed pursuant to Section 25140, of the California Health and Safety Code,
Division 20, Chapter 6.5 (Hazardous Waste Control Law), (ii) defined as a
"Hazardous Substance" under Section 25316 of the California Health and Safety
Code, Division 20, Chapter 6.8 (Carpenter- Presley-Tanner Hazardous Substance
Account Act), (iii) defined as a "Hazardous Material," "Hazardous Substance," or
"Hazardous Waste" under Section 25501 of the California Health and Safety Code,
Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and
Inventory), (iv) defined as a "Hazardous Substance" under Section 25281 of the
California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage
of Hazardous Substances), (v) petroleum, (vi) asbestos, (vii) listed under
Article 9 or defined as Hazardous or extremely hazardous pursuant to Article 11
of Title 22 of the California Administrative Code, Division 4, Chapter 20,
(viii) designated as a "Hazardous Substance" pursuant to Section 311 of the
Federal Water Pollution Control Act (33 U.S.C. ss. 1317), (ix) defined as a
"Hazardous Waste" pursuant to Section 1004 of the Federal Resource Conservation
and Recovery Act, 42 U.S.C. ss. 6901 et seq. (42 U.S.C. ss. 6903), or (x)
defined as a "Hazardous Substance" pursuant to Section 101 of the Comprehensive
Environmental Response, Compensation and


<PAGE>   40

Liability Act, 42 U.S.C. ss. 9601 et seq. (42 U.S.C. ss. 9601).

     (d) As used herein, the term "Laws" mean any applicable federal, state or
local laws, ordinances, or regulations relating to any Hazardous Material
affecting the Project, including, without limitation, the laws, ordinances, and
regulations referred to in Article 28(c) above.

                                   ARTICLE 29
                   SURRENDER OF PREMISES; REMOVAL OF PROPERTY

     (a) The voluntary or other surrender of this Lease by Tenant to Landlord,
or a mutual termination hereof, shall not work a merger, and shall at the option
of Landlord, operate as an assignment to it of any or all subleases or
subtenancies affecting the Premises.

     (b) Upon the expiration of the Term of this Lease, or upon any earlier
termination of this Lease, Tenant shall quit and surrender possession of the
Premises to Landlord in as good order and condition as the same are now and
hereafter may be improved by Landlord or Tenant, reasonable wear and tear,
damage by casualty resulting in termination of this Lease and repairs which are
Landlord's obligation excepted, and shall, without expense to Landlord, remove
or cause to be removed from the Premises all debris and rubbish, all furniture,
equipment, business and trade fixtures, free-standing cabinet work, moveable
partitioning, telephone and data cabling and other articles of personal property
owned by Tenant or installed or placed by Tenant at its own expense in the
Premises, and all similar articles of any other persons claiming under Tenant
unless Landlord exercises its option to have any subleases or subtenancies
assigned to it, and Tenant shall repair all damage to the Premises resulting
from the installation and removal of such items to be removed.

     (c) Whenever Landlord shall reenter the Premises as provided in Article 12
hereof, or as otherwise provided in this Lease, any property of Tenant not
removed by Tenant upon the expiration of the Term of this Lease (or within two
(2) business days after a termination by reason of Tenant's default), as
provided in this Lease, shall be considered abandoned and Landlord may remove
any or all of such items and dispose of the same in accordance with applicable
law or store the same in a public warehouse or elsewhere for the account and at
the expense and risk of Tenant, and if Tenant shall fail to pay the cost of
storing any such property after it has been stored for a period of ninety (90)
days or more, Landlord may sell any or all of such property at public or private
sale, in such manner and at such times and places as Landlord, in its sole
discretion, may deem proper, without notice or to demand upon Tenant, for the
payment of all or any part of such charges or the removal of any such property,
and shall apply the proceeds of such sale as follows: first, to the cost and
expense of such sale, including reasonable attorneys' fees for services
rendered; second, to the payment of the cost of or charges for storing any such
property; third, to the payment of any other sums of money which may then or
thereafter be due to Landlord from Tenant under any of the terms hereof; and
fourth, the balance, if any, to Tenant.

     (d) All fixtures, equipment, leasehold improvements, Alterations and/or
appurtenances attached to or built into the Premises prior to or


<PAGE>   41

during the Term, whether by Landlord or Tenant and whether at the expense of
Landlord or Tenant, or of both, shall be and remain part of the Premises and
shall not be removed by Tenant at the end of the Term unless otherwise expressly
provided for in this Lease or unless such removal is required by Landlord. Such
fixtures, equipment, leasehold improvements, Alterations, additions,
improvements and/or appurtenances shall include but not be limited to: all floor
coverings, drapes, paneling, built-in cabinetry, molding, doors, vaults
(including vault doors), plumbing systems, security systems, electrical systems,
lighting systems, silencing equipment, communication systems, all fixtures and
outlets for the systems mentioned above and for all telephone, radio, telegraph
and television purposes, and any special flooring or ceiling installations.

                                   ARTICLE 30
                                  MISCELLANEOUS

     (a) Severability; Entire Agreement. Any provision of this Lease which shall
prove to be invalid, void, or illegal shall in no way affect, impair or
invalidate any other provision hereof and such other provisions shall remain in
full force and effect. This Lease and the Exhibits and any Addendum attached
hereto constitute the entire agreement between the parties hereto with respect
to the subject matter hereof, and no prior agreement or understanding pertaining
to any such matter shall be effective for any purpose. No provision of this
Lease may be amended or supplemented except by an agreement in writing signed by
the parties hereto or their successor in interest.

     (b)  Attorneys' Fees; Waiver of Jury Trial.

       (i) In any action to enforce the terms of this Lease, including any suit
by Landlord for the recovery of rent or possession of the Premises, the losing
party shall pay the successful party a reasonable sum for attorneys' fees in
such suit and such attorneys' fees shall be deemed to have accrued prior to the
commencement of such action and shall be paid whether or not such action is
prosecuted to judgment.

       (ii) EACH PARTY HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION
SEEKING SPECIFIC PERFORMANCE OF ANY PROVISION OF THIS LEASE, FOR DAMAGES FOR ANY
BREACH UNDER THIS LEASE, OR OTHERWISE FOR ENFORCEMENT OF ANY RIGHT OR REMEDY
HEREUNDER.

     (c) Time of Essence. Time is of the essence with respect to the performance
of every provision of this Lease.

     (d) Headings; Joint and Several. The article headings contained in this
Lease are for convenience only and do not in any way limit or amplify any term
or provision hereof. The terms "Landlord" and "Tenant" as used herein shall
include the plural as well as the singular, the neuter shall include the
masculine and feminine genders and the obligations herein imposed upon Tenant
shall be joint and several as to each of the persons, firms or corporations of
which Tenant may be composed.

     (e) Reserved Area. Tenant hereby acknowledges and agrees that the exterior
walls of the Premises and the area between the finished ceiling of the Premises
and the slab of the floor of the project


<PAGE>   42

thereabove have not been demised hereby and the use thereof together with the
right to install, maintain, use, repair and replace pipes, ducts, conduits and
wires leading through, under or above the Premises in locations which will not
materially interfere with Tenant's use of the Premises and serving other parts
of the Project are hereby excepted and reserved unto Landlord.

     (f) NO OPTION. THE SUBMISSION OF THIS LEASE BY LANDLORD, ITS AGENT OR
REPRESENTATIVE FOR EXAMINATION OR EXECUTION BY TENANT DOES NOT CONSTITUTE AN
OPTION OR OFFER TO LEASE THE PREMISES UPON THE TERMS AND CONDITIONS CONTAINED
HEREIN OR A RESERVATION OF THE PREMISES IN FAVOR OF TENANT, IT BEING INTENDED
HEREBY THAT THIS LEASE SHALL ONLY BECOME EFFECTIVE UPON THE EXECUTION HEREOF BY
LANDLORD AND DELIVERY OF A FULLY EXECUTED LEASE TO TENANT.

     (g) Use of Project Name; Improvements. Tenant shall not be allowed to use
the name, picture or representation of the Project, or words to that effect, in
connection with any business carried on in the Premises or otherwise (except as
Tenant's address) without the prior written consent of Landlord. In the event
that Landlord undertakes any additional improvements on the Real Property
including but not limited to new construction or renovation or additions to the
existing improvements, provided that Landlord uses commercially reasonable
efforts not to interfere with Tenant's business operations or access to the
Premises, Landlord shall not be liable to Tenant for any noise, dust, vibration
or interference with access to the Premises or disruption in Tenant's business
caused thereby, except as provided in Section 11(g) above.

     (h) Rules and Regulations. Tenant shall observe faithfully and comply
strictly with the Rules and Regulations attached to this Lease as Exhibit "B"
and made a part hereof, and such other Rules and Regulations as Landlord may
from time to time reasonably adopt for the safety, care and cleanliness of the
Project, the facilities thereof, or the preservation of good order therein.
Landlord shall not be liable to Tenant for violation of any such Rules and
Regulations, or for the breach of any covenant or condition in any lease by any
other tenant in the Project. A waiver by Landlord of any Rule or Regulation for
any other tenant shall not constitute nor be deemed a waiver of the Rule or
Regulation for this Tenant. Landlord agrees not to discriminate among tenants of
the Project in its enforcement of the Rules and Regulations and not to apply
such Rules and Regulations in an unreasonable manner.

     (i) Quiet Possession. Upon Tenant's paying the Basic Rent, Additional Rent
and other sums provided hereunder and observing and performing all of the
covenants, conditions and provisions on Tenant's part to be observed and
performed hereunder, Tenant shall have quiet possession of the Premises for the
entire Term hereof, subject to all of the provisions of this Lease.

     (j) Rent. All payments required to be made hereunder to Landlord shall be
deemed to be rent, whether or not described as such.

     (k) Successors and Assigns. Subject to the provisions of Article 15 hereof,
all of the covenants, conditions and provisions of this Lease shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
heirs, personal representatives,


<PAGE>   43

successors and assigns.

     (l) Notices. Any notice required or permitted to be given hereunder shall
be in writing and may be given by personal service evidenced by a signed receipt
or sent by registered or certified mail, return receipt requested, or via
overnight courier, and shall be effective upon proof of delivery, addressed to
Tenant at the Premises or to Landlord at the management office for the Project,
with a copy to Landlord, c/o Arden Realty, Inc., 11601 Wilshire Boulevard,
Fourth Floor, Los Angeles, California 90025, Attn: Legal Department. Either
party may by notice to the other specify a different address for notice purposes
except that, upon Tenant's taking possession of the Premises, the Premises shall
constitute Tenant's address for notice purposes. A copy of all notices to be
given to Landlord hereunder shall be concurrently transmitted by Tenant to such
party hereafter designated by notice from Landlord to Tenant. Any notices sent
by Landlord regarding or relating to eviction procedures, including without
limitation three day notices, may be sent by regular mail.

     (m)  Intentionally Omitted.

     (n) Right of Landlord to Perform. All covenants and agreements to be
performed by Tenant under any of the terms of this Lease shall be performed by
Tenant at Tenant's sole cost and expense and without any abatement of rent. If
Tenant shall fail to pay any sum of money, other than rent, required to be paid
by it hereunder or shall fail to perform any other act on its part to be
performed hereunder, and such failure shall continue beyond any applicable cure
period set forth in this Lease, Landlord may, but shall not be obligated to,
after reasonable notice to Tenant, without waiving or releasing Tenant from any
obligations of Tenant, make any such payment or perform any such other act on
Tenant's part to be made or performed as is in this Lease provided. All sums so
paid by Landlord and all reasonable incidental costs, together with interest
thereon at the rate of ten percent (10%) per annum from the date of such payment
by Landlord, shall be payable to Landlord within thirty (30) days after demand
and Tenant covenants to pay any such sums, and Landlord shall have (in addition
to any other right or remedy of Landlord) the same rights and remedies in the
event of the nonpayment thereof by Tenant as in the case of default by Tenant in
the payment of the rent.

     (o)  Access, Changes in Project, Facilities, Name.

       (i) Every part of the Project except the inside surfaces of all walls,
windows and doors bounding the Premises (including exterior building walls, core
corridor walls and doors and any core corridor entrance), and any space in or
adjacent to the Premises used for shafts, stacks, pipes, conduits, fan rooms,
ducts, electric or other utilities, sinks or other building facilities, and the
use thereof, as well as access thereto through the Premises for the purposes of
operation, maintenance, decoration and repair, are reserved to Landlord.

       (ii) Tenant shall permit Landlord to install, use and maintain pipes,
ducts and conduits within the walls, columns and ceilings of the Premises.

<PAGE>   44

       (iii) Landlord reserves the right, without incurring any liability to
Tenant therefor, to make such changes in or to the Project and the fixtures and
equipment thereof, as well as in or to the street entrances, halls, passages,
elevators, stairways and other improvements thereof, as it may deem necessary or
desirable.

       (iv) Landlord may adopt any name for the Project and Landlord reserves
the right to change the name or address of the Project at any time, so long as
Landlord pays for Tenant's reprinting costs for announcements, stationery and
business cards where the new name or address is initiated by Landlord and is not
imposed involuntarily upon Landlord by any governmental agency or other third
party.

     Landlord agrees that, except where required by law, Landlord's exercise of
its rights under this Section 30(o) shall be conditioned upon Landlord not
unreasonably interfering with Tenant's access to or use of the Premises and the
parking facilities of the Project.

     (p) Signing Authority. Concurrently with Tenant's execution of this Lease,
Tenant shall provide to Landlord reasonably satisfactory evidence that the
individuals executing this Lease on behalf of Tenant are authorized to bind
Tenant and to enter into this Lease.

     (q)  Intentionally Omitted.

     (r) Substitute Premises. Landlord shall have the right at any time during
the Term hereof, upon giving Tenant not less than sixty (60) days prior notice,
to provide and furnish Tenant with comparable space elsewhere in the Project of
approximately the same size as Suite 2030 and remove and place Tenant in such
space, with Landlord to pay all verified and previously approved costs and
expenses incurred as a result of such movement to such new space. Such new space
shall have comparable identity with similar views to that of Suite 2030, shall
be located on the twentieth (20th) floor of the Project or higher, shall be of
at least substantially the same size as Suite 2030 and shall have a perimeter
configuration substantially usable for the purposes for which Suite 2030 was
then being used by Tenant. If Landlord moves Suite 2030 to such new space, this
Lease and each and all of its terms, covenants and conditions shall remain in
full force and effect and shall be deemed applicable to such new space and such
new space shall thereafter be deemed to be a portion of the "Premises" as though
Landlord and Tenant had entered into an express written amendment of this Lease
with respect thereto.

     (s) Survival of Obligations. Any obligations of Tenant occurring prior to
the expiration or earlier termination of this Lease shall survive such
expiration or earlier termination.

     (t) Reasonable Consent. Except for matters for which there is a standard of
consent or approval specifically set forth in this Lease (other than a
reasonableness standard), and except for matters which could affect (i) the
systems and equipment of the Project; (ii) structural aspects of the Project or
(iii) the exterior appearance of the Project, in which case Landlord shall have
the right to act in its sole and absolute discretion (but at all times in good
faith), any time the consent or approval of Landlord or Tenant is required under
this Lease, such consent or approval shall not be unreasonably withheld,


<PAGE>   45

conditioned or delayed.

     (u) Governing Law. This Lease shall be governed by and construed in
accordance with the laws of the State of California. No conflicts of law rules
of any state or country (including, without limitation, California conflicts of
law rules) shall be applied to result in the application of any substantive or
procedural laws of any state or country other than California. All
controversies, claims, actions or causes of action arising between the parties
hereto and/or their respective successors and assigns, shall be brought, heard
and adjudicated by the courts of the State of California, with venue in the
County of Los Angeles. Each of the parties hereto hereby consents to personal
jurisdiction by the courts of the State of California in connection with any
such controversy, claim, action or cause of action, and each of the parties
hereto consents to service of process by any means authorized by California law
and consent to the enforcement of any judgment so obtained in the courts of the
State of California on the same terms and conditions as if such controversy,
claim, action or cause of action had been originally heard and adjudicated to a
final judgment in such courts. Each of the parties hereto further acknowledges
that the laws and courts of California were freely and voluntarily chosen to
govern this Lease and to adjudicate any claims or disputes hereunder.

     (v) Exhibits and Addendum. The Exhibits and Addendum, if applicable,
attached hereto are incorporated herein by this reference as if fully set forth
herein.

                                   ARTICLE 31
                                OPTIONS TO EXTEND

     (a) Option Right. Landlord hereby grants Tenant the following options: (i)
two (2) consecutive options to extend Tenant's lease of Suite 2030 for a period
of twenty-one (21) months each ("Suite 2030 Option"); provided that the second
Suite 2030 Option shall be exercisable only in the event Tenant has exercised
the first Suite 2030 Option, and (ii) one (1) option ("Option") to extend the
Lease Term for the entire Premises for a period of five (5) years ("Option
Term"), both of which options shall be exercisable only by written notice
delivered by Tenant to Landlord set forth below. The rights contained in this
Article 31 shall be personal to the Tenant named in this Lease (the "Original
Tenant") and any Affiliated Assignee.

     (b)  Option Rent.

       (i) In the event Tenant exercises its Suite 2030 Options, the Term of
Tenant's lease of Suite 2030 shall be extended on all the same terms and
conditions set forth in this Lease and the rent payable during the two (2) Suite
2030 Options shall be the same rate per rentable square foot as Tenant is paying
for Suite 2100. In no event shall Tenant be entitled to exercise the second
(2nd) Suite 2030 Option unless Tenant has exercised the first Suite 2030 Option.
Tenant shall not be entitled to any additional Tenant Improvement Allowance
during the Suite 2030 Option periods.

       (ii) In the event Tenant exercises the Option as to the entire Premises,
the rent payable by Tenant during the Option Term ("Option

<PAGE>   46

Rent") shall be equal to the "Market Rent" (defined below). "Market Rent" shall
mean the applicable Monthly Basic Rental, including all escalations, Direct
Costs, additional rent and other charges at which tenants, as of the time of
Landlord's "Option Rent Notice" (as defined below), are entering into leases for
non-sublease, non-encumbered, space comparable in size, location and quality to
the Premises in renewal transactions for a term comparable to the Option Term
which comparable space is located in office buildings comparable to the Project
on Wilshire Boulevard in the Brentwood area of Los Angeles, California, taking
into consideration the value of the existing improvements in the Premises to
Tenant, as compared to the value of the existing improvements in such comparable
space, with such value to be based upon the age, quality and layout of the
improvements and the extent to which the same could be utilized by Tenant with
consideration given to the fact that the improvements existing in the Premises
are specifically suitable to Tenant.

     (c) Exercise of Options.

       (i) The Suite 2030 Options shall be exercised by Tenant only in the
following manner: (i) Tenant shall not be in default beyond any applicable cure
periods on the delivery date of the Exercise Notice; and (ii) Tenant shall
deliver written notice ("Exercise Notice") to Landlord not less than six (6)
months prior to the expiration of the then current Lease Term as to Suite 2030,
stating that Tenant is exercising the Option. Tenant's failure to deliver the
Exercise Notice on or before the date specified above shall be deemed to
constitute Tenant's election not to exercise the Suite 2030 Option. If Tenant
timely and properly exercises its Suite 2030 Option(s), the Lease Term shall be
extended as to Suite 2030 for an additional twenty-one (21) months upon all of
the terms and conditions set forth in this Lease.

       (ii) The Option shall be exercised by Tenant only in the following
manner: (A) Tenant shall not be in default beyond any applicable cure periods on
the delivery date of the Interest Notice and Tenant's Acceptance; (B) Tenant
shall deliver written notice ("Interest Notice") to Landlord not more than
twelve (12) months nor less than nine (9) months prior to the expiration of the
Lease Term, stating that Tenant is interested in exercising the Option, (C)
within fifteen (15) business days of Landlord's receipt of Tenant's written
notice, Landlord shall deliver notice ("Option Rent Notice") to Tenant setting
forth the Option Rent; and (D) if Tenant desires to exercise such Option, Tenant
shall provide Landlord written notice within fifteen (15) business days after
receipt of the Option Rent Notice ("Tenant's Acceptance") and upon, and
concurrent with such exercise, Tenant may, at its option, object to the Option
Rent contained in the Option Rent Notice. Tenant's failure to deliver the
Interest Notice or Tenant's Acceptance on or before the dates specified above
shall be deemed to constitute Tenant's election not to exercise the Option. If
Tenant timely and properly exercises its Option, the Lease Term shall be
extended for the Option Term upon all of the terms and conditions set forth in
this Lease, except that the rent for the Option Term shall be as indicated in
the Option Rent Notice unless Tenant, concurrently with Tenant's Acceptance,
objects to the Option Rent contained in the Option Rent Notice, in which case
the parties shall follow the procedure and the Option Rent shall be determined,
as set forth in Section 31(d) below.


<PAGE>   47

     (d) Determination of Market Rent. If Tenant timely and appropriately
objects to the Market Rent in Tenant's Acceptance, Landlord and Tenant shall
attempt to agree upon the Market Rent using their best good-faith efforts. If
Landlord and Tenant fail to reach agreement within twenty-one (21) days
following Tenant's Acceptance ("Outside Agreement Date"), then each party shall
make a separate determination of the Market Rent which shall be submitted to
each other and to arbitration in accordance with the following items (i) through
(vii):

       (i) Landlord and Tenant shall each appoint, within ten (10) days of the
Outside Agreement Date, one arbitrator who shall by profession be a current real
estate broker or appraiser of commercial high-rise properties in the immediate
vicinity of the Project, and who has been active in such field over the last
five (5) years. The determination of the arbitrators shall be limited solely to
the issue of whether Landlord's or Tenant's submitted Market Rent is the closest
to the actual Market Rent as determined by the arbitrators, taking into account
the requirements of item (b), above.

       (ii) The two arbitrators so appointed shall within five (5) business days
of the date of the appointment of the last appointed arbitrator agree upon and
appoint a third arbitrator who shall be qualified under the same criteria set
forth hereinabove for qualification of the initial two arbitrators.

       (iii) The three arbitrators shall within fifteen (15) days of the
appointment of the third arbitrator reach a decision as to whether the parties
shall use Landlord's or Tenant's submitted Market Rent, and shall notify
Landlord and Tenant thereof.

       (iv) The decision of the majority of the three arbitrators shall be
binding upon Landlord and Tenant.

       (v) If either Landlord or Tenant fails to appoint an arbitrator within
ten (10) days after the applicable Outside Agreement Date, the arbitrator
appointed by one of them shall reach a decision, notify Landlord and Tenant
thereof, and such arbitrator's decision shall be binding upon Landlord and
Tenant.

       (vi) If the two arbitrators fail to agree upon and appoint a third
arbitrator, or both parties fail to appoint an arbitrator, then the appointment
of the third arbitrator or any arbitrator shall be dismissed and the matter to
be decided shall be forthwith submitted to arbitration under the provisions of
the American Arbitration Association, but subject to the instruction set forth
in this item (d).

       (vii) The cost of arbitration shall be paid by Landlord and Tenant
equally.

                                   ARTICLE 32
                              RIGHT OF FIRST OFFER

     Landlord hereby grants to Tenant a right of first offer with respect to all
space on the twentieth (20th) floor of the Building other than the Premises
("First Offer Space"). Notwithstanding the


<PAGE>   48

foregoing, such first offer right of Tenant shall commence only following the
expiration or earlier termination of (A) any existing lease pertaining to the
First Offer Space, and (B) as to any First Offer Space which is vacant as of the
date of this Lease, the first lease pertaining to any portion of such First
Offer Space entered into by Landlord after the date of this Lease (collectively,
the "Superior Leases"), including any renewal or extension of such existing or
future lease, whether or not such renewal or extension is pursuant to an express
written provision in such lease, and regardless of whether any such renewal or
extension is consummated pursuant to a lease amendment or a new lease (the
rights described above to be known collectively as "Superior Rights"). Tenant's
right of first offer shall be on the terms and conditions set forth in this
Section 32.

     (a) Procedure for Offer. Landlord shall notify Tenant (the "First Offer
Notice") from time to time when Landlord determines that Landlord shall commence
the marketing of any First Offer Space because such space shall become available
for lease to third parties, where no holder of a Superior Right desires to lease
such space. The First Offer Notice shall describe the space so offered to Tenant
and shall set forth Landlord's proposed economic terms and conditions applicable
to Tenant's lease of such space (collectively, the "Economic Terms").
Notwithstanding the foregoing, Landlord's obligation to deliver the First Offer
Notice shall not apply during the last nine (9) months of the initial Lease Term
unless Tenant has delivered an Interest Notice to Landlord pursuant to Section
31(c) above nor shall Landlord be obligated to deliver the First Offer Notice
during the last eight (8) months of the initial Lease Term unless Tenant has
timely delivered Tenant's Acceptance to Landlord pursuant to Section 31(c)
above.

     (b) Procedure for Acceptance. If Tenant wishes to exercise Tenant's right
of first offer with respect to the space described in the First Offer Notice,
then within five (5) business days after delivery of the First Offer Notice to
Tenant, Tenant shall deliver notice to Landlord of Tenant's intention to
exercise its right of first offer with respect to the entire space described in
the First Offer Notice. If concurrently with Tenant's exercise of the first
offer right, Tenant notifies Landlord that it does not accept the Economic Terms
set forth in the First Offer Notice, Landlord and Tenant shall, for a period of
fifteen (15) days after Tenant's exercise, negotiate in good faith to reach
agreement as to such Economic Terms. If Tenant does not so notify Landlord that
it does not accept the Economic Terms set forth in the First Offer Notice
concurrently with Tenant's exercise of the first offer right, the Economic Terms
shall be as set forth in the First Offer Notice. In addition, if Tenant does not
exercise its right of first offer within the five (5) business day period, or,
if Tenant exercises its first offer right but timely objects to Landlord's
determination of the Economic Terms and if Landlord and Tenant are unable to
reach agreement on such Economic Terms within said fifteen (15) day period, then
Landlord shall be free to lease the space described in the First Offer Notice to
anyone to whom Landlord desires on any terms Landlord desires ; provided,
however, that if Landlord intends to enter into a lease upon Economic Terms
which are more favorable to a third (3rd) party tenant than those Economic Terms
proposed by Landlord in the First Offer Notice, Landlord shall first deliver
written notice to Tenant ("Second Chance Notice") providing Tenant with the
opportunity to lease the First Offer Space on such more


<PAGE>   49

favorable Economic Terms. Tenant's failure to elect to lease the First Offer
Space upon such more favorable Economic Terms by written notice to Landlord
within three (3) business days after Tenant's receipt of such Second Chance
Notice from Landlord shall be deemed to constitute Tenant's election not to
lease such space upon such more favorable Economic Terms, in which case Landlord
shall be entitled to lease such space to any third (3rd) party on terms no more
favorable to the third (3rd) party than those set forth in the Second Chance
Notice. If Landlord does lease such First Offer Space to a third (3rd) party
tenant pursuant to the terms and conditions of this Section 32(b) above, Tenant
shall have no further right to lease such First Offer Space and Tenant's right
of first offer shall terminate as to the First Offer Space described in the
First Offer Notice. Notwithstanding anything to the contrary contained herein,
Tenant must elect to exercise its right of first offer, if at all, with respect
to all of the space offered by Landlord to Tenant at any particular time, and
Tenant may not elect to lease only a portion thereof.

     (c) Lease of First Offer Space. If Tenant timely exercises Tenant's right
to lease the First Offer Space as set forth herein, Landlord and Tenant shall
execute an amendment adding such First Offer Space to this Lease upon the same
non-economic terms and conditions as applicable to the initial Premises, and the
economic terms and conditions as provided in this Article 32. Tenant shall
commence payment of rent for the First Offer Space and the Lease Term of the
First Offer Space shall commence upon the date of delivery of such space to
Tenant. The Lease Term for the First Offer Space shall expire co-terminously
with Tenant's lease of the initial Premises.

     (d) No Defaults. The rights contained in this Article 32 shall be personal
to the Original Tenant and any Affiliated Assignee and may only be exercised by
the Original Tenant or an Affiliated Assignee (and not any other assignee,
sublessee or other transferee) if the Original Tenant or such Affiliated
Assignee occupies the entire Premises as of the date of the First Offer Notice.
Tenant shall not have the right to lease First Offer Space as provided in this
Article 32 if, as of the date of the First Offer Notice, or, at Landlord's
option, as of the scheduled date of delivery of such First Offer Space to
Tenant, Tenant is in default under this Lease after expiration of applicable
cure periods.

                                   ARTICLE 33
                                     SIGNAGE

     Tenant shall be entitled to retain the number of directory listings
utilized by Tenant as of the date of this Lease under its existing lease at the
Project. Further, Tenant shall have the right to maintain up to five (5) lines
in the lobby directory on the Twentieth (20th) floor of the Project, which
directory may list up to four (4) Co-Producers, subject to Landlord's approval
as indicated below and provided that the Co-Producers do not have an
Objectionable Name, as defined below. In addition, Tenant shall have the right
to maintain signage identifying Tenant in the lobby of the Project (in its
current location utilized pursuant to Tenant's existing lease in the Project)
("Tenant's Signage"), which signage (including size, design, materials and
content) shall conform to the signage specifications of the Project. In
connection with any assignment of Tenant's interest under


<PAGE>   50

this Lease, which assignment is permitted by Landlord pursuant to the provisions
of Article 15 hereof (including without limitation any Affiliated Assignee),
Tenant's Signage may be assigned to the assignee with Landlord's prior consent,
which consent shall not be unreasonably withheld by Landlord so long as the name
of the assignee is not an "Objectionable Name," as that term is defined below.
Should the name of the Original Tenant change, Tenant shall be entitled to
modify, at Tenant's sole cost and expense, Tenant's Signage to reflect Tenant's
new name, but only if Tenant's new name is not an "Objectionable Name." The term
"Objectionable Name" shall mean any name that relates (i) to an entity that is
of a character or reputation, or is associated with a political orientation or
faction that is materially inconsistent with the quality of the Project, or
which would otherwise reasonably offend a landlord of a building comparable to
the Project, taking into consideration the level and visibility of Tenant's
Signage, or (ii) conflicts with any covenants in other leases of space in the
Project.

                                   ARTICLE 34
                                  STORAGE SPACE

     Commencing as of the Commencement Date, and continuing on a month-to-month
basis terminable by either party upon at least thirty (30) days prior written
notice to the other, Tenant shall lease from Landlord and Landlord shall lease
to Tenant certain storage area located on the P-1 floor of the Project("Storage
Space") which Storage Space consists of approximately 362 rentable square feet
("RSF"), at the location currently leased by Tenant pursuant to its existing
lease at the Project. Tenant hereby agrees to accept the Storage Space in its
"as-is" condition and Tenant hereby acknowledges that Landlord shall not be
obligated to provide or pay for any improvement work or services related to the
improvement of the Storage Space. Tenant also acknowledges that Landlord has
made no representation or warranty regarding the condition of the Storage Space.

     (a) Monthly Storage Rent. The monthly rental rate for the Storage Space
("Monthly Storage Rent") shall be One and 50/100 Dollar ($1.50) per RSF per
month of the Storage Space per month ($543.00 per month) throughout the term of
Tenant's lease of the Storage Space. Such Monthly Storage Rent shall be payable
on the first day of each month in advance during the Lease Term at the same time
and in the same manner as monthly Basic Rental for the Premises. In the event
the Monthly Storage Rent is not paid when due, Landlord shall have the same
rights as provided in Article 20 of this Lease for unpaid rent. Tenant's
Proportionate Share shall not be increased as a result of Tenant's leasing the
Storage Space.

     (b) Indemnification. Except to the extent any loss, costs, damage, expense
or liability exceeds the coverage of the liability insurance and property
insurance coverage required hereunder to be carried by Tenant and is caused by
(i) any default by Landlord in the observance or performance of any of the
terms, covenants or conditions to be observed or performed by Landlord under
this Lease, or (ii) the negligence or willful misconduct of Landlord or any of
its agents, employees, contractors, or licensees, Tenant hereby absolves
Landlord from any and all loss, cost, damage, expense and liability, whether
foreseeable or not, from any cause whatsoever, that Tenant may suffer to its
personal property located anywhere in the Storage Space or that


<PAGE>   51

it or its agents, employees, principals, invitees, or licensees may suffer as a
direct or indirect consequence of Tenant's lease of or use of the Storage Space
or access areas to the Storage Space. In addition, Tenant hereby agrees to
indemnify, defend, protect and hold Landlord harmless from and against any loss,
cost, damage, liability, expense, claim, action or cause of action of any third
party, whether foreseeable or not, resulting as a direct or indirect consequence
of Tenant's lease or use of the Storage Space or access areas to the Storage
Space.

     (c) Use of Storage Space. Tenant agrees not to store any flammable or
highly combustible materials in the Storage Space. Tenant also agrees not to
store excess or highly concentrated waste in the Storage Space; it shall be
Tenant's responsibility to obtain from Landlord the tolerable limits thereof.
Tenant agrees to use the Storage Space solely for storage purposes and not as
office space. Tenant agrees that Landlord and its agents may enter and inspect
the Storage Space and any goods stored therein at any time during regular
business hours upon giving twenty-four (24) hours prior notice to Tenant. Tenant
shall, at its sole cost and expense, deliver to Landlord a key for any locks
installed by Tenant for Landlord's emergency entrance purposes.

     (d) Incorporation of Lease Provisions. The provisions of this Lease with
regard to the Premises, to the extent applicable and not inconsistent with the
provisions of this Article 34, shall be deemed to apply to the Storage Space as
though the Storage Space is part of the Premises, and as though the Monthly
Storage Rent is part of the monthly Basic Rental.

     IN WITNESS WHEREOF, the parties have executed this Lease, consisting of the
foregoing provisions and Articles, including all exhibits and other attachments
referenced therein, as of the date first above written.


     "LANDLORD"                      ARDEN REALTY LIMITED PARTNERSHIP,
                                     a Maryland limited partnership

                                     By:  ARDEN REALTY, INC.,
                                        ----------------------------
                                     a Maryland corporation
                                     Its:  Sole General Partner

                                     By:  /s/ VICTOR J. COLEMAN
                                        ----------------------------
                                       VICTOR J. COLEMAN
                                       Its:  President and COO

                                     By:  /s/ ANDREW J. SOBEL
                                        ----------------------------
                                       ANDREW J. SOBEL
                                       Its: Exec. V.P. and
                                            Assistant Secretary


     "TENANT"                        THE KUSHNER-LOCKE COMPANY,
                                     a California corporation

<PAGE>   52

                                     By:  /s/ DONALD KUSHNER
                                        ----------------------------
                                     Print Name:
                                        Title:

                                     By:  /s/ ROBERT SWAN
                                        ----------------------------
                                     Print Name:  ROBERT SWAN
                                        Title: SR. V.P. & CFO


                                   EXHIBIT "A"
                                    PREMISES

[ Floor plans: omitted.]


                                   EXHIBIT "B"
                              RULES AND REGULATIONS

     1. No sign, advertisement or notice shall be displayed, printed or affixed
on or to the Premises or to the outside or inside of the Project or so as to be
visible from outside the Premises or Project without Landlord's prior written
consent. Landlord shall have the right to remove any non-approved sign,
advertisement or notice, without notice to and at the expense of Tenant, and
Landlord shall not be liable in damages for such removal. All approved signs or
lettering on doors and walls shall be printed, painted, affixed or inscribed at
the expense of Tenant by Landlord or by a person selected by Landlord and in a
manner and style acceptable to Landlord.

     2. Tenant shall not obtain for use on the Premises ice, waxing, cleaning,
interior glass polishing, rubbish removal, towel or other similar services, or
accept barbering or bootblackening, or coffee cart services, milk, soft drinks
or other like services on the Premises, except from persons reasonably
authorized by Landlord and at the hours and under regulations reasonably fixed
by Landlord. Except for a reasonable number of soft drink and snack vending
machines for use by Tenant's employees, no vending machines or machines of any
description shall be installed, maintained or operated upon the Premises without
Landlord's prior written consent.

     3. The sidewalks, halls, passages, exits, entrances, elevators and
stairways shall not be obstructed by Tenant or used for any purpose other than
for ingress and egress from Tenant's Premises. Under no circumstances is trash
to be stored in the corridors. Notice must be given to Landlord for any large
deliveries. Furniture, freight and other large or heavy articles, and all other
deliveries may be brought into the Project only at times and in the manner
designated by Landlord, and always at Tenant's sole responsibility and risk.
Landlord may impose reasonable charges for use of freight elevators after or
before normal business hours. All damage done to the Project by moving or
maintaining such furniture, freight or articles shall be repaired by Landlord at
Tenant's expense. Tenant shall not take or permit to be taken in or out of
entrances or passenger elevators of the Project, any item normally taken, or
which Landlord otherwise reasonably requires to be taken, in or out through
service doors or on freight elevators. Tenant shall move all supplies, furniture
and equipment as soon as received directly to the Premises, and shall move


<PAGE>   53

all waste that is at any time being taken from the Premises directly to the
areas designated for disposal.

     4. Toilet rooms, toilets, urinals, wash bowls and other apparatus shall not
be used for any purpose other than for which they were constructed and no
foreign substance of any kind whatsoever shall be thrown therein.

     5. Tenant shall not overload the floor of the Premises or , except for
customary wall-hangings, mark, drive nails, screw or drill into the partitions,
ceilings or floor or in any way deface the Premises. Tenant shall not place
typed, handwritten or computer generated signs in the corridors or any other
common areas. Should there be a need for signage additional to the Project
standard tenant placard, a written request shall be made to Landlord to obtain
approval prior to any installation. All costs for said signage shall be Tenant's
responsibility.

     6. In no event shall Tenant place a load upon any floor of the Premises or
portion of any such flooring exceeding the floor load per square foot of area
for which such floor is designed to carry and which is allowed by law, or any
machinery or equipment which shall cause excessive vibration to the Premises or
noticeable vibration to any other part of the Project. Prior to bringing any
heavy safes, vaults, large computers or similarly heavy equipment into the
Project, Tenant shall inform Landlord in writing of the dimensions and weights
thereof and shall obtain Landlord's consent thereto. Such consent shall not
constitute a representation or warranty by Landlord that the safe, vault or
other equipment complies, with regard to distribution of weight and/or
vibration, with the provisions of this Rule 6 nor relieve Tenant from
responsibility for the consequences of such noncompliance, and any such safe,
vault or other equipment which Landlord determines to constitute a danger of
damage to the Project or a nuisance to other tenants, either alone or in
combination with other heavy and/or vibrating objects and equipment, shall be
promptly removed by Tenant, at Tenant's cost, upon Landlord's written notice of
such determination and demand for removal thereof.

     7. Except for normal office supplies used in accordance with Law and in
commercially reasonable amounts, Tenant shall not use or keep in the Premises or
Project any kerosene, gasoline or inflammable, explosive or combustible fluid or
material, or use any method of heating or air-conditioning other than that
supplied by Landlord.

     8. Tenant shall not lay linoleum, tile, carpet or other similar floor
covering so that the same shall be affixed to the floor of the Premises in any
manner except as approved by Landlord.

     9. Tenant shall not install or use any blinds, shades, awnings or screens
in connection with any window or door of the Premises and shall not use any
drape or window covering facing any exterior glass surface other than the
standard drapes, blinds or other window covering established by Landlord.

     10. Tenant shall cooperate with Landlord in obtaining maximum effectiveness
of the cooling system by closing window coverings when the sun's rays fall
directly on windows of the Premises. Tenant shall


<PAGE>   54

not obstruct, alter, or in any way impair the efficient operation of Landlord's
heating, ventilating and air-conditioning system. Tenant shall not tamper with
or change the setting of any thermostats or control valves.

     11. The Premises shall not be used for manufacturing or for the storage of
merchandise except as such storage may be incidental to the permitted use of the
Premises. Tenant shall not, without Landlord's prior written consent, occupy or
permit any portion of the Premises to be occupied or used for the manufacture or
sale of liquor or tobacco in any form, or a barber or manicure shop, or as an
employment bureau. The Premises hall not be used for lodging or sleeping or for
any improper, objectionable or immoral purpose. No auction shall be conducted on
the Premises.

     12. Tenant shall not make, or permit to be made, any unseemly or disturbing
noises, or disturb or unreasonably interfere with occupants of Project or
neighboring buildings or premises or those having business with it by the use of
any musical instrument, radio, phonographs or unusual noise, or in any other
way.

     13. No bicycles, vehicles or animals of any kind shall be brought into or
kept in or about the Premises, and no cooking shall be done or permitted by any
tenant in the Premises, except that the preparation of coffee, tea, hot
chocolate and similar items for tenants, their employees and visitors shall be
permitted. No tenant shall cause or permit any unusual or objectionable odors to
be produced in or permeate from or throughout the Premises. The foregoing
notwithstanding, Tenant shall have the right to use a microwave and to heat
microwavable items typically heated in an office. No hot plates or similar open
element cooking apparatus shall be permitted in the Premises.

     14. The sashes, sash doors, skylights, windows and doors that reflect or
admit light and air into the halls, passageways or other public places in the
Project shall not be covered or obstructed by any tenant, nor shall any bottles,
parcels or other articles be placed on the window sills.

     15. No additional locks or bolts of any kind shall be placed upon any of
the doors or windows by any tenant, nor shall any changes be made in existing
locks or the mechanisms thereof unless Landlord is first notified thereof, gives
written approval, and is furnished a key therefor. Each tenant must, upon the
termination of his tenancy, give to Landlord all keys and key cards of stores,
offices, or toilets or toilet rooms, either furnished to, or otherwise procured
by, such tenant, and in the event of the loss of any keys so furnished, such
tenant shall pay Landlord the cost of replacing the same or of changing the lock
or locks opened by such lost key if Landlord shall deem it necessary to make
such change. If more than two keys for one lock are desired, Landlord will
provide them upon payment therefor by Tenant. Tenant shall not key or re-key any
locks. All locks shall be keyed by Landlord's locksmith only.

     16. Landlord shall have the right to prohibit any advertising by any tenant
which, in Landlord's opinion, tends to impair the reputation of the Project or
its desirability as an office building and upon written notice from Landlord any
tenant shall refrain from and


<PAGE>   55

discontinue such advertising.

     17. Landlord reserves the right to control access to the Project by all
persons after reasonable hours of generally recognized business days and at all
hours on Sundays and legal holidays. Each tenant shall be responsible for all
persons for whom it requests after hours access and shall be liable to Landlord
for all acts of such persons. Landlord shall have the right from time to time to
establish reasonable rules pertaining to freight elevator usage, including the
allocation and reservation of such usage for tenants' initial move-in to their
premises, and final departure therefrom.

     18. Any person employed by any tenant to do janitorial work shall, while in
the Project and outside of the Premises, be subject to and under the control and
direction of the Office of the Project or its designated representative such as
security personnel (but not as an agent or servant of Landlord, and the Tenant
shall be responsible for all acts of such persons).

     19. All doors opening on to public corridors shall be kept closed, except
when being used for ingress and egress. Tenant shall cooperate and comply with
any reasonable safety or security programs, including fire drills and air raid
drills, and the appointment of "fire wardens" developed by Landlord for the
Project, or required by law. Before leaving the Premises unattended, Tenant
shall close and securely lock all doors or other means of entry to the Premises
and shut off all lights and water faucets in the Premises.

     20. The requirements of tenants will be attended to only upon application
to the Office of the Project.

     21. Canvassing, soliciting and peddling in the Project are prohibited and
each tenant shall cooperate to prevent the same.

     22. All office equipment of any electrical or mechanical nature shall be
placed by tenants in the Premises in settings approved by Landlord, to absorb or
prevent any vibration, noise or annoyance.

     23. No air-conditioning unit or other similar apparatus shall be installed
or used by any tenant without the prior written consent of Landlord. Tenant
shall pay the cost of all electricity used for air-conditioning in the Premises
if such electrical consumption exceeds normal office requirements, regardless of
whether additional apparatus is installed pursuant to the preceding sentence.

     24. There shall not be used in any space, or in the public halls of the
Project, either by any tenant or others, any hand trucks except those
equippedwith rubber tires and side guards.

     25. All electrical ceiling fixtures hung in offices or spaces along the
perimeter of the Project must be fluorescent and/or of a quality, type, design
and bulb color approved by Landlord. Tenant shall not permit the consumption in
the Premises of more than 3 watts per net usable square foot in the Premises in
reespect of office lighting norshall Tenant permit the consumption in the
Premises of more than 2 watts per net usable square foot of space in the
Premises in respect of the power outlets therein, at any one time. In the event

<PAGE>   56

that such limits are exceeded, Landlord shall have the right to require Tenant
to remove lighting fixtures and equipment and/or to charge Tenant for the cost
of the additional electricity consumed.

     26.  Parking.

          (a) Garage hours shall be 7:00 a.m. to 7:00 p.m., Monday through
Friday, and closed on weekends, state and federal holidays excepted, as such
hours may be revised from time to time by Landlord.

          (b) Automobiles must be parked entirely within the stall lines on the
floor.

          (c) All directional signs and arrows must be observed.

          (d) The speed limit shall be 5 miles per hour.

          (e) Parking is prohibited in areas not striped for parking.

          (f) Parking cards or any other device or form of identification
supplied by Landlord (or its operator) shall remain the property of Landlord (or
its operator). Such parking identification device must be displayed as requested
and may not be mutilated in any manner. The serial number of the parking
identification device may not be obliterated. Devices are not transferable or
assignable and any device in the possession of an unauthorized holder will be
void. There will be a replacement charge to the Tenant or person designated by
Tenant of $25.00 for loss of any parking card. There shall be a security deposit
of $25.00 due at issuance for each card key issued to Tenant.

          (g) The monthly rate for parking is payable in advance and must be
paid by the third business day of each month. Failure to do so will
automatically cancel parking privileges and a charge at the prevailing daily
rate will be due. No deductions or allowances from the monthly rate will be made
for days parker does not use the parking facilities.

          (h) Tenant may validate visitor parking by such method or methods as
the Landlord may approve, at the validation rate from time to time generally
applicable to visitor parking.

          (i) Landlord (and its operator) may refuse to permit any person who
violates the within rules to park in the garage, and any violation of the rules
shall subject the automobile to removal from the garage at the parker's expense.
In either of said events, Landlord (or its operator) shall refund a prorata
portion of the current monthly parking rate and the sticker or any other form of
identification supplied by Landlord (or its operator) will be returned to
Landlord (or its operator).

          (j) Garage managers or attendants are not authorized to make or allow
any exceptions to these Rules and Regulations.

          (k) All responsibility for any loss or damage to automobiles or any
personal property therein is assumed by the parker.

          (l) Loss or theft of parking identification devices from automobiles
must be reported to the garage manager immediately, and a lost or stolen report
must be filed by the parker at that time.

          (m) The Parking facilities are for the sole purpose of parking one
automobile per space. Washing, waxing, cleaning or servicing of any vehicles by
the parker or his agents is prohibited.

          (n) Landlord (and its operator) reserves the right to refuse the
issuance of monthly stickers or other parking identification devices to any
Tenant and/or its employees who refuse to comply with the above Rules and
Regulations and all City, State or Federal ordinances, laws or agreements.

<PAGE>   57

          (o)  Tenant agrees to acquaint all employees with these Rules and
Regulations.

          (p) No vehicle shall be stored in the garage for a period of more than
one (1) week.

     27. The Project is a non-smoking Project. Smoking or carrying lighted
cigars or cigarettes in the Premises or the Project, including the elevators in
the Project, is prohibited.


                                   EXHIBIT "C"
                           NOTICE OF LEASE TERM DATES
                        AND TENANT'S PROPORTIONATE SHARE

TO:                                                     DATE:


RE:  Lease dated ________________, 1999, between
             ("Landlord"), and
               ("Tenant"), concerning
Suite ________, located at __________________________________________.

Ladies and Gentlemen:

     In accordance with the Lease, Landlord wishes to advise and/or confirm the
following:

       1. That the Premises have been accepted herewith by the Tenant as being
substantially complete in accordance with the Lease and that there is no
deficiency in construction.

       2. That the Tenant has taken possession of the Premises and acknowledges
that under the provisions of the Lease the Term of said
Lease shall commence as of ____________ for a term of ________________________
ending on ________________________.

       3. That in accordance with the Lease, Basic Rental commenced to accrue on
________________________.

       4. If the Commencement Date of the Lease is other than the first day of
the month, the first billing will contain a prorata adjustment. Each billing
thereafter shall be for the full amount of the monthly installment as provided
for in said Lease.

       5. Rent is due and payable in advance on the first day of each and every
month during the Term of said Lease. Your rent checks should
be made payable to ________________________ at ________________________________.

       6. The exact number of rentable square feet within the Premises is
__________ square feet.

       7. Tenant's Proportionate Share, as adjusted based upon the exact number
of rentable square feet within the Premises is _______%.

AGREED AND ACCEPTED:


<PAGE>   58

TENANT:
  ,
a
By:
Its:

                                   EXHIBIT "D"
                               TENANT WORK LETTER

     This Tenant Work Letter shall set forth the terms and conditions relating
to the renovation of the tenant improvements in the Premises. This Tenant Work
Letter is essentially organized chronologically and addresses the issues of the
construction of the Premises, in sequence, as such issues will arise.

                                    SECTION 1

                 LANDLORD'S INITIAL CONSTRUCTION IN THE PREMISES

     Landlord has constructed, at its sole cost and expense, the base, shell and
core (i) of the Premises, and (ii) of the floor of the Building on which the
Premises is located (collectively, the "Base, Shell and Core"). Tenant has
inspected and hereby approves the condition of the Premises and the Base, Shell
and Core, and agrees that the Premises and the Base, Shell and Core shall be
delivered to Tenant in their current "as-is" condition. The renovation to the
improvements in the Premises shall be designed and constructed pursuant to this
Tenant Work Letter.

                                    SECTION 2

                                  IMPROVEMENTS

     2.1 Improvement Allowance. Tenant shall be entitled to a one-time
improvement allowance (the "Improvement Allowance") in the amount of $295,671.00
(based on $15.00 per usable square foot of Suite 2100 and $6.00 per usable
square foot of Suite 2030) for the costs relating to the initial design and
construction of Tenant's improvements which are permanently affixed to the
Premises (the "Improvements"). In no event shall Landlord be obligated to make
disbursements pursuant to this Tenant Work Letter in a total amount which
exceeds the Improvement Allowance. Tenant may elect, by written notice to
Landlord, to receive up to $6.00 per usable square foot (i.e., $130,170.00) of
the Premises of the Improvement Allowance as a cash payment from Landlord, which
shall be due and payable within thirty (30) days after the date of Tenant's
execution and delivery of this Lease. In no event shall Tenant be entitled to
any credit to the extent any portion of the Improvement Allowance is not used by
Tenant for such cash payment or otherwise on or before June 30, 2001.

     2.2 Disbursement of the Improvement Allowance. Except as otherwise set
forth in this Tenant Work Letter, the Improvement Allowance shall be disbursed
by Landlord (each of which disbursements shall be made pursuant to Landlord's
disbursement process provided below) for costs related to the construction of
the Improvements and for the following items and costs (collectively, the
"Improvement Allowance Items"): (i) payment of the fees of the "Architect" and
the


<PAGE>   59

"Engineers," as those terms are defined in Section 3.1 of this Tenant Work
Letter, and payment of the fees incurred by, and the cost of documents and
materials supplied by, Landlord and Landlord's consultants in connection with
the preparation and review of the "Construction Drawings," as that term is
defined in Section 3.1 of this Tenant Work Letter, and designer/consultant fees;
(ii) the cost of permits and construction supervision fees; (iii) the cost of
any changes in the Base, Shell and Core required by the Construction Drawings;
(iv) the cost of any changes to the Construction Drawings or Improvements
required by applicable building codes (the "Code"); (v) the "Landlord
Coordination Fee," as that term is defined in Section 4.3 of this Tenant Work
Letter; and (vi) installation of telecommunications equipment, wiring and
cabling and furniture, fixtures and equipment (collectively, "Miscellaneous
Items"). However, in no event shall more than $2.00 per usable square foot of
the Improvement Allowance be used for the items described in (i) and (ii) above
nor shall more than $3.00 per usable square foot of the Improvement Allowance be
used for the Miscellaneous Items; any additional amount incurred shall be deemed
to constitute an Over-Allowance Amount. During the construction of the
Improvements, Landlord shall make monthly disbursements of the Improvement
Allowance for Improvement Allowance Items for the benefit of Tenant and shall
authorize the release of monies for the benefit of Tenant as follows.

          2.2.1 Monthly Disbursements. On or before the first day of each
calendar month, during the construction of the Improvements Tenant shall deliver
to Landlord: (i) a request for payment of the "Contractor," as that term is
defined in Section 4.1 of this Tenant Work Letter, approved by Tenant, in a form
to be provided by Landlord, showing the schedule, by trade, of percentage of
completion of the Improvements in the Premises, detailing the portion of the
work completed and the portion not completed; (ii) invoices from all of
"Tenant's Agents," as that term is defined in Section 4.2 of this Tenant Work
Letter, for labor rendered and materials delivered to the Premises; (iii)
executed mechanic's lien releases from all of Tenant's Agents which shall comply
with the appropriate provisions, as reasonably determined by Landlord, of
California Civil Code Section 3262(d); and (iv) all other information reasonably
requested by Landlord. Tenant's request for payment shall be deemed Tenant's
acceptance and approval of the work furnished and/or the materials supplied as
set forth in Tenant's payment request. Thereafter, Landlord shall deliver a
check to Tenant in payment of the lesser of: (A) the amounts so requested by
Tenant, as set forth in this Section 2.2.1, above, less a ten percent (10%)
retention (the aggregate amount of such retentions to be known as the "Final
Retention"), and (B) the balance of any remaining available portion of the
Improvement Allowance (not including the Final Retention), provided that
Landlord does not dispute any request for payment based on non-compliance of any
work with the "Approved Working Drawings," as that term is defined in Section
3.4 below, or due to any substandard work, or for any other reason. Landlord's
payment of such amounts shall not be deemed Landlord's approval or acceptance of
the work furnished or materials supplied as set forth in Tenant's payment
request.

          2.2.2. Final Retention. Subject to the provisions of this Tenant Work
Letter, a check for the Final Retention payable to Tenant shall be delivered by
Landlord to Tenant following the completion of


<PAGE>   60

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

          2.2.3 Other Terms. Landlord shall only be obligated to make
disbursements from the Improvement Allowance to the extent costs are incurred by
Tenant for Improvement Allowance Items. All Improvement Allowance Items for
which the Improvement Allowance has been made available shall be deemed
Landlord's property.

     2.3 Standard Tenant Improvement Package. Landlord has established
specifications (the "Specifications") for the Building- standard components to
be used in the construction of the Improvements in the Premises (collectively,
the "Standard Improvement Package"), which Specifications are available upon
request. The quality of Improvements shall be equal to or of greater quality
than the quality of the Specifications, provided that Landlord may, at
Landlord's option, require the Improvements to comply with certain
Specifications.

                                    SECTION 3

                              CONSTRUCTION DRAWINGS

     3.1 Selection of Architect/Construction Drawings. If based upon the scope
of the Improvements, Landlord reasonably determines that plans and
specifications are necessary, Tenant shall retain an architect/space planner
reasonably approved by Landlord (the "Architect") to prepare the "Construction
Drawings," as that term is defined in this Section 3.1. If necessary, Tenant
shall also retain the engineering consultants designated by Landlord (the
"Engineers") to prepare all plans and engineering working drawings relating to
the structural, mechanical, electrical, plumbing, HVAC and lifesafety work of
the Improvements; provided, however, that Landlord shall ensure that the charges
of such engineering consultants designated by Landlord are commercially
competitive. The plans and drawings to be prepared by Architect and the
Engineers hereunder shall be known collectively as the "Construction Drawings"
All Construction Drawings shall comply with the drawing format and
specifications as reasonably determined by Landlord, and shall be subject to
Landlord's reasonable approval. Tenant and Architect shall verify, in the field,
the dimensions and conditions as shown on the relevant portions of the base
building plans, and Tenant and Architect shall be solely responsible for the
same, and Landlord shall have no responsibility in connection therewith.
Landlord's review of the Construction Drawings as set forth in this Section 3,
shall be for its sole purpose and shall not imply Landlord's review of the same,
or obligate Landlord to review the same, for quality, design, Code compliance or
other like matters.


<PAGE>   61

Accordingly, notwithstanding that any Construction Drawings are reviewed by
Landlord or its space planner, architect, engineers and consultants, and
notwithstanding any advice or assistance which may be rendered to Tenant by
Landlord or Landlord's space planner, architect, engineers, and consultants,
Landlord shall have no liability whatsoever in connection therewith and shall
not be responsible for any omissions or errors contained in the Construction
Drawings.

     3.2 Final Space Plan. Tenant and the Architect shall prepare the final
space plan for Improvements in the Premises (collectively, the "Final Space Plan
"), which Final Space Plan shall include a layout and designation of all
offices, rooms and other partitioning, their intended use, and equipment to be
contained therein, and shall deliver the Final Space Plan to Landlord for
Landlord's approval.

     3.3 Final Working Drawings. Architect and the Engineers shall complete the
architectural and engineering drawings for the Premises, and the final
architectural working drawings in a form which is complete to allow
subcontractors to bid on the work and to obtain all applicable permits
(collectively, the "Final Working Drawings") and shall submit the same to
Landlord for Landlord's approval.

     3.4 Permits. The Final Working Drawings shall be approved by Landlord (the
"Approved Working Drawings") prior to the commencement of the construction of
the Improvements. Tenant shall cause the Architect to immediately submit the
Approved Working Drawings to the appropriate municipal authorities for all
applicable building permits necessary to allow "Contractor," as that term is
defined in Section 4.1, below, to commence and fully complete the construction
of the Improvements (the "Permits"). No changes, modifications or alterations in
the Approved Working Drawings may be made without the prior written consent of
Landlord, which consent shall not be unreasonably withheld.

                                    SECTION 4

                        CONSTRUCTION OF THE IMPROVEMENTS

     4.1 Contractor. A general contractor shall be retained by the Tenant to
construct the Improvements. Such general contractor ("Contractor") shall be
selected by the Tenant and approved by Landlord.

     4.2 Tenant's Agents. All subcontractors, laborers, materialmen, and
suppliers used by the Tenant (such subcontractors, laborers, materialmen, and
suppliers, and the Contractor to be known collectively as "Tenant's Agents")
must be approved in writing by Landlord, which approval shall not be
unreasonably withheld or delayed. If Landlord does not approve any of the
Tenant's proposed subcontractors, laborers, materialmen or suppliers, the Tenant
shall submit other proposed subcontractors, laborers, materialmen or suppliers
for Landlord's written approval. Notwithstanding the foregoing, the Tenant shall
be required to utilize subcontractors designated by Landlord for any mechanical,
electrical, plumbing, life-safety, sprinkler, structural and air-balancing work;
provided, however, that Landlord shall ensure that the rates charged by such
designated subcontractors are commercially competitive.

<PAGE>   62

       4.3 Construction of Improvements by Contractor. The Tenant shall
independently retain, in accordance with Section 4.1 above, Contractor to
construct the Improvements in accordance with the Approved Working Drawings. The
Tenant shall pay a logistical coordination fee (the "Landlord Coordination Fee")
to Landlord in an amount equal to five percent (5%) of the total amount of the
construction contract and general conditions between the Tenant and the
Contractor, excluding any flooring, painting and wallcovering.

       4.4  Indemnification & Insurance.

         4.4.1 Indemnity. Tenant's indemnity of Landlord as set forth in Article
13 of the Lease shall also apply with respect to any and all costs, losses,
damages, injuries and liabilities related in any way to any act or omission of
Tenant or Tenant's Agents.

         4.4.2 Requirements of Tenant's Agents. Each of Tenant's Agents shall
guarantee to Tenant and for the benefit of Landlord that the portion of the
Improvements for which it is responsible shall be free from any defects in
workmanship and materials for a period of not less than one (1) year from the
date of completion thereof. All such warranties or guarantees as to materials or
workmanship of or with respect to the Improvements shall be contained in the
contract or subcontract and shall be written such that such guarantees or
warranties shall inure to the benefit of both Landlord and Tenant, as their
respective interests may appear, and can be directly enforced by either. Tenant
covenants to give to Landlord any assignment or other assurances which may be
necessary to effect such right of direct enforcement.

         4.4.3  Insurance Requirements.

           4.4.3.1 General Coverages. All of Tenant's Agents shall carry
worker's compensation insurance covering all of their respective employees, and
shall also carry public liability insurance, including property damage, all with
limits, in form and with companies as are required to be carried by Tenant as
set forth in Article 14 of the Lease.

           4.4.3.2 Special Coverages. Tenant shall carry "Builder's All Risk"
insurance in an amount approved by Landlord covering the construction of the
Improvements, and such other insurance as Landlord may require. Such insurance
shall be in amounts and shall include such extended coverage endorsements as may
be reasonably required by Landlord.

           4.4.3.3 General Terms. Certificates for all insurance carried
pursuant to this Section 4.4.3.3 shall be delivered to Landlord before the
commencement of construction of the Improvements and before the Contractor's
equipment is moved onto the site. In the event that the Improvements are damaged
by any cause during the course of the construction thereof, Tenant shall
immediately repair the same at Tenant's sole cost and expense.

                               SECTION 5

                             MISCELLANEOUS
<PAGE>   63

     5.1 Tenant's Representative. The Tenant has designated Richard Marks as its
sole representative with respect to the matters set forth in this Tenant Work
Letter, who, until further notice to Landlord, shall have full authority and
responsibility to act on behalf of the Tenant as required in this Tenant Work
Letter.

     5.2 Landlord's Representative. Prior to commencement of construction of
Improvements, Landlord shall designate a representative with respect to the
matters set forth in this Tenant Work Letter, who, until further notice to the
Tenant, shall have full authority and responsibility to act on behalf of the
Landlord as required in this Tenant Work Letter.

     5.3 Time of the Essence in This Tenant Work Letter. Unless otherwise
indicated, all references herein to a "number of days" shall mean and refer to
calendar days. Tenant acknowledges that the work to be performed by Tenant
pursuant to this Tenant Work Letter may be performed during the Lease Term, that
Tenant shall be entitled to (but shall not be obligated to) conduct business
throughout the course of such renovations and that Tenant shall not be entitled
to any abatement of rent, nor shall Tenant be deemed to be constructively
evicted from the Premises, as a result of the construction of such renovations.

     5.4 Miscellaneous Charges. Landlord agrees that the Contractor shall not be
charged for utilities, freight elevator usage during normal business hours, or
parking during the construction of these renovations.