<PAGE>

                                                                   EXHIBIT 10.7

Renco
Renco Properties, Inc.


                                October 3, 1996

Mr. Michael Liccardo
Lexar Micro Systems
47421 Bayside Parkway
Fremont, California  94538

          Re:  Renco 36
          Bayside Technology Park
          Fremont, California

Dear Mike:

          I enjoyed the opportunity to meet you and learn a little about your
new venture.  You asked for a formal written proposal; so here it is:

          Renco Properties is pleased to make the following proposal to Lexar
Micro Systems to lease space in Bayside Technology Park in Fremont, California.

LANDLORD:           Renco Investment Company
                    a California partnership

TENANT:             Lexar Micro Systems, Inc.

PREMISES:           Approximately 22,788 square feet of space in the building
                    identified as Renco 36 located at 47421 Bayside Parkway,
                    Fremont, California.

LEASE TERM:         The term of the Lease shall be two (2) years.

COMMENCEMENT:       The lease shall commence on January 1, 1997, upon the
                    expiration of the existing lease with Cirrus Logic.

RENTAL:             The Base Monthly Rent during the term of the lease
                    shall be as follows:

                    $21,649.00 per month for the first twelve months,

                    $25,668.00 per month for the next twelve months.

                    As Additional Rent, Lexar Micro Systems shall pay the actual
                    operating costs for the building including but not limited
                    to: taxes, assessments, insurance, and maintenance costs.

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INTERIOR IMPROVEMENTS:   Lexar Micro Systems shall accept the building in its
                         current condition, "As Is", with the exception that
                         Cirrus Logic will be required to place the mechanical
                         systems in good operating condition and otherwise
                         satisfy the conditions in its lease to leave the
                         premises in good condition and repair.

SECURITY DEPOSIT:             Upon signing the Lease, Lexar Micro Systems shall
                              post a Security Deposit equal to the last month's
                              base monthly rent and shall repay the first
                              month's rent.

APPROVAL OF FINANCIAL
CONDITION:                    This proposal and the execution of a Lease are
                              conditioned upon Renco's approval of Lexar Micro
                              System's current financial condition at the time
                              of Lease execution.

LEASE FORM:                   Lexar Micro Systems shall use substantially the
                              same lease form as the current Cirrus Logic lease
                              with the exception that the management fee shall
                              be 3% of the base monthly rent.

BROKER:                       The parties acknowledge that no real estate broker
                              was involved in this transaction and no commission
                              shall be due.

TERM OF PROPOSAL:             This proposal will remain in full force and effect
                              for five days from the date of this proposal,
                              subject to prior proposals and subject to the
                              execution of a lease within two weeks from the
                              date of this letter.

We look forward to working with you to continue your occupancy in Bayside
Technology Park.


                                    Sincerely,
                                    Renco Properties, Inc.


                                    William N. Neidig
                                    Executive Vice President

                                    Accepted for Lexar Micro Systems

                                    By:_________________________________________
                                         Michael Liccardo

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                       Office Space Lease Summary/Lease

                                       3
<PAGE>

                                                      File No.  ________________


                             INDUSTRIAL SPACE LEASE

                               (MULTI-TENANT NET)

          THIS LEASE, dated 10/25/96 for reference purposes only, is made by and
between Renco Investment Company, a California Partnership ("Landlord"), and
Lexar Micro Systems, a California Corporation ("Tenant"), to be effective and
binding upon the parties as of the date the last of the designated signatories
to this Lease shall have executed this Lease (the "Effective Date of this
Lease").

                                   ARTICLE 1

                                  REFERENCES

          1.1  REFERENCES:  All references in this Lease (subject to any further
clarifications contained in this Lease) to the following terms shall have the
following meaning or refer to the respective address, person, date, time period,
amount, percentage, calendar year or fiscal year as below set forth:

     A. Tenant's Address for Notices:     47421 Bayside Parkway
                                          Fremont, CA  94538


     B. Tenant's Representative:
           Phone Number:

     C. Landlord's Address for Notice:    1285 Oakmead Parkway
                                          Sunnyvale, CA  94086

     D. Landlord's Representative:        William F. Neidig
           Phone Number:                  (408) 730-5500

     E. Intended Commencement Date:       January 1, 1997

     F. Intended Term:                    Two (2) Years

     G. Lease Expiration Date:            December 31, 1998

     H. Tenant's Punchlist Period:        One (1) Day

     I. First Month's Prepaid Rent:       $21,649.00

     J. Last Month's Prepaid Rent:        -0-

     K. Tenant's Security Deposit:        $25,668.00

     L. Late Charge Amount:               Ten percent (10%) of the delinquent
                                          amount

     M. Tenant's Required Liability
        Coverage:                         $3,000,000 Single limit

     N. Tenant's Number of Parking
        Spaces:                           88

     O. Brokers:                          None
<PAGE>

     P. Project or Property:  That certain real property situated in the
City of Fremont, County of Alameda, State of California, as presently improved
with Two (2) buildings, which real property is shown on the Site Plan attached
hereto as Exhibit "A" and is commonly known as or otherwise described as
follows:  Renco 36 and Renco 37.

     Q. Building:  That certain Building within the Project in which the
Leased Premises are located, which Building is shown outlined in red on Exhibit
"A" hereto.

     R. Common Areas:  The "Common Areas" shall mean those areas within
the Project which are located outside the buildings and which are provided and
designated by Landlord from time to time for general use by tenants of the
Project including driveways, pedestrian walkways, parking spaces, landscaped
areas and enclosed trash disposal areas.

     S. Leased Premises:  That certain space which is a portion of the
Building, which space is shown outlined in red on the Floor Plan attached hereto
as Exhibit "B" consisting of approximately 22,788 square feet of gross leasable
area and, for purposes of this Lease, agreed to contain said number of square
feet.  The Leased Premises are commonly known as or otherwise described as
follows:

               47421 Bayside Parkway
               Fremont

     T. Base Monthly Rent:  The term "Base Monthly Rent" shall mean the
following:  Twenty One Thousand Six Hundred Forty-nine dollars ($21,649,000) for
each of the first twelve months of the lease term.   Twenty Five Thousand Six
Hundred Sixty-eight dollars ($25,668.00) for each of the next twelve months of
the lease term.

     U. Permitted Use:  The term "Permitted Use" shall mean the
following:  Office, Research and Development, Light assembly and the storage of
tenant's own material.

     V. Exhibits.  The term "Exhibits" shall mean the Exhibits to this
Lease which are described as follows:

          Exhibit "A" -- Site Plan showing the Project and delineating the
                         Building in which the Leased Premises are located.

          Exhibit "B" -- Floor Plan outlining the Leased Premises.

          Exhibit "D" -- Acceptance Agreement.

     W. Addenda.  The term "Addenda" shall mean the Addendum (or Addenda)
to this Lease which is (or are) described as follows:  First Addendum to Lease

                                   ARTICLE 2

                      LEASED PREMISES, TERM AND POSSESSION

          2.1  DEMISE OF LEASED PREMISES:  Landlord hereby leases to Tenant and
Tenant hereby leases from Landlord for Tenant's own use in the conduct of
Tenant's business and not for purposes of speculation in real estate, for the
Lease Term and upon the terms and subject to the condition of this Lease, that
certain interior space described in Article 1(s) as the Leased Premises,
reserving and excepting to Landlord the exclusive right to one-half of all
excess rentals and assignment considerations (as defined in Section 7.5), all
profits to be derived from any assignments or sublettings by Tenant during the
Lease Term by reason of the appreciation in the


<PAGE>

fair market rental value of the Leased Premises, Landlord further reserves the
right to install, maintain, use and replace ducts, wires, conduits and pipes
leading through the Leased Premises in locations which will not materially
interfere with Tenant's use of the Leased Premises.  Tenant's lease of the
Leased Premises, together with the appurtenant right to use the Common Areas as
described in Article 2.2 below, shall be conditioned upon and be subject to the
continuing compliance by Tenant with (i) all the terms and conditions of the
Lease, (ii) all Laws governing the use of the Leased Premises and the Project,
(iii) all Private Restrictions, easements and other matters now of public record
respecting the use of the Leased Premises and the Project, and (iv) all
reasonable rules and regulations from time to time established by Landlord.  See
Addendum Paragraph 2.1.

     2.2  RIGHT TO USE COMMON AREAS:  As an appurtenant right to Tenant's right
to the use of the Leased Premises, Tenant shall have the non-exclusive right to
use the Common Areas in conjunction with other tenants of the Project and their
invitees, subject to the limitations on such use as set forth in Article 4, and
solely for the purpose for which they were designed and intended.  Tenant's
right to use the Common Areas shall terminate concurrently with any termination
of this Lease.

     2.3  LEASE COMMENCEMENT DATE AND LEASE TERM:  The term of this Lease shall
begin, and the Lease Commencement Date shall be deemed to have occurred, on the
Intended Commencement Date (as set forth in Article 1) unless either (i)
Landlord is unable to deliver possession of the Leased Premises to Tenant on the
Intended Commencement Date, in which case the Lease Commencement Date shall be
as determined pursuant to Article 2.4 below or (ii) Tenant enters into
possession of the Leased Premises prior to the Intended Commencement Date, in
which case the Lease Commencement Date shall be as determined pursuant to
Article 2.7 below (the "Lease Commencement Date").  The term of this Lease shall
end on the Lease Expiration Date (as set forth in Article 1), irrespective of
whatever date the Lease Commencement Date is determined to be pursuant to the
foregoing sentence.  The Lease Term shall be the period of time commencing on
the lease Commencement Date and ending on the Lease Expiration Date (the "Lease
Term").

     2.4  DELIVERY OF POSSESSION:  Landlord shall deliver to Tenant possession
of the Leased Premises on or before the Intended Commencement Date (as set forth
in Article 1) in their presently existing condition, broom clean, unless
Landlord shall have agreed, as a condition to Tenant's obligation to accept
possession of the Leased Premises, pursuant to an Exhibit or Addends attached to
and made a part of this Lease to modify existing interior improvements or to
make, construct and/or install additional specified improvements within the
Leased Premises, in which case Landlord shall deliver to Tenant possession of
the Leased Premises on or before the Intended Commencement Date as so modified
and/or improved.  If Landlord is unable to so deliver possession of the Leased
Premises to Tenant on or before the Intended Commencement Date, for whatever
reason other than Landlord's failure to commence construction of diligently
pursue it to completion to the extent it is within Landlord's reasonable control
to do so.  Landlord shall not be in default under this Lease, nor shall this
Lease be void, voidable or cancelable by Tenant until the lapse of one hundred
twenty days after the Intended Commencement Date (the "delivery grace period";
however, the Lease Commencement Date shall not be deemed to have occurred until
such date as Landlord notifies Tenant that the Leased Premises are Ready for
Occupancy.  Additionally, the delivery grace period above set forth shall

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<PAGE>

be extended for such number of days as Landlord may be delayed in delivering
possession of the Leased Premises to Tenant by reason of Force Majeure or the
actions of Tenant. If Landlord is unable to deliver possession of the Leased
Premises to Tenant within the described delivery grace period (including any
extensions thereof by reason of Force Majeure or the actions of Tenant), then
Tenant's sole remedy shall be to cancel and terminate this Lease, and in no
event shall Landlord be liable to Tenant for such delay. Tenant may not cancel
this Lease at nay time after the date Landlord notifies Tenant the Leased
Premises are Ready for Occupancy unless Landlord's notice is not given in good
faith.

     2.5  ACCEPTANCE OF POSSESSION:  Tenant acknowledges that it has inspected
the Leased Premises and is willing to accept them in their existing condition,
broom clean, unless Landlord shall have agreed, as a condition to Tenant's
obligation to accept possession of the Leased Premises, pursuant to an Exhibit
or Addenda attached to and made part of this Lease to modify existing interior
improvements or to make, construct and/or install additional specified
improvements within the Leased Premises, in which case Tenant agrees to accept
possession of the Leased Premises when Landlord has substantially completed such
modifications or improvements and the Leased Premises are Ready for Occupancy.
If Landlord shall have so modified existing improvements or constructed
additional improvements within the Leased Premises for Tenant, Tenant shall,
within Tenant's Punchlist Period (as set forth in Article 1) which shall
commence on the date that Landlord notifies Tenant that the Leased Premises are
Ready for Occupancy, subject to Landlord as signed copy of the Acceptance
Agreement attached hereto as Exhibit "D" together with a punchlist of all
incomplete and/or improper work performed by Landlord.  Upon the expiration of
Tenant's Punchlist Period, Tenant shall be conclusively deemed to have accepted
the Leased Premises in their then-existing condition as so delivered by Landlord
to Tenant, except as to those items reasonably set forth in the punchlist
submitted to Landlord prior to the expiration of said period.  Landlord agrees
to correct all items reasonably set forth in Tenant's punchlist, provided that
such punchlist was submitted to Landlord within Tenant's Punchlist Period.
Additionally, Landlord agrees to place in good working order all existing
plumbing, lighting, heating, ventilating and air conditioning systems within the
Leased Premises and all man doors and roll-up truck doors serving the Leased
Premises to the extent that such systems and/or items are not in good operating
condition as of the date Tenant accepts possession of the Leased Premises;
provided that, and only if, Tenant notifies Landlord in writing of such failures
or deficiencies within 15 business days from the date Tenant so accepts
possession of the Leased Premises.  See Addendum Paragraph 2.5.

     2.6  SURRENDER OF POSSESSION:  Immediately prior to the expiration or upon
the sooner termination of this Lease, Tenant shall remove all of Tenant's signs
from the exterior of the Building and shall remove all of Tenant's equipment,
trade fixtures, furniture, supplies, wall decorations and other personal
property from the Leased Premises, and shall vacate and surrender the Leased
Premises to Landlord in the same condition, broom clean, as existed at the Lease
Commencement Date.  Landlord, at Tenant's expense, shall retain a mechanical
contractor to serve all heating, ventilation and air conditioning equipment, and
Tenant shall pay the cost to restore (or replace a required), said equipment to
good working order.  Tenant shall pay the cost of restoring or replacing all
trees, shrubs, plants, lawn and ground cover, and repair (or replace as
required) all paved surfaces of the Property, and otherwise satisfy all
requirements to repair any damage or wear to the Leased Premises, Building,
Common Areas, Outside Areas, and/or

                                       2
<PAGE>

Property. Tenant shall repair all damage to the Leased Premises caused by Tenant
or by Tenant's removal of Tenant's property and all damage to the exterior of
the Building caused by Tenant's removal of Tenant's signs. Tenant shall patch
and refinish, to Landlord's reasonable satisfaction, all penetrations made by
Tenant or its employees to the floor, walls or ceiling of the Lease Premises,
whether such penetrations were made with Landlord's approval or not Tenant shall
clean, repair or replace all stained or damaged ceiling tiles, wall coverings
and clean or replace as my be required floor coverings to [illegible] all burned
out light bulbs and damaged light lenses, and clean and repaint all painted
walls. Tenant shall repair all damage caused by Tenant to the exterior surface
of the Building and the paved surfaces of the outside areas adjoining the Leased
Premises and, where necessary, replace or resurface same. Additionally, Tenant
shall, prior to the expiration or sooner termination of this Lease, remove any
improvements constructed or installed by Tenant which Landlord requests be so
removed by Tenant and repair all damage caused by such removal. If the Leased
Premises are not surrendered to Landlord in the condition required by this
Article at the expiration or sooner termination of this Lease, Landlord may, at
Tenant's expense, so remove Tenant's signs, property and/or improvements not so
removed and make such repairs and replacements not so made or hire, at Tenant's
expense, independent contractors to perform such work. Tenant shall be liable to
Landlord for all costs incurred by Landlord in returning the Leased Premises to
the required condition, plus interest on all costs incurred from the date paid
by Landlord at the then maximum rate of interest not prohibited by Law until
paid, payable by Tenant to Landlord within ten days after receipt of a statement
therefore from Landlord, and Tenant be deemed to have impermissibly held over
until such time as such required work is completed, and Tenant shall pay Base
Monthly Rent and Additional Rent in accordance with the terms of Section 13.2
(Holding Over) until such work is completed. Tenant shall indemnify Landlord
against loss or liability resulting from delay by Tenant in surrendering the
Leased Premises, including, without limitation, any claims made by any
succeeding tenant or any losses to Landlord due to lost opportunities to lease
to succeeding tenants.

     2.7  EARLY OCCUPANCY:  If Tenant's enters into possession of the Leased
Premises prior to the Intended Commencement Date (or permits its contractors to
enter the Leased Premises prior to the Intended Commencement Date), unless
otherwise agreed in writing by landlord, the Lease Commencement Date shall be
deemed to have occurred on such sooner date, and Tenant shall be obligated to
perform all its obligations under this Lease, including the obligation to pay
rent, from that sooner date.

                                   ARTICLE 3
                   RENT, LATE CHARGES AND SECURITY DEPOSITS

     3.1  BASE MONTHLY RENT:  Commencing on the Lease Commencement Date (as
determined pursuant to Article 2.3 above) and continuing throughout the Lease
Term, Tenant shall pay to Landlord, without prior demand therefore, in advance
on the first day of each calendar month, as base monthly rent, the amount set
forth as "Base Monthly Rent" in Article 1 (the "Base Monthly Rent").

     3.2  ADDITIONAL RENT:  Commencing on the Lease Commencement Date (as
determined pursuant to Article 2.3 above) and continuing throughout the Lease
Term, in addition

                                       3
<PAGE>

to the Base Monthly Rent, Tenant shall pay to Landlord as additional rent (the
"Additional Rent") the following amounts:

          A.   Tenant's Proportionate Share of all Building Operating Expenses
(as defined in Article 13).  Payment shall be made by whichever of the following
methods (or combination of methods) is (are) from time to time  designated by
Landlord:

               (1)  Landlord may bill to Tenant, on a periodic basis not more
frequently than monthly, Tenant's Proportionate Share of such expenses (or group
of expenses) as paid or incurred by Landlord, and Tenant shall pay such share of
such expenses within ten days after receipt of a written bill therefore from
Landlord; and/or

               (2)  Landlord may deliver to Tenant Landlord's reasonable
estimate of any given expense (or group of expenses, such as Landlord's
Insurance Costs or Real Property Taxes) which it anticipates will be paid or
incurred for the ensuing calendar or fiscal year, as Landlord may determine, and
Tenant shall pay its Proportionate Share of such expenses for such year in equal
monthly installments during such year with the installments of Base Monthly
Rent. Landlord reserves the right to change from time to time the method of
billing Tenant its Proportionate Share of such expenses or the periodic basis on
which such expenses are billed.

          B.   Landlord's share of the consideration received by Tenant upon
certain assignments and sublettings as required by Article 7;

          C.   Any legal fees and costs that Tenant is obligated to pay or
reimburse to Landlord pursuant to Article 13; and

          D.   Any other shares or reimbursements due Landlord from Tenant
pursuant to the terms of this Lease.  See Addendum Paragraph 3.2.

     3.3  YEAR-END ADJUSTMENTS:  If Landlord shall have elected to charge Tenant
its Proportionate Share of the Building Operating Expenses (or any group of such
expenses) on an estimated basis in accordance with the provisions of Article
3.2A(2) above, Landlord shall furnish to Tenant within three months following
the end of the applicable calendar or fiscal year, as the case may be, a
statement setting forth (i) the amount of such expenses paid or incurred during
the just ended calendar or fiscal year, as appropriate, and (ii) Tenant's
Proportionate Share of such expenses for such period.  If Tenant shall have paid
more than its Proportionate Share of such expenses for the stated period,
Landlord shall, at its election, either (i) credit the amount of such
overpayment toward the next ensuing payment or payments of Additional Rent that
would otherwise be due or (ii) refund in cash to Tenant the amount of such
overpayment.  If such year-end statement shall show that Tenant did not pay its
Proportionate Share of any such expenses in full, then Tenant shall pay to
Landlord the amount of such underpayment within ten days from Landlord's billing
of same to Tenant.  The provisions of this Article shall survive the expiration
or sooner termination of this Lease.  See Addendum Paragraph 3.3.

     3.4  LATE CHARGE AND INTEREST ON RENT IN DEFAULT:  Tenant acknowledges that
the late payment by Tenant of any monthly installment of Base Monthly Rent or
any Additional Rent will cause Landlord to incur certain costs and expenses not
contemplated under this Lease, the exact amounts of which are extremely
difficult or impractical to fix.  Such

                                       4
<PAGE>

costs and expenses will include, without limitation, administration and
collection costs and processing and accounting expenses. Therefore, if any
installment of Base Monthly Rent is not received by Landlord from Tenant within
six calendar days after the same becomes due, Tenant shall immediately pay to
Landlord a late charge in an amount equal to the amount set forth in Article 1
as the "Late Charge Amount", and if any Additional Rent is not received by
Landlord within six calendar days after same becomes due, Tenant shall
immediately pay to Landlord a late charge in an amount equal to 57 percent of
the Additional Rent not so paid. Landlord and Tenant agree that this late charge
represents a reasonable estimate of such costs and expenses and is fair
compensation to Landlord for its loss suffered by reason of [illegible]
provision for a late charge be deemed to grant to Tenant a grace period
extension of time within which to pay any rental installment or prevent Landlord
from exercising any right or remedy available to Landlord upon Tenant's failure
to pay each rental installment due under this Lease when due, including the
right to terminate this Lease. If any rent remains delinquent for a period in
excess of 10 calendar days, then, in addition to such late charge, Tenant shall
pay to Landlord interest on any rent that is not so paid from said tenth day at
the then maximum rate of interest not prohibited by Law until paid. See Addendum
Paragraph 3.4.

     3.5  PAYMENT OF RENT:  Except an specifically provided otherwise in this
Lease all rent shall be paid in lawful money of the United States, without any
abatement, deduction or offset for any reason whatsoever, to Landlord at such
address as Landlord may designate from time to time.  Tenant's obligation to pay
Base Monthly Rent and all Additional Rent shall be prorated at the commencement
and expiration of Lease Term.  The failure by Tenant to pay any Additional Rent
as when due, and Landlord shall have the same rights and remedies against Tenant
as landlord would have if Tenant failed to pay the Base Monthly Rent when due.

     3.6  PREPAID RENT:  Upon signing this Lease, Tenant shall immediately pay
to Landlord the amount set forth in Article 1 as "First Month's Prepaid Rent" as
prepayment of rent for credit against the first installment(s) of Base Monthly
Rent due hereunder.

     3.7  SECURITY DEPOSIT:  Upon signing this Lease, Tenant shall immediately
deposit with Landlord the amount set forth in Article 1 as the "Security
Deposit" as security for the performance by Tenant of the terms of this Lease to
be performed by Tenant, and not as prepayment of rent.  Landlord may apply such
portion or portions of the Security Deposit as are reasonably necessary for the
following purposes: (i) to remedy any default by Tenant in the payment of Base
Monthly Rent or Additional Rent or a late charge or interest on defaulted rent:
(ii) to repair damage to the Leased Premises caused by Tenant; (iii) to clean
and repair the Leased Premises following their surrender to Landlord if not
surrendered in the condition required pursuant to the provisions of Article 2;
and (iv) to remedy any other default of Tenant to the extent permitted by Law
including, without limitation, paying in full on Tenant's behalf any sums
claimed by materialmen or contractors of Tenant to be owing to them by Tenant
for work done or improvements made at Tenant's request to the Leased Premises.
In this regard, Tenant hereby waives any restriction on the uses to which the
Security Deposit may be applied as contained in Section 1950.7(c) of the
California Civil Code and/or any successor statute.  In the event the Security
Deposit or any portion thereof is so used, Tenant shall pay to Landlord,
promptly upon demand, an amount in cash sufficient to restore the Security
Deposit to the full original sum.  if Tenant fails to promptly restore the
Security Deposit and if Tenant shall have paid to Landlord any sums as "Last
Month's Prepaid Rent", Landlord may, in addition to any

                                       5
<PAGE>

other remedy Landlord may have under this Lease, reduce the amount of Tenant's
Last Month's Prepaid Rent by transferring all or portions of such Last Month's
Prepaid Rent to Tenant's Security Deposit until such Security Deposit is
restored to the amount set forth in Article 1. Landlord shall not be deemed a
trustee of the Security Deposit. Landlord may use the Security Deposit in
Landlord's ordinary business and shall not be required to segregate it from its
general accounts. Tenant shall not be entitled to any interest on the Security
Deposit. If Landlord transfers the Building during the Lease Term, Landlord may
pay the Security Deposit to any subsequent owner in conformity with the
provisions of Section 1950.7 of the California Civil Code and/or any successor
statute, in which event the transferring landlord shall be released from all
liability for the return of the Security Deposit. Tenant specifically grants to
Landlord (and hereby waives the provisions of California Civil Code Section
1950.7 to the contrary) a period of sixty days following a surrender of the
Leased Premises by Tenant to Landlord within which to return the Security
Deposit (less permitted deductions) to Tenant, it being agreed between Landlord
and Tenant that sixty days is a reasonable period of time within which to
inspect the Leased Premises, make required repairs, receive and verify workmen's
billings therefore, and prepare a final accounting with respect to such deposit.
In no event shall the Security Deposit, or any portion thereof, be considered
prepaid rent. See Addendum Paragraph 3.7.

                                   ARTICLE 4
                    USE OF LEASED PREMISES AND COMMON AREAS

     4.1  PERMITTED USE:  Tenant shall be entitled to use the Leased Premises
solely for the "Permitted Use" as set forth in Article 1 and for no other
purpose whatsoever.  Tenant shall continuously and without interruption use the
Leased Premises for such purpose for the entire Lease Term.  Any discontinuance
of such use for a period of thirty consecutive calendar days shall be, at
Landlord's election, a default by Tenant under the terms of this Lease.  Subject
to the limitations contained in this Article 4.  Tenant shall have the right to
use the Common Areas, in conjunction with other tenants and during normal
business hours, solely for the purposes for which they were intended and for no
other purposes whatsoever.  Tenant shall not have the right to use the exterior
surfaces of exterior walls, the area beneath the floor or the area above the
ceiling of the Leased Premises.  See Addendum Paragraph 4.1.

     4.2  GENERAL LIMITATIONS ON USE:  Tenant shall not do or permit anything to
be done in or about the Leased Premises, the Building, the Common Area or the
Project which does or could (i) interfere with the rights of other tenants or
occupants of the Building or the Project, (ii) jeopardize the structural
integrity of the Building or (iii) cause damage to any part of the Building or
the Project.  Tenant shall not operate any equipment within the Leased Premises
which does or could (i) injure, vibrate or shake the Leased Premises or the
Building, (ii) damage, overload, corrode, or impair the efficient operation of
any electrical, plumbing, sewer, heating, ventilating or air conditioning
systems within or servicing the Leased Premises or the Building or (iii) damage
or impair the efficient operation of the sprinkler system (if any) within or
servicing the Leased Premises or the Building.  Tenant shall not install any
equipment or antennas on or make any penetrations of the exterior walls or roof
of the Building.  Tenant shall not affix any equipment to or make any
penetrations or cuts in the floor, ceiling or walls of the Leased Premises.
Tenant shall not place any loads upon the floors, foundations or supporting
structural components.  Tenant shall place any explosive, flammable or harmful
fluids, including Hazardous Materials, or other waste materials in the drainage
systems of the Building or the

                                       6
<PAGE>

Project. Tenant shall not drain or discharge any fluids in the landscaped areas
or across the paved areas of the Project. Tenant shall not use any area located
outside the Leased Premises for the storage of its materials, supplies,
inventory or equipment, and all such materials, supplies, inventory and
equipment shall at all times be stored within the Leased Premises. Tenant shall
not commit nor permit to be committed any waste in or about the Leased Premises,
the Common Areas or the Project. The provisions of this Section 4.2 shall not
prohibit Tenant's installation of equipment within Premises. See Addendum
Paragraph 6.1.

     4.3  NOISE AND EMISSIONS:  all noise generated by Tenant in its use of the
Leased Premises shall be confined or muffled so that is does not interfere with
the businesses of or annoy other tenants of the Building or the Project.  All
dust, fumes, odors and other emissions generated by Tenant's use of the Leased
Premises shall be sufficiently dissipated in accordance with sound environmental
practices and exhausted from the Leased Premises in such a manner so as not to
interfere with the businesses of or annoy other tenants of the Building or the
Project, or cause any damage to the Lease Premises or the Building or any
component part thereof or the property of other tenants of the Building or the
Project.

     4.4. TRASH DISPOSAL:  Tenant shall provide trash and garbage disposal
facilities inside the Leased Premises for all of its trash, garbage and waster
requirements and shall cause such trash garbage and waster to be regularly
removed from the Leased Premises at Tenant's sole cost.  Tenant shall deep all
outside the Leased Premises and all firm corridors and mechanical equipment
rooms in or about the Leased Premises free and clear of all trash, garbage,
waste and boxes containing same at all times.

     4.5  PARKING:  Tenant is allocated, and Tenant and its employees and
invitees shall have the non-exclusive right to use, not more than the number of
parking spaces set forth in Article 1 as "Tenant's Number of Parking Spaces".
Tenant shall not, at any time, use or permit its employees or invitees to use
more parking spaces than the number so allocated to Tenant.  Tenant shall not
have the exclusive right to use any specific parking spaces, and Landlord
reserves the right to designate from time to time the location of the parking
spaces allocated for Tenant's use.  In the event Landlord elects or is so
required by any Law to limit or control parking within the Project, whether by
validation of parking tickets or any other method, Tenant agrees to participate
in such validation or other program as reasonably established by Landlord.
Tenant shall not, at any time, park or permit to be parked any trucks or
vehicles adjacent to entryways or lading areas within the Project so as to
interfere in any way with the use of such areas, nor shall Tenant, at any time,
park or permit the parking of Tenant's trucks or other vehicles, or the trucks
and vehicles of Tenant's suppliers or others, in any portion of the Common Areas
not designated by Landlord for such use by Tenant.  Tenant shall not, at any
time, park or permit to be parked any recreational vehicles, inoperative
vehicles or equipment on any portion of the common parking area or other Common
Areas of the Project.  Tenant agrees to assume responsibility for compliance by
its employees and invitees with the parking provisions contained herein.  if
Tenant or its employees park any vehicle within the Project in violation of
these provisions, then Landlord may charge Tenant, as Additional Rent, and
Tenant agrees to pay, as Additional Rent, Fifty Dollars per day for each day or
partial day that each such vehicle is illegally parked, or parked in any area
other than that designated.  Tenant hereby authorizes Landlord, at Tenant's sole
expense, to tow away from the Project and store until

                                       7
<PAGE>

redeemed by its owner any vehicle belonging to Tenant or Tenant's employees
parked in violation of these provisions.

     4.6  SIGNS:  Tenant shall not place or install on or within any portion of
the Leased Premises, the Building, the Common Areas or the Project any sign
(other than a business identification sign first approved by Landlord in
accordance with this Article), advertisements, banners, placards or pictures
which are visible from the exterior of the Leased Premises.  Tenant shall not
place or install on or within any portion of the Leased Premises, the Building,
the Common Areas or the Project any business identification sign which is
visible from the exterior of the Leased Premises until Landlord shall have first
approved in writing the location, size, content, design, method of attachment
and material to be used in the making of such sign.  Any signs, once approved by
Landlord, shall be installed only in strict compliance with Landlord's approval,
at Tenant's expense, using a person first approved by Landlord to install same.
Landlord may remove any signs (not first approved in writing by Landlord),
advertisements, banners, placards or pictures so placed by Tenant on or with the
Leased Premises, the Building, the Common Areas or the Project and charge to
Tenant the cost of such removal, together with any costs incurred by Landlord to
repair any damage caused thereby, including any cost incurred to restore the
surface upon which such sign was so affixed to its original condition.  Tenant
shall remove any such signs, repair any damage caused thereby, and restore the
surface upon which the sign was affixed to its original condition, all to
Landlord's reasonable satisfaction, upon the termination of this Lease.
Landlord's approval of Tenant's Business name signage shall not be unreasonably
withheld.

     4.7  COMPLIANCE WITH LAWS AND PRIVATE RESTRICTIONS:  Tenant shall not use
or permit any person to use the Leased Premises in any manner which violates any
Laws or Private Restrictions.  Tenant shall abide by and shall promptly observe
and comply with, at its sole cost and expense, of record as of the date of this
Lease or amendments to Private restrictions approved by Tenant all Laws and
Private Restrictions respecting the use and occupancy of the Leased Premises,
the Building, the Common Areas or the Project and shall defend with competent
counsel, indemnify and hold Landlord harmless from any claims, damages or
liability resulting from Tenant's failure to do so.  Addendum Paragraph 4.7.

     4.8  COMPLIANCE WITH INSURANCE REQUIREMENTS:  With respect to any insurance
policies carried by Landlord in accordance with the provisions of this Lease,
Tenant shall not conduct (nor permit any other person to conduct) any activities
within the Leased Premises, or store, keep or use anything within the Leased
Premises which (i) is prohibited under the terms of any of such policies, (ii)
could result in the termination of the coverage afforded under any of such
policies, (iii) could give to the insurance carrier the right to cancel any of
such policies, or (iv) could cause an increase in the rates (over standard
rates) charged for the coverage afforded under any of such policies.  Tenant
shall comply with all requirements of any insurance company, insurance
underwriter, or Board of First Underwriter which are necessary to maintain, at
standard rates, the insurance coverages carried by either Landlord or Tenant
pursuant to this Lease.  See Addendum Paragraph 4.8.

     4.9  LANDLORD'S RIGHT TO ENTER:  Landlord and its agents shall have the
right to enter the Leased Premises during normal business hours and subject to
Tenant's reasonable security measures for the purpose of (i) inspecting the
same; (ii) supplying any services to be

                                       8
<PAGE>

provided by Landlord to Tenant; (iii) showing the Leased Premises to prospective
purchasers, mortgagees or tenants; (iv) making necessary alterations, additions
or repairs; (v) performing any of Tenant's obligations when Tenant has failed to
do so after giving Tenant reasonable written notice of its intent to do so; and
(vi) posting notices of non-responsibility for "For Lease" or "For Sale" signs.
Additionally, Landlord shall have the right to enter the Leased Premises at
times of emergency. Any entry into the Leased Premises or portions thereof
obtained by Landlord in accordance with this Article shall not under any
circumstances be construed or deemed to be a forcible or unlawful entry into, or
a detainer of, the Leased Premises or an eviction, actual or constructive, of
Tenant from the Leased Premises or any portion thereof. See Addendum Paragraph
4.9.

     4.10 CONTROL OF COMMON AREAS:  Landlord shall at all times have exclusive
control of the Common Areas.  Landlord shall have the right, without the same
constituting an actual or constructive eviction and without entitling Tenant to
any reduction in or abatement of rent, to: (i) temporarily close any part of the
Common Areas to whatever extent required in the opinion of Landlord's counsel to
prevent a dedication thereof or the accrual of any prescriptive rights therein:
(ii) temporarily close all or any part of the Common Areas to perform
maintenance or for any other reason deemed sufficient by Landlord; (iii) change
the shape, size, location of driveways, entrances, exits, parking spaces,
parking areas sidewalks, directional or locator signs, or the direction of the
flow of traffic, and (iv) to make additions to the Common Areas including,
without limitation, the construction of parking structures.  Landlord shall have
the right to change the name or address of the Building.  Tenant, in its use of
the Common Areas, shall keep he Common Areas free and clear of all obstructions
created or permitted by Tenant.  If, in the opinion of Landlord, unauthorized
persons are using any of the Common Areas by reason of, or under claim of, the
express or implied authority or consent of Tenant, then Tenant, upon demand of
Landlord, shall restrain, to the fullest extent then allowed by Law, such
unauthorized use, and shall initiate  such appropriate proceedings as may be
required to so restrain such use.  Nothing contained herein shall affect the
right of Landlord at any time to remove any unauthorized person from the Common
Areas or to prohibit the use of the Common Areas by unauthorized persons,
including, without limitation, the right to prohibit mobile food and beverage
vendors.  in exercising any such right regarding the Common Areas, Landlord
shall make a reasonable effort to minimize any disruption to Tenant's business.

     4.11 ENVIRONMENTAL PROTECTION:  Landlord may voluntarily cooperate in a
reasonably manner with the efforts of all governmental agencies in reducing
actual or potential environmental damage.  Tenant shall not be entitled to
terminate this Lease or to any reduction in or abatement of rent by reason of
such compliance or cooperation.  Tenant agrees at  all times to cooperate fully
with Landlord and to abide by all rules and regulations and requirements which
Landlord may reasonably prescribe in order to comply with the requirements and
recommendations of governmental agencies regulating, or otherwise involved in,
the protection of the environment.  See Addendum Paragraph 4.12.

     4.12 OUTSIDE AREAS:  No materials, pallets, supplies, tanks or containers
whether above or below ground level, equipment, finished products or semi-
finished products, raw materials, inoperable vehicles or articles of any nature
shall be stored upon or permitted to remain outside of the Leased Premises
expect in fully fenced and screened areas outside the

                                       9
<PAGE>

Building which have been designated for such purpose and have been approved in
writing by landlord for such use by Tenant.

     4.14 HAZARDOUS MATERIALS:  Landlord and Tenant agree as follows with
respect to the existence or use of Hazardous Materials on the Property:

          A.   Any handling, transportation, storage, treatment, disposal or use
of Hazardous Materials by Tenant, Tenant's Agents, or any other party after the
Effective Date of this Lease in or about the Property shall strictly comply with
all applicable Hazardous Materials Laws.  Tenant shall indemnify, defend upon
demand with counsel reasonably acceptable to Landlord, and hold harmless
Landlord from and against any and all liabilities, losses, claims, damages, lost
profits, consequential damages, interests, penalties, fines, court costs,
remediation costs, investigation costs, and other expenses which result from or
arise in any manner whatsoever out of the use, storage, treatment,
transportation, release, or disposal of Hazardous Materials on or about the
Property by tenant, Tenant's Agents, Permitees, or Invitees after the Effective
Date.

          B.   If the presence of Hazardous Materials on the Property caused or
permitted by Tenant, Tenant's Agents, Permittees, or Invitees after the
Effective Date of this Lease results in contamination or deterioration of water
or soil or any other part of the Property, then Tenant shall promptly take any
and all action necessary or investigate and premeditate such contamination.
Tenant shall further be solely responsible for, and shall defend, indemnify and
hold Landlord and its agents harmless from and against all claims, costs and
liabilities, including attorney's fees and costs, arising out of or in
connection with any investigation and remediation (including investigative
analysis, removal, cleanup, and/or restoration work) required hereunder to
return the Leased Premises, Building, Common Areas, Outside Areas, and/or
Property and any other property of whatever nature to their condition existing
prior to the appearance of such Hazardous Materials.

          C.   Landlord and Tenant shall each give written notice to the other
as soon as reasonably practicable of (i) any communication received from any
governmental authority concerning Hazardous Materials which relates to the
Property, and (ii) any contamination or the Property by Hazardous Materials
which constitutes a violation of any Hazardous Materials Law.  Tenant
acknowledges that Landlord, as the owner of the Property, at Landlord, as the
owner of the Property, at Landlord's election, shall have the sole right at
Tenant's expense to negotiate, defend, approve, and/or appeal any action taken
or order issued with regard to Hazardous Materials by any applicable
governmental authority.  Tenant may use small quantities of household chemicals
such as adhesive, lubricants, and cleaning fluids in order to conduct its
business at the Premises and such other Hazardous materials as are necessary to
the operation of Tenant's business of which Landlord receives notice prior to
such Hazardous Materials being brought onto the Property (or any portion
thereof) and which Landlord consents in writing may be brought onto the
Property.  In granting Landlord's consent, Landlord may specify the location and
manner of use, storage, or handling of any Hazardous Material.  Landlord's
consent shall in no way relieve Tenant from any of its obligations as contained
herein.  Tenant shall notify Landlord in writing at least ten (10) days prior to
the first appearance of any Hazardous Material on the Leased Premises, Building,
Common Areas, Outside Areas, and/or Property.  Tenant shall provide Landlord
with a list of all Hazardous Materials and the quantities of each Hazardous

                                      10
<PAGE>

Material to be stored, or used, on any portion of the Property, and upon
Landlord's request Tenant shall provide Landlord with copies of any and all
hazardous materials Management Plans, Material Safety Data Sheets, Hazardous
Waste Manifests, and other documentation maintained or received by Tenant
pertaining to the Hazardous Materials used, stored, or transported on any
portion of the Property.  At any time during the Lease Term, Tenant shall,
within five days after written request therefore received from Landlord,
disclose in writing all Hazardous Materials that are being used by Tenant on the
Property (or have been used on the Property), the nature of such use, and the
manner of storage and disposal.

          D.   Landlord may cause testing wells to be installed on the Property
and may cause the ground water to be tested to detect the presence of Hazardous
Material by the use of such tests as are then customarily used for such
purposes.  If Tenant so requests, Landlord shall supply Tenant with copies of
such test results.  The cost of such tests and of the installation, maintenance,
repair and replacement of such wells shall be paid by Tenant if such tests
disclose the existence of facts which give rise to liability of Tenant pursuant
to its indemnity given in A and/or B above.  Landlord may retain consultants to
inspect the Property, conduct periodic environmental audits, and review any
information provided by Tenant.  Tenant shall pay the reasonable cost of fees
charged by Landlord and/or Landlord's consultants as a Project maintenance Cost.

          E.   Upon the expiration or earlier termination of the Lease, Tenant,
at its sole cost shall remove all Hazardous Materials from the Property and
shall provide a certificate to Landlord from a registered consultant
satisfactory to Landlord, certifying that Tenant has caused no contamination of
building9s), soil or groundwater in or about the Leased Premises, Building,
Common Areas, Outside Areas, or Property.  If Tenant fails to so surrender the
Property, Tenant shall indemnify and hold Landlord harmless from all damages
resulting from Tenant's failure to surrender the Property as required by this
Subsection, including without limitation, any claims or damages in connection
with the condition of the Property including, without limitation, damages
occasioned by the inability to Lease the Property (or any portion thereof) or a
reduction in the fair market and/or rental value of the Property, Building,
Common Areas, Outside Areas, and/or Property by reason of the existence of any
Hazardous Materials in or around the Leased Premises, Building, Common Areas,
Outside Areas, and/or Property.  If any action is required to be taken by a
governmental authority to test, monitor, and/or clean up Hazardous Materials
from the Leased Premises, Building, Common Areas, Outside Areas, and/or Property
and such action is not completed prior to the expiration or earlier termination
of the Lease, Tenant shall be deemed to have impermissibly held over until such
time as required action is completed, and Tenant shall pay Base Monthly Rent and
Additional Rent in accordance with the terms of Section 13.2 (Holding Over).  In
addition, Landlord shall be entitled to all damages directly or indirectly
incurred in connection with such holding over, including without limitation,
damages occasioned by the inability to Lease the Property or a reduction of the
fair market and/or rental value of the Leased Premises, Building, Common Areas,
Outside Areas, and/or Property.

     F.   As used herein, the term "Hazardous Materials(s)" means any hazardous
or toxic substance, material or waste, which is or becomes regulated by any
federal, state, regional or local governmental authority because it is in any
way hazardous, toxic, carcinogenic, mutagenic or otherwise adversely affects any
part of the environment or creates risks of any such hazards or effects,
including, but not limited to, petroleum; asbestos, and polychlorinated bipheyls
and any

                                      11
<PAGE>

material, substance, or waste (a) defined as a "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); (b) 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); (c) defined as a "hazardous material," "hazardous substance" or
"hazardous waste" under Section 25501 of the California Health and Safety Code,
Division 20, Chapter 6.98 (Hazardous Materials Release Response Plans and
Inventory); (d) 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); (e) defined as a "hazardous substance" pursuant to
Section 311 of the Clean Water Act, 33 United States Code Sections 1251 et seq.
                                                                        -- ---
(33 U.S.C. 1321) or listed pursuant to Section 307 of the Clean Water Act (33
U.S.C. 1317); (f) defined as a "hazardous waste" pursuant to Section 1004 of the
Resource Conservation and Recovery Act, 42 United States Code Section 6901 et
                                                                           --
seq. (42 U.S.C. 6903); or (g) defined as a "hazardous substance" pursuant to
---
Section 101 of the Comprehensive Environmental Response, Compensation, and
Liability Act, 42 United States Code Section 9601 et seq. (41 U.S.C. 9601) or
                                                  -- ---
(h) defined as a "hazardous substance" pursuant to Section 311 of the Federal
Water Pollution Control Act, 33 U.S.C. 1251 et seq. or (i) listed pursuant to
                                            -- ---
Section 307 of the Federal Water Pollution Control Act (33 U.S.C. 1317) or (j)
regulated under the Toxic Substances Control Act (15 U.S.C. 2601 et seq.) or (k)
                                                                 -- ---
defined as a "hazardous material" under Section 66680 or 66084 of Title 22 of
the California Code of Regulations (Administrative Code) (l) listed in the
United States Department of Transportation Hazardous Materials Table (49 C.F.R.
172.101) or (m) listed by the Environmental Protection Agency as "hazardous
substances" (40 C.F.R. Part 302) and amendments thereto. The term "Hazardous
Material Laws" shall mean (i) all the foregoing laws as amended form time to
time and (ii) any other federal, state, or local law, ordinance, regulation, or
order regulating Hazardous Materials.

     G.   Tenant's failure to comply with any of the requirements of this
Section regarding the storage, use, disposal or transportation of Hazardous
Materials, or the appearance of any Hazardous Materials on the Leased Premises,
Building, Common Area, Outside Area, and/or the Property without Landlord's
consent shall be an Event of Default as defined in this Lease.  The obligations
of Landlord and Tenant under this Section shall survive the expiration or
earlier termination of the Lease Term.  The rights and obligations of Landlord
and Tenant within respect to issues relating to Hazardous Materials are
exclusively established by this section.  In the event of any inconsistency
between any other part of this Lease and this Section, the terms of this Section
shall control.

                                   ARTICLE 5
                 REPAIRS, MAINTENANCE, SERVICES AND UTILITIES

     5.1  REPAIR AND MAINTENANCE:  Except in the case of damage to or
destruction of the Leased Premises, the Building or the Project caused by an Cat
of God or other peril, in which case the provisions of Article 10 shall control,
the parties shall have the following obligations and responsibilities with
respect to the repair and maintenance of the Leased Premises, the Building and
the Common Areas.  See Addendum Paragraph 5.1.

                                      12
<PAGE>

          A.   Tenants Obligation:  Tenant shall, at all times during the Lease
Term and at its sole cost and expense, regularly clean and continuously keep and
maintain in good order, condition and repair the Leased Premises and every part
thereof and all appurtenances thereto, including, without limiting the
generality of the foregoing, (i) all interior walls, floors and ceilings, (ii)
all windows, doors and skylights, (iii) all electrical wiring, conduits,
connectors and fixtures, (iv) all plumbing, pipes, sinks, toilets, faucets and
drains, (v) all lighting fixtures, bulbs and lamps, (vi) all heating,
ventilating and air conditioning equipment located within the Leased Premises or
located outside the Leased premises (e.g. rooftop compressors) and serving the
Leased Premises (_____________________ defined in Subarticle B below), and (vii)
all entranceways to the Leased Premises, Tenant, if requested to do so by
Landlord, shall hire, at Tenant's sole cost and expense, a licensed heating,
ventilating and air conditioning contractor to regularly, and periodically
inspect (not less frequently than every three months) and perform required
maintenance on the heating, ventilating and air conditioning equipment and
systems serving the Leased Premises, or alternatively, Landlord may, at its
election, contract in its own name for such regular and periodic inspections of
and maintenance on such heating, ventilating and air conditioning equipment and
systems and charge to Tenant, as Additional Rent, the cost thereof.  Subject to
Section 9.2 of this Lease, Tenant shall, at its sole cost and expense, repair
all damage to the Building, the Common Areas or the Project caused by the
activities of Tenant, its employees, invitees or contractors promptly following
written notice from Landlord to so repair such damage, provided that Landlord
shall make available to Tenant any insurance proceeds (if any) available for
said repairs.  If Tenant shall fail to perform the required maintenance or fail
to make repairs required of it pursuant to this Article within a reasonable
period of time following notice from Landlord to do so, then Landlord may, at
its election and without waiving any other remedy it may otherwise have under
this Lease or at Law, perform such maintenance or make such repairs and charge
to Tenant, as Additional Rent, the costs so incurred by Landlord for same.  All
glass within or a part of the Leased Premises, both interior and exterior, is at
the sole risk of Tenant and any broken glass shall promptly be replaced by
Tenant at Tenant's expense with glass of the same kind, size and quality.

          B.   Landlord's Obligation:  Landlord shall, at all times during the
Lease Term, maintain in good condition and repair:  (i) the exterior and
structural parts of the Building (including the foundation, subflooring, load-
bearing and exterior walls, and roof); (ii) the Common Areas; and (iii) the
electrical and plumbing systems located outside the Leased Premises which
service the Building.  Additionally, to the extent that the Building contains
central heating, ventilating and/or air conditioning systems located outside the
Leased Premises which are designed to service, and are then servicing, more than
a single tenant within the Building ("Common HVAC"), Landlord shall maintain in
good operating condition and repair such Common HVAC equipment and systems.  The
provisions of this Subarticle B shall in no way limit the right of Landlord to
charge to tenants of the Project, as Additional Rent pursuant to Article 3, the
costs incurred by Landlord in making such repairs and/or performing such
maintenance.

     5.2  SERVICES AND UTILITIES:  The parties shall have the following
responsibilities and obligations with respect to obtaining and paying the cost
of providing the following utilities and other services to the Leased Premises.

                                      13
<PAGE>

          A.   Gas and Electricity.  Tenant shall arrange, at its sole cost and
expense and in its own name, for the supply of gas and electricity to the Leased
Premises.  In the event that such services are not separately metered, Tenant
shall, at its sole expense, cause such meters to be installed.  Tenant shall be
responsible for determining if the local supplier of gas and/or electricity can
supply the needs of Tenant and whether or not the existing gas and/or electrical
distribution systems within the Building and the Leased Premises are adequate
for Tenant's needs.  Tenant shall pay all charges for gas and electricity as so
supplied to the Leased Premises.

          B.   Water:  Landlord shall provide the Leased Premises with water for
lavatory and drinking purposes only.  Tenant shall pay, as Additional Rent, the
cost to Landlord of providing water to the Leased Premises.  In the event
Landlord believes that Tenant is using more water than what normally would be
required for lavatory and drinking purposes, Landlord at its election may (i)
periodically charge Tenant, as Additional Rent, a sum equal to Landlord's
estimate of the cost of Tenant's excess water usage or (ii) install (or require
Tenant to install at Tenant's sole cost) a separate meter for purposes of
measuring Tenant's water usage and, based upon such meter readings, periodically
charge Tenant, as Additional Rent, a sum equal to Landlord's estimate of the
cost of Tenant's excess water usage.  In the event that Landlord shall so
install such a separate meter, Tenant shall pay to Landlord, upon demand, the
costs incurred by Landlord in purchasing and installing such meter and
thereafter all costs incurred by Landlord in maintaining said meter.  The cost
of Tenant's water usage shall include any costs to Landlord in keeping account
of such usage and all governmental fees, public charges or the like attributable
to or based upon (such as sewer usage fees) the use of water to the extent of
such usage.

          C.   Security Service:  Tenant acknowledges that Landlord is not
responsible for the security of the Leased Premises or the protection of
Tenant's property or Tenant's employees, invitees or contractors, and that to
the extent Tenant determines that such security or protection services are
advisable or necessary, Tenant shall arrange for and pay the costs of providing
same.

          D.   Trash Disposal:  Tenant acknowledges that Landlord is not
responsible for the disposal of Tenant's waste, garbage or trash and that Tenant
shall arrange, in its own name and at its sole cost, for the regular and
periodic removal of such waste, garbage or trash from the Leased Premises.  In
no event shall Landlord be required to provide trash bins for the disposal of
Tenant's waste, garbage or trash.

     5.3  ENERGY AND RESOURCE CONSUMPTION:  Landlord may voluntarily cooperate
in a reasonable manner with the efforts of governmental agencies and/or utility
suppliers in reducing energy or other resource consumption within the Project.
Tenant shall not be entitled to terminate this Lease or to any reduction in or
abatement of rent by reason of such compliance or cooperation.  Tenant agrees at
all times to cooperate fully with Landlord and to abide by all reasonable rules
established by Landlord (i) in order to maximize the efficient operation of the
electrical, heating, ventilating and air conditioning systems and all other
energy or other resource consumption systems within the Project and/or (ii) in
order to comply with the requirements and recommendations of utility suppliers
and governmental agencies regulating the consumption of energy and/or other
resources.  See Addendum Paragraph 5.4.

                                      14
<PAGE>

     5.4  LIMITATION OF LANDLORD'S LIABILITY:  Landlord shall not be liable to
Tenant for injury to Tenant, its employees, agents, invitees or contractors,
damage to Tenant's property or loss of Tenant's business or profits, nor shall
Tenant be entitled to terminate this Lease or to any reduction in or abatement
of rent by reason of (i) Landlord's failure to perform any maintenance or
repairs to the Project until Tenant shall have first notified Landlord, in
writing, of the need for such maintenance or repairs, and then only after
Landlord shall have had a reasonable period of time following its receipt of
such notice within which to perform such maintenance or repairs, or (ii) any
failure, interruption, rationing or other curtailment in the supply of water,
electric current, gas or other utility service to the Leased Premises, the
Building or the Project from whatever cause (other than Landlord's active
negligence or willful misconduct), or (iii) the unauthorized intrusion or entry
into the Leased Premises by third parties (other than Landlord).  See Addendum
Paragraph 5.5.

                                   ARTICLE 6
                         ALTERATIONS AND IMPROVEMENTS

     6.1  BY TENANT:  Tenant shall not make any alterations to or modifications
of the Leased Premises or construct any improvements to or within the Leased
Premises without Landlord's prior written approval, and then not until Landlord
shall have first approved, in writing, the plans and specifications therefore,
which approval shall not be unreasonably withheld.  All such modifications,
alterations or improvements, once so approved, shall be made, constructed or
installed by Tenant at Tenant's expense, using a licensed contractor first
approved by Landlord, in substantial compliance with the Landlord-approved plans
and specifications therefore.  All work undertaken by Tenant shall be done in
accordance with all Laws and in a good and workmanlike manner using new
materials of good quality.  Tenant shall not commence the making of any such
modifications or alterations or the construction of any such improvements until
(i) all required governmental approvals and permits shall have been obtained,
(ii) all requirements regarding insurance imposed by this Lease have been
satisfied, (iii) Tenant shall have given Landlord at least five business days
prior written notice of its intention to commence such work so that Landlord may
post and file notices of non-responsibility, and (iv) if requested by Landlord,
Tenant shall have obtained contingent liability and broad form builder's risk
insurance in an amount satisfactory to Landlord to cover any perils relating to
the proposed work not covered by insurance carried by Tenant pursuant to Article
9.  In no event shall Tenant make any modifications, alterations or improvements
to the Common Areas or any areas outside of the Leased Premises.  As used in
this Article, the term "modifications, alterations and/or improvements" shall
include, without limitation, the installation of additional electrical outlets,
overhead lighting fixtures, drains, sinks, partitions, doorways or the like.
See Addendum Paragraph 6.1.

     6.2  OWNERSHIP OF IMPROVEMENTS:  All modifications, alterations or
improvements made or added to the Leased Premises by Tenant (other than Tenant's
inventory, equipment, movable furniture, wall decorations and trade fixtures)
shall be deemed real property and a part of the Leased Premises, but shall
remain the property of Tenant during the Lease Term.  Any such modifications,
alterations or improvements, once completed, shall not be altered or removed
from the Leased Premises during the Lease Term without Landlord's written
approval first obtained in accordance with the provisions of Article 6.1 above.
At the expiration or sooner termination of the Lease, all such modifications,
alterations and improvements (other

                                      15
<PAGE>

than Tenant's inventory, equipment, movable furniture, wall decorations and
trade fixtures) if not removed by Tenant shall automatically become the property
of Landlord and shall be surrendered to Landlord as a part of the Leased Premise
as required pursuant to Article 2, unless Landlord shall require Tenant to
remove any of such modifications, alterations or improvements in accordance with
the provisions of Article 2, in which case Tenant shall so remove same. Landlord
shall have no obligation to reimburse to Tenant all or any portion of the cost
or value of any such modifications, alterations or improvements so surrendered
to Landlord. All modifications, alterations or improvements which are installed
or constructed on or attached to the Leased Premises by Landlord at Landlord's
expense shall be deemed real property, and a part of the Leased Premises and
shall be the property of Landlord. All lighting, plumbing, electrical, heating,
ventilating and air conditioning fixtures, partitioning, window coverings, wall
coverings and floor coverings installed by Tenant shall be deemed improvements
to the Leased Premises and not trade fixtures of Tenant. See Addendum Paragraphs
2.6 and 6.2.

     6.3  ALTERATIONS:  Tenant may remove its trade fixtures and leasehold
improvement constructed by Tenant at its expense.  At its sole cost, Tenant
shall make all modifications, alterations and improvements to the Leased
Premises that are required by any Law because of (i) Tenant's use or occupancy
of the Leased Premises, the Building, the Outside Areas, or the Property, (ii)
Tenant's application for any permit or governmental approval, or (iii) Tenant's
making of any modifications, alterations or improvements to or within the Leased
Premises.  If Landlord shall, at any time during the Lease Term, (i) be required
by any governmental authority to make any modifications, alterations or
improvements to the Building or the Project, (ii) modify the existing (or
construct additional) capital improvements or provide building service equipment
for the purpose of reducing the consumption of utility services or project
maintenance costs for the property, the cost incurred by Landlord in making such
modifications, alterations or improvements, interest at a rate equal to
____________ quoted by Wells Fargo Bank, N.T. & S.A. from time to time as its
prime rate (2%) ("Wells Prime Plus Two"), cost of money factor, shall be
amortized by Landlord over the useful life of such modifications, alterations or
improvements, as determined in accordance with generally accepted accounting
standards, and the monthly amortized cost of such modifications, alterations and
improvements as so amortized shall be considered a Project Maintenance Cost.

     6.4  LIENS:  Tenant shall keep the Leased Premises, the Building and the
Property free from any liens and shall pay when due all bills arising out of any
work performed, materials furnished, or obligations incurred by Tenant, its
agents, employees or contractors relating to the Leased Premises.  If any such
claim of lien is recorded against Tenant's interest in this Lease, the Leased
Premises, the Building or the Project, Tenant shall bond against, discharge or
otherwise cause such lien to be entirely released within ten days after receipt
of written notice from Landlord.

                                   ARTICLE 7
                      ASSIGNMENT AND SUBLETTING BY TENANT

     7.1  BY TENANT:  Tenant shall not sublet the Leased Premises (or any
portion which shall not be unreasonably withheld thereof) or assign or encumber
its interest in this Lease, whether voluntarily or by operation of Law, without
Landlord's prior written consent first obtained in accordance with the
provisions of this Article 7.  Any attempted subletting,

                                      16
<PAGE>

assignment or encumbrance without Landlord's prior written consent, at
Landlord's election, shall constitute a default by Tenant under the terms of
this Lease. The acceptance of rent by Landlord from any person or entity other
than Tenant, or the acceptance of rent by Landlord from Tenant with knowledge of
a violation of the provisions of this Article, shall not be deemed to be a
waiver by Landlord of any provision of this Article or this Lease or to be a
consent to any subletting by Tenant or any assignment or encumbrance of Tenant's
interest in this Lease. See Addendum Paragraph 7.1.

     7.2  MERGER OR REORGANIZATION:  If Tenant is a corporation, any
dissolution, merger, consolidation or other reorganization of Tenant, or the
sale or other transfer in the aggregate over the Lease Term of a controlling
percentage of the capital stock of Tenant, shall be deemed a voluntary
assignment of Tenant's interest in this Lease.  The phrase "controlling
percentage" means the ownership of and the right to vote stock possessing more
than fifty percent of the total combined voting power of all classes of Tenant's
capital stock issued, outstanding and entitled to vote for the election of
directors.  If Tenant is a partnership, a withdrawal or change, whether
voluntary, involuntary or by operation of Law, of any general partner, or the
dissolution of the partnership, shall be deemed a voluntary assignment of
Tenant's interest in this Lease.  See Addendum Paragraph 7.2.

     7.3  LANDLORD'S ELECTION:  If Tenant shall desire to assign its interest
under this Lease or to sublet the Leased Premises.  Tenant must first notify
Landlord, in writing, of its intent to so assign or sublet, at least fifteen
(15) days in advance of the date it intends to so assign its interest in this
Lease or sublet the Leased Premises but not sooner than one hundred eighty days
in advance of such date, specifying in detail the terms of such proposed
assignment or subletting, including the name of the proposed assignee or
sublessee, the proposed assignee's or Sublessee's intended use of the Leased
Premises, a current financial statement of such proposed assignee or sublessee
and the form of documents to be used in effectuating such assignment or
subletting.  Landlord shall have a period of ten (10) days following receipt of
such notice within which to do one of the following:  (i) on the condition that
the proposed Transferee immediately enter into a direct lease of the Leased
Premises with Landlord (or, in the case of a partial sublease, a lease for the
portion proposed to be so sublet) on the same terms and conditions contained in
Tenant's notice, or (ii) so that Landlord is thereafter free to lease the Leased
Premises (or, in the case of a partial sublease, the portion proposed to be so
sublet) to whomever it pleases on whatever terms are acceptable to Landlord.  In
the event Landlord elects to so terminate this Lease, then (i) if such
termination is conditioned upon the execution of a lease between Landlord and
the proposed Transferee, Tenant's obligations under this Lease shall not be
terminated until such Transferee executes a new lease with Landlord, enters into
possession, and commences the payment of rent, and (ii) if Landlord elects
simply to terminate this Lease (or, in the case of a partial sublease, terminate
this Lease as to the portion to be so sublet), the Lease shall so terminate in
its entirety (or as to the space to be so sublet) fifteen (15) days after
Landlord has notified Tenant in writing of such election.  In the case of a
partial termination of the Lease, the Base Monthly Rent and Tenant's
proportionate share shall be reduced to an amount which bears the same
relationship to the original amount thereof as the area of that part of the
Leased Premises which remains subject to the Lease bears to the original area of
the Leased Premises.  Landlord and Tenant shall execute a cancellation agreement
with respect to the Lease to effect such termination or partial termination, or
(b) if Landlord shall not have elected to cancel and terminate this Lease, to
either (i) consent to such requested assignment or

                                      17
<PAGE>

subletting subject to Tenant's compliance with the conditions set forth in
Article 7.4 below or (ii) refuse to so consent to such requested assignment or
subletting, provided that such consent shall not be unreasonably refused. It
shall not be unreasonable for Landlord to withhold its consent to any proposed
assignment or subletting if (i) the proposed assignee's or subtenant's
anticipated use of the Premises involves the storage, use or disposal of a
Hazardous Material; (ii) if the proposed assignee or subtenant has been required
by any prior landlord, lender or governmental authority to clean up Hazardous
Materials unlawfully discharged by the proposed assignee or subtenant; or (iii)
if the proposed assignee or subtenant is subject to investigation or enforcement
order or proceeding by any governmental authority in connection with the use,
disposal or storage of a Hazardous Material. During such ten (10) business day
period, Tenant covenants and agrees to supply to Landlord, upon request, all
necessary or relevant information which Landlord may reasonably request
respecting such proposed assignment or subletting and/or the proposed assignee
or sublessee.

     7.4  CONDITIONS TO LANDLORD'S CONSENT.  If Landlord elects to consent, or
shall have been ordered to so consent by a court of competent jurisdiction, to
such requested assignment, subletting or encumbrance, such consent shall be
expressly conditioned upon the occurrence of each of the conditions below set
forth, and any purported assignment, subletting or encumbrance made or ordered
prior to the full and complete satisfaction of each of the following conditions
shall be void and, at the election of the Landlord, which election may be
exercised at any time following such a purported assignment, subletting or
encumbrance but prior to the satisfaction of each of the stated conditions,
shall constitute a material default by Tenant under this Lease giving Landlord
the absolute right to terminate this Lease unless such default is promptly cured
by satisfying in full each such condition by the assignee, sublessee or
encumbrances.  The conditions are as follows:  See Addendum Paragraph 7.4.

          A.   Landlord having approved in form and substance the assignment or
sublease agreement (or the encumbrance agreement), which approval shall not be
unreasonably withheld by Landlord if the requirements of this Article 7 are
otherwise complied with.

          B.   Each such sublessee or assignee having agreed, in writing
satisfactory to Landlord and its counsel and for the benefit of Landlord, to
assume, to be bound by, and to perform the obligations of this Lease to be
performed by Tenant (or, in the case of an encumbrance, each such encumbrancer
having similarly agreed to assume, be bound by and to perform Tenant's
obligations upon a foreclosure or transfer in lieu thereof), which relate to
space their subleased.

          C.   Tenant having reimbursed to Landlord all reasonable costs and
reasonable attorneys fees incurred by Landlord in conjunction with the
processing and documentation of any such requested subletting, assignment or
encumbrance.

          D.   Tenant having delivered to Landlord a complete a fully-executed
duplicate original of such sublease agreement, assignment agreement or
encumbrance (as applicable) and all related agreements.

          E.   Tenant having paid, or having agreed in writing to pay as to
future payments, to Landlord fifty (50%) percent of all assignment consideration
or excess rentals to be

                                      18
<PAGE>

paid to Tenant or to any other on Tenant's behalf or for Tenant's benefit for
such assignment or subletting as follows:

               (1)  If Tenant assigns its interest under the Lease and if all or
a portion of the consideration for such assignment is to be paid by the assignee
at the time of the assignment, that Tenant shall have paid to Landlord and
Landlord shall have received an amount equal to fifty (50%) percent of the
assignment consideration so paid or to be paid whichever is the greater) at the
time of the assignment by the assignee; or

               (2)  If Tenant assigns its interest under this Lease and if
Tenant is to receive all or a portion of the consideration for such assignment
in future installments, that Tenant and Tenant's assignee shall have entered
into a written agreement with and for the benefit of Landlord satisfactory to
Landlord and its counsel whereby Tenant and Tenant's assignee jointly agree to
pay to Landlord an amount equal to fifty (50%) percent of all such future
assignment consideration installments to be paid by such assignee as and when
such assignment consideration is so paid.

               (3)  If Tenant subleases the Leased Premises, that Tenant and
Tenant's sublessee shall have entered into a written agreement with and for the
benefit of Landlord satisfactory to landlord and its counsel whereby Tenant and
Tenant's sublessee jointly agree to pay to Landlord fifty (50%) percent of all
excess rentals to be paid by such sublessee as and when such excess rentals are
so paid.

     7.5  ....:  this Article, the term "assignment consideration" shall mean
all consideration to be paid by the assignee to Tenant or to any other on
Tenant's behalf or for Tenant's benefit as consideration for such assignment,
less any commissions paid by Tenant to a licensed real estate broker for
arranging such assignment (not to exceed then standard rates), and the term
"excess rentals" shall mean all consideration to be paid by the sublessee to
Tenant or to any other on Tenant's behalf or for Tenant's benefit for the
sublease of the Leased Premises in excess of the rent due Landlord under the
terms of this Lease for the same period, less any commissions paid by Tenant to
a licensed real estate broker for arranging such sublease (not to exceed then
standard rates).  Tenant agrees that the portion of any assignment consideration
and/or excess rentals arising from and assignment or subletting by Tenant which
is to be paid to Landlord pursuant to this Article now is and shall then be the
property of Landlord and not the property of Tenant.  See Addendum Paragraph 7.2
and Paragraph 7.5.

     7.6  PAYMENTS:  All payments required by this Article to be made to
Landlord shall be made in cash in full as and when they become due.  At the time
Tenant, Tenant's assignee or sublessee makes each such payment to Landlord,
Tenant or Tenant's assignee or sublessee, as the case may be, shall deliver to
Landlord an itemized statement in reasonable detail showing the method by which
the amount due Landlord was calculated and certified by the party making such
payment as true and correct.

     7.7  GOOD FAITH:  The rights granted to Tenant by this Article are granted
in consideration of Tenant's express covenant that all pertinent allocations
which are made by Tenant between the rental value of the Leased Premises and the
value of any of Tenant's personal property which may be conveyed or leased
concurrently with and which may

                                      19
<PAGE>

reasonably be considered a part of the same transaction as the permitted
assignment or subletting shall be made fairly, honestly and in good faith. If
Tenant shall breach this Covenant of Good Faith, Landlord may immediately
declare Tenant to be in default under the terms of this Lease and terminate this
Lease and/or exercise any other rights and remedies Landlord would have under
the terms of this Lease in the case of a material default by Tenant under this
Lease.

     7.8  EFFECT OF LANDLORD'S CONSENT:  No subletting, assignment or
encumbrance, even with the consent of Landlord, shall relieve Tenant of its
personal and primary obligation to pay rent and to perform all of the
obligations to be performed by Tenant hereunder.  Consent by Landlord to one or
more assignments or encumbrances of Tenant's interest in this Lease or to one or
more sublettings of the Leased Premises shall not be deemed to be a consent to
any subsequent assignment, encumbrance or subletting.  If Landlord shall have
been ordered by a court of competent jurisdiction to consent to a requested
assignment or subletting, or such an assignment or subletting shall have been
ordered over the objection of Landlord, such assignment or subletting shall not
be binding between the assignee (or sublessee) and Landlord until such time as
all conditions set forth in Article 7.4 above have been fully satisfied (to the
extent not then satisfied) by the assignee or sublessee, including, without
limitation, the payment to Landlord of all agreed assignment considerations
and/or excess rentals then due Landlord.

     7.9  PROHIBITED FINANCIAL TRANSACTIONS:  Tenant shall not, without
Landlord's consent, enter into or do any of the following acts if to do so would
result in Tenant having a net worth or net income after such action or event
that is less than Tenant's net worth and/or net income as of the date of this
Lease: (i) make any distribution or declare or pay any cash dividends on, or
purchase, acquire, redeem or retire any of its capital stock, of any class,
whether now or hereafter outstanding, (ii) acquire, merge, or consolidate with
or into any other business organization, (iii) make any changes in Tenant's
financial structure or (iv) borrow funds, pledge assets, or lease or sell
equipment or other property.  Landlord and Tenant understand and agree that the
value of the Leased Premises is influenced by Tenant that are not conducted in
the normal course of its business which would reduce Tenant's net worth and/or
net income and thereby would adversely effect the value of the Leased Premises.

                                   ARTICLE 8
               LIMITATION ON LANDLORD'S LIABILITY AND INDEMNITY

     8.1  LIMITATION ON LANDLORD'S LIABILITY AND RELEASE:  Landlord shall not be
liable to Tenant for, and Tenant hereby releases Landlord and its partners and
officers from, any and all liability, whether in contract, tort or on any other
basis, for any injury to or any damage sustained by Tenant, its agents,
employees, contractors or invitees; any damages to Tenant's property; or any
loss to Tenant's business, loss of Tenant's profits or other financial loss of
Tenant resulting from or attributable to the condition of, the management of,
the maintenance of, or the protection of the Leased Premises, the Building, the
Project or the Common Areas, including, without limitation, any such injury,
damage or loss resulting from (i) the failure, interruption, rationing or other
curtailment or cessation in the supply of electricity, water, gas or other
utility service to the Project, the Building or the Leased Premises: (ii) the
vandalism or forcible entry into the Building or the Leased Premises; (iii) the
penetration of water into or onto any portion of the Leased Premises through
roof leaks or otherwise; (iv) the failure to provide security and/or adequate
lighting in or about the Project, the Building or the

                                      20
<PAGE>

Leased Premises; (v) the existence of any design or construction defects within
the Project, the Building or the Leased Premises; (vi) the failure of any
mechanical systems to function properly (such as the HVAC systems); or (vii) the
blockage of access to any portion of the Project, the Building or the Leased
Premises, except to the extent such damage was proximately caused by the
Landlord's active negligence or willful misconduct, or Landlord's failure to
perform an obligation expressly undertaken pursuant to this Lease but only if
Tenant shall have given Landlord prior written notice to perform such obligation
and Landlord shall have failed to perform such obligation within a reasonable
period of time following receipt of written notice from Tenant to so perform
such obligation. In this regard, Tenant acknowledges that it is fully apprised
of the provisions of Law relating to releases, and particularly to those
provisions contained in Section 1542 of the California Civil Code which read as
follows: A general release does not extent to claims which the creditor does not
know or suspect to exist in his favor at the time of executing the release,
which if known by him must have materially affected his settlement with the
debtor. Notwithstanding such statutory provision, and for the purpose of
implementing a full and complete release and discharge, Tenant hereby (i) waives
the benefit of such statutory provision and (ii) acknowledges that, subject to
the exceptions specifically set forth herein, the release and discharge set
forth in this Article is a full and complete settlement and release and
discharge of all claims and is intended to include in its effect, without
limitation, all claims which Tenant, as of the date hereof, does not know of or
suspect to exist in its favor.

     8.2  TENANT'S INDEMNIFICATION OF LANDLORD:  Tenant shall defend, with
_______ ______ satisfactory to Landlord, any claims made or legal actions filed
or threatened by third parties against Landlord which result in the death,
bodily injury, personal injury, damage to property or interference with
contractual or other rights suffered by any third party, (including other
Tenants within the Project) which (i) occurred within the Leased Premises or
(ii) resulted from Tenant's use or occupancy of the Leased Premises or the
Common Areas or (iii) resulted from Tenant's activities in or about the Leased
Premises, the Building or the Project, and Tenant shall indemnify and hold
Landlord, Landlord's principals, employees and agents harmless from any loss
(including loss of rents by reason of vacant space which otherwise would have
been leased but for such activities), liabilities, penalties, or expense
whatsoever (including all legal fees incurred by Landlord with respect to
defending such claims) resulting therefrom, except to the extent proximately
cause by the active negligence or willful misconduct of Landlord.  This
indemnity agreement shall survive the expiration or sooner termination of this
Lease, provided that Tenant shall not be required to indemnify Landlord under
this section 8.2 with respect to events that first occur after the later of (a)
the date of the expiration, or sooner termination, of this Lease, or (b) the
date Tenant actually vacates the Premises, provided that Landlord has actual
notice of such vacation.  Tenant shall not be obligated to indemnify Landlord
against loss resulting from the negligence of Landlord or its agents, employees
or contractors.

                                   ARTICLE 9
                                   INSURANCE

     9.1  TENANT'S INSURANCE:  Tenant shall maintain insurance complying with
all of the following:

          A.   Tenant shall procure, pay for and keep in full force and effect,
at all times during the Lease Term, the following:

                                      21
<PAGE>

               (1)  Commercial General Liability insurance insuring Tenant
against liability for bodily injury, death, property damage and personal injury
occurring at the Leased Premises, or resulting from Tenant's use or occupancy of
the Leased Premises or the Building, Outside Areas, Property, or Common Areas or
resulting from Tenant's activities in or about the Leased Premises. Such
insurance shall be on an occurrence basis with a combined single limit of
liability of not less than the amount of Tenant's Required Liability Coverage
(as set forth in Article 1). The policy or policies shall be endorsed to name
Landlord and such others as are designated by Landlord as additional insured in
the form equivalent to CG20111185 or successor and shall contain the following
additional endorsement: "The insurance afforded to the additional insured is
primary insurance. If the additional insured have other insurance which is
applicable to the loss on a contributing, excess or contingent basis, the amount
of this insurance company's liability under this policy shall not be reduced by
the existence of such other insurance. Any insurance carried by the additional
insureds shall be excess and non contributing with the insurance provided by the
Tenant." The policy shall not canceled or reduced without at least 30 days
written notice to additional insureds. If the policy insurers more than one
location, it shall be endorsed to show that the limits and aggregate apply per
location using endorsement CG25041185 or successor. Tenant's policy shall also
contain the severability of interest and cross-liability endorsement or clauses.

               (2)  Fire and property damage insurance in so-called Special Form
plus earthquake and flood insuring Tenant against loss from physical damage to
Tenant's personal property, inventory, stock, trade fixtures and improvements
within the Leased Premises with coverage for the full actual replacement cost
thereof:

               (3)  Plate-glass insurance, at actual replacement cost;

               (4)  Boiler and Machinery insurance, if applicable;

               (5)  Liability insurance to cover sale or distribution of food
and beverages arising out of the distribution, sale, or consumption of food
and/or beverages including alcoholic beverages at the Leased Premises for not
less than the Tenant's Required Liability Coverage as set forth in Article1;

               (6)  Workers' compensation insurance and any other employee
benefit insurance sufficient to comply with all Laws which policy shall be
endorsed to provide thirty (30) days written notice of cancellation to Landlord;

               (7)  With respect to making alterations or the construction of
improvements or the like undertaken by Tenant, contingent liability and
builder's risk insurance, in an amount and with coverage satisfactory to
Landlord;

               (8)  Business Income Insurance at a minimum of 50% co-insurance
including coverage for loss of business income due to damage to equipment from
perils covered under the so-called Special Form plus perils of earthquake and
flood; and

               (9)  Comprehensive Auto Liability insurance with a combined
single limit coverage of not less than the amount of Tenant's Required Liability
Coverage (as set forth in Article 1) for bodily injury and/or property damage
liability for: a) Owned autos; b) Hired or

                                      22
<PAGE>

borrowed autos; c) Non-owned autos; d) Auto blanket contractual form CA0029. The
policy shall be endorsed to provide 30 days written notice of cancellation to
Landlord.

          B.   Each policy of liability insurance required to be carried by
Tenant pursuant to this Article or actually carried by Tenant with respect to
the Leased Premises or the Property (i) shall be in a form satisfactory to
Landlord, (ii) shall be provided by carriers admitted to do business in the
state of California, with a Best rating of "A/VI" or better and/or acceptable to
Landlord. Property insurance shall contain a waiver and/or a permission to waive
by the insurer any right of subrogation against Landlord, its principals,
employees, agents and contractors which might arise by reason of any payment
under such policy or by reason of any act or omission of Landlord, its
principals, employees, agents or contractors.

          C.   Prior to the time Tenant or any of its contractors enters the
Leased Premises, Tenant shall deliver to the Landlord with respect to each
policy of insurance required to be carried by Tenant pursuant to this Article, a
certificate of the insurer certifying, in a form satisfactory to the Landlord,
that the policy has been issued and premium paid providing the coverage required
by this Article and containing the provisions herein.  Attached to such a
certificate shall be endorsements naming Landlord as additional insured, and
including the wording under primary insurance above.  With respect to each
renewal or replacement of any such insurance, the requirements of this Article
must be complied with not less than 30 days prior to the expiration or
cancellation of the policy being renewed or replaced.  Landlord may at any time
and from time-to-time inspect and/or copy any and all insurance policies
required to be carried by Tenant pursuant to this article.  If Landlord's
lender, insurance broker or advisor or counsel reasonably determines at any time
that the form or amount of coverage set forth in Article 9.1(A) for any policy
of insurance Tenant is required to carry pursuant to this Article is not
adequate, then Tenant shall increase the amount of coverage for such insurance
to such greater amount or change the form as Landlord's lender, insurance broker
or advisor or counsel reasonably deems adequate (provided however such increase
level of coverage may not exceed the level of coverage for such insurance
commonly carried by comparable businesses similarly situated and operating under
similar circumstances).

          D.   The Commercial General Liability insurance carried by Tenant
shall specifically insure the performance by Tenant of the Indemnification
provisions set forth in Article 8.2 of this lease provided, however, nothing
contained in this Article 9 shall be construed to limit the liability of Tenant
under the Indemnification provisions set forth in said Article 8.2.

     9.2  LANDLORD'S INSURANCE:  With respect to insurance maintained by
Landlord:

          A.   Landlord shall maintain, as the minimum coverage required of it
by this Lease, property insurance in so-called "Special" form insuring Landlord
(and such others as Landlord may designate) against loss from physical damage to
the Building with coverage of not less than one hundred percent of the full
actual replacement cost thereof and against loss of rents for a period of not
less than twelve months.  Such property damage insurance, at Landlord's election
but without any requirement on Landlord's behalf to do so, (i) may be written in
so-called Special Form, excluding only those perils commonly excluded from such
coverage by Landlord's then property damage insurer; (ii) may provide coverage
for physical damage to the

                                      23
<PAGE>

improvements so insured for up to the entire full actual replacement cost
thereof; (iii) may be endorsed to include (or separate policies which may be
carried to cover) loss or damage caused by any additional perils against which
Landlord may elect to insure, including earthquake and/or flood; (iv) may
provide coverage for loss of rents for a period of up to twelve months; and/or
(v) may contain "deductibles" per occurrence in an amount reasonably acceptable
to Landlord. Landlord shall not be required to cause such insurance to cover any
of Tenant's personal property, inventory and trade fixtures, or any
modifications, alterations or improvements made or constructed by Tenant to or
within the Leased Premises.

          B.   Landlord shall maintain Commercial General Liability insurance
insuring Landlord (and such others as are designated by Landlord) against
liability for personal injury, bodily injury, death, and damage to property
occurring in, on or about, or resulting from the use or occupancy of the
Project, or any portion thereof, with combined single limit coverage of at least
Two Million Dollars.  Landlord may carry such greater coverage as Landlord or
Landlord's Lender, insurance broker or advisor or counsel may from time to time
determine is reasonably necessary for the adequate protection of Landlord and
the Project.

          C.   Landlord may maintain any other insurance which in the opinion of
its lender, insurance broker or advisor, or legal counsel is prudent to carry
under this given circumstances provided such insurance is commonly carried by
owners of property similarly situated and operation under similar circumstances,
and cost thereof is customarily paid by tenants pursuant to industrial triple
net leases.

     9.3  MUTUAL WAIVER OF SUBROGATION:  Landlord hereby releases Tenant, and
Tenant hereby releases Landlord and its respective partners and officers,
agents, employees and servants, from any and all liability for loss, damage or
injury to the property of the other in or about the Leased Premises which is
caused by or results from a peril or event or happening which would be covered
by insurance required to be carried under the terms of this Lease, or is covered
by insurance actually carried and in force at the time of the loss, by the party
sustaining such loss; provided, however, that such waiver shall be effective
only to the extent permitted by the insurance covering such loss and to the
extent such insurance is not prejudiced thereby.

                                  ARTICLE 10
                           DAMAGE TO LEASED PREMISES

     10.1 LANDLORD'S DUTY TO RESTORE:  If the Leased Premises are damaged by any
peril after the Effective Date of this Lease, Landlord shall restore the Leased
Premises, as and when required by this Article, unless this Lease is terminated
by Landlord pursuant to Article 10.2 or by Tenant pursuant to Article 10.3.  All
insurance proceeds available from the fire and property damage insurance carried
by Landlord shall be paid to and become the property of Landlord.  If this Lease
is terminated pursuant to either Article 10.2 and 10.3, all insurance proceeds
available from insurance carried by Tenant which cover loss to property that is
Landlord's property or would become Landlord's property on termination of this
Lease shall be paid to and become the property of Landlord, and the remainder of
such proceeds shall be paid to and become the property of Tenant. If this Lease
is not terminated pursuant to either Article 10.2 or 10.3, all insurance
proceeds available from insurance carried by Tenant which cover loss to property
that is Landlord's property shall be paid to and become the property of
Landlord, and

                                      24
<PAGE>

all proceeds available which cover loss to property which would become the
property of Landlord upon the termination of this Lease shall be paid to and
remain the property of Tenant. If this Lease is not so terminated, then upon
receipt of the insurance proceeds (if the loss is covered by insurance) and the
issuance of all necessary governmental permits, Landlord shall commence and
diligently prosecute to completion the restoration of the Leased Premises, to
the extent then allowed by Law, to substantially the same condition in which the
Leased Premises existed as of the Lease Commencement Date. Landlord's obligation
to restore shall be limited to the Leased Premises and interior improvements
constructed by Landlord. Landlord shall have no obligation to restore any other
improvements to the Leased Premises or any of the Tenant's personal property,
inventory or trade fixtures. Upon completion of the restoration by Landlord,
Tenant shall forthwith replace or fully repair all of Tenant's personal
property, inventory, trade fixtures and other improvements constructed by Tenant
to like or similar condition as existed at the time of such damage or
destruction.

     10.2 LANDLORD'S RIGHT TO TERMINATE:  Landlord shall have the option to
terminate this Lease in the event any of the following occurs, which option may
be exercised only by delivery to Tenant of a written notice of election to
terminate within thirty days after the date of such damage or destruction:

          A.   The Building is damaged by any peril covered by valid and
collectible insurance actually carried by Landlord and in force at the time of
such damage or destruction (and "insured peril") to such an extent that the
estimated cost to restore the Building exceeds the lesser of (i) the insurance
proceeds available from insurance actually carried by Landlord, or (ii) seventy-
five percent of the then actual replacement cost thereof;

          B.   The Building is damaged by an uninsured peril, which peril
Landlord was required to insure against pursuant to the provisions of Article 9
of this Lease, to such an extent that the estimated cost to restore the Building
exceeds the lesser of (i) the insurance proceeds which would have been available
had Landlord carried such required insurance, or (ii) seventy-five percent of
the then actual replacement cost thereof;

          C.   The Building is damaged by an uninsured peril, which peril
Landlord was not required to insure against pursuant to the provisions of
Article 9 of this Lease, to any extent.

          D.   The Building is damaged by any peril and, because of the Laws
then in force, the Building (i) can not be restored at reasonable cost or (ii)
if restored, can not be used for the same use being made thereof before such
damage.

          The determination of Landlord's property and Tenant's Property shall
be made pursuant to Paragraph 6.2.does not elect to terminate this Lease or is
_________________________________ as reasonably practicable, Landlord shall
furnish Tenant with the written opinion of Landlord's architect or construction
consultant as to when the restoration work required of Landlord may be complete.
Tenant shall have the option to terminate this Lease in the event any of the
following occurs, which option may be exercised in the case of A or B below only
by delivery to Landlord of a written notice of election to terminate within
seven days after Tenant receives from Landlord the estimate of the time needed
to complete such restoration:

                                      25
<PAGE>

          A.   The Leased Premises are damaged by any peril and, in the
reasonable opinion of Landlord's architect or construction consultant, the
restoration of the Leased Premises cannot be substantially completed within
twelve months after the date of such notice from Landlord; or

          B.   The Leased Premises are damaged by any peril within nine months
of the last day of the Lease Term and, in the reasonable opinion of Landlord's
architect or construction consultant, the restoration of the Leased Premises
cannot be substantially completed within ninety days after the date such
restoration is commenced.

          See Addendum Paragraph 10.3

     10.4 TENANT'S WAIVER:  Landlord and Tenant agree that the provisions of
Article 10.3 above, captioned "Tenant's Right to Terminate", are intended to
supersede and replace the provisions contained in California Civil Code, Section
1932, Subdivision 2, and California Civil Code, Section 1934, and accordingly,
Tenant hereby waives the provisions of said Civil Code Sections and the
provisions of any successor Code Sections or similar Laws hereinafter enacted.

     10.5 ABATEMENT OF RENT:  In the event of damage to the Leased Premises
which does not result in the termination of this Lease, the Base Monthly Rent
(and any Additional Rent) shall be temporarily abated during the period of
restoration in proportion to the degree to which Tenant's use of the Leased
Premises is impaired by such damage.

                                  ARTICLE 11
                                 CONDEMNATION

     11.1 LANDLORD'S RIGHT TO TERMINATE:  Subject to Article 11.3, Landlord
shall have the option to terminate this Lease if, as a result of a taking by
means of the exercise of the power of eminent domain (including inverse
condemnation and/or a voluntary sale or transfer by Landlord under threat of
condemnation to an entity having the power of eminent domain), (i) all or any
part of the Leased Premises is so taken, (ii) twenty (20%) percent of the
Buildings leasable area is so taken, (iii) more than eighty-five (85%) percent
of the Common Area is so taken, or (iv) because of the Laws then in force, the
Leased Premises may not be used for the same use being made thereof before such
taking, whether or not restored as required by Article 11.4 below.  Any such
option to terminate by Landlord must be exercisable within a reasonable period
of time, to be effective as of the date possession is taken by the condemnor.

     11.2 TENANT'S RIGHT TO TERMINATE:  Subject to Article 11.3, Tenant shall
have the option to terminate this Lease if, as a result of any taking by means
of the exercise of the power of eminent domain (including inverse condemnation
and/or a voluntary sale or transfer by Landlord to an entity having the power of
eminent domain under threat of condemnation), (i) substantially all of the
Leased Premises is so taken, (ii) thirty-three and one-third percent or more of
the Leased Premises is so taken and the part of the Leased Premises that remains
cannot, within a reasonable period of time, be made reasonably suitable for the
continued operation of the Tenant's business, or (iii) there is a taking of a
portion of the Common Area and, as a result of such taking, Landlord cannot
provide parking spaces within the Project (or within a

                                      26
<PAGE>

reasonable distance therefrom) equal in number to at least sixty-six and two-
thirds percent of Tenant's Number of Parking Spaces (as set forth in Article 1),
whether by rearrangement of the remaining parking areas in the Common Area
(including, if Landlord elects, construction of multi-dock parking structures or
re-striping for compact cars where permitted by Law), or by providing
alternative parking facilities on other land within reasonable walking distance
of the Leased Premises. Tenant must exercise such option within a reasonable
period of time, to be effective on the later to occur of (i) the date that
possession of that portion of the Common Area or the Leased Premises that is
condemned is taken by the condemnor or (ii) the date Tenant vacates the Leased
Premises.

     11.3 TEMPORARY TAKING:  If any portion of the Leased Premises is
temporarily less, this Lease shall remain in effect except that if any portion
of the Leased Premises is temporarily taken for a period which either exceeds 9
months or which extends beyond the natural expiration of the Lease Term, then
Landlord and Tenant shall have the option to terminate this Lease, effective on
the date possession is taken by the condemnor.

     11.4 RESTORATION AND ABATEMENT OF RENT:  If any part of the Leased Premises
is taken by condemnation and this Lease is not terminated, then Landlord shall
repair any damage occasioned thereby to the remainder of the Leased Premises to
a condition reasonably suitable for Tenant's continued operations and otherwise,
to the extent practicable, in the manner and to the extent provided in Article
10.1  As of the date possession is taken by the condemning authority, (i) the
Base Monthly Rent shall be reduced in the same proportion that the area of that
part of the Leased Premises so taken (less any addition to the area of the
Leased Premises by reason of any reconstruction) bears to the area of the Leased
Premises immediately prior to such taking, and (ii) Tenant's Proportionate Share
shall be appropriately adjusted.

     11.5 DIVISION OF CONDEMNATION AWARD:  Any award made for any condemnation
of the Project, the Building, the Common Areas or the Leased Premises, or any
portion thereof, shall belong to and be paid to Landlord, and Tenant hereby
assigns to Landlord all of its right, title and interest in any such award;
provided, however, that Tenant shall be entitled to receive any condemnation
award that is made directly to Tenant (i) for the taking of personal property,
inventory or trade fixtures belonging to Tenant, (ii) for the interruption of
Tenant's business or its moving costs, (iii) for loss of Tenant's goodwill, or
(iv) for any temporary taking where this Lease is not terminated as a result of
such taking, or (v) for the value of any leasehold improvements installed by
Tenant at its cost that Tenant could remove pursuant to Paragraph 6.2.  The
rights of Landlord and Tenant regarding any condemnation shall be determined as
provided in this Article, and each party hereby waives the provisions of Section
1265.130 of the California Code of Civil Procedure, and the provisions of any
similar law hereinafter enacted, allowing either party to petition the Superior
Court to terminate this Lease and/or allocating condemnation awards between
Landlord and Tenant in the event of a taking of the Leased Premises.

                                  ARTICLE 12
                             DEFAULT AND REMEDIES

     12.1 EVENTS OF TENANT'S DEFAULT:  Tenant shall be in default of its
obligations under this Lease if any of the following events occur:

                                      27
<PAGE>

          A.   Tenant shall have failed to pay Base Monthly Rent or any
Additional Rent within six days after receiving written notice from Landlord; or

          B.   Tenant shall have done or permitted to have been done any act,
use or thing in its use, occupancy or possession of the Leased Premises or in
its use of the Common Areas which is prohibited by the terms of this Lease; or

          C.   Tenant shall have failed to perform any term, covenant or
condition of this Lease, except those requiring the payment of Base Monthly Rent
or Additional Rent, within 30 days after written notice from Landlord to Tenant
specifying the nature of such failure and requesting Tenant to perform same.

          D.   Tenant shall have sublet the Leased Premises or assigned or
encumbered its interest in this Lease in violation of the provisions contained
in Article 7, whether voluntarily or by operation of Law; or

          E.   Tenant shall have failed to continuously occupy the Leased
Premises for a period of 10 consecutive days; or

          F.   Tenant or any Guarantor of this Lease shall have permitted or
suffered the sequestration or attachment of, or execution on, or the appointment
of a custodian or receiver with respect to, all or any substantial part of the
property or assets of Tenant (or such Guarantor) or any property or asset
essential to the conduct of Tenant's (or such Guarantor's) business, and Tenant
(or such Guarantor) shall have failed to obtain a return or release of the same
within thirty days thereafter, or prior to sale pursuant to such sequestration,
attachment or levy, whichever is earlier; or

          G.   Tenant or any Guarantor of this Lease shall have made a general
assignment of all or a substantial part of its assets for the benefit of its
creditors; or

          H.   Tenant or any Guarantor of this Lease shall have allowed (or
sought) to have entered against it a decree or order which:  (i) grants or
constitutes an order for relief, appointment of a trustee, or confirmation of a
reorganization plan under the bankruptcy laws of the United States; (ii)
approves as properly filed a petition seeking liquidation or reorganization
under said bankruptcy laws or any other debtor's relief law or similar statute
of the United States or any state thereof; or (iii) otherwise directs the
winding up or liquidation of Tenant; provided, however, if any decree or order
was entered without Tenant's consent or over Tenant's objection, Landlord may
not terminate this Lease pursuant to this Subarticle if such decree or order is
rescinded or reversed within thirty days after its original entry.

          I.   Tenant or any Guarantor of this Lease shall have availed itself
of the protection of any debtor's relief law, moratorium law or other similar
Law which does not require the prior entry of a decree of order.

     12.2 LANDLORD'S REMEDIES:  In the event of any default by Tenant, and
without limiting Landlord's right to indemnification as provided in Article 8.2,
Landlord shall have the following remedies, in addition to all other rights and
remedies provided by Law or otherwise provided in this Lease, to which Landlord
may resort cumulatively, or in the alternative:

                                      28
<PAGE>

          A.   Landlord may, at Landlord's election, keep this Lease in effect
and enforce, by an action at law or in equity all of its rights and remedies
under this Lease including, without limitation, (i) the right to recover the
rent and other sums as they become due by appropriate legal action, (ii) the
right to make payments required of Tenant, or perform Tenant's obligations and
be reimbursed by Tenant for the cost thereof with interest at the then maximum
rate of interest not prohibited by Law from the date the sum is paid by Landlord
until Landlord is reimbursed by Tenant, and (iii) the remedies of injunctive
relief and specific performance to prevent Tenant from violating the terms of
this Lease and/or to compel Tenant to perform its obligations under this Lease,
as the case may be.

          B.   Landlord may, at Landlord's election, terminate this Lease by
giving Tenant written notice of termination, in which event this Lease shall
terminate on the date set forth for termination in such notice.  Any termination
under this Subarticle shall not relieve Tenant from its obligation to pay to
Landlord all Base Monthly Rent and Additional Rent then or thereafter due, or
any other sums due or thereafter accruing to Landlord, or from any claim against
Tenant for damages previously accrued or then or thereafter accruing.  In no
event shall any one or more of the following actions by Landlord, in the absence
of a written election by Landlord to terminate this Lease, constitute a
termination of this Lease:

               (1)  Appointment of a receiver or keeper in order to protect
Landlord's interest hereunder;

               (2)  Consent to any subletting of the Leased Premises or
assignment of this Lease by Tenant, whether pursuant to the provisions hereof,
or otherwise; or

               (3)  Any other action by Landlord or Landlord's agents intended
to mitigate the adverse effects of any breach of this Lease by Tenant,
including, without limitation, any action taken to maintain and preserve the
Leased Premises or any action taken to relet the Leased Premises, or any portion
thereof, for the account of Tenant and in the name of Tenant.

          C.   In the event Tenant breaches this Lease and abandons the Leased
Premises, Landlord may terminate this Lease, but this Lease shall not terminate
unless Landlord gives Tenant written notice of termination.  No act by or on
behalf of Landlord intended to mitigate the adverse effect of such breach,
including those described by Subarticles B(1), (2) and (3) immediately
preceding, shall constitute a termination of Tenant's right to possession unless
Landlord gives Tenant written notice of termination.  If Landlord does not
terminate this Lease by giving written notice of termination, Landlord may
enforce all its rights and remedies under this Lease, including the right to
recover rent as it becomes due under this Lease as provided in California Civil
Code Section 1951.4, as in effect on the Effective Date of this Lease.

          D.   In the event Landlord terminates this Lease, Landlord shall be
entitled, at Landlord's election, to damages in an amount as set forth in
California Civil Code Section 1951.2, as in effect on the Effective Date of this
Lease.  For purposes of computing damages pursuant to said Section 1951.2, an
interest rate equal to the maximum rate of interest then not prohibited by Law
shall be used where permitted.  Such damages shall include, without limitation:

                                      29
<PAGE>

               (1)  The worth at the time of award of the amount by which the
unpaid rent for the balance of the term after the time of award exceeds the
amount of such rental loss that Tenant proves could be reasonably avoided,
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; and

               (2)  Any other amount necessary to compensate Landlord for all
detriment proximately caused by Tenant's failure to perform Tenant's obligations
under this Lease, or which in the ordinary course of things would be likely to
result therefrom, including, without limitation, the following: (i) expenses for
cleaning, repairing or restoring the Leased Premises; (ii) expenses for
altering, remodeling or otherwise improving the Leased premises for the purpose
of reletting, including removal of existing leasehold improvements but excluding
installation of additional leasehold improvements (regardless of how the same is
funded, including reduction of rent, a direct payment or allowance to a new
tenant, or otherwise); (iii) broker's fees, advertising costs and other expenses
of reletting the Leased Premises; (iv) costs of carrying the Leased Premises,
which costs would have been billed to Tenant as Additional Rent had Tenant not
defaulted and which include, but are not limited to: taxes, insurance premiums,
landscape maintenance, HVAC maintenance, utility charges and security
precautions; (v) expenses incurred in removing, disposing of and/or storing any
of Tenant's personal property, inventory or trade fixtures remaining therein;
(vi) attorneys' fees, expert witness fees, court costs and other reasonable
expenses incurred by Landlord (but not limited to taxable costs) in retaking
possession of the Leased Premises, establishing damages hereunder, and re-
leasing the Leased Premises; and (vii) any other expenses, costs or damages
otherwise incurred or suffered as a result of Tenant's default. [allowable to
the remainder of the term of this Lease -- unsure where this text goes above]

     12.3 LANDLORD'S DEFAULT AND TENANT'S REMEDIES:  In the event Landlord fails
to perform any of its obligations under this Lease, Landlord shall nevertheless
not be in default under the terms of this Lease until such time as Tenant shall
have first given Landlord written notice specifying the nature of such failure
to perform its obligations, and then only after Landlord shall have had a
reasonable period of time following its receipt of such notice within which to
perform such obligations.  In the event of Landlord's default as above set
forth, then, and only then, Tenant shall have the following remedies only:

          A.   Tenant may then proceed in equity or at law to compel Landlord to
perform its obligations and/or to recover damages proximately caused by such
failure to perform (except as and to the extent Tenant has waived its right to
damages as provided in this Lease).

          B.   Tenant, at its option, may then cure any default of Landlord at
Landlord's cost.  If, pursuant to this Subarticle, Tenant reasonably pays any
sum to any third party or docs any act that requires the payment of any sum to
any third party at any time by reason of Landlord's default, the sum paid by
Tenant shall be immediately due from Landlord to Tenant at the time Tenant
supplies Landlord with an invoice therefore (provided such invoice sets forth
and is accompanied by a written statement of Tenant setting forth in reasonable
detail the amount paid, the party to whom it was paid, the date it was paid, and
the reasons giving rise to such payment), together with interest at twelve
percent per annum from the date of such invoice until Tenant is reimbursed by
Landlord.  Tenant may not offset such sums against any installment of rent due
Landlord under the terms of this Lease.

                                      30
<PAGE>

          C.   The remedies afforded Tenant in this Section 12.3 are granted in
addition to any and all remedies afforded Tenant at law or in equity.

     12.4 LIMITATION ON TENANT'S RECOURSE:  If Landlord is a corporation, trust,
partnership, joint venture, unincorporated association, or other form of
business entity, Tenant agrees that (i) the obligations of Landlord under this
Lease shall not constitute personal obligations of the officers, directors,
trustees, partners, joint venturers, members, owners, stockholders, or other
principals of such business entity and (ii) Tenant shall have recourse only to
Landlord's then equity interest, if any, in the Property for the satisfaction of
such obligations and not against the assets of such officers, directors,
trustees, partners, joint venturers, members, owners, stockholders or principals
(other than to the extent of their interest in the Property).  Tenant shall look
exclusively to such equity interest of Landlord, if any, in the Property for
payment and discharge of any obligations imposed upon Landlord hereunder, and
Landlord is hereby released and relieved of any other obligations hereunder.
Additionally, if Landlord is a partnership, then Tenant covenants and agrees:

          A.   No partner of Landlord shall be sued or named as a party in any
suit or action brought by Tenant with respect to any alleged breach of this
Lease (except to the extent necessary to secure jurisdiction over the
partnership and then only for that sole purpose);

          B.   No service of process shall be made against any partner of
Landlord except for the sole purpose of securing jurisdiction over the
partnership; and

          C.   No writ of execution shall be levied against the assets of any
partner of Landlord other than to the extent of his interest in Property.

Tenant further agrees that each of the foregoing covenants and agreements shall
be enforceable by Landlord and by any partner of Landlord and shall be
applicable to any actual or alleged misrepresentation or non-disclosure made
respecting this Lease or the Leased Premises or any actual or alleged failure,
default or breach of any covenant or agreement either expressly or implicitly
contained in this Lease or imposed by statute or at common law.

     12.5 TENANT'S WAIVER:  Landlord and Tenant agree that the provisions of
Article 12.3 above are intended to supersede and replace the provisions of
California Civil Code 1932(l), 1941 and 1942, and accordingly, Tenant hereby
waives the provisions of Section 1932(l), 1941 and 1942 of the California Civil
Code and/or any similar or successor Law regarding Tenant's right to terminate
this Lease or to make repairs and deduct the expenses of such repairs from the
rent due under this Lease.

                                  ARTICLE 13
                              GENERAL PROVISIONS

     13.1 TAXES ON TENANT'S PROPERTY.  Tenant shall pay before delinquency any
and all taxes, assessments, license fees, use fees, permit fees and public
charges of whatever nature or description levied, assessed or imposed against
Tenant or Landlord by a governmental agency arising out of, caused by reason of
or based upon Tenant's estate in this Lease, Tenant's ownership of property,
improvements made by Tenant to the Leased Premises, improvements made by
Landlord for Tenant's use within the Leased Premises, Tenant's use (or estimated
use)

                                      31
<PAGE>

of public facilities or services or Tenant's consumption (or estimated
consumption) of public utilities, energy, water or other resources. On demand by
Landlord, Tenant shall furnish Landlord with satisfactory evidence of these
payments. If any such taxes, assessments, fees or public charges are levied
against Landlord, Landlord's property, the Building or the Project, or if the
assessed value of the Building or the Project is increased by the inclusion
therein of a value placed upon same, then Landlord, after giving written notice
to Tenant, shall have the right, regardless of the validity taxes, assessment,
fee or public charge so paid on Tenant's (unable to read) receives an invoice
from Landlord setting forth the amount of such taxes, assessment, fee or public
charge so levied, pay to Landlord, as Additional Rent, the amount set forth in
said invoice. Failure by Tenant to pay the amount so invoiced within said ten
day period shall be conclusively deemed a default by Tenant under this Lease.
Tenant shall have the right, and with Landlord's full cooperation if Tenant is
not then in default under the terms of this Lease, to bring suit in any court of
competent jurisdiction to recover from the taxing authority the amount of any
such taxes, assessment, fee or public charge so paid.

     13.2 HOLDING OVER:  This Lease shall terminate without further notice on
the Lease Expiration Date (as set forth in Article 1).  Any holding over by
Tenant after expiration of the Lease Term shall neither constitute a renewal nor
extension of this Lease nor give Tenant any rights in or to the Leased Premises
except as expressly provided in this Article.  Any such holding over shall be
deemed an unlawful detainer of the Leased Premises unless Landlord has consented
to same.  Any such holding over to which Landlord has consented shall be
construed to be a tenancy from month to month, on the same terms and conditions
herein specified insofar as applicable, except that the Base Monthly Rent shall
be increased to an amount equal to one hundred fifty percent of the Base Monthly
Rent payable during the last full month immediately preceding such holding over.

     13.3 SUBORDINATION TO MORTGAGES:  This Lease is subject and subordinate to
all underlying ground leases and to all mortgages and deed of trust which affect
the Building and are of public record as of the Effective Date of this Lease,
and to all renewals, modifications, consolidations, replacements and extensions
thereof.  However, if the lessor under any such ground lease or any Lender
holding any such mortgage or deed of trust shall advise Landlord that it desires
or requires this Lease to be made prior and superior thereto, then, upon written
request of Landlord to Tenant, Tenant shall promptly execute, acknowledge and
deliver any and all documents or instruments which Landlord and such lessor or
Lender deem necessary or desirable to make this Lease prior thereto.  Tenant
hereby consents to Landlord's ground leasing the land underlying the Building
and/or encumbering the Building as security for future loans on such terms as
Landlord shall desire, all of which future ground leases, mortgages or deeds of
trust shall be subject and subordinate to this Lease.  However, if any lessor
under any such future ground lease or any Lender holding such future mortgage or
deed of trust shall desire or require that this Lease be made subject and
subordinate to such future ground lease, mortgage or deed of trust, then Tenant
agrees, within ten days after Landlord's written request therefore, to execute,
acknowledge and deliver to Landlord any and all documents or instruments
requested by Landlord or such lessor or Lender as may be necessary or proper to
assure the subordination of this Lease to such future ground lease, mortgage or
deed of trust; but only if such lessor or Lender agrees to recognize Tenant's
rights under this Lease and not to disturb Tenant's quiet possession of the
Leased Premises so long as Tenant is not in default under this Lease.

                                      32
<PAGE>

     13.4 TENANT'S ATTORNMENT UPON FORECLOSURE:  Tenant shall, upon request,
attorn (i) to any purchaser of the Building at any foreclosure sale or private
sale conducted pursuant to any security instrument encumbering the Building,
(ii) to any grantee or transferee designated in any deed given in lieu of
foreclosure of any security interest encumbering the Building, or (iii) to the
lessor under any underlying ground lease of the land underlying the Building,
should such ground lease be terminated; provided that such purchaser, grantee or
lessor recognizes Tenant's rights under this Lease.

     13.5 MORTGAGEE PROTECTION:  In the event of any default on the part of
Landlord, Tenant will give notice by registered mail to any Lender or lessor
under any underlying ground lease who shall have requested, in writing, to
Tenant that it be provided with such notice, and Tenant shall offer such Lender
or lessor a reasonable opportunity to cure the default, including time to obtain
possession of the Leased Premises by power of sale or judicial foreclosure or
other appropriate legal proceedings if reasonably necessary to effect a cure.

     13.6 ESTOPPEL CERTIFICATES:  Tenant will, following any request by
Landlord, promptly execute and deliver to Landlord an estoppel certificate (i)
certifying 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 so modified, is in full force and effect, (ii) stating the date to
which the rent and other charges are paid in advance, if any, (iii)
acknowledging that there are not, to Tenant's knowledge, any uncured defaults on
the part of Landlord hereunder, or specifying such defaults if any are claimed,
and (iv) certifying such other information about this Lease as may be reasonably
requested by Landlord.  Tenant's failure to execute and deliver such estoppel
certificate within ten days after Landlord's request therefore shall be a
material default by Tenant under this Lease, and Landlord shall have all of the
rights and remedies available to Landlord as Landlord would otherwise have in
the case of any other material default by Tenant, including the right to
terminate this Lease and sue for damages proximately caused thereby, it being
agreed and understood by Tenant that Tenant's failure to so deliver such
estoppel certificate in a timely manner could result in Landlord being unable to
perform committed obligations to other third parties which were made by Landlord
in reliance upon this covenant of Tenant.  Landlord and Tenant intend that any
statement delivered pursuant to this Article may be relied upon by any Lender or
purchaser or prospective Lender or purchaser of the Building, the Project, or
any interest therein.  See Addendum Paragraph 13.6

     13.7 TENANT'S FINANCIAL INFORMATION:  Tenant shall, within ten business
days after Landlord's request therefore, deliver to Landlord a copy of a current
financial statement, including an income statement and balance sheet, and any
such other information reasonably requested by Landlord regarding Tenant's
financial condition.  Tenant acknowledges that Landlord has and will rely on the
truth and accuracy of the information provided by Tenant to Landlord both prior
to and during the term of the Lease.  Landlord shall be entitled to disclose
such financial statements or other information to its Lender, to any present or
prospective principal of or investor in Landlord, or to any prospective Lender
or purchaser of the Building, the Project or any portion thereof or interest
therein.  Any such financial statement or other information which is marked
"confidential" or "company secrets" (or is otherwise similarly marked by Tenant)
shall be confidential and shall not be disclosed by Landlord to any third party
except as specifically provided in this Article, unless the same becomes a part
of the public domain without the fault of Landlord.

                                      33
<PAGE>

     13.8  TRANSFER BY LANDLORD:  Landlord and its successors in interest shall
have the right to transfer their interest in the Building, the Project, or any
portion thereof at any time and to any person or entity.  In the event of any
such transfer, the Landlord originally named herein (and in the case of any
subsequent transfer, the transferor), from the date of such transfer, (i) shall
be automatically relieved, without any further act by any person or entity, of
all liability for the performance of the obligations of the Landlord hereunder
which may accrue after the date of such transfer and (ii) shall be relieved of
all liability for the performance of the obligations of the Landlord hereunder
which have accrued before the date of transfer if its transferee agrees to
assume and perform all such prior obligations of the Landlord hereunder.  Tenant
shall attorn to any such transferee.  After the date of any such transfer, the
term "Landlord" as used herein shall mean the transferee of such interest in the
Building or the Project.

     13.9  FORCE MAJEURE:  The obligations of each of the parties under this
Lease (other than the obligation to pay money) shall be temporarily excused if
such party is prevented or delayed in performing such obligation by reason of
any strikes, lockouts or labor disputes; inability to obtain labor, materials,
fuels or reasonable substitutes therefore; governmental restrictions,
regulations, controls, action or inaction; civil commotion; inclement weather,
fire or other acts of God; or other causes (except financial inability) beyond
the reasonable control of the party obligated to perform (including acts or
omissions of the other party for a period equal to the period of any such
prevention, delay or stoppage.

     13.10 NOTICES:  Any notice required or desired to be given by a party
regarding this Lease shall be in writing and shall be personally served, or in
lieu of personal service may be given by: (i) delivery by Federal Express,
United Parcel Service or similar commercial service, (ii) electronic facsimile
transmission, or (iii) by depositing such notice in the United States mail,
postage prepaid, addressed to the other party as follows:

           A.   If addressed to Landlord, to Landlord at its Address for Notices
(as set forth in Article 1).

           B.   If addressed to Tenant, to Tenant at its Address for Notices (as
set forth in Article 1).

Any notice given by registered mail shall be deemed to have been given on the
third business day after its deposit in the United States mail.  Any notice
given by certified mail shall be deemed given on the date receipt was
acknowledged to the postal authorities.  Any notice given by mail other than
registered or certified mail shall be deemed given only if received by the other
party, and then on the date of receipt.  In the event of notice by electronic
facsimile transmission or commercial carrier, notice shall be deemed received on
the date of confirmation documented by the transmission or carrier.  Each party
may, by written notice to the other in the manner aforesaid, change the address
to which notices addressed to it shall thereafter be mailed.

     13.11 ATTORNEYS' FEES:  In the event any party shall bring any action,
arbitration proceeding or legal proceeding alleging a breach of any provision of
this Lease to recover rent, to terminate this Lease, or to enforce, protect,
determine or establish any term or covenant of this Lease or rights or duties
hereunder of either party, the prevailing party shall be entitled to recover
from the non-prevailing party as a part of such action or proceeding, or in a
separate

                                      34
<PAGE>

action for that purpose brought within one year from the determination of such
proceeding, reasonable attorneys' fees, expert witness fees, court costs and
other reasonable expenses incurred by the prevailing party. In the event that
Landlord shall be required to retain counsel to enforce any provision of this
Lease, and if Tenant shall thereafter cure (or desire to cure) such default,
Landlord shall be conclusively deemed the prevailing party, and Tenant shall pay
to Landlord all attorneys' fees, expert witness fees, court costs and other
reasonable expenses so incurred by Landlord promptly upon demand provided that
Landlord has first notified Tenant in writing that Landlord was retaining
counsel in connection with such matter prior to Landlord's retention of counsel.
Landlord may enforce this provision by either (i) requiring Tenant to pay such
fees and costs as a condition to curing its default or (ii) bringing a separate
action to enforce such payment, it being agreed by and between Landlord and
Tenant that Tenant's failure to pay such fees and costs upon demand shall
constitute a breach of this Lease in the same manner as a failure by Tenant to
pay the Base Monthly Rent, giving Landlord the same rights and remedies as if
Tenant failed to pay the Base Monthly Rent.

     13.12 DEFINITIONS:  Any term that is given a special meaning by any
provision in this Lease shall, unless otherwise specifically stated, have such
meaning whenever used in this Lease or in any Addenda or amendment hereto. In
addition to the terms defined in Article 1, the following terms shall have the
following meanings: See Addendum Paragraph 13.12

           A.   REAL PROPERTY TAXES:  The term "Real Property Tax" or "Real
Property Taxes" shall each mean (i) all taxes, assessments, levies and other
charges of any kind or nature whatsoever, general and special, foreseen and
unforeseen (including all installments of principal and interest required to pay
any general or special assessments for public improvements and any increases
resulting from reassessments caused by any change in ownership or new
construction), now or hereafter imposed by any governmental or quasi-
governmental authority or special district having the direct or indirect power
to tax or levy assessments, which are levied or assessed for whatever reason
against the Project or any portion thereof, or Landlord's interest therein, or
the fixtures, equipment and other property of Landlord that is an integral part
of the Project and located thereon, or Landlord's business of owning, leasing or
managing the Project or the gross receipts, income or rentals from the Project;
(ii) all charges, levies or fees imposed by any governmental authority against
Landlord by reason of or based upon the use of or number of parking spaces
within the Project, the amount of public services or public utilities used or
consumed (e.g. water, gas, electricity, sewage or surface water disposal) at the
Project, the number of persons employed by tenants of the Project, the size
(whether measured in area, volume, number of tenants or whatever) or the value
of the Project, or the type of use or uses conducted within the Project; and
(iii) all costs and fees (including attorneys' fees) incurred by Landlord in
contesting any Real Property Tax and in negotiating with public authorities as
to any Real Property Tax.  If, at any time during the Lease Term, the taxation
or assessment of the Project prevailing as of the Effective Date of this Lease
shall be altered so that in lieu of or in addition to any Real Property Tax
described above there shall be levied, assessed or imposed (whether by reason of
a change in the method of taxation or assessment, creation of a new tax or
charge, or any other cause) an alternate, substitute, or additional tax or
charge (i) on the value, size, use or occupancy of the Project or Landlord's
interest therein or (ii) on or measured by the gross receipts, income or rentals
from the Project, or on Landlord's business of owning, leasing or managing the
Project or (iii) computed in any manner with respect to the operation of the
Project, then any such tax or charge, however designated, shall be included
within the meaning

                                      35
<PAGE>

of the terms "Real Property Tax" or "Real Property Taxes" for purposes of this
Lease. If any Real Property Tax is partly based upon property or rents unrelated
to the Project, then only that part of such Real Property Tax that is fairly
allocable to the Project shall be included within the meaning of the terms "Real
Property Tax" or "Real Property Taxes". Notwithstanding the foregoing, the terms
"Real Property Tax" or "Real Property Taxes" shall not include estate,
inheritance, transfer, gift or franchise taxes of Landlord or the federal or
state income tax imposed on Landlord's income from all sources. Notwithstanding
the above, Tenant shall only be liable for Real Property taxes which relate to
the Lease Term.

          B.   LANDLORD'S INSURANCE COSTS:  The term "Landlord's Insurance
Costs" shall mean the costs to Landlord to carry and maintain the policies of
fire and property damage insurance, including quake and flood, for the Project
and general liability insurance required, or permitted, to be carried by
Landlord pursuant to Article 9, together with any deductible amounts paid by
Landlord upon the occurrence of any insured casualty or loss, which are
recoverable by Landlord from Tenant pursuant to this Lease

          C.   PROJECT MAINTENANCE COSTS:  The term "Project Maintenance Costs"
shall mean all costs and expenses (except Landlord's Insurance Costs and Real
Property Taxes) paid or incurred by Landlord in protecting, operating,
maintaining, repairing and preserving the Project and all parts thereof,
including without limitation, (i) professional management fees (equal to five
percent of annualized Base Monthly Rent), (ii) the amortizing portion of any
costs incurred by Landlord in the making of any modifications, alterations or
improvements as set forth in Article 6, which are so amortized during the Lease
Term, (iii) costs of complying with governmental regulations governing Tenant's
use of Hazardous Materials, and Landlord's costs of monitoring Tenant's use of
Hazardous Materials including fees charged by Landlord's consultants to
periodically inspect the Premises and the Property, and (iv) such other costs as
may be paid or incurred with respect to operating, maintaining and preserving
the Project, such as repairing, replacing and resurfacing the exterior surfaces
of the buildings (including roofs), repairing, replacing, and resurfacing paved
areas, repairing structural parts of the buildings, cleaning, maintaining,
repairing, or replacing the interior of the Leased Premises both during the
Lease Term and upon the termination of the Lease, and maintaining, repairing or
replacing, when necessary electrical, plumbing, sewer, drainage, heating,
ventilating and air conditioning systems serving the buildings, providing
utilities to the common areas, maintenance, repair, replacement or installation
of lighting fixtures, directional or other signs and signals, irrigation or
drainage systems, trees, shrubs, materials, maintenance of all landscaped areas,
and depreciation and financing costs on maintenance and operating machinery and
equipment (if owned) and rental paid for such machinery and equipment (if
leased).

          D.   READY FOR OCCUPANCY:  The term "Ready for Occupancy" shall mean
the date upon which (i) the Leased Premises are available for Tenant's occupancy
in a broom clean condition and (ii) the improvements, if any, to be made to the
Leased Premises by Landlord as a condition to Tenant's obligation to accept
possession of the Leased Premises have been substantially completed and the
appropriate governmental building department (i.e. the City building department,
if the Project is located within a City, or otherwise the County building
department) shall have approved the construction of the improvements as
substantially complete or is willing to so approve the construction of such
improvements as substantially complete subject only to compliance with specified
conditions which are the responsibility of Tenant to

                                      36
<PAGE>

satisfy or is willing to allow Tenant to occupy subject to its receiving
assurances that specified work will be completed.

          E.   TENANT'S PROPORTIONATE SHARE:  The term "Tenant's Proportionate
Share" or "Tenant's Share", as used with respect to an item pertaining to the
Building, shall each mean that percentage obtained by dividing the leasable
square footage contained within the Leased Premises (as set forth in Article 1)
by the total leasable square footage contained within the Building as the same
from time to time exists or, as used with respect to an item pertaining to the
Project, shall each mean that percentage obtained by dividing the leasable
square footage contained within the Leased Premises (as set forth in Article 1)
by the total leasable square footage contained within the Project as the same
from time to time exists, unless, as to any given item, such a percentage
allocation unfairly burdens or benefits a given tenant(s), in which case
Landlord shall have the exclusive right to equitably allocate such item so as to
not unfairly burden or benefit any given tenant(s).  Landlord's determination of
any such special allocation shall be final and binding upon Tenant unless made
in bad faith.

          F.   BUILDING'S PROPORTIONATE SHARE:  The term "Building's
Proportionate Share" or "Building's Share" shall each mean that percentage which
is obtained by dividing the leasable square footage contained within the
Building by the leasable square footage contained within all buildings located
within the Project, unless, as to any given item, such a percentage allocation
unfairly burdens or benefits a given building(s), in which case Landlord shall
have the exclusive right to equitably allocate such item so as to not unfairly
burden or benefit any given building(s).  Landlord's determination of any such
special allocation shall be final and binding upon Tenant unless made in bad
faith.

          G.   BUILDING OPERATING EXPENSES:  The term "Building Operating
Expenses" shall mean and include the Building's Share of all Real Property
Taxes, plus the Building's Share of all Landlord's Insurance Costs, plus the
Building's Share of all Project Maintenance Costs, plus an accounting fee equal
to five percent of all such costs.

          H.   LAW:  The term "Law" shall mean any judicial decision and any
statute, constitution, ordinance, resolution, regulation, rule, administrative
order, or other requirement of any municipal, county, state, federal, or other
governmental agency or authority having jurisdiction over the parties to this
Lease, the Leased Premises, the Building or the Project, or any of them in
effect either at the Effective Date of this Lease or at any time during the
Lease Term, including, without limitation, any regulation, order, or policy of
any quasi-official entity or body (e.g. a board of fire examiners or a public
utility or special district).

          I.   LENDER:  The term "Lender" shall mean the holder of any Note or
other evidence of indebtedness secured by the Project or any portion thereof.

          J.   PRIVATE RESTRICTIONS:  The term "Private Restrictions" shall mean
all recorded covenants, conditions and restrictions, private agreements,
easements, and any other recorded instruments affecting the use of the Project,
as they may exist from time to time.

          K.   RENT:  The term "rent" shall mean collectively Base Monthly Rent
and all Additional Rent.

                                      37
<PAGE>

     13.13 GENERAL WAIVERS:  One party's consent to or approval of any act by
the other party, requiring the first party's consent or approval shall not be
deemed to waive or render unnecessary the first party's consent to or approval
of any subsequent similar act by the other party.  No waiver of any provision
hereof or any breach of any provision hereof shall be effective unless in
writing and signed by the waiving party.  The receipt by Landlord of any rent or
payment with or without knowledge of the breach of any other provision hereof
shall not be deemed a waiver of any such breach.  No waiver of any provision of
this Lease shall be deemed a continuing waiver unless such waiver specifically
states so in writing and is signed by both Landlord and Tenant.  No delay or
omission in the exercise of any right or remedy accruing to either party upon
any breach by the other party under this Lease shall impair such right or remedy
or be construed as a waiver of any such breach theretofore or thereafter
occurring.  The waiver by either party of any breach of any provision of this
Lease shall not be deemed to be a waiver of any subsequent breach of the same or
any other provisions herein contained.

     13.14 MISCELLANEOUS:  Should any provision of this Lease prove to be
invalid or illegal, such invalidity or illegality shall in no way affect, impair
or invalidate any other provision hereof, and such remaining provisions shall
remain in full force and effect.  Time is of the essence with respect to the
performance of every provision of this Lease in which time of performance is a
factor.  Any copy of this Lease which is executed by the parties shall be deemed
an original for all purposes.  This Lease shall, subject to the provisions
regarding assignment, apply to and bind the respective heirs, successors,
executors, administrators and assigns of Landlord and Tenant.  The term "party"
shall mean Landlord or Tenant as the context implies.  If Tenant consists of
more than one person or entity, then all members of Tenant shall be jointly and
severally liable hereunder.  This Lease shall be construed and enforced in
accordance with the Laws of the State in which the Leased Premises are located.
The language in all parts of this Lease shall in all cases be construed as a
whole according to its fair meaning, and not strictly for or against either
Landlord or Tenant.  The captions used in this Lease are for convenience only
and shall not be considered in the construction or interpretation of any
provision hereof.  When the context of this Lease requires, the neuter gender
includes the masculine, the feminine, a partnership or corporation or joint
venture, and the singular includes the plural.  The terms "must", "shall",
"will" and "agree" are mandatory.  The term "may" is permissive.  When a party
is required to do something by this Lease, it shall do so at its sole cost and
expense without right of reimbursement from the other party unless specific
provision is made therefor.  Where Tenant is obligated not to perform any act or
is not permitted to perform any act, Tenant is also obligated to restrain any
others reasonably within its control, including agents, invitees, contractors,
subcontractors and employees, from performing said act.  Landlord shall not
become or be deemed a partner or a joint venturer with Tenant by reason of any
of the provisions of this Lease.  See Addendum Paragraph 13.14

                                  ARTICLE 14
                              CORPORATE AUTHORITY
                         BROKERS AND ENTIRE AGREEMENT

     14.1  CORPORATE AUTHORITY:  If Tenant is a corporation, each individual
executing this Lease on behalf of said corporation represents and warrants that
Tenant is validly formed and duly authorized and existing, that Tenant is
qualified to do business in the State in which the Lease Premises are located,
that Tenant has the full right and legal authority to enter

                                      38
<PAGE>

into this Lease, that he or she is duly authorized to execute and deliver this
Lease on behalf of Tenant in accordance with the bylaws and/or a board of
directors' resolution of Tenant, and that this Lease is binding upon Tenant in
accordance with its terms. Tenant shall, within thirty days after execution of
this Lease, deliver to Landlord a certified copy of the resolution of its board
of directors authorizing or ratifying the execution of this Lease, and if Tenant
fails to do so, Landlord at its sole election may elect to (i) extend the
Intended Commencement Date by such number of days that Tenant shall have delayed
in so delivering such corporate resolution to Landlord or (ii) terminate this
Lease.

     14.2 BROKERAGE COMMISSIONS:  Tenant warrants that it has not had any
dealings with any real estate broker(s), leasing agent(s), finder(s) or
salesmen, other than those persons or entities named in Article 1 as the
"Brokers" with respect to the lease by it of the Leased Premises pursuant to
this Lease, and that it will indemnify, defend with competent counsel, and hold
Landlord harmless from any liabilities for the payment of any real estate
brokerage commissions, leasing commissions or finder's fees claimed by any other
real estate broker(s), leasing agent(s), finder(s) or salesmen to be earned or
due and payable by reason of Tenant's agreement or promise (implied or
otherwise) to pay (or have Landlord pay) such a commission or finder's fee by
reason of its leasing the Leased Premises pursuant to this Lease.

     14.3 ENTIRE AGREEMENT:  This Lease, the Exhibits (as described in Article
1) and the Addenda (as described in Article 1), which Exhibits and Addenda are
by this reference incorporated herein, constitute the entire agreement between
the parties, and there are no other agreements, understandings or
representations between the parties relating to the lease by Landlord of the
Leased Premises to Tenant, except as expressed herein.  No subsequent changes,
modifications or additions to this Lease shall be binding upon the parties
unless in writing and signed by both Landlord and Tenant.

     14.4 LANDLORD'S REPRESENTATIONS:  Tenant acknowledges that neither Landlord
nor any of its agents made any representations or warranties respecting the
Project, the Building or the Leased Premises, upon which Tenant relied in
entering into this Lease, which are not expressly set forth in this Lease.
Tenant further acknowledges that neither Landlord nor any of its agents made any
representations as to (i) whether the Leased Premises may be used for Tenant's
intended use under existing Law or (ii) the suitability of the Leased Premises
for the conduct of Tenant's business or (iii) the exact square footage of the
Leased Premises, and that Tenant relied solely upon its own investigations
representing said matters.  Tenant expressly waives any and all claims for
damage by reason of any statement, representation, warranty, promise or other
agreement of Landlord or Landlord's agent(s), if any, not contained in this
Lease or in any Addenda hereto.

                                      39
<PAGE>

     IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the
respective dates below set forth with the intent to be legally bound thereby as
of the Effective Date of this Lease.

AS LANDLORD:                          AS TENANT:

_____________________________         _____________________________

_____________________________         _____________________________

By:__________________________         By:__________________________

Title:_______________________         Title:_______________________

By:__________________________         By:__________________________

Title:_______________________         Title:_______________________

Dated:_______________________         Dated:_______________________

     If Tenant is a CORPORATION, the authorized officers must sign on behalf of
the corporation and indicate the capacity in which they are signing.  This Lease
must be executed by the chairman of the board, president or vice president, and
the secretary, assistant secretary, the chief financial officer or assistant
treasurer, unless the bylaws or a resolution of the board of directors shall
otherwise provide, in which event a certified copy of the bylaws or a certified
copy of the resolution, as the case may be, must be attached to this Lease.

                                      40
<PAGE>

                            FIRST ADDENDUM TO LEASE
                                   Renco 36

THIS FIRST ADDENDUM TO LEASE ("Addendum") is dated for reference purposes as of
____________, and is made between RENCO INVESTMENT COMPANY, California general
partnership ("Landlord") and LEXAR MICROSYSTEMS, INC., a California corporation
("Tenant") to be a part of that certain Industrial Space Lease of even date
herewith between Landlord and Tenant (herein the "Lease Form"), with respect to
the building (the "Building") commonly known as Renco 36 , located at 47421
Bayside Parkway, Fremont, California. Such property, together with the Building
and all improvements located thereon during the term, including any extended
term, are referred to collectively herein as the "Property." Terms defined in
the Lease Form shall have the same meaning when used herein unless specifically
defined otherwise herein. Landlord and Tenant agree that the Lease Form is
hereby modified and supplemented as follows:

     1.1    S. Base Monthly Rent: Intentionally omitted.

     2.1    Demise of Leased Premises. Notwithstanding anything to the
            -------------------------
contrary in Section 2.1 of the Lease Form, Tenant's compliance with Laws
concerning hazardous materials, whether governing the use of the Leased Premises
or the Property or not, shall be governed solely and exclusively by Paragraph 16
of this Addendum.

     2.5    Acceptance of Possession: Notwithstanding anything to the
            ------------------------
contrary in Section 2.5 of the Lease Form: Landlord warrants that the
construction of the Tenant Improvements will be performed substantially in
accordance with the Construction Drawings (as defined in Exhibit C) and; in
compliance with all laws, codes, ordinances, rules and regulations, in a good
and workmanlike manner, and that all materials and equipment furnished will
substantially conform to said drawings and will be new and otherwise of good
quality. This warranty does not extend to, and Landlord shall not be liable for,
any defect in construction or equipment which is discovered more than one year
after the recordation of a notice of completion for the Building. Tenant shall
promptly notify Landlord in writing of any defect in construction or equipment
covered within such one-year period, and promptly thereafter Landlord shall
commence the cure of each such defect and complete such cure with diligence at
Landlord's cost and expense, not to be passed through to Tenant.

     With respect to defects discovered after the expiration of such one-year
period, Landlord and Tenant acknowledge that they intend that Tenant shall have
the benefit of any express or implied construction or equipment warranties
existing in favor of Landlord which would assist Tenant in correcting such
defects and in discharging its obligations regarding the repair and maintenance
of the Leased Premises. Upon request by Tenant following the expiration of such
one-year period, Landlord shall inform Tenant of all written construction and
equipment warranties existing in favor of Landlord which affect the Building or
equipment. Landlord shall cooperate with Tenant in enforcing such warranties and
in bringing any suit that maybe necessary to enforce liability with regard to
any defective construction or equipment which is discovered or of which Landlord
receives notice after the expiration of said one-year warranty
<PAGE>

First Addendum to Lease
Renco 36
Page 2


period, so long as Tenant pays all costs reasonably incurred by Landlord in
connection therewith. This warranty applies only to construction performed by
Landlord for Tenant after the date of this Lease.

     2.6    Surrender of Possession: Notwithstanding anything to the contrary
            -----------------------
in Sections  2.6 and 6.2 of the Lease Form: Tenant shall have the right to
remove all trade fixtures and any leasehold improvements installed at Tenant's
expense (together the "Tenant's Property") so long as it repairs all damage
caused by the installation thereof and returns the Leased Premises to
substantially the condition existing prior to the installation of such Tenant's
Property. At the expiration or sooner termination of the Lease Term, all
Tenant's Property which Tenant does not elect to remove shall be surrendered to
Landlord as a part of the Leased Premises and shall then become Landlord's
property, and Landlord shall have no obligation to reimburse Tenant for all or
any portion of the value or cost thereof. If Landlord so requires, at the
expiration or earlier termination of the Lease Term, Tenant shall remove any
Tenant's Property designated for removal by Landlord and shall restore the
Leased Premises to the condition existing prior to the installation of such
Tenant's Property.

     2.6    Surrender of Possession: In consideration of the short term of
this Lease, Tenant agrees to return the Leased Premises in the same condition as
received by Tenant. Tenant shall paint all walls that require paint to appear in
the same condition as initially delivered to Tenant. Tenant shall clean, repair,
or replace the carpet and other floor covering to restore same to the condition
as initially delivered to Tenant. It is understood that Tenant shall return the
Leased Premises to a condition so that it may be leased to a third party with no
additional work or expense to Landlord as if Landlord had leased the Leased
Premises to the third party as of the commencement date of this Lease.

     3.2    Additional Rent:  Notwithstanding anything to the contrary in
            ---------------
Section 3.2 of the Lease Form, Tenant shall pay Real Property Taxes (as defined
in Article 13 of the Lease form) no later than ten (10) days before Real
   ----------
Property Taxes become delinquent, and Tenant shall not be required to pay Real
Property Taxes prior to such date.

     3.3    Year End Adjustments: Notwithstanding anything to the contrary in
            --------------------
Section 3.3 of the Lease Form:

     A.     Tenant shall have the right, at its expense, exercisable upon
reasonable prior written notice to Landlord, to audit Landlord's books and
records for Property Operating Expenses provided such audit is conducted during
normal business hours and within six (6) months following the Lease year subject
to audit.

     B.     Landlord shall pay the cost of such audit if it is determined that
Tenant has been overcharged for Property Operating Expenses by more than five
percent (5%) and shall promptly refund the amount of such overpayment to Tenant.
<PAGE>

First Addendum to Lease
Renco 36
Page 3


     3.4    Late Charge and Interest on Rent in Default: Notwithstanding
anything to the contrary in Section 3.4 of the Lease Form:

     A.     No late charge shall become due and payable until Tenant has
received written notice that a payment of Base Monthly Rent or Additional Rent
is delinquent and Tenant fails to pay such delinquent amount within six (6) days
after receipt of Landlord's written notice, provided that, after Landlord
provides Tenant with one (1) such delinquency notice in any one calendar year,
for the remainder of such calendar year, late charges shall be due and payable
after the applicable six (6)-day grace period described in Section 3.4 of the
Lease Form without the requirement that Landlord first deliver a delinquency
notice to Tenant.

     B.     Interest on delinquent rent payments shall not commence until ten
(10) days after Tenant's receipt of Landlord's written notice that rent has not
been paid.

     4.1    Permitted Use:  Notwithstanding anything to the contrary in
            -------------
Section 4.1 of the Lease Form, Tenant shall not be required to continuously and
without interruption occupy or use the Leased Premises, and Tenant may vacate
the Leased Premises so long as it provides notice to Landlord and safeguards the
Leased Premises in a manner reasonably satisfactory to Landlord and Landlord's
insurance carrier.

     4.7    Compliance with Laws and Private Restrictions:  Notwithstanding
            ---------------------------------------------
anything to the contrary in Section 4.7 of the Lease Form:

     A.     Landlord, at its sole cost and expense, shall remain liable for
the correction of any violations of law or private restrictions for Landlord's
work which existed as of the Lease Commencement Date and was performed after the
date of this Lease.

     B.     Tenant's compliance with Laws governing the use and/or disposal of
hazardous materials and Tenant's obligation to defend Landlord with competent
counsel, indemnify and hold Landlord harmless from any claims, damages or
liabilities resulting from Tenant's failure to do so shall be governed solely
and exclusively pursuant to Paragraph 16 of this Addendum.

     4.8    Compliance with Insurance Requirements: Notwithstanding anything
            --------------------------------------
to the contrary in Section 4.8 of the Lease Form, Tenant shall be permitted to
conduct any activities or keep, store or use any item or thing within the Leased
Premises, the Building, the Outside Areas or the Property which is reasonably
necessary to Tenant's business even if it causes an increase in the rates
charged for coverage afforded under any insurance policies required or permitted
to be carried by Landlord, so long as Tenant is willing to pay any increase in
insurance rates so caused, and such activities do not constitute an unreasonable
danger to the Leased Premises or any part thereof or otherwise materially
interfere with Landlord's ability to obtain insurance for the Leased Premises
and Landlord's other buildings. If Tenant's activities cause an increase in
insurance rates for Landlord's other buildings, Tenant shall pay the entire
amount of such increase to the extent caused solely by Tenant's activities.
<PAGE>

First Addendum to Lease
Renco 36
Page 4


     4.9    Landlord's Right to Enter: Notwithstanding anything to the
            -------------------------
contrary in Section 4.9 of the Lease Form, Landlord shall enter the Leased
Premises only in a manner which will not unreasonably interfere with Tenant's
use of the Leased Premises.

     4.12   Environmental Protection:  Notwithstanding anything to the
            ------------------------
contrary in Section 4.12 of the Lease Form, Landlord may voluntarily cooperate
in reducing actual or potential environmental damage so long as such cooperation
is required by law or does not unreasonably interfere with Tenant's use of the
Leased Premises or increase Tenant's costs.

     5.1    Repair and Maintenance:  Notwithstanding anything to the contrary
            ----------------------
in Section B of Section 5.1 of the Lease Form, with respect to all repairs or
maintenance undertaken by Landlord, the cost of which is a Property Operating
Expense which is to be charged back to Tenant, Landlord shall use reasonable
efforts to obtain services and materials at fair market value.

     5.4    Energy and Resource Consumption:  Notwithstanding anything to the
            -------------------------------
contrary in Section 5.4 of the Lease Form, Landlord shall not reduce energy or
other resource consumption in a manner which unreasonably interferes with
Tenant's use of the Leased Premises, and Tenant shall not be required to
cooperate in any reduction of energy which unreasonably interferes with Tenant's
use of the Leased Premises or increases Tenant's costs unless such cooperation
is required by law.

     5.5    Limitation of Landlord's Liability:  Notwithstanding anything to
            ----------------------------------
the contrary in Section 5.5 of the Lease Form, Landlord shall be liable for any
loss or liability incurred by Tenant as a result of the negligence or misconduct
of Landlord, its agents, employees, or contractors.

     6.1    By Tenant:  Notwithstanding anything to the contrary in Section
            ---------
4.2 or Section 6.1 of the Lease Form:

     A.     Tenant shall have the right to make interior alterations which cost,
in the aggregate, less that $15,000 per Lease year without Landlord's prior
consent provided that such alterations do not affect the structural parts of the
Building or involve the demolition of Landlord's property. Tenant shall,
however, deliver to Landlord a copy of any plans and specifications for any
leasehold improvement made by Tenant to the Leased Premises.

     B.     The threshold amount of $15,000 described in subparagraph A
immediately above will be increased $1,000 per Lease year for the initial Lease
Term and any extended term.

     C.     Tenant shall have the right to make modifications, alterations or
improvements to the Outside Areas, the exterior of the Building and structural
components of the Building only with Landlord's prior written consent, which
shall not be unreasonably withheld.
<PAGE>

First Addendum to Lease
Renco 36
Page 5


     6.2    Ownership of Improvements:  Notwithstanding anything to the
            -------------------------
contrary in Section 6.2 of the Lease Form, with respect to Tenant's Property (as
defined in Paragraph 2.6 above), Landlord shall, upon Tenant's request, execute
a lien waiver in a form reasonably acceptable to Tenant's lender or equipment
lessor, so long as such waiver does not alter the terms of the Lease.

     7.1    By Tenant: Notwithstanding anything to the contrary in Section
            ---------
7.1 of the Lease Form, Landlord shall not unreasonably withhold its consent to
any assignment or sublease.

     7.2    Merger or Reorganization:  Notwithstanding anything to the
            ------------------------
contrary in Section 7.2 of the Lease Form:

     A.     If Tenant is a publicly traded corporation, or Tenant is not a
publicly traded corporation but the Lease does not represent substantially all
of the assets of Tenant, then Landlord's consent shall not be required for any
assignment or sublease (i) made in connection with a merger, consolidation, or
other reorganization of Tenant, (ii) made in connection with a sale of
substantially all of the assets of Tenant, or (iii) involving any corporation
which controls, is controlled by, or is under common control with Tenant. For
the purpose of the Lease if Tenant is a corporation, the sale, or other transfer
of Tenant's capital stock shall not be deemed an assignment, subletting, or any
other transfer of the Lease or the Lease Premises. Notwithstanding any provision
to the contrary in Article 7 of the Lease Form, in the case of any of the above
described transfers, Tenant shall not be obligated to pay any assignment
consideration or excess rentals to Landlord.

     B.     If Tenant or Landlord assigns the Lease as security for a loan,
Landlord and Tenant agree to execute such documents as are reasonably requested
by the lender and to provide reasonable provisions in the Lease protecting such
lender's security interest which are customarily required by institutional
lenders making loans secured by a deed of trust or a leasehold mortgage, so long
as such provisions do not alter the benefits of Landlord or Tenant or the
obligations of Tenant or Landlord under the Lease.

     7.4    Conditions to Landlord's Consent: Notwithstanding anything to the
            --------------------------------
contrary in Section 7.4 of the Lease Form, if Tenant is in the process of curing
a default under the Lease, the sublease or assignment may become effective
following the completion of the cure of such default; provided, however, that it
the default cannot be cured and the default is not material and Landlord does
not terminate the Lease or commence termination proceedings because of such
default, the sublease or assignment may become effective notwithstanding such
uncured non-material default.

     7.5    Assignment Consideration and Excess Rentals Defined:
Notwithstanding anything to the contrary in Section 7.5 of the Lease Form:
<PAGE>

First Addendum to Lease
Renco 36
Page 6


     A.     Tenant may sublease up to seventeen percent (17%) of the Leased
Premises without the obligation to pay excess rentals to Landlord.

     B.     The following costs shall be deducted from (a) all consideration
received by Tenant with respect to an assignment and (b) all consideration in
excess of rent due to Landlord under the Lease for the same period with respect
to subletting, to determine the meaning of the terms "assignment consideration"
or "excess rentals": (i) any commissions paid by Tenant to a licensed real
estate broker for arranging such sublease or assignment (not to exceed then
standard rates); (ii) any costs of retro-fit or restoration necessary for a
subtenant or assignee; (iii) any other reasonable expense of Tenant attributable
to locating and preparing the Leased Premises for the use and occupancy of such
subtenant or assignee; and (iv) a deduction for vacancy costs calculated from
the time that the space is vacant of Tenant's employees and has been offered for
lease with a licensed real estate broker.

     8.1    Limitation on Landlord's Liability and Release: Notwithstanding
anything to the contrary in Section 8.1 of the Lease Form, Tenant shall not
release Landlord, and Landlord shall remain liable to Tenant for the following:

            (i)    Landlord's liability to repair code violations in Landlord's
work existing as of the Lease Commencement Date;

            (ii)   Loss resulting from the negligence (whether active or
passive) or misconduct of Landlord, its agents, employees, or contractors,
provided, however, that Landlord shall not be liable to Tenant unless Tenant
shall have first provided Landlord with written notice of any known or suspected
code violation or negligence and given Landlord reasonable time to correct said
defect or negligence; and

            (iii)  Liability for hazardous materials other than liability
assumed by Tenant pursuant to Paragraph 16 of this Addendum.

     9.2    Landlord's Insurance:  Notwithstanding anything to the contrary
            --------------------
in Section 9.2 of the Lease Form:

     A.     Tenant's obligation to pay for the cost of any earthquake and/or
flood insurance premiums is limited to the obligation to pay an amount which is
equal to or less than five (5) times the cost of fire insurance premiums for the
Leased Premises.

     B.     Uninsured losses and earthquake and/or flood insurance deductibles
shall be handled in the following manner:

            (i)    Tenant shall pay for the uninsured loss or earthquake and/or
flood insurance deductible up to an amount equal to one dollar ($1.00) per
square foot of Rentable Area.
<PAGE>

First Addendum to Lease
Renco 36
Page 7



     (ii)   If Tenant's contribution of an amount equal to one dollar ($1.00)
per square foot of Rentable Area is not sufficient to cover an uninsured loss or
earthquake and/or flood insurance deductible, Landlord shall pay the balance up
to an amount equal to ten percent (10%) of the replacement cost of the Building.
If an uninsured loss or earthquake and/or flood insurance deductible exceeds ten
percent (10%) of the Building replacement cost, Landlord may terminate the Lease
unless Tenant agrees to pay the entire amount which is in excess of ten percent
(10%) of the Building replacement cost.

     (iii)  If Landlord contributes to payment for an uninsured loss or
earthquake and/or flood insurance deductible, such amount shall be repaid and
amortized by Tenant over the remaining term of the Lease together with interest
at Wells Prime Plus Two, and Tenant shall pay same as Additional Rent. However,
Tenant shall in no event be required to pay an amount in excess the product of
six and one-half cents ($0.065) times the Rentable Area of the Building in
square feet per month (the "Ceiling Amount"). All amortization will terminate on
the expiration of Tenant's occupancy of the Building.

     (iv)   If the Ceiling Amount is not adequate to amortize Landlord's
contribution to an uninsured loss or earthquake and/or flood insurance
deductible over the initial Lease Term, and Tenant exercises an option to renew
the Lease or otherwise remains in possession of the Premises, Tenant's payment
shall continue at the Ceiling Amount during any period of Tenant's occupancy of
the Premises until Landlord's contribution is amortized with interest as
provided above.

     10.3   Landlord's Right to Terminate: Notwithstanding anything to the
            -----------------------------
contrary in Section 10.3 of the Lease Form:

     A.     If more than three (3) years remain of the Lease Term then in
effect, Landlord will rebuild the Leased Premises provided that the casualty was
caused by either a loss which Landlord was required to insure against under the
Lease or a loss which Landlord actually insured against, even if such insurance
was not required (an "Insured Loss").

     B.     If fewer than three (3) years remain of the Lease term then in
effect, Landlord's obligation to rebuild after an Insured Loss shall be governed
by the following: (i) if 36-24 months remain of such Lease term, Landlord will
rebuild provided that the cost of rebuilding does not exceed an amount equal to
50% of the replacement cost of the Building; (ii) if 23-7 months remain of such
Lease term, Landlord will rebuild provided that the cost of rebuilding does not
exceed an amount equal to 30% of the replacement cost of the Building: and (iii)
if fewer than six (6) months remain of such Lease term, Landlord will rebuild
provided that the cost of rebuilding does not exceed an amount equal to 10% of
the replacement cost of the Building.

     C.     Notwithstanding the above, in the event of an Insured Loss at a
time when fewer than three (3) years remain of the Lease term then in effect,
Landlord must rebuild following an
<PAGE>

First Addendum to Lease
Renco 36
Page 8

Insured Loss if Tenant exercises an option to renew within fifteen (15) days
after the date of damage.

     11.6   Abatement of Rent:  Intentionally Omitted.
            -----------------

     12.1   Events of Tenant's Default:  Notwithstanding anything to the
            --------------------------
contrary in Section 12.1 of the Lease Form, Tenant shall not be in default for
any of the reasons specified in Sections (B) and (C) of Section 12.1 unless
Tenant has failed to cure a default within thirty (30) days after written notice
from Landlord (or such longer period of time if reasonably necessary to cure the
default so long as Tenant begins the cure within such thirty (30)-day period and
prosecutes it with due diligence and best faith efforts to completion).

     13.6   Estoppel Certificates:  Notwithstanding anything to the contrary
            ---------------------
in Section 13.6 of the Lease Form, Landlord shall, upon the same terms and
conditions applicable to Tenant, give an estoppel certificate to Tenant for the
benefit of any lender taking a security interest in the Lease or for the benefit
of a purchaser of Tenant's assets.

     13.12  Definitions: Notwithstanding anything to the contrary in
            -----------
SubSection C of Section 13.12 of the Lease Form:

     A.     The term "Property Maintenance Costs" shall not include any of the
following:

            (i)    The cost to correct code violations in work constructed by
Landlord existing as of the Lease Commencement Date;

            (ii)   The cost to correct defects in design or construction of
structural components of the Building;

            (iii)  The cost to correct defects in design or construction of non
structural components of the Building or structural and non structural
components of other improvements located on the Property, if such defect is (i)
discovered within two (2) years of the Lease Commencement Date or (ii)
discovered more than two (2) years after the Lease Commencement Date if such
defect is material and could not reasonably have been discovered by Tenant
within two (2) years of the Lease Commencement Date;

            (iv)   The cost of repairs necessitated by the active negligence or
misconduct of Landlord, its agents, employees or contractors;

            (v)    The cost of repairs which are covered by insurance or
required to be covered by insurance under the Lease; and

            (vi)   Any cost or expense related to or incurred in connection with
hazardous materials unless Landlord incurs such cost or expense as a result of
Tenant's failure to comply with its obligations under Paragraph 16 of this
Addendum.
<PAGE>

First Addendum to Lease
Renco 36
Page 9


     B.     Any single item of Property Maintenance Cost under Subparagraph
(C) which exceeds $25,000, is incurred with respect to an item with a useful
life not less than five (5) years and would be defined as a capital expenditure
under generally accepted accounting principles, shall be amortized over the
useful life of the improvement, and Tenant shall pay such amortization on a
monthly basis together with interest at Wells Prime Plus Two.

     C.     In calculating the scheduled gross rental income for purposes of
the "professional management fees" in SubSection C, amortization of improvements
required by law pursuant to Section 6.3 shall be excluded.

     13.12  C. Landlord has agreed to use this form at Tenant's request.
This form was drafted for use with a single tenant building. The. Leased
Premises is a part of a multi tenant building. Landlord and Tenant agree to
prorate Property Maintenance Costs based on the relative size of the space
occupied by Tenant when compared to the total floor area of the Building, Tenant
shall not be required to pay for services provided to another tenant in the
Building as a result of that tenant's disproportionate use of services, In
addition, Tenant agrees to use no more than its prorata share of any service or
facility existing or provided to the Building, specifically including parking
and loading facilities. Landlord agrees not to permit any other tenant in the
Building to use a disproportionate share of any service or facility existing or
provided to the Building.

     13.14   Miscellaneous: Notwithstanding anything to the contrary in
             -------------
Section 13.14 of the Lease Form:

     Whenever the Lease requires an approval, consent, designation,
determination or Judgment by either Landlord or Tenant, such approval, consent,
designation, determination or judgment shall not be unreasonably withheld or
delayed and in exercising any remedy or right hereunder, each party shall at all
times act reasonably and in good faith.

     15.    Cross Default: Landlord and Tenant have previously entered into
            -------------
the Building 59 Lease. The lease provides for Tenant's occupancy of a building
identified as Renco 59, 47341 Bayside parkway, Fremont, California. A default by
Tenant (as defined in the Article entitled "Default and Remedies") under such
lease or under this Lease shall be considered to be a default under the Renco 59
lease as well as this Lease. In the event of a default by Tenant under the Renco
59 lease or this Lease, Landlord may pursue the remedies permitted by law or
pursuant to the terms of any, either or all of such leases, as if Tenant had
defaulted under any one or all of such leases. If Tenant and Landlord enter into
any other Leases, the immediately preceding cross default provisions shall apply
to all such leases.

     16.    Hazardous Materials: Notwithstanding anything to the contrary in
            -------------------
the Lease:

     A.     Landlord represents that, to the best of its knowledge, any
handling, transportation, storage, treatment or use of Hazardous Materials (as
defined below) that has occurred on the property prior to the date of the Lease
has been done in compliance with all laws
<PAGE>

First Addendum to Lease
Renco 36
Page 10


and that the property is, to the best of Landlord's knowledge, presently in
compliance with all laws which relate to Hazardous Materials.

     B.     Tenant, at its sole cost, shall comply with all Laws relating to
the storage, use and disposal of hazardous, toxic or radioactive matter
including those materials identified in Section 66630 through 66685 of Title 22
of the California Administrative Code, Division 4, Chapter 30 ("Title 22") as
they may be amended from time to time (collectively "Hazardous Materials");
provided, however, that Tenant shall not be responsible for contamination of the
Leased Premises by Hazardous Materials existing as of the Lease/Commencement
Date (unless caused by Tenant) or by any release of Hazardous Materials
occurring off-site on adjacent or neighboring property (but not caused by
Tenant) which migrates onto the Leased Premises. If Tenant does store, use or
dispose of any Hazardous Materials, Tenant shall notify Landlord in writing at
least ten (10) days prior to their first appearance on the Leased Premises.
Tenant shall be solely responsible for and shall defend, indemnify, and hold
Landlord and its agents harmless form and against all claims, costs and
liabilities, including attorneys' fees and costs, arising out of or in
connection with Tenant's storage, use and/or disposal of Hazardous Materials. If
the presence of Hazardous Materials on the Leased Premises caused or permitted
by Tenant results in contamination or deterioration of water or soil resulting
in a level of contamination greater than the levels established by any
governmental agency having jurisdiction over such contamination, then Tenant
shall Promptly take any and all action necessary to clean up such contamination
if required by Law or as a condition to the issuance or continuing effectiveness
of any governmental approval which relates to the use of the Leased Premises. At
any time prior to the expiration of the Lease Term, Tenant shall have the right
to conduct appropriate tests of water and soil and to deliver to Landlord the
results of such tests to demonstrate that no contamination in excess of
permitted levels has occurred as a result of Tenant's use of the Leased
Premises. Tenant shall further be solely responsible for, and shall defend,
indemnify, and hold Landlord and its agents harmless from and against all
claims, costs and liabilities, including attorneys' fees and costs, arising out
of or in connection with any removal, cleanup and restoration work and materials
required hereunder to return the Leased Premises and any other property of
whatever nature to their condition existing prior to the appearance of the
Hazardous Materials. Notwithstanding the preceding sentence, Tenant shall only
be required to clean up the deterioration or contamination of water or soil to a
level of contamination less, than or equal to the levels established by any
governmental agency having jurisdiction over such contamination. Tenant's
obligation hereunder shall survive the termination of the Lease.

     17.    Limitations on Liability.  Intentionally Omitted.
            ------------------------
<PAGE>

First Addendum to Lease
Renco 36
Page 11


     20.    General.  In the event of any inconsistency between this First
            -------
Addendum and the Lease Form, the terms of this First Addendum shall prevail. As
used herein, the term "Lease" shall mean the Lease Form, this Addendum and all
riders, Exhibit s, rules, regulations, covenants, conditions and restrictions
referred to in the Lease Form or this Addendum.



LANDLORD:                                TENANT:
RENCO INVESTMENT COMPANY                 LEXAR MICROSYSTEMS, INC.
a California General Partnership         a California Corporation


By:_____________________________         By:_________________________
        General Partner
                                         Title:______________________
By:_____________________________
        General Partner
                                         By:_________________________

By:_____________________________         Title:______________________
        General Partner

Dated:__________________________         Dated:______________________

<PAGE>

                                   EXHIBIT A
<PAGE>

                                   EXHIBIT B
<PAGE>

                           FIRST AMENDMENT OF LEASE

This First Amendment of Lease ("Amendment") is made and entered into this the
15th day of July, 1998 by and between RENCO INVESTMENT COMPANY, a California
Partnership ("Landlord") and LEXAR MEDIA, INC., a California Corporation
("Tenant").

                                    RECITALS

          A.  Landlord and Tenant entered into a Lease dated October 25, 1996
("Lease"), for the lease of approximately 22,788 gross square feet of space in
the building located at 47421 Bayside Parkway, Fremont, Alameda County,
California ("Premises").

          B.  Landlord and Tenant now desire to extend the lease term by five
years, such that the lease termination date would be December 31, 2003.

          NOW, THEREFORE, in consideration of the foregoing, and other good and
valuable consideration, the receipt of which is hereby acknowledged, Landlord
and Tenant agree as follows:

          1.  Unless otherwise expressly provided herein, all terms which are
given a special definition by the Lease, that are used herein, are intended to
be used with the definition given to them in the Lease. The provisions of the
Lease shall remain in full force and effect except as specifically amended
hereby. In the event of any inconsistency between the Lease and this Amendment,
the terms of this Amendment shall prevail.

          2.  Paragraph 1.1.G. is hereby amended to extend the Lease term by
five (5) years and to provide for a lease termination date of December 31, 2003
("First Extended Term").

          3.  Paragraph 1.1.K. is hereby amended to increase tenant's Security
Deposit from $25,668.00 to the sum of $37,322.23. Payment of the additional sum,
in the amount of $11,654.23, shall be made upon execution of this Amendment, and
shall be held by Landlord as security under the terms of the Lease.

          4.  Paragraph 1. 1. S. is amended as follows:

              Commencing on January 1, 1999, and continuing through the month of
              December, 1999, the Base Monthly Rent shall be $31,903.20.

              Commencing on January 1, 2000, and continuing through the month of
              December, 2000, the Base Monthly Rent shall be $33,179.33.

              Commencing on January 1, 2001, and continuing through the month of
              December, 2001, the Base Monthly Rent shall be $34,506.50.

              Commencing on January 1, 2002 and continuing through the month of
              December, 2002, the Base Monthly Rent shall be $35,886.76.
<PAGE>

Lexar Micro Systems, Inc.
First Amendment of Lease
Page 2

              Commencing on January 1, 2003, and continuing through the month of
              December, 2003, the Base Monthly Rent shall be $37,322.23.

          5.  Throughout the First Extended Term of the Lease, Tenant shall
continue to pay all sums of Additional Rent, as set forth in the Lease.

          6.  Tenant agrees, as of the date of the execution of this Amendment,
to lease the Premises, in its "as is" condition.

          7.  Landlord and Tenant each agree to pay their own broker for
services provided. Neither Landlord nor Tenant shall be obligated to pay the
other party's real estate brokerage fees. Landlord and Tenant each agree to
indemnify, defend and hold the other party harmless from and against any and all
liability, damages and costs (including attorneys' fees) incurred by the other
as a result of a claim made by the other party's real estate broker.

          8.  For and in consideration of Tenant entering into the Amendment,
and other valuable consideration, Landlord hereby grants Tenant one option
("Option") to renew the Lease for an additional term of five (5) years ("Renewal
Term"), with the Option commencing on January 1, 2004 (the "First Renewal
Commencement Date") and ending five (5) years thereafter (the "First Renewal
Expiration Date").

          The lease of the Premises for the Renewal Term shall be on the same
terms and conditions as set forth in the Lease and Amendment, except:

              a. That the rental for the Premises during the Renewal Term shall
be as set forth below.

              b. The Security Deposit shall be increased such that it shall not
be less than the rental amount determined below (the "Increased Security Deposit
Amount").

              c. Provided that Tenant is not in default (following the passage
of the notice and cure periods described in Article 12) as of the exercise of
the Option, Tenant shall notify Landlord of Tenant's exercise of its right to
renew the Lease for the Renewal Term only by giving to Landlord written notice
not later than December 31, 2002. Time is expressly of the essence to Landlord.
Any attempted exercise of this Option made other than within the time period set
forth above or in the manner stated, shall be void and of no force or effect.

              d. If Tenant shall have properly and timely exercised its right to
extend the term of the Lease, provided that Tenant is not in default (following
the passage of notice and cure periods described in Article 12), as of the first
renewal commencement date, the term of the Lease shall be so extended for such
renewal term on the same terms and conditions contained in the Lease; provided,
however, the Base Monthly Rent for each month of the Renewal Term shall be
calculated as follows:
<PAGE>

Lexar Micro Systems, Inc.
First Amendment of Lease
Page 3

          The new Base Monthly Rent for each month of the Renewal Term shall be
the greater of:

               (i)  the Base Monthly Rent being paid by Tenant to Landlord
during the final full month of the final year of the initial lease term, or

               (ii) the Then Market Rental Rate for the Premises.

          e.   The term "Then Market Rental Rate" shall mean the Base Monthly
Rent that a ready and willing nonrenewal, new, prospective tenant would pay, as
of the applicable date, to a ready and willing landlord for property comparable
to the Premises in the Bayside Technology Park, Fremont, California, if such
property were exposed for lease on the open market, for a term of five (5)
years.

          f.   The Then Market Rental Rate shall be determined by mutual
agreement between Landlord and Tenant or, in the event such agreement cannot be
made within ten (10) days from the date Tenant shall have exercised this Option,
Landlord and Tenant shall each appoint a real estate appraiser with at least
five (5) years full time commercial/industrial experience in Santa Clara or
Alameda county, to appraise and determine the Then Market Rental Rate for the
Premises. If either party does not appoint an appraiser within ten (10) days
after the other party has given notice of the name of its appraiser, the other
party can then apply to the President of the Santa Clara County Real Estate
Board or presiding judge of the Superior Court of Alameda County for the
selection of a second appraiser that meets the qualifications stated above. The
failing party shall bear the cost of appointing the second appraiser and paying
the second.

          g.   appraiser's fee. Two appraisers shall attempt to establish the
Then Market Rental Rate for the Premises. If the two appraisers are unable to
agree on the Then Market Rental Rate for the Premises within ten (10) days after
the second appraiser has been selected or appointed, then the two appraisers
shall attempt to select a third appraiser meeting the qualifications stated
above. If they fail to agree on a third appraiser, either party can follow the
above procedure for having an appraiser appointed by the Real Estate Board or a
judiciary. Each of the parties shall bear one half (1/2) the cost of appointing
the third appraiser and of paying the third appraiser's fee. Unless the three
appraisers are able to agree on the Then Market Rental Rate for the Premises
within ten (10) days after the selection or appointment of the third appraiser,
the two appraisals being calculated most closely together, after having
discarded the appraisal amount which most greatly varies from the other two
appraisal amounts, shall be added together, then divided by two (2). The
resulting rental amount shall be defined as the Then Market Rental Rate for the
Premises.

          h.   In no event, however, shall the resulting Then Market Rental Rate
for the Renewal Term be less than the Base Monthly Rent paid during the full
final month of the initial Lease term.
<PAGE>

Lexar Micro Systems, Inc.
First Amendment of Lease
Page 4

          9.  Except as herein modified or amended, the Lease shall remain in
full force and effect.

          IN WITNESS WHEREOF, the parties have signed this First Amendment of
Lease, which, for reference purposes shall be deemed to have been dated as of
July 15, 1998.


LANDLORD:                                    TENANT
RENCO INVESTMENT COMPANY                     LEXAR MEDIA, INC.
A California Partnership                     A California Corporation


By:_____________________________             By:__________________________
Title: General Partner
                                             Title:_______________________

By:_____________________________
Title: General Partner
                                             By:__________________________

By:_____________________________             Title:_______________________
Title: General Partner


<PAGE>

                           SECOND AMENDMENT OF LEASE

     This Second Amendment of Lease ("Amendment") is made and entered into this
the 13th day of September, 1999 by and between RENCO INVESTMENT COMPANY, a
California General Partnership ("Landlord") and LEXAR MEDIA, INC., a California
Corporation ("Tenant").

                                R E C I T A L S

     A.  Landlord and Tenant entered into a Lease dated October 25, 1996
("Lease"), for the lease of approximately 22,788 gross square feet of space in
the building located at 47421 Bayside Parkway, Fremont, Alameda County,
California ("Premises").

     B.  Landlord and Tenant entered into a First Amendment of Lease dated July
15, 1998 wherein the Lease term was extended to December 31, 2003.  The Lease
and First Amendment shall here after be referred to herein as the "Lease"
herein.

     C.  Landlord and Tenant agree to amend the Lease to extend the lease term
and to allow Tenant to lease additional space within the building, such that
Tenant shall occupy and lease 34,396 gross square feet of space.

     NOW, THEREFORE, in consideration of the foregoing, and other good and
valuable consideration, the receipt of which is hereby acknowledged, Landlord
and Tenant agree as follows:

     1.  Unless otherwise expressly provided herein, all terms which are given a
special definition by the Lease, that are used herein, are intended to be used
with the definition given to them in the Lease.  The provisions of the Lease
shall remain in full force and effect except as specifically amended hereby.  In
the event of any inconsistency between the Lease and this Amendment, the terms
of this Amendment shall prevail.

     2.  The Lease expiration date of December 31, 2003, shall be extended to a
date that is five (5) years after the Effective Date, as defined in Paragraph 3
below.

     3.  Tenant hereby agrees to lease and hire from Landlord an additional
11,608 gross square feet of space located at 47361 Bayside Parkway, Fremont,
Alameda County, California ("Additional Space"), such that the total space
leased by Tenant shall total 34,396 gross square feet of space.  Possession of
the Additional Space shall be tendered to Tenant, and Tenant's obligation to pay
Rent shall commence on the "Effective Date", which shall be the later of: (i)
January 1, 2000; or (ii) the date that the Additional Space becomes available
for Tenant's occupancy.

     4.  Paragraph 1.1.K. is hereby amended to increase Tenant's Security
Deposit from $37,322.23 to the sum of $55,789.77.  Payment of the additional
sum, in the amount of $18,467.54 shall be made upon execution of this Amendment,
and shall be held by Landlord as security under the terms of the Lease.

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<PAGE>

     5.  Paragraph 1.1.P. is amended as follows:

         Commencing on January 1, 2000, and continuing through the month of
         December 2000, the Base Monthly Rent shall be $47,689.33.

         Commencing on January 1, 2001, and continuing through the month of
         December, 2001, the Base Monthly Rent shall be $49,596.90.

         Commencing on January 1, 2002, and continuing through the month of
         December, 2002, the Base Monthly Rent shall be $51,580.78.

         Commencing on January 1, 2003, and continuing through the month of
         December, 2003, the Base Monthly Rent shall be $53,644.01.

         Commencing on January 1, 2004, and continuing through the month of
         December, 2004, the Base Monthly Rent shall be $55,789.77.

     6.  Tenant agrees to lease the Additional Space, in its "as is" condition.

     7.  Landlord and Tenant each agree to pay their own broker for services
provided. Neither Landlord nor Tenant shall be obligated to pay the other
party's real estate brokerage fees. Landlord and Tenant each agree to indemnify,
defend and hold the other party harmless from and against any and all liability,
damages and costs (including attorneys' fees) incurred by the other as a result
of a claim made by the other party's real estate broker.

     8.  Commencing on the Effective Date and continuing though December 31,
2004, Tenant shall have a right of first refusal as to the 11,180 gross square
foot space located at 47381 Bayside Parkway, Fremont, California. Tenant's right
of first refusal shall be the right to lease all of the space upon the terms and
conditions then being proposed by any other prospective tenant. Landlord shall
notify Tenant, in writing, of the availability of the space and the proposed
terms offered by a prospective tenant. Tenant shall then have 3 business days
within which to elect to lease all of the space on the terms and conditions
otherwise proposed by the prospective tenant. If Tenant fails to make a timely
election to lease the space, then this right of first refusal shall terminate.
In the event Tenant elects to exercise this right of first refusal, then an
amendment to this Lease shall be executed by Landlord and Tenant incorporating
the new space into the terms of this Lease. Tenant's failure to execute the
amendment within 3 business days of receipt of the amendment, shall void this
right of first refusal and Landlord shall have the right to lease the space to
any prospective tenant that it shall elect.

     9.  Tenant's election to exercise the Option in Paragraph 8 of the First
Amendment shall be the election to extend the term of the Lease as to the entire
34,396 square feet of the Premises. Tenant my not exercise the Option as to a
portion of the Premises.

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<PAGE>

     10.  Except as herein modified or amended, the Lease shall remain in full
force and effect.

     IN WITNESS WHEREOF, the parties have signed this Amendment, which, for
reference purposes shall be deemed to have been dated as of September 13, 1999.

LANDLORD:                                  TENANT:
RENCO INVESTMENT COMPANY                   LEXAR MEDIA INC.
A California General Partnership           A California Corporation

By: _______________________________        By: ____________________________
Title: General Partner
                                           Title: _________________________

By: _______________________________
Title: General Partner                     By: ____________________________

                                           Title: _________________________
By: _______________________________
Title: General Partner

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