<PAGE>   1
                                                                    EXHIBIT 10.6


                                 [SOBRATO LOGO]


                                 LEASE BETWEEN
          THE SOBRATO 1979 TRUST AND PENINSULA ENGINEERING GROUP, INC.

<TABLE>
<CAPTION>
Section                                                                   Page #
-------                                                                   ------
<S>                                                                       <C>
Parties .................................................................    1
Premises ................................................................    1
Use .....................................................................    1
Term and Rental .........................................................    1
Security Deposit ........................................................    1
Late Charges ............................................................    2
Construction and Possession .............................................    2
   Landlord's Obligation to Construct ...................................    2
   Contribution to Tenant Improvement Costs .............................    2
   Tenant Improvement Plans and Cost Estimate ...........................    2
   Commencement Date ....................................................    2
Acceptance of Possession and Covenants to Surrender .....................    2
Uses Prohibited .........................................................    3
Alterations and Additions ...............................................    3
Maintenance of Premises .................................................    3
   Landlord and Tenant's Obligations Regarding Common Area Costs ........    3
   Common Area Costs ....................................................    4
   Tenant's Allocable Share .............................................    4
   Waiver of Liability ..................................................    4
   Tenant's Obligations .................................................    5
Hazard Insurance ........................................................    5
   Tenant's Use .........................................................    5
   Tenant's Insurance ...................................................    5
   Waiver ...............................................................    6
Taxes ...................................................................    6
Utilities ...............................................................    6
Abandonment .............................................................    6
Free From Liens .........................................................    6
Compliance With Governmental Regulations ................................    7
Toxic Waste and Environmental Damage ....................................    7
   Tenant's Responsibility ..............................................    7
   Tenant's Indemnity Regarding Hazardous Materials .....................    7
   Environmental Monitoring .............................................    7
   Landlord's Indemnity Regarding Hazardous Materials ...................    8
Indemnity ...............................................................    8
Advertisements and Signs ................................................    8
Attorney's Fees .........................................................    8
Tenant's Default ........................................................    8
   Remedies .............................................................    8
   Abandonment ..........................................................    9
   No Termination .......................................................    9
Surrender of Lease ......................................................    9
This paragraph intentionally left blank .................................    9
Landlord's Default ......................................................    9
Notices .................................................................   10
Entry by Landlord .......................................................   10
Destruction of Premises .................................................   10
   Destruction by an Insured Casualty ...................................   10
   Destruction by an Uninsured Casualty .................................   10
</TABLE>



                                     Page i


<PAGE>   2


<TABLE>
<S>                                                                        <C>
Assignment or Sublease ..................................................   11
   Consent by Landlord ..................................................   11
   Assignment or Subletting Consideration ...............................   11
   No Release ...........................................................   12
   Effect of Default ....................................................   12
Condemnation ............................................................   12
Effects of Conveyance ...................................................   12
Subordination ...........................................................   13
Waiver ..................................................................   13
Holding Over ............................................................   13
Successors and Assigns ..................................................   13
Estoppel Certificates ...................................................   13
This paragraph intentionally left blank .................................   14
Quiet Enjoyment .........................................................   14
Brokers .................................................................   14
Landlord's Liability ....................................................   14
Authority of Parties ....................................................   14
   Corporate Authority ..................................................   14
This paragraph intentionally left blank .................................   14
Miscellaneous Provisions ................................................   14
   Rent .................................................................   14
   Performance by Tenant ................................................   14
   Performance by Landlord ..............................................   14
   Interest .............................................................   14
   Rights and Remedies ..................................................   14
   Survival of Indemnities ..............................................   15
   Severability .........................................................   15
   Choice of Law ........................................................   15
   Time .................................................................   15
   Entire Agreement .....................................................   15
   Representations ......................................................   15
   Headings .............................................................   15
Exhibits ................................................................   16
</TABLE>


                                     Page ii
<PAGE>   3


                                 [SOBRATO LOGO]


         1. PARTIES: THIS LEASE, is entered into on this 7th day of August,
1992, between The Sobrato 1979 Trust, a California general partnership, whose
address is 10600 North DeAnza Boulevard, Cupertino, California, 95014, and
Peninsula Engineering Group, Inc., a California Corporation, whose address is
1091 Industrial Road, San Carlos, California, 94070, hereinafter called
respectively Landlord and Tenant.

         2. PREMISES: Landlord hereby leases to Tenant, and Tenant hires from
Landlord those certain Premises with the appurtenances, situated in the City of
Sunnyvale, County of Santa Clara, State of California, and more particularly
described as follows, to-wit:

That certain real property commonly known and designated as 1150 Morse Avenue
consisting of approximately 40,333 rentable square feet of a larger 70,000
square foot freestanding building ("Building") as outlined in red on Exhibit
"A".

         3. USE: Tenant shall use the Premises only for the following purposes
and shall not change the use of the Premises without the prior written consent
of Landlord: Office, research, development, testing, light manufacturing,
ancillary warehouse, and related legal uses. Landlord makes no representation or
warranty that any specific use of the Premises desired by Tenant is permitted
pursuant to any Laws.

         4. TERM AND RENTAL: The term ("Lease Term") shall be for seventy two
(72) months, commencing, as adjusted pursuant to paragraph 7, on the 1st day of
January, 1993 ("Commencement Date"), and ending on the 31st day of December,
1998, ("Expiration Date"). In addition to all other sums payable by Tenant under
this Lease, Tenant shall pay as base monthly rent ("Base Monthly Rent") for the
Premises the following amounts:

                  01/01/93 - 12/31/95        $22,586.48 per month

                  01/01/96 - 12/31/98        $26,619.78 per month

Base Monthly Rent shall be due on or before the first day of each calendar month
during Lease Term. All sums payable by Tenant under this Lease shall be paid in
lawful money of the United States of America, without offset or deduction, and
shall be paid to Landlord at such place or places as may be designated from time
to time by Landlord. Base Monthly Rent for any period less than a calendar month
shall be a pro rata portion of the monthly installment.

         5. SECURITY DEPOSIT: Concurrently with Tenant's execution of this
Lease, Tenant has deposited with Landlord the sum of Twenty Six Thousand Six
Hundred Nineteen and 78/100 Dollars ($26,619.78) as a security deposit. If
Tenant defaults with respect to any provisions of this Lease, including but not
limited to the provisions relating to payment of Base Monthly Rent or other
charges, Landlord may, to the extent reasonably necessary to remedy Tenant's
default, use all or any part of said deposit for the payment of Base Monthly
Rent or other charges in default or the payment of any other payment of any
other amount which Landlord may spend or become obligated to spend by reason of
Tenant's default or to compensate Landlord for any other loss or damage which
Landlord may suffer by reason of Tenant's default. If any portion of said
deposit is so used or applied, Tenant shall, within ten (10) days after written
demand therefor, deposit cash with Landlord in an amount sufficient to restore
said deposit to the full amount hereinabove stated and shall pay to Landlord
such other sums as shall be necessary to reimburse Landlord for any sums paid by
Landlord. Said deposit shall be returned to Tenant within thirty (30) days after
the Expiration Date and surrender of



                                     Page 1
<PAGE>   4

the Premises to Landlord, less any amount deducted in accordance with this
paragraph, together with Landlord's written notice itemizing the amounts and
purposes for such retention. In the event of termination of Landlord's interest
in this Lease, Landlord shall transfer said deposit to Landlord's successor in
interest.

         6. LATE CHARGES: A late charge of ten percent (10%) of the Base Monthly
Rent will be assessed on payments received after the fifth day of the calendar
month excluding Sunday and legal holidays.

IT IS FURTHER MUTUALLY AGREED BETWEEN THE PARTIES AS FOLLOWS:

         7. CONSTRUCTION AND POSSESSION:

         A. LANDLORD'S OBLIGATION TO CONSTRUCT: The Tenant Improvements shall be
constructed by independent contractors to be employed by and under the
supervision of a General Contractor, in accordance with interior plans prepared
by Dennis Kobza & Associates, to be attached as Exhibit "B" ("Working
Drawings"). Landlord shall construct the Tenant Improvements in accordance with
all existing applicable municipal, local, state and federal laws, statutes,
rules, regulations and ordinances. Landlord shall utilize H & L Construction for
the construction of the Tenant Improvements.

         B. CONTRIBUTION TO TENANT IMPROVEMENT COSTS: Landlord shall be
responsible for and shall pay the cost of (i) the Tenant Improvements up to the
amount of Eighty Thousand Dollars ($80,000.00) ("Tenant Improvement Allowance"),
(ii) demising the Building, (iii) bringing the restrooms into compliance with
Title 24 requirements, and (iv) any future expenses which may be required to
meet federal, state, county and city building codes, both at the time of
occupancy and subsequently found to have been omitted following occupancy, such
as, but not limited to the Americans with Disabilities Act (ADA) and Title 24.
Costs in excess of said Tenant Improvement Allowance shall be paid for by Tenant
within fifteen (15) days following the Commencement Date.

         C. TENANT IMPROVEMENT PLANS AND COST ESTIMATE: Tenant to supply
Landlord with general improvement information including a space plan (one line
drawing) of Tenant's wall layout, ("Space Plan") by August 31, 1992. Landlord
and Tenant shall approve the Working Drawings and Budget (or modify the same)
within seven (7) days thereafter. In the event (i) Tenant fails to provide the
Space Plan when required above, or (ii) Tenant Fails to approve the Working
Drawings or Budget within seven (7) days as provided above, or (iii) Tenant
makes any changes to the Working Drawings which cause Landlord's construction
schedule to be delayed, the Commencement Date shall occur one (1) day in advance
of Substantial Completion as defined below for each day of delay.

         D. COMMENCEMENT DATE: If Landlord, for any reason whatsoever, cannot
deliver possession of the said Premises to Tenant by the Commencement Date, this
Lease shall not be void or voidable, nor shall Landlord be liable to Tenant for
any loss or damage resulting therefrom; but in that event the Commencement Date
and Expiration Date of the Lease and all other dates affected thereby shall be
revised to conform to the date of Landlord's delivery of possession. The Lease
Term shall not commence until substantial completion of the Premises occurs. The
terms "Substantial Completion" and "Substantially Complete" shall mean that (i)
all necessary governmental approvals for occupancy of the Building have been
obtained; (ii) construction of the Premises has been completed in accordance
with the Working Drawings approved by Tenant to an extent that would permit
Tenant to use the Premises for its intended purpose; and (iii) the Premises are
in a "broom clean" finished condition.

         8. ACCEPTANCE OF POSSESSION AND COVENANTS TO SURRENDER: By entry
hereunder, Tenant accepts the Premises as being in good and sanitary order,
condition and repair and accepts the Building and the other improvements in
their present condition, except for the "punch list" as set forth on Exhibit
"C", attached hereto.



                                     Page 2
<PAGE>   5

The Tenant agrees on Expiration Date, or on the sooner termination of this
Lease, to surrender the Premises to Landlord in good condition and repair,
reasonable wear and tear excepted. "Good condition" shall mean that the interior
walls, floors, suspended ceilings, and carpeting within the Premises will be
cleaned to the same condition as existed at the commencement of the Lease,
normal wear and tear excepted. Tenant agrees, at its sole cost, to remove all
phone and data cabling from the suspended ceiling and repair or replace broken
ceiling tiles, and relevel the ceiling if required. Tenant shall ascertain from
Landlord within thirty (30) days before the Expiration Date whether Landlord
desires to have the Premises or any part or parts thereof restored to their
condition as of the Commencement Date or to cause Tenant to surrender all
Alterations in place to Landlord. If Landlord shall so desire, then Tenant shall
remove such Alterations as Landlord may require and shall repair and restore
said Premises or such part or parts thereof before the Expiration Date at
Tenant's sole cost and expense. Tenant on or before the Expiration Date or
sooner termination of this Lease, shall remove all its personal property and
trade fixtures from the Premises, and all property and fixtures not so removed
shall be deemed to be abandoned by Tenant. If the Premises are not surrendered
at the Expiration Date or sooner termination of this Lease in the condition
required by this paragraph, Tenant shall indemnify, defend, and hold harmless
Landlord against loss or liability resulting from delay by Tenant in so
surrendering the Premises including, without limitation, any claims made by any
succeeding tenant founded on such delay.

         9. USES PROHIBITED: Tenant shall not commit, or suffer to be committed,
any waste upon the said Premises, or any nuisance, or other act or thing which
may disturb the quiet enjoyment of any other tenant in or around the Building,
or allow the Premises to be used for any unlawful purpose, or place any loads
upon the floor, walls, or ceiling which endanger the structure, or use any
machinery or apparatus which will in any manner vibrate or shake the Building,
or place any harmful liquids, waste materials, or hazardous materials in the
drainage system of, or upon or in the soils surrounding the Building. No
materials, supplies, equipment, finished products or semi-finished products, raw
materials or articles of any nature or any waste materials, refuse, scrap or
debris shall be stored upon or permitted to remain on any portion of the
Premises outside of the Building proper except in enclosed storage areas without
Landlord's prior approval, which approval may be withheld in its sole
discretion.

         10. ALTERATIONS AND ADDITIONS: Tenant shall not make, or suffer to be
made, any alteration or addition to the said Premises ("Alterations"), or any
part thereof, without (i) the written consent of Landlord first had and
obtained, and (ii) delivering to Landlord the proposed architectural and
structural plans for all such Alterations. Any Alterations, except movable
furniture and trade fixtures, shall become at once a part of the realty and
belong to Landlord. Alterations which are not to be deemed as trade fixtures
shall include heating, lighting, electrical systems, air conditioning,
partitioning, carpeting, or any other installation which has become an integral
part of the Premises. After having obtained Landlord's consent, Tenant agrees
that it will not proceed to make such Alterations until (i) Tenant has obtained
all required governmental approvals and permits, and (ii) Tenant has provided
Landlord reasonable security, in form reasonably approved by Landlord, to
protect Landlord against mechanics' lien claims. Tenant further agrees to
provide Landlord (i) written notice of the actual start date of the work, (iii)
a complete set of as-built drawings. All Alterations shall be maintained,
replaced or repaired at Tenant's sole cost and expense.

         11. MAINTENANCE OF PREMISES:

                  A. LANDLORD AND TENANT'S OBLIGATIONS REGARDING COMMON AREA
COSTS: Tenant agrees to reimburse Landlord for the expenses resulting from
Landlord's payment of Common Area Costs as defined in paragraph 11(B) incurred
by Landlord because the cost is not directly allocable to or payable by a single
tenant in the Building or the Project. Tenant agrees to pay Tenant's Allocable
Share as defined in paragraph 11(C) of the Common Area Costs, as additional
rental, within ten (10) days of written invoice from Landlord.



                                     Page 3
<PAGE>   6

                  B. COMMON AREA COSTS: For purposes of calculating Tenant's
Allocable Share of Building and of Project Costs, the term "Common Area Costs"
shall mean all costs and expenses of the nature hereinafter described which are
incurred in connection with ownership and operation of the Building or the
Project in which the Premises are located, as the case may be not directly
allocable to or payable by a single tenant in the Building or the Project,
together with such additional facilities as may be determined by Landlord to be
reasonably desirable or necessary to the ownership and operation of the Building
and/or Project. All costs and expenses shall be determined in accordance with
generally accepted accounting principles which shall be consistently applied
(with accruals appropriate to Landlord's business), including but not limited
to, the following: (i) common area utilities, including water and power,
heating, lighting, air-conditioning, ventilating and Building utilities to the
extent not separately metered; (ii) common area maintenance and service
agreements for the Building or the Project and the equipment therein including,
without limitation, common area janitorial services, alarm and security
services, exterior window cleaning, and maintenance of the sidewalks,
landscaping, waterscape, roof membrane, parking areas, driveways, service areas,
mechanical rooms, elevators, and the building exterior; (iii) insurance premiums
and costs, including without limitation, the premiums and cost of fire, casualty
and liability coverage and rental abatement and earthquake (if commercially
available) insurance applicable to the Building or Project; (iv) repairs,
replacements and general maintenance (excluding repairs and general maintenance
paid by proceeds of insurance or by Tenant or other third parties, and repairs
or alterations attributable solely to tenants of the Building or Project other
than Tenant); and (v) All real estate taxes and assessment installments (special
or general) or other impositions or charges which may be levied on the Premises,
upon the occupancy of the Premises and including any substitute or additional
charges which may be imposed during, or applicable to the Lease Term including
real estate tax increases due to a sale or other transfer of the Premises, as
such taxes are levied or appear on the City and County tax bills and assessment
rolls. This shall be a Net Lease and the Base Monthly Rent shall be paid to
Landlord absolutely net of all costs and expenses. The provision for payment of
Common Area Costs by means of periodic payment of Tenant's Allocable Share of
Building and/or Project Costs are intended to pass on to Tenant and reimburse
Landlord for all costs of operating and managing the Building and/or Project.

                  C. TENANT'S ALLOCABLE SHARE: For purposes of prorating Common
Area Costs which Tenant shall pay, Tenant's Allocable Share of Building Costs is
computed by multiplying the total Common Area Costs for services shared by the
Building by a fraction, the numerator of which is the rentable square footage of
the Premises and the denominator of which is the total rentable square footage
of the Building (excluding common areas). Tenant's Allocable Share of Project
Costs shall be computed on a shared service by service basis, by multiplying the
total Common Area Costs for services shared by the Building and one or more
buildings in the Project by a fraction, the numerator of which is the rentable
square footage of the Premises and the denominator of which is the total
rentable square footage of the Buildings in the Project which share the
services. It is understood and agreed by Landlord and Tenant that Tenant's
Allocable Share of Building Costs is 57.62% and of Project Costs is 57.62%.
based on 40,333 square feet of the 70,000 square foot Building. It is understood
and agreed that Tenant's obligation to share in Common Area Costs shall be
adjusted to reflect the commencement and termination dates of the Lease Term and
are subject to recalculation in the event of expansion of the Building or
Project.

                  D. WAIVER OF LIABILITY: Failure by Landlord to perform any
defined services, or any cessation thereof, when such failure is caused by
accident, breakage, repairs, strikes, lockout or other labor disturbances or
labor disputes of any character, or by any other cause, similar or dissimilar,
beyond the reasonable control of Landlord, shall not render Landlord liable in
any respect for damages to either person or property, nor be construed as an
eviction of Tenant, nor cause an abatement of rent nor relieve Tenant from
fulfillment of any covenant or agreement hereof. Should any of the equipment or
machinery utilized in supplying the services listed herein break down, or for
any cause cease to function properly, upon receipt of written notice from Tenant
of any deficiency or failure of any defined Services, Landlord shall use
reasonable



                                     Page 4
<PAGE>   7

diligence to repair the same promptly, but Tenant shall have no right to
terminate this Lease, and shall have no claim for rebate of rent or damages, on
account of any interruptions in service occasioned thereby or resulting
therefrom. Tenant waives the provisions of California Civil Code Sections 1941
and 1942 concerning the Landlord's obligation of tenantability and Tenant's
right to make repairs and deduct the cost of such repairs from the rent.
Landlord shall not be liable for a loss of or injury to property, however
occurring, through or in connection with or incidental to furnishing or its
failure to furnish any of the foregoing.

                  E. TENANT'S OBLIGATIONS: Except as provided in 11(A) above,
Tenant shall, at its sole cost, keep and maintain, repair and replace, said
Premises and appurtenances and every part hereof, including but not limited to,
roof membrane, glazing, sidewalks, plumbing, electrical and HVAC systems, and
all the Tenant Interior Improvements in good and sanitary order, condition, and
repair. Tenant shall provide Landlord with a copy of a service contract between
Tenant and a licensed air-conditioning and heating contractor which contract
shall provide for quarterly maintenance of all air conditioning and heating
equipment at the Premises. Tenant shall pay the cost of all air-conditioning and
heating repairs or replacements which are either excluded from such service
contract or any existing equipment warranties. All wall surfaces and floor tile
are to be maintained in an as good a condition as when Tenant took possession
free of holes, gouges, or defacements.

         12. HAZARD INSURANCE:

                  A. TENANT'S USE: Tenant shall not use, or permit said
Premises, or any part thereof, to be used, for any purpose other than that for
which the said Premises are hereby leased; and no use shall be made or permitted
to be made of the said Premises, nor acts done, which will cause an increase in
premiums or a cancellation of any insurance policy covering said Building, or
any part thereof, nor shall Tenant sell or permit to be kept, used or sold, in
or about said Premises, any article which may be prohibited by the standard form
of fire insurance policies. Tenant shall, at its sole cost and expense, comply
with any and all requirements, pertaining to said Premises, of any insurance
organization or company, necessary for the maintenance of reasonable fire and
public liability insurance, covering said Building and appurtenances.

                  B. LANDLORD'S INSURANCE: Landlord agrees to purchase and keep
in force fire and extended coverage, and earthquake (at Landlord's election),
and 12 month rental loss insurance covering the Premises in amounts not to
exceed the actual insurable value of the Building as determined by Landlord's
insurance company's appraisers. The Tenant agrees to pay to the Landlord as
additional rent, on demand, the full cost of said insurance as evidenced by
insurance billings to the Landlord, and in the event of damage covered by said
insurance, the amount of any deductible under such policy. Payment shall be due
to Landlord within ten (10) days after written invoice to Tenant.
Notwithstanding the foregoing, Tenant's obligation to pay for the cost of any
earthquake insurance premiums shall be limited to an amount equal or less than
four (4) times the cost of the fire and extended coverage premiums. It is
understood and agreed that Tenant's obligation under this paragraph will be
prorated to reflect the commencement and termination dates of this Lease.

                  C. TENANT'S INSURANCE: Tenant, at its sole cost, agrees to
insure its personal property and Alterations for their full replacement value
(without depreciation) and to obtain worker's compensation and public liability
and property damage insurance for occurrences within the Premises with a
$3,000,000.00 combined single limit for bodily injury and property damage.
Tenant shall name Landlord and Landlord's lender as an additional insured,
shall deliver a copy of the policies and renewal certificates to Landlord. All
such policies shall provide for thirty (30) days' prior written notice to
Landlord of any cancellation, termination, or reduction in coverage.
Notwithstanding the above, Landlord retains the right to have Tenant provide
other forms of insurance which may be reasonably required to cover future risks.



                                     Page 5
<PAGE>   8

                  D. WAIVER: Landlord and Tenant hereby waive any and all rights
each may have against the other on account of any loss or damage occasioned to
the Landlord or the Tenant as the case may be, or to the Premises or its
contents, and which may arise from any risk covered by their respective
insurance policies, as set forth above. The parties shall use their reasonable
efforts to obtain from their respective insurance companies a waiver of any
right of subrogation which said insurance company may have against the Landlord
or the Tenant, as the case may be.

         13. TAXES: Tenant shall be liable and shall pay prior to delinquency,
for all taxes and assessments levied against personal property and trade or
business fixtures, and agrees to pay, as additional rental, all real estate
taxes and assessment installments (special or general) or other impositions
including tax increases due to sale or other transfer of the Premises as they
appear on the City and County tax bills during the Lease Term, and as they
become due. It is understood and agreed that Tenant's obligation under this
paragraph will be prorated to reflect the Commencement and Expiration Dates. In
any time during the Lease Term a tax, excise on rents, business license tax, or
any other tax, however described, is levied or assessed against Landlord, as a
substitute or addition in whole or in part for taxes assessed or imposed on land
or Buildings, Tenant shall pay and discharge his pro rata share of such tax or
excise on rents or other tax before it becomes delinquent, except that this
provision is not intended to cover net income taxes, inheritance, gift or estate
tax imposed upon the Landlord. In the event that a tax is placed, levied, or
assessed against Landlord and the taxing authority takes the position that the
Tenant cannot pay and discharge his pro rata share of such tax on behalf of the
Landlord, then at the sole election of the Landlord, the Landlord may increase
the rental charged hereunder by the exact amount of such tax and Tenant shall
pay such increase as additional rent hereunder.

Notwithstanding the foregoing, if property taxes increase during the lease term
as a result of a reassessment due to a voluntary change of ownership, Tenant's
shall be responsible for payment of the resulting property tax increase as
follows: during the first twelve months, Tenant shall be responsible for payment
of one third (1/3) of the tax increase; during the second twelve months, Tenant
shall be responsible for payment of two thirds (2/3) of the tax increase,
thereafter Tenant shall be responsible for payment of the entire tax increase.

         14. UTILITIES: Tenant shall pay directly, or as pro rated by Landlord,
to the providing utility all water, gas, heat, light, power, telephone and other
utilities supplied to the Premises. Landlord shall not be liable for a loss of
or injury to property, however occurring, through or in connection with or
incidental to furnishing or failure to furnish any utilities to the Premises and
Tenant shall not be entitled to abatement or reduction of any portion of the
Base Monthly Rent so long as any failure to provide and furnish the utilities to
the Premises due to any cause beyond the Landlord's reasonable control.

         15. ABANDONMENT: Tenant shall not vacate or abandon the Premises at any
time during the Lease Term; and if Tenant shall abandon, vacate or surrender
said Premises, or be dispossessed by process of law, or otherwise, any personal
property belonging to Tenant and left on the Premises shall be deemed to be
abandoned, at the option of Landlord, except such property as may be mortgaged
to Landlord.

         16. FREE FROM LIENS: Tenant shall keep the Premises and the Building
free from any liens arising out of any work performed, materials furnished, or
obligations incurred by Tenant or claimed to have been performed for Tenant. In
the event Tenant fails to discharge any such lien within ten (10) days after
receiving notice of the filing, Landlord shall be entitled to discharge such
lien at Tenant's expense and all resulting costs incurred by Landlord, including
attorney's fees shall be due from Tenant as additional rent.

Landlord shall keep the Premises and the Building free from any liens arising
out of any work performed, materials furnished, or obligations incurred by the
Landlord or claimed to have been performed for Landlord. In the event Landlord
fails to discharge any such lien within the (10) days after receiving notice of
the filing, Tenant shall be



                                     Page 6
<PAGE>   9

entitled to discharge such lien at Landlord's expense and all resulting costs
incurred by Tenant, including attorney's fees, shall be deducted from Tenant's
Monthly Base Rent.

         17. COMPLIANCE WITH GOVERNMENTAL REGULATIONS: Tenant shall, at its sole
cost and expense, comply with all of the requirements of all Municipal, State
and Federal authorities now in force, or which may hereafter be in force,
pertaining to the said Premises, and shall faithfully observe in the use of the
Premises all Municipal ordinances and State and Federal statutes now in force or
which may hereafter be in force, with the exception of those items and
conditions mentioned in paragraph 7B. The judgment of any court of competent
jurisdiction, or the admission of Tenant in any action or proceeding against
Tenant, whether Landlord be a party thereto or not, that Tenant has violated any
such ordinance or statute in the use of the Premises, shall be conclusive of
that fact as between Landlord and Tenant.

         18. TOXIC WASTE AND ENVIRONMENTAL DAMAGE:

                  A. TENANT'S RESPONSIBILITY: Without the prior written consent
of Landlord, Tenant shall not bring, use, or permit upon the Premises, or
generate, emit, or dispose from the Premises any chemicals, toxic or hazardous
gaseous, liquid or solid materials or waste, including without limitation,
material or substance having characteristics of ignitability, corrosivity,
reactivity, or toxicity or substances or materials which are listed on any of
the Environmental Protection Agency's lists of hazardous wastes or which are
identified in Sections 66680 through 66685 of Title 22 of the California
Administrative Code as the same may be amended from time to time ("Hazardous
Materials"). In order to obtain consent, Tenant shall deliver to Landlord its
written proposal describing the toxic material to be brought onto the Premises,
measures to be taken for storage and disposal thereof, safety measures to be
employed to prevent pollution of the air, ground, surface and ground water.
Landlord's approval may be withheld in its reasonable judgment. In the event
Landlord consents to Tenant's use of Hazardous Materials on the Premises, Tenant
represents and warrants that Tenant will (i) adhere to all reporting and
inspection requirements imposed by Federal, State, County or Municipal laws,
ordinances or regulations and will provide Landlord a copy of any such reports
or agency inspections, (ii) obtain and provide Landlord copies of all necessary
permits required for the use and handling Hazardous Materials on the Premises,
(iii) enforce Hazardous Materials handling and disposal practices consistent
with industry standards, and (iv) properly close the facility with regard to
Hazardous Materials including the removal or decontamination of any process
piping, mechanical ducting, storage tanks, containers, or trenches which have
come into contact with Hazardous Materials and obtain a closure certificate from
the local administering agency prior to the Expiration Date. Landlord may
employ, at Tenant's expense, an independent engineer or consultant to
periodically inspect Tenant's operations to verify that Tenant is complying with
its obligations under this paragraph.

                  B. TENANT'S INDEMNITY REGARDING HAZARDOUS MATERIALS: Tenant
shall comply, at its sole cost, with all laws pertaining to, and shall indemnify
and hold Landlord harmless from any claims, liabilities, costs or expenses
incurred or suffered by Landlord arising from such bringing, using, permitting,
generating, emitting or disposing of Hazardous Materials. Tenant's
indemnification and hold harmless obligations include, without limitation, (i)
claims, liability, costs or expenses resulting from or based upon
administrative, judicial (civil or criminal) or other action, legal or
equitable, brought by any private or public person under common law or under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
("CERCLA"), the Resource Conservation and Recovery Act of 1980 ("RCRA") or any
other Federal, State, County or Municipal law, ordinance or regulation, (ii)
claims, liabilities, costs or expenses pertaining to the identification,
monitoring, cleanup, containment, or removal of Hazardous Materials from soils,
riverbeds or aquifers including the provision of an alternative public drinking
water source, and (iii) all costs of defending such claims.

                  C. ENVIRONMENTAL MONITORING: Landlord and its agents shall
have the right, at Landlord's sole cost and expense to inspect, investigate,
sample and/or



                                     Page 7
<PAGE>   10
monitor the Premises, including any air, soil, water, groundwater or other
sampling or any other testing, digging, drilling or analysis to determine
whether Tenant is complying with the terms of this paragraph 18. If Landlord
discovers that Tenant is not in compliance with the terms of this paragraph, any
such costs incurred by Landlord, including attorneys' and consultant's fees
shall be due and payable by Tenant to Landlord within five days following
Landlord's written demand therefore.

                  D. LANDLORD'S INDEMNITY REGARDING HAZARDOUS MATERIALS:
Landlord shall indemnify and hold Tenant harmless for any costs related to the
remediation or removal of Hazardous Materials, as defined by paragraph 18,
existing prior to Tenant's occupancy.

         19. INDEMNITY: Tenant hereby waives all claims against Landlord for
damages to goods, wares and merchandise, and all other personal property in,
upon or about said Premises and for injuries to persons in or about said
Premises, from any cause arising at any time except due to the negligence or
willful misconduct of Landlord, and Tenant will hold Landlord exempt and
harmless from any damage or injury to any person, or to the goods, wares and
merchandise and all other personal property of any person, arising from the use
of the Premises by Tenant, or from the failure of Tenant to keep the Premises in
good condition and repair, as herein provided. Further, in the event Landlord is
made party to any litigation due to the acts or omission of Tenant, Tenant will
indemnify and hold Landlord harmless from any such claim or liability including
Landlord's costs and expenses and reasonable attorney's fees incurred in
defending such claims.

         20. ADVERTISEMENTS AND SIGNS: Tenant will not place or permit to be
placed, in, upon or about the said Premises any unusual or extraordinary signs,
or any signs not approved by the city or other governing authority. The Tenant
will not place, or permit to be placed, upon the Premises, any signs,
advertisements or notices without the written consent of the Landlord as to
type, size, design, lettering, coloring and location, and such consent will not
be unreasonably withheld. Any sign so placed on the Premises shall be removed by
Tenant, at its expense, prior to the Expiration Date or promptly following the
earlier termination of the lease and Tenant shall repair any damage or injury to
the Premises caused thereby, and if not so removed by Tenant then Landlord may
have same so removed at Tenant's expense.

         21. ATTORNEY'S FEES: In case suit should be brought for the possession
of the Premises, for the recovery of any sum due hereunder, or because of the
breach of any other covenant herein, the losing party shall pay to the
prevailing party a reasonable attorney's fee as part of it costs which shall be
deemed to have accrued on the commencement of such action.

         22. TENANT'S DEFAULT: The occurrence of any of the following shall
constitute a material default and breach of this Lease by Tenant: a) Any failure
by Tenant to pay the rental or to make any other payment required to be made by
Tenant hereunder provided however, that Tenant may cure such default by payment
to Landlord of the Base Monthly Rent or other sum due within ten (10) days after
receipt by Tenant of written notice specifying Landlord has failed to receive
the amount in question; b) The abandonment or vacation of the Premises by
Tenant; or c) A failure by Tenant to observe and perform any other provision of
this Lease to be observed or performed by Tenant, where such failure continues
for thirty (30) days after written notice thereof by Landlord to Tenant;
provided, however, that if the nature of such default is such that the same
cannot reasonably be cured within such thirty (30) day period Tenant shall not
be deemed to be in default if Tenant shall within such period commence such cure
and thereafter diligently prosecute the same to completion.

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



                                     Page 8
<PAGE>   11


         of award of any unpaid rent which had been earned at the time of such
         termination; plus b) the worth at the time of award of the amount by
         which the unpaid rent would have been earned after termination until
         the time of award exceeds the amount of such rental loss Tenant proves
         could have been reasonably avoided; plus c) the worth at the time of
         award of the amount by which the unpaid rent for the balance of the
         Lease Term after the time of award exceeds the amount of such rental
         loss that Tenant proves could be reasonably avoided.

                      B. ABANDONMENT: In the event of the vacation or
         abandonment of the Premises by Tenant or in the event that Landlord
         shall elect to re-enter as provided in paragraph 22(B) above or shall
         take possession of the Premises pursuant to legal proceeding or
         pursuant to any notice provided by law, then if Landlord does not elect
         to terminate this Lease as provided in paragraph 22(A) above, then the
         provisions of California Civil Code Section 1951.4, as amended from
         time to time, shall apply and Landlord may from time to time, without
         terminating this Lease, either recover all rental as it becomes due or
         relet the Premises or any part thereof for such term or terms and at
         such rental or rentals and upon such other terms and conditions as
         Landlord in its sole discretion may deem advisable with the right to
         make alterations and repairs to the Premises. In the event that
         Landlord shall elect to so relet, then rentals received by Landlord
         from such reletting shall be applied: first, to the payment of any
         indebtedness other than Base Monthly Rent due hereunder from Tenant to
         Landlord; second, to the payment of any cost of such reletting; third,
         to the payment of the cost of any alterations and repairs to the
         Premises; fourth, to the payment of Base Monthly Rent due and unpaid
         hereunder; and the residue, if any, shall be held by Landlord and
         applied in payment of future Base Monthly Rent as the same may become
         due and payable hereunder. Should that portion of such rentals received
         from such reletting during any month, which is applied by the payment
         of rent hereunder, be less than the rent payable during that month by
         Tenant hereunder, then Tenant shall pay such deficiency to Landlord
         immediately upon demand therefor by Landlord. Such deficiency shall be
         calculated and paid monthly. Tenant shall also pay to Landlord, as soon
         as ascertained, any costs and expenses incurred by Landlord in such
         reletting or in making such alterations and repairs not covered by the
         rentals received from such reletting.

                      C. NO TERMINATION: No re-entry or taking possession of the
         Premises by Landlord pursuant to 22(B) of this Article 22 shall be
         construed as an election to terminate this Lease unless a written
         notice of such intention be given to Tenant or unless the termination
         thereof be decreed by a court of competent jurisdiction.
         Notwithstanding any reletting without termination by Landlord because
         of any default by Tenant, Landlord may at any time after such reletting
         elect to terminate this Lease for any such default.

               23. SURRENDER OF LEASE: The voluntary or other surrender of this
         Lease by Tenant, or a mutual cancellation thereof, shall not
         automatically effect a merger of the Lease with Landlord's ownership of
         the Building or Premises. Instead, at the option of Landlord, Tenant's
         surrender may terminate all or any existing sublease or subtenancies,
         or may operate as an assignment to Landlord of any or all such
         subleases or subtenancies, thereby creating a direct Landlord-Tenant
         relationship between Landlord and any subtenants.

               24. This paragraph intentionally left blank.

               25. LANDLORD'S DEFAULT: In the event of Landlord's failure to
         perform any of its covenants or agreements under this Lease, Tenant
         shall give Landlord written notice of such failure and shall give
         Landlord thirty (30) days or such other reasonable opportunity to cure
         or to commence to cure such failure prior to any claim for breach or
         for damages resulting from such failure. In addition, upon any such
         failure by Landlord, Tenant shall give notice by registered or
         certified mail to any person or entity with a security interest in the
         Premises ("Mortgagee") that has provided Tenant with notice of its
         interest in the Premises, and shall provide such Mortgagee a reasonable
         opportunity to cure such failure, including such time to obtain
         possession of the


                                     Page 9


<PAGE>   12


         Premises by power of sale or judicial foreclosure, if such should prove
         necessary to effectuate a cure. Tenant agrees that each of the
         Mortgagees to whom this Lease has been assigned is an expressed third
         party beneficiary hereof. Tenant shall not make any prepayment of rent
         more than one (1) month in advance without the prior written consent of
         such Mortgagee. Tenant waives any right under California Civil Code
         Section 1950.7 or any other present or future law to the collection of
         any payment or deposit from such Mortgagee or any purchaser at a
         foreclosure sale of such Mortgagee's interest unless such Mortgagee or
         such purchaser shall have actually received and not refunded the
         applicable payment or deposit.

               26. NOTICES: All notices, demands, requests, or consents required
         to be given under this Lease shall be sent in writing by certified
         mail, return receipt requested, or by personal delivery addressed to
         the party to be notified at the address for such party specified in
         paragraph 1 of this Lease, or to such other place as the party to be
         notified may from time to time designate by at least fifteen (15) days
         prior notice to the notifying party.

                27. ENTRY BY LANDLORD: Tenant shall permit Landlord and his
          agents to enter into and upon said Premises at all reasonable times
          subject to any security regulations of Tenant for the purpose of
          inspecting the same or for the purpose of maintaining the Premises or
          for the purpose of making repairs, alterations or additions to any
          other portion of said Premises or for the purpose of erecting
          additional building(s) and improvements on the land where the Premises
          are situated, or on adjacent land owned by Landlord, including the
          erection and maintenance of such scaffolding, canopies, fences and
          props as may be required without any abatement or reduction of Base
          Monthly Rent or without any liability to Tenant for any loss of
          occupation or quiet enjoyment of the Premises thereby occasioned; and
          Tenant shall permit Landlord and his agents, at any time within one
          hundred eighty (180) days prior to the Expiration Date (or at any
          time during the Lease if Tenant is in default hereunder), to place
          upon the Premises any "For Sale" or "For Lease" signs and exhibit the
          Premises to real estate brokers and prospective tenants at reasonable
          hours.

                28. DESTRUCTION OF PREMISES:

                    A. DESTRUCTION BY AN INSURED CASUALTY: In the event of a
          partial destruction of the Premises by a casualty for which Landlord
          has received insurance proceeds sufficient to repair the damage or
          destruction during the Lease Term from any cause, Landlord shall
          forthwith repair the same, provided such repairs can be made within
          one hundred eighty (180) days from the date of receipt of all
          necessary governmental approvals necessary under the laws and
          regulations of State, Federal, County or Municipal authorities, such
          partial destruction shall in no way annul or void this Lease, except
          that Tenant shall be entitled to a proportionate reduction of Base
          Monthly Rent while such repairs are being made, such proportionate
          reduction to be based upon the extent to which the making of such
          repairs shall interfere with the business carried on by Tenant in the
          Premises, in the mutual reasonable judgment of Landlord and Tenant.
          For purposes of this paragraph "partial destruction" shall mean
          destruction of no greater than one-third (1/3) of the replacement cost
          of the Premises, including the replacement cost of the Tenant
          Improvements paid for by Landlord. In the event the Premises are more
          than partially destroyed, or in the event the repairs cannot be made
          in one hundred eighty (180) days, Landlord or Tenant may elect to
          terminate this Lease. Landlord shall not be required to restore
          Alterations or replace Tenant's fixtures or personal property. In
          respect to any partial destruction which Landlord is obligated to
          repair or may elect to repair under the terms of this paragraph, the
          provision of Section 1932, Subdivision 2, and of Section 1933,
          Subdivision 4, of the Civil Code of the State of California and any
          other similarly enacted Statute are waived by Tenant and the
          provisions of this paragraph 28 shall govern in the case of such
          destruction.

                    B. DESTRUCTION BY AN UNINSURED CASUALTY: In the event of a
          total or partial destruction of the Premises by an uninsured
          casualty, the Lease shall automatically terminate, unless (i) Landlord
          elects to rebuild, and (ii) the damage can be


                                     Page 10


<PAGE>   13


          repaired within one hundred eighty (180) days. If Landlord elects to
          contribute to payment for an uninsured loss, such contributed amount
          shall be amortized over the useful life of the improvements and such
          amortization shall be reimbursed by Tenant to Landlord as additional
          rent.


                29. ASSIGNMENT OR SUBLEASE:

                    A. CONSENT BY LANDLORD: In the event Tenant desires to
          assign this Lease or any interest therein including, without
          limitation, a pledge, mortgage or other hypothecation, or sublet the
          Premises or any part thereof, Tenant shall deliver to Landlord
          executed counterparts of any such agreement and of all ancillary
          agreements with the proposed assignee or subtenant, financial
          statements, and any additional information as reasonably required to
          determine whether it will consent to the proposed assignment or
          sublease. The notice shall give the name and current address of the
          proposed assignee/subtenant, proposed use of the Premises, rental
          rate and current financial statement; and upon request to Tenant,
          Landlord shall be given additional information as reasonably required
          to determine whether it will consent to the proposed assignment or
          sublease. Landlord shall then have a period of thirty (30) days
          following receipt of such notice within which to notify Tenant in
          writing that Landlord elects (i) to terminate this Lease as to the
          space so affected as of the date so specified by Tenant in which
          event Tenant will be relieved of all further obligations hereunder as
          to such space, (ii) to permit Tenant to assign or sublet such space to
          the named assignee/subtenant on the terms end conditions set forth in
          the notice, or (iii) to refuse consent. If Landlord should fail to
          notify Tenant in writing of such election within said thirty (30) day
          period, Landlord shall be deemed to have elected option (ii) above. If
          Landlord exercises its option to terminate this Lease in part in the
          event Tenant desires to sublet or assign part of the Premises, then
          (i) this Lease shall end and expire, with respect to such part of the
          Premises, on the date upon which the proposed sublease was to
          commence, and (ii) from and after such date, the Base Monthly Rent
          and Tenant's allocable share of all other costs and charges shall be
          adjusted, based upon the proportion that the rentable area of the
          Premises remaining bears to the total rentable area of the Premises.
          If Landlord does not exercise its option to terminate this Lease,
          Landlord's consent (which must be in writing and in form reasonably
          satisfactory to Landlord) to the proposed assignment or sublease shall
          not be unreasonably withheld or delayed, provided and upon condition
          that: (i) The proposed assignee or subtenant is engaged in a business
          that is limited to the use expressly permitted under this Lease; (ii)
          The proposed assignee or subtenant is a company with sufficient
          financial worth and management ability to undertake the financial
          obligation of this Lease, and Landlord has been furnished with
          reasonable proof thereof; (iii) The proposed sublease shall be in
          form reasonably satisfactory to Landlord; (iv) The amount of the
          aggregate rent to be paid by the proposed subtenant is not less than
          the then current "Fair Market Value" as defined in paragraph 38 below;
          (v) Tenant shall reimburse Landlord on demand for any costs that may
          be incurred by Landlord in connection with said assignment or
          sublease, including the costs of making investigations as to the
          acceptability of the proposed assignee or subtenant and legal costs
          incurred in connection with the granting of any requested consent;
          and (vi) Tenant shall not have advertised or publicized in any way
          the availability of the Premises without prior notice to, and approval
          by Landlord.

                    B. ASSIGNMENT OR SUBLETTING CONSIDERATION: Any rent or other
          economic consideration realized by Tenant under any such sublease and
          assignment in excess of the rent payable hereunder (including an
          allocation of the purchase price attributable to Tenant's leasehold
          interest in the event of a sale of the Tenant's business), after the
          net unamortized cost of the Tenant Improvements for which Tenant has
          itself paid, and reasonable subletting and assignment costs, shall be
          divided and paid fifty percent (50%) to Landlord and fifty percent
          (50%) to Tenant. Tenant's obligation to pay over Landlord's portion of
          the consideration shall constitute an obligation for additional rent
          hereunder. The above provisions relating to Landlord's right to
          terminate the Lease and relating to the allocation of bonus rent are
          independently negotiated terms of the Lease, constitute a material
          inducement for the Landlord to enter into the Lease, and are agreed as
          between the parties to be commercially reasonable. No assignment or


                                    Page 11

<PAGE>   14

          subletting by Tenant shall relieve Tenant of any obligation under
          this Lease. Any assignment or subletting which conflicts with the
          provisions hereof shall be void.

                    C. NO RELEASE: Any assignment or sublease shall be made only
          if and shall not be effective until the assignee or subtenant shall
          execute, acknowledge and deliver to Landlord an agreement, in form
          and substance satisfactory to Landlord, whereby the assignee or
          subtenant shall assume all of the obligations of this Lease on the
          part of Tenant to be performed or observed and shall be subject to all
          of the covenants, agreements, terms, provisions and conditions
          contained in this Lease. Notwithstanding any such sublease or
          assignment and the acceptance of rent or additional rent by Landlord
          from any subtenant or assignee, Tenant or any guarantor shall and will
          remain fully liable for the payment of the rent and additional rent
          due, and to become due hereunder, for the performance of all of the
          covenants, agreements, terms, provisions and conditions contained in
          this Lease on the part of Tenant to be performed and for all acts and
          omissions of any licensee, subtenant, assignee or any other person
          claiming under or through any subtenant that shall be in violation of
          any of the terms and conditions of this Lease, and any such violation
          shall be deemed to be a violation by Tenant. Tenant shall further
          indemnify, defend and hold Landlord harmless from and against any
          and all losses, liabilities, damages, costs and expenses (including
          reasonable attorney fees) resulting from any claims that may be made
          against Landlord by the proposed assignee or subtenant or by any real
          estate brokers or other persons claiming a commission or similar
          compensation in connection with the proposed assignment or sublease.

                    D. EFFECT OF DEFAULT: In the event of Tenant's default,
          Tenant hereby assigns all rents due from any assignment or subletting
          to Landlord as security for performance of its obligations under this
          Lease and Landlord may collect such rents as Tenant's
          Attorney-in-Fact, except that Tenant may collect such rents unless a
          default occurs as described in paragraph 22 above. The termination of
          this Lease due to Tenant's default shall not automatically terminate
          any assignment or sublease then in existence. At the election of
          Landlord, the assignee or subtenant shall attorn to Landlord and
          Landlord shall undertake the obligations of the Tenant under the
          sublease or assignment; provided the Landlord shall not be liable for
          prepaid rent, security deposits or other defaults of the Tenant to the
          subtenant or assignee, or any acts or omissions of Tenant, its agents,
          employees or invitees.

                30. CONDEMNATION: If any part of the Premises shall be taken for
          any public or quasi-public use, under any statute or by right of
          eminent domain or private purchase in lieu thereof, and a part
          thereof remains which is susceptible of occupation hereunder, this
          Lease shall as to the part so taken, terminate as of the date
          title shall vest in the condemnor or purchaser, and the Base Monthly
          Rent payable hereunder shall be adjusted so that the Tenant shall be
          required to pay for the remainder of the Lease Term only such portion
          of such rent as the value of the part remaining after such taking
          bears to the value of the entire Premises prior to such taking; but in
          such event Landlord shall have the option to terminate this Lease as
          of the date when title to the part so taken vests in the condemnor or
          purchaser. If all of the Premises, or such part thereof be taken so
          that there does not remain a portion susceptible for occupation
          hereunder, this Lease shall thereupon terminate. If a part or all of
          the Premises be taken, all compensation awarded upon such taking shall
          go to the Landlord and the Tenant shall have no claim thereto but
          Landlord shall cooperate with Tenant to recover compensation for
          damage to or taking of any Alterations or for Tenant's moving costs.
          Tenant hereby waives the provisions of California Code of Civil
          Procedures Section 1265.130 and any other similarly enacted statute
          are waived by Tenant and the provisions of this paragraph 30 shall
          govern in the case of such destruction.

                31. EFFECTS OF CONVEYANCE: The term Landlord as used in this
          Lease, means only the owner for the time being of the land and
          Building, containing the Premises, so that, in the event of any sale
          or other conveyance of said land or Building, or in the event of a
          master Lease of the Building, the Landlord shall be and hereby is
          entirely freed and relieved of all covenants and obligations of the
          Landlord hereunder, and it shall be deemed and construed, without
          further agreement between the parties


                                    Page 12

<PAGE>   15


          and the purchaser at any such sale, or the master tenant of the
          Building, that the purchaser or master tenant of the Building has
          assumed and agreed to carry out any and all covenants and obligations
          of the Landlord hereunder. Landlord shall transfer and deliver
          Tenant's security deposit to the purchaser at any such sale or the
          master tenant of the Building, and thereupon the Landlord shall be
          discharged from any further liability in reference thereto.

                32. SUBORDINATION: In the event Landlord notifies Tenant in
          writing, this Lease shall be subordinate to any ground Lease, deed of
          trust, or other hypothecation for security now or hereafter placed
          upon the real property of which the Premises are a part and to any and
          all advances made on the security thereof and to renewals,
          modifications, replacements and extensions thereof. Tenant agrees to
          promptly execute and deliver any documents which may be required to
          effectuate such subordination. Notwithstanding such subordination,
          Tenant's right to quiet possession of the Premises shall not be
          disturbed if Tenant is not in default and so long as Tenant shall pay
          the rent and observe and perform all of the provisions of this Lease.
          At the request of any lender, Tenant agrees to execute and deliver
          any reasonable modifications of this Lease which do not materially
          adversely affect Tenant's rights hereunder.

                 33. WAIVER: The waiver by Landlord of any breach of any term,
          covenant or condition, herein contained shall not be deemed to be a
          waiver of such term, covenant or condition or any subsequent breach of
          the same or any other term, covenant or condition herein contained.
          The subsequent acceptance of rent hereunder by Landlord shall not be
          deemed to be a waiver of any preceding breach by Tenant of any term,
          covenant or condition of this Lease, other than the failure of Tenant
          to pay the particular rental so accepted, regardless of Landlord's
          knowledge of such preceding breach at the time of acceptance of such
          rent. No delay or omission in the exercise of any right or remedy by
          Landlord shall impair such right or remedy or be construed as a waiver
          thereof by Landlord. No act or conduct of Landlord, including, without
          limitation, the acceptance of keys to the Premises shall constitute
          acceptance of the surrender of the Premises by Tenant before the
          Expiration Date. Landlord's consent to or approval of any act by
          Tenant which require Landlord's consent or approvals shall not be
          deemed to waive or render unnecessary Landlord's consent to or
          approval of any subsequent act by Tenant.

                 34. HOLDING OVER: Any holding over after the termination or
          Expiration Date, shall be construed to be a tenancy from month to
          month terminable on thirty (30) days written notice from either party
          and Tenant shall pay Base Monthly Rent to Landlord at a rate equal to
          the greater of (i) one hundred fifty percent (150%) of the Base
          Monthly Rent due in the month preceding the termination or Expiration
          Date or (ii) one hundred fifty percent (150%) of the Fair Market
          Rental (as defined in paragraph 37). Any holding over shall otherwise
          be on the terms and conditions herein specified, except those
          provisions relating to the Lease Term and any options to extend or
          renew, which provisions shall be of no further force and effect
          following the expiration of the applicable exercise period. Tenant
          shall indemnify, defend, and hold Landlord harmless from all loss or
          liability (including, without limitation, any loss or liability
          resulted from any claim against Landlord made by any succeeding
          tenant) founded on or resulting from Tenant's failure to surrender the
          Premises and losses to Landlord due to lost opportunities to lease the
          Premises to succeeding tenants.

                35. SUCCESSORS AND ASSIGNS: The covenants and conditions herein
          contained shall, subject to the provisions of paragraph 28, apply to
          and bind the heirs, successors, executors, administrators and assigns
          of all the parties hereto; and all of the parties hereto shall be
          jointly and severally liable hereunder.

                36. ESTOPPEL CERTIFICATES: Tenant shall at any time during the
          Lease Term, within ten (10) days following written notice from
          Landlord, execute and deliver to Landlord a statement in writing
          certifying that this Lease is unmodified and in full force and effect
          (or, if modified, stating the nature of such modification) and the
          date to which the rent and other charges are paid in advance, if any,
          and acknowledging that there are not, to Tenant's knowledge, any
          uncured defaults on the part of Landlord


                                    Page 13

<PAGE>   16


          hereunder or specifying such defaults if they are claimed. Any such
          statement may be conclusively relied upon by any prospective
          purchaser or encumbrancer of the Premises. Tenant's failure to
          deliver such statement within such time shall be conclusive upon the
          Tenant that: (i) this Lease is in full force and effect, without
          modification except as may be represented by Landlord; (ii) there are
          not uncured defaults in Landlord's performance. Tenant also agrees to
          provide the most current three (3) years of audited financial
          statements within five (5) days of a request by Landlord for
          Landlord's use in financing the Premises with commercial lenders.

                 37. This paragraph intentionally left blank.

                 39. QUIET ENJOYMENT: Upon Tenant's faithful and timely
          performance of all the terms and covenants of the Lease, Tenant shall
          quietly have and hold the Premises for the Lease Term and any
          extensions thereof.

                 40. BROKERS: Tenant represents it has not utilized or
          contacted a real estate broker or finder with respect to this Lease
          other than Cornish & Carey Commercial and Tenant agrees to indemnify
          and hold Landlord harmless against any claim, cost, liability or cause
          of action asserted by any other broker or finder claiming through
          Tenant.

                41. LANDLORD'S LIABILITY: If Tenant should recover a money
          judgment against Landlord arising in connection with this Lease, the
          judgment shall be satisfied only out of Landlord's interest in the
          Premises including the improvements and real property and neither
          Landlord or any of its partners, officers, directors or employees
          shall be liable personally for any deficiency.

                42. AUTHORITY OF PARTIES:

                    A. CORPORATE AUTHORITY: If Tenant is a corporation, each
          individual executing this Lease on behalf of said corporation
          represents and warrants that he is duly authorized to execute and
          deliver this Lease on behalf of said corporation, in accordance with a
          duly adopted resolution of the Board of Directors of said corporation
          or in accordance with the by-laws of said corporation, and that this
          Lease is binding upon said corporation in accordance with its terms.

                43. This paragraph intentionally left blank.

                44. MISCELLANEOUS PROVISIONS:

                    A. RENT: All monetary sums due from Tenant to Landlord under
          this Lease shall be deemed to be rent.

                    B. PERFORMANCE BY TENANT: If Landlord fails to perform any
          obligation required under this Lease or by law or government
          regulation, Tenant in its sole discretion may, without notice, perform
          such obligation, in which event Landlord shall reimburse Tenant within
          ten (10) days following Tenant's written notice of such payment.

                    C. PERFORMANCE BY LANDLORD: If Tenant fails to perform any
          obligation required under this Lease or by law or governmental
          regulation, Landlord in its sole discretion may without notice
          perform such obligation, in which event Tenant shall pay Landlord as
          additional rent all sums paid by Landlord in connection with such
          substitute performance within ten (10) days following Landlord's
          written notice for such payment.

                    D. INTEREST: All sums due hereunder, including rent and
          additional rent, if not paid when due, shall bear interest at the
          maximum rate permitted under California law accruing from the date due
          until the date paid to Landlord.

                    E. RIGHTS AND REMEDIES: All rights and remedies hereunder
          are


                                     Page 14


<PAGE>   17


         cumulative and not alternative to the extent permitted by law and are
         in addition to all other rights and remedies in law and in equity.

                    F. SURVIVAL OF INDEMNITIES: All indemnification, defense,
         and hold harmless obligations of Landlord and Tenant under the Lease
         shall survive the expiration or sooner termination of the Lease.

                    G. SEVERABILITY: If any term or provision of this Lease is
         held unenforceable or invalid by a court of competent jurisdiction, the
         remainder of the Lease shall not be invalidated thereby but shall be
         enforceable in accordance with its terms, omitting the invalid or
         unenforceable term.

                    H. CHOICE OF LAW: This Lease shall be governed by and
         construed in accordance with California law.

                    I. TIME: Time is of the essence hereunder.

                    J. ENTIRE AGREEMENT: This instrument (including attached
         Exhibits "A", "B", and "C") contains all of the agreements and
         conditions made between the parties hereto and may not be modified
         orally or in any other manner than by an agreement in writing signed by
         all of the parties hereto or their respective successors in interest.

                    K. REPRESENTATIONS: Tenant acknowledges that neither
         Landlord or its affiliates or agents have made any agreements,
         representations, warranties or promises with respect to the demised
         Premises or the Building of which they are a part, or with respect to
         present or future rents, expenses, operations, tenancies or any other
         matter. Except as herein expressly set forth herein, Tenant relied on
         no statement of Landlord or its agents for that purpose.

                    L. HEADINGS: The headings or titles to the paragraphs of
         this Lease are not a part of this Lease and shall have no effect upon
         the construction or interpretation of any part thereof.

         IN WITNESS WHEREOF, Landlord and Tenant have executed these presents,
         the day and year first above written.

         LANDLORD: The Sobrato 1979 Trust   TENANT: Peninsula Engineering Group,
         a California general partnership   a California corporation
         Inc.

         BY: /s/ JOHN MICHAEL SOBRATO          BY: /s/ EDWARD SHERMAN
            -------------------------          --------------------------
         ITS: General Partner               ITS: President / CEO
                                                 ------------------------

                                     Page 15


<PAGE>   18



                                  EXHIBIT "A"
                                    PREMISES

                                   [SITE MAP]






                                    Page 16



<PAGE>   19

                            FIRST AMENDMENT TO LEASE

This amendment to lease ("Amendment") is made this 16th day of October, 1998
between Sobrato Interests II, a California limited partnership, having an
address at 10600 N. De Anza Blvd., Suite 200, Cupertino, California 95014
("Landlord") and Repeater Technologies, formerly known as Peninsula Engineering
Group, having its principal place of business at 1150 Morse Avenue, Sunnyvale,
California, 94089 ("Tenant").

                                   WITNESSETH

WHEREAS Landlord and Tenant entered into a lease dated August 7, 1992 ("Lease")
for the premises ("Premises") located at 1150 Morse Avenue in Sunnyvale,
California; and

WHEREAS effective the date of this Amendment, Landlord and Tenant wish to
modify the Lease to: (i) change the Expiration Date specified in Section 4; and
(ii) specify the Base Monthly Rent due for the period from January 1, 1999
through December 31, 2003;

NOW, THEREFORE, in order to effect the intent of the parties as set forth above
and for good and valuable consideration exchanged between the parties, the
Lease is amended as follows:

1.  The Expiration Date specified in Lease Section 4 is changed from December
31, 1998 to December 31, 2003.

2.  Base Monthly Rent during the period from January 1, 1999 through December
31, 2003 shall be due according to the following schedule:

    01/01/1999 through 06/30/2001:      $50,013.00 per month
    07/01/2001 through 12/31/2003:      $53,855.00 per month

3.  All defined terms shall have the same meanings as in the Lease, except as
otherwise stated in this Amendment.

IN WITNESS WHEREOF, the parties hereto have set their hands to this Amendment
as of the day and date first above written.

LANDLORD:                                 TENANT:
Sobrato Interests, II,                    Repeater Technologies, Inc.,
a California limited partnership          a California Corporation

By: /s/ JOHN MICHAEL SOBRATO              By: /s/ TODD SCHULL
   ----------------------------------        ----------------------------------

Its: General Partner                      Its: CFO
                                              ---------------------------------
<PAGE>   20
                                 Lease between
          The Sobrato 1979 Trust and Peninsula Engineering Group, Inc.

Section                                                                   Page #
-------                                                                   ------
Parties ...................................................................... 1
Premises ..................................................................... 1
Use .......................................................................... 1
Term and Rental .............................................................. 1
Security Deposit ............................................................. 1
Late Charges ................................................................. 2
Construction and Possession .................................................. 2
    Landlord's Obligation to Construct ....................................... 2
    Contribution to Tenant Improvement Costs ................................. 2
    Tenant Improvement Plans and Cost Estimate ............................... 2
    Commencement Date ........................................................ 3
Acceptance of Possession and Covenants to Surrender .......................... 3
Uses Prohibited .............................................................. 3
Alterations and Additions .................................................... 4
Maintenance of Premises ...................................................... 4
    Landlord and Tenant's Obligations Regarding Common Area Costs ............ 4
    Common Area Costs ........................................................ 4
    Tenant's Allocable Share ................................................. 5
    Waiver of Liability ...................................................... 5
    Tenant's Obligations ..................................................... 5
Hazard Insurance ............................................................. 5
    Tenant's Use ............................................................. 5
    Landlord's Insurance ..................................................... 6
    Tenant's Insurance ....................................................... 6
    Waiver ................................................................... 6
Taxes ........................................................................ 6
Utilities .................................................................... 7
Abandonment .................................................................. 7
Free From Liens .............................................................. 7
Compliance With Governmental Regulations ..................................... 7
Toxic Waste and Environmental Damage ......................................... 7
    Tenant's Responsibility .................................................. 7
    Tenant's Indemnity Regarding Hazardous Materials ......................... 8
    Environmental Monitoring ................................................. 8
Indemnity .................................................................... 8
Advertisements and Signs ..................................................... 8
Attorney's Fees .............................................................. 8
Tenant's Default ............................................................. 8
    Remedies ................................................................. 9
    Right to Re-enter ........................................................ 9
    Abandonment .............................................................. 9
    No Termination .......................................................... 10
Surrender of Lease .......................................................... 10
Habitual Default ............................................................ 10
Landlord's Default .......................................................... 10
Notices ..................................................................... 11
Entry by Landlord ........................................................... 11
Destruction of Premises ..................................................... 11
    Destruction by an Insured Casualty ...................................... 11
    Destruction by an Uninsured Casualty .................................... 11
Assignment or Sublease ...................................................... 11
    Consent by Landlord ..................................................... 11
    Assignment or Subletting Consideration .................................. 12
    No Release .............................................................. 12
    Effect of Default ....................................................... 13
Condemnation ................................................................ 13
Effects of Conveyance ....................................................... 13
Subordination ............................................................... 14
Waiver ...................................................................... 14
Holding Over ................................................................ 14
Successors and Assigns ...................................................... 14

                                     Page 1
<PAGE>   21


Estoppel Certificates ....................................................... 14
This paragraph intentionally left blank ..................................... 15
Options ..................................................................... 15
Quiet Enjoyment ............................................................. 15
Brokers ..................................................................... 15
Landlord's Liability ........................................................ 15
Authority of Parties ........................................................ 15
    Corporate Authority ..................................................... 15
    Limited Partnerships .................................................... 15
Transportation Demand Management Programs ................................... 15
Miscellaneous Provisions .................................................... 15
    Rent .................................................................... 15
    Management Fee .......................................................... 15
    Performance by Landlord ................................................. 16
    Interest ................................................................ 16
    Rights and Remedies ..................................................... 16
    Survival of Indemnities ................................................. 16
    Severability ............................................................ 16
    Choice of Law ........................................................... 16
    Time .................................................................... 16
    Entire Agreement ........................................................ 16
    Representations ......................................................... 16
    Headings ................................................................ 16
Exhibit "A" ................................................................. 17

























                                    Page ii
<PAGE>   22
     1.   PARTIES: THIS LEASE, is entered into on this ____ day of August,
1992, between The Sobrato 1979 Trust, a California general partnership, whose
address is 10600 North DeAnza Boulevard, Cupertino, California, 95014, and
Peninsula Engineering Group, Inc., a California Corporation, whose address is
1091 Industrial Road, San Carlos, California, 94070, hereinafter called
respectively Landlord and Tenant.

     2.   PREMISES: Landlord hereby leases to Tenant, and Tenant hires from
Landlord those certain Premises with the appurtenances, situated in the City of
Sunnyvale, County of Santa Clara, State of California, and more particularly
described as follows, to-wit:

That certain real property commonly known and designated as 1150 Morse Avenue
consisting of approximately 40,000 rentable square feet of a larger 70,000
square foot freestanding building ("Building") as outlined in red on Exhibit
"A".

     3.   USE: Tenant shall use the Premises only for the following purposes and
shall not change the use of the Premises without the prior written consent of
Landlord: Office, research, development, testing, light manufacturing, ancillary
warehouse, and related legal uses. Landlord makes no representation or warranty
that any specific use of the Premises desired by Tenant is permitted pursuant to
any Laws.

     4.   TERM AND RENTAL: The term ("Lease Term") shall be for seventy two
(72) months, commencing, as adjusted pursuant to paragraph 7, on the 1st day of
January, 1993 ("Commencement Date"), and ending on the 31st day of December,
1998, ("Expiration Date"). In addition to all other sums payable by Tenant
under this Lease, Tenant shall pay as base monthly rent ("Base Monthly Rent")
for the Premises the following amounts:

               01/01/93 - 12/31/95      $22,400.00 per month
               01/01/96 - 12/31/98      $26,400.00 per month

Base Monthly Rent shall be due on or before the first day of each calendar
month during Lease Term. All sums payable by Tenant under this Lease shall be
paid in lawful money of the United States of America, without offset or
deduction, and shall be paid to Landlord at such place or places as may be
designated from time to time by Landlord. Base Monthly Rent for any period less
than a calendar month shall be a pro rata portion of the monthly installment.

Concurrently with Tenant's execution of this Lease, Tenant shall pay to
Landlord the sum of Twenty Two Thousand Four Hundred and No/100 Dollars
($22,400.00) as prepaid rent for the period of January 1, 1993 to January 31,
1993.

     5.   SECURITY DEPOSIT: Concurrently with Tenant's execution of this Lease,
Tenant has deposited with Landlord the sum of Twenty Six Thousand Four Hundred
and No/100 Dollars ($26,400.00) as a security deposit. If Tenant defaults with
respect to any provisions of this Lease, including but not limited to the
provisions relating to payment of Base Monthly Rent or other charges, Landlord
may, to the extent reasonably necessary to remedy Tenant's default, use all or
any part of said deposit for the payment of Base Monthly Rent or other charges
in default or the payment of any other payment of any other amount which
Landlord may spend or become obligated to spend by reason of Tenant's default
or to compensate Landlord for any other loss or damage which Landlord may
suffer by reason of Tenant's default. If any portion of said deposit is so used
or applied, Tenant shall, within ten (10) days after written demand therefor,
deposit cash with Landlord in an amount sufficient to restore said deposit to
the full amount hereinabove stated and shall pay to Landlord such other sums as
shall be necessary to reimburse Landlord for any sums paid by Landlord. Said
deposit shall be returned to Tenant within thirty (30) days after the
Expiration Date and surrender of the Premises to Landlord, less any amount
deducted in accordance with this paragraph, together with Landlord's written
notice itemizing the amounts and purposes for such retention. In the event of
termination of Landlord's interest in this Lease, Landlord shall transfer said
deposit to Landlord's successor or interest.

                                     Page 1

<PAGE>   23

        6.      LATE CHARGES: Tenant hereby acknowledges that late payment by
Tenant to Landlord of Base Monthly Rent and other sums due hereunder will
cause Landlord to incur costs not contemplated by this Lease, the exact amount
of which will be extremely difficult to ascertain. Such costs include, but are
not limited to, administrative, processing, accounting charges, and late
charges, which may be imposed on Landlord by the terms of any contract,
revolving credit, mortgage or trust deed covering the Premises. Accordingly, if
any installment of Base Monthly Rent or any other sum due from Tenant shall not
be received by Landlord or Landlord's designee when due, Tenant shall pay to
Landlord a late charge equal to five (5%) percent of such overdue amount which
shall be due and payable with the payment then delinquent. Landlord agrees to
waive said late charge in the event the Base Monthly Rent or other sum due is
received within five days after receipt by Tenant of Landlord's notice to quit
or pay rent. The parties hereby agree that such late charge represents a fair
and reasonable estimate of the costs Landlord will incur by reason of late
payment by Tenant. Acceptance of such late charge by Landlord shall in no event
constitute a waiver of Tenant's default with respect to such overdue amount,
nor prevent Landlord from exercising any of the other rights and remedies
granted hereunder. In the event that a late charge is payable hereunder,
whether or not collected, for three (3) consecutive installments of Base
Monthly Rent, then rent shall automatically become due and payable quarterly in
advance, rather than monthly, notwithstanding any provision of this Lease to
the contrary.

IT IS FURTHER MUTUALLY AGREED BETWEEN THE PARTIES AS FOLLOWS:

        7.      CONSTRUCTION AND POSSESSION:

                A.      Landlord's Obligation to Construct: The Tenant
Improvements shall be constructed by independent contractors to be employed by
and under the supervision of a General Contractor, in accordance with interior
plans prepared by Dennis Kobza & Associates, to be attached as Exhibit "B"
("Working Drawings"). Landlord shall construct the Tenant Improvements in
accordance with all existing applicable municipal, local, state and federal
laws, statutes, rules, regulations and ordinances.

                B.      Contribution to Tenant Improvement Costs: Landlord
shall be responsible for and shall pay the cost of (i) the Tenant Improvements
up to the amount of Eighty Thousand Dollars ($80,000.00) ("Tenant Improvement
Allowance"), (ii) demising the Building, (iii) bringing the restrooms into
compliance with Title 24 requirements, and (iv) any future expenses which may
be required, in Landlord's discretion, to bring the Premises into compliance
with ADA. Costs in excess of said Tenant Improvements Allowance, if any, shall
be paid for by Tenant in cash within ten (10) days after Landlord has provided
Tenant with evidence that General Contractors progress payments to
sub-contractors has exceeded said Tenant Improvement budget. All costs for
Tenant Improvements shall be fully documented to and verified by Tenant.

                C.      Tenant Improvement Plans and Cost Estimate: Tenant to
supply Landlord with general improvement information including a space plan
(one line drawing) of Tenant's wall layout, ("Space Plan") by August 31, 1992.
Based on this information, Landlord shall prepare the final working drawings
("Working Drawings") and budget for the Tenant improvement costs ("Budget")
within fourteen (14) working days of receipt of the Space Plan. Landlord and
Tenant shall approve the Working Drawings and Budget (or modify the same)
within seven (7) days thereafter. In the event the Budget exceed the Tenant
Improvement Allowance, Landlord shall have the right to require Tenant to
deposit cash with Landlord equal to the difference between the Budget and the
Tenant Improvement Allowance. In the event (i) Tenant fails to provide the
Space Plan when required above, or (ii) Tenant fails to approve the Working
Drawings or Budget within seven (7) days as provided above, or (iii) Tenant
makes any changes to the Working Drawings which cause Landlord's construction
schedule to be delayed, the Commencement Date shall occur one (1) day in
advance of Substantial Completion as defined below for each day of delay.

                D.      Commencement Date: If Landlord, for any reason
whatsoever, cannot deliver possession of the said Premises to Tenant by the
Commencement Date, this Lease shall not be void or voidable, nor shall Landlord
be liable to Tenant for any loss or damage resulting therefrom; but in that
event the Commencement Date and Expiration Date of the Lease and all other
dates affected thereby shall be revised to conform to the date of Landlord's
delivery of possession. The Lease Term shall not commence until substantial
completion of the Premises occurs. The terms "Substantial Completion" and
"Substantially Complete" shall



                                     Page 2
<PAGE>   24
mean that (i) all necessary governmental approvals for occupancy of the
Building have been obtained; (ii) construction of the Premises has been
completed in accordance with the Working Drawings approved by Tenant to an
extent that would permit Tenant to use the Premises for its intended purpose;
and (iii) the Premises are in a "broom clean" finished condition.

     8.  ACCEPTANCE OF POSSESSION AND COVENANTS TO SURRENDER: By entry
hereunder, Tenant accepts the Premises as being in good and sanitary order,
condition and repair and accepts the Building and the other improvements in
their present condition, except for the "punch list" as set forth on Exhibit
"C", attached hereto. The Tenant agrees on Expiration Date, or on the sooner
termination of this Lease, to surrender the Premises to Landlord in good
condition and repair, reasonable wear and tear excepted. "Good condition" shall
mean that the interior walls, floors, suspended ceilings, and carpeting within
the Premises will be cleaned to the same condition as existed at the
commencement of the Lease, normal wear and tear excepted. Tenant agrees, at its
sole cost, to remove all phone and data cabling from the suspended ceiling and
repair or replace broken ceiling tiles, and relevel the ceiling if required.
Tenant shall ascertain from Landlord within thirty (30) days before the
Expiration Date whether Landlord desires to have the Premises or any part or
parts thereof restored to their condition as of the Commencement Date or to
cause Tenant to surrender all Alterations in place to Landlord. If Landlord
shall so desire, then Tenant shall remove such Alterations as Landlord may
require and shall repair and restore said Premises or such part or parts thereof
before the Expiration Date at Tenant's sole cost and expense. Tenant on or
before the Expiration Date or sooner termination of this Lease, shall remove
all its personal property and trade fixtures from the Premises, and all
property and fixtures not so removed shall be deemed to be abandoned by Tenant.
If the Premises are not surrendered at the Expiration Date or sooner
termination of this Lease in the condition required by this paragraph, Tenant
shall indemnify, defend, and hold harmless Landlord against loss or liability
resulting from delay by Tenant in so surrendering the Premises including,
without limitation, any claims made by any succeeding tenant founded on such
delay.

     9.  USES PROHIBITED: Tenant shall not commit, or suffer to be committed,
any waste upon the said Premises, or any nuisance, or other act or thing which
may disturb the quiet enjoyment of any other tenant in or around the Building or
allow any sale by auction upon the Premises, or allow the Premises to be used
for any unlawful or objectionable purpose, or place any loads upon the floor,
walls, or ceiling which endanger the structure, or use any machinery
or apparatus which will in any manner vibrate or shake the Building, or place
any harmful liquids, waste materials, or hazardous materials in the drainage
system of, or upon or in the soils surrounding the Building. No materials,
supplies, equipment, finished products or semi-finished products, raw materials
or articles of any nature or any waste materials, refuse, scrap or debris shall
be stored upon or permitted to remain on any portion of the Premises outside of
the Building proper without Landlord's prior approval, which approval may be
withheld in its sold discretion.

     10. ALTERATIONS AND ADDITIONS: Tenant shall not make, or suffer to be made,
any alteration or addition to the said Premises ("Alterations"), or any part
thereof, without (i) the written consent of Landlord first had and obtained, and
(ii) delivering to Landlord the proposed architectural and structural plans for
all such Alterations. Any Alterations, except movable furniture and trade
fixtures, shall become at once a part of the realty and belong to Landlord.
Alterations which are not to be deemed as trade fixtures shall include heating,
lighting, electrical systems, air conditioning, partitioning, carpeting, or any
other installation which has become an integral part of the Premises. After
having obtained Landlord's consent, Tenant agrees that it will not proceed to
make such alterations until (i) Tenant has obtained all required governmental
approvals and permits, and (ii) Tenant has provided Landlord reasonable
security, in form reasonably approved by Landlord, to protect Landlord against
mechanics' lien claims. Tenant further agrees to provide Landlord (i) written
notice of the actual start date of the work, (iii) a complete set of as-built
drawings. All Alterations shall be maintained, replaced or repaired at Tenant's
sole cost and expense. Tenant acknowledges Landlord's right to and hereby
consents to construction of additional building(s) on the land where the
Premises are located or on adjacent land owned by Landlord.

     11. MAINTENANCE OF PREMISES:

         A. Landlord and Tenant's Obligations Regarding Common Area Costs:
Tenant agrees to reimburse Landlord for the expenses resulting from Landlord's
payment of

                                     Page 3
<PAGE>   25
Common Area Costs as defined in paragraph 11(B) incurred by Landlord because the
cost is not directly allocable to or payable by a single tenant in the Building
or the Project. Tenant agrees to pay Tenant's Allocable Share as defined in
paragraph 11(C) of the Common Area Costs, as additional rental, within ten (10)
days of written invoice from Landlord.

      B. Common Area Costs: For purposes of calculating Tenant's Allocable Share
of Building and of Project Costs, the term "Common Area Costs" shall mean all
costs and expenses of the nature hereinafter described which are incurred in
connection with ownership and operation of the Building or the Project in which
the Premises are located, as the case may be not directly allocable to or
payable by a single tenant in the Building or the Project, together with such
additional facilities as may be determined by Landlord to be reasonably
desirable or necessary to the ownership and operation of the Building and/or
Project. All costs and expenses shall be determined in accordance with generally
accepted accounting principles which shall be consistently applied (with
accruals appropriate to Landlord's business), including but not limited to, the
following: (i) common area utilities, including water and power, heating,
lighting, air-conditioning, ventilating and Building utilities to the extent not
separately metered; (ii) common area maintenance and service agreements for the
Building or the Project and the equipment therein including, without limitation,
common area janitorial services, alarm and security services, exterior window
cleaning, and maintenance of the sidewalks, landscaping, waterscape, roof
membrane, parking areas, driveways, service areas, mechanical rooms, elevators,
and the building exterior; (iii) insurance premiums and costs, including without
limitation, the premiums and cost of fire, casualty and liability coverage and
rental abatement and earthquake (if commercially available) insurance applicable
to the Building or Project; (iv) repairs, replacements and general maintenance
(excluding repairs and general maintenance paid by proceeds of insurance or by
Tenant or other third parties, and repairs or alterations attributable solely to
tenants of the Building or project other than Tenant); and (v) all real estate
taxes and assessment installments (special or general) or other impositions or
charges which may be levied on the Premises, upon the occupancy of the Premises
and including any substitute or additional charges which may be imposed during,
or applicable to the Lease Term including real estate tax increases due to a
sale or other transfer of the Premises, as such taxes are levied or appear on
the City and County tax bills and assessment rolls. This shall be a Net Lease
and the Base Monthly Rent shall be paid to Landlord absolutely net of all costs
and expenses. The provision for payment of Common Area Costs by means of
periodic payment of Tenant's Allocable Share of Building and/or Project Costs
are intended to pass on to Tenant and reimburse Landlord for all costs of
operating and managing the Building and/or Project.

      C. Tenant's Allocable Share: For purposes of prorating Common Area Costs
which Tenant shall pay, Tenant's Allocable Share of Building Costs is computed
by multiplying the total Common Area Costs for service shared by the Building by
a fraction, the numerator of which is the rentable square footage of the
Premises and the denominator of which is the total rentable square footage of
the Building (excluding common areas). Tenant's Allocable Share of Project Costs
shall be commuted on a shared service by service basis, by multiplying the total
Common Area Costs for services shared by the Building and one or more buildings
in the Project by a fraction, the numerator of which is the rentable square
footage of the Premises and the denominator of which is the total rentable
square footage of the Buildings in the Project which share the services. It is
understood and agreed by Landlord and Tenant that Tenant's Allocable Share of
Building Costs is 57.14% and Project Costs is 57.14%. It is understood and
agreed that Tenant's obligation to share in Common Area Costs shall be adjusted
to reflect the commencement and termination dates of the Lease Term and are
subject to recalculation in the event of expansion of the Building or Project.

      D. Waiver of Liability. Failure by Landlord to perform any defined
services, or any cessation thereof, when such failure is caused by accident,
breakage, repairs, strikes, lockout or other labor disturbances or labor
disputes of any character, or by any other cause, similar or dissimilar, beyond
the reasonable control of Landlord, shall not render Landlord liable in any
respect for damages to either person or property, nor be construed as an
eviction of Tenant, nor cause an abatement of rent nor relieve tenant from
fulfillment of any covenant or agreement hereof. Should any of the equipment or
machinery utilized in supplying the services listed herein break down, or for
any cause cease to function properly, upon receipt of written notice from Tenant
of any deficiency or failure of any defined Services, Landlord shall use
reasonable diligence to repair the same promptly, but Tenant shall have no right
to terminate this Lease, and shall have no claim for rebate of rent or damages,
on account of any interruptions in service occasioned thereby or resulting
therefrom. Tenant waives the provisions of California Civil Code Sections 1941
and 1942 concerning the Landlord's

                                     Page 4

<PAGE>   26
obligation of tenantability and Tenant's right to make repairs and deduct the
cost of such repairs from the rent. Landlord shall not be liable for a loss of
or injury to property, however occurring, through or in connection with or
incidental to furnishing or its failure to furnish any of the foregoing.

            E. Tenant's Obligations: Except as provided in 11(A) above, Tenant
shall, at its sole cost, keep and maintain, repair and replace, said Premises
and appurtenances and every part hereof, including but not limited to, exterior
walls, roof, glazing, sidewalks, parking areas, elevator, plumbing, electrical
and HVAC systems, and all the Tenant Interior Improvements in good and sanitary
order, condition, and repair. Tenant shall provide Landlord with a copy of a
service contract between Tenant and (i) a licensed air-conditioning and heating
contractor which contract shall provide for bi-monthly maintenance of all air
conditioning and heating equipment at the Premises; and (ii) a licensed elevator
maintenance contractor which contract shall provide for monthly maintenance of
all elevator related systems. Tenant shall pay the cost of all air-conditioning,
heating, and elevator equipment repairs or replacements which are either
excluded from such service contract or any existing equipment warranties. All
wall surfaces and floor tile are to be maintained in an as good a condition as
when Tenant took possession free of holes, gouges, or defacements. Tenant agrees
to limit attachments to vinyl demountable wall surfaces exclusively to V-joints.

      12. HAZARD INSURANCE:

            A. Tenant's Use: Tenant shall not use, or permit said Premises, or
any part thereof, to be used, for any purpose other than that for which the said
Premises are hereby leased; and no use shall be made or permitted to be made of
the said Premises, nor acts done, which will cause an increase in premiums or a
cancellation of any insurance policy covering said Building, or any part
thereof, nor shall Tenant sell or permit to be kept, used or sold, in or about
said Premises, any article which may be prohibited by the standard form of fire
insurance policies. Tenant shall, at its sole cost and expense, comply with any
and all requirements, pertaining to said Premises, of any insurance organization
or company, necessary for the maintenance of reasonable fire and public
liability insurance, covering said Building and appurtenances.

            B. Landlord's Insurance: Landlord agrees to purchase and keep in
force fire and extended coverage, earthquake (at Landlord's election), and 12
month rental loss insurance covering the Premises in amounts not to exceed the
actual insurable value of the Building as determined by Landlord's insurance
company's appraisers. The Tenant agrees to pay to the Landlord as additional
rent, on demand, the full cost of said insurance as evidenced by insurance
billings to the Landlord, and in the event of damage covered by said insurance,
the amount of any deductible under such policy. Payment shall be due to Landlord
within ten (10) days after written invoice to Tenant. Notwithstanding the
foregoing, Tenant's obligation to pay for the cost of any earthquake insurance
premiums shall be limited to an amount equal or less than four (4) times the
cost of the fire and extended coverage premiums. It is understood and agreed
that Tenant's obligation under this paragraph will be prorated to reflect the
commencement and termination dates of this Lease.

            C. Tenant's Insurance: Tenant, at its sole cost, agrees to insure
its personal property and Alterations for their full replacement value (without
depreciation) and to obtain worker's compensation and public liability and
property damage insurance for occurrences within the Premises with a
$5,000,000.00 combined single limit for bodily injury and property damage.
Tenant shall name Landlord and Landlord's lender as an additional insured, shall
deliver a copy of the policies and renewal certificates to Landlord. All such
policies shall provide for thirty (30) days' prior written notice to Landlord of
any cancellation, termination, or reduction in coverage. Notwithstanding the
above, Landlord retains the right to have Tenant provide other forms of
insurance which may be reasonably required to cover future risks.

            D. Waiver: Landlord and Tenant hereby waive any and all rights each
may have against the other on account of any loss or damage occasioned to the
Landlord or the Tenant as the case may be, or to the Premises or its contents,
and which may arise from any risk covered by their respective insurance
policies, as set forth above. The parties shall use their reasonable efforts to
obtain from their respective insurance companies a waiver of any right of
subrogation which said insurance company may have against the Landlord or the
Tenant, as the case may be.


                                     Page 5
<PAGE>   27
     13.  TAXES:  Tenant shall be liable and shall pay prior to delinquency, for
all taxes and assessments levied against personal property and trade or
business fixtures, and agrees to pay, as additional rental, all real estate
taxes and assessment installments (special or general) or other impositions or
charges which may be levied on the Premises, upon the occupancy of the Premises
and including any substitute or additional charges which may be imposed during,
or applicable to the Lease Term including real estate tax increases due to a
sale or other transfer of the Premises, as they appear on the City and County
tax bills during the Lease Term, and as they become due. It is understood and
agreed that Tenant's obligation under this paragraph will be prorated to
reflect the Commencement and Expiration Dates. In any time during the Lease
Term a tax, excise on rents, business license tax, or any other tax, however
described, is levied or assessed against Landlord, as a substitute or addition
in whole or in part for taxes assessed or imposed on land or Buildings, Tenant
shall pay and discharge his pro rata share of such tax or excise on rents or
other tax before it becomes delinquent, except that this provision is not
intended to cover net income taxes, inheritance, gift or estate tax imposed
upon the Landlord. In the event that a tax is placed levied, or assessed
against Landlord and the taxing authority takes the position that the Tenant
cannot pay and discharge his pro rata share of such tax on behalf of the
Landlord, then at the sole election of the Landlord, the Landlord may increase
the rental charged hereunder by the exact amount of such tax and Tenant shall
pay such increase as additional rent hereunder.

     14.  UTILITIES:  Tenant shall pay directly to the providing utility all
water, gas, heat, light, power, telephone and other utilities supplied to the
Premises. Landlord shall not be liable for a loss of or injury to property,
however occurring, through or in connection with or incidental to furnishing or
failure to furnish any utilities to the Premises and Tenant shall not be
entitled to abatement or reduction of any portion of the Base Monthly Rent so
long as any failure to provide and furnish the utilities to the Premises due to
any cause beyond the Landlord's reasonable control.

     15.  ABANDONMENT:  Tenant shall not vacate or abandon the Premises at any
time during the Lease Term; and if Tenant shall abandon, vacate or surrender
said Premises, or be dispossessed by process of law, or otherwise, any personal
property belonging to Tenant and left on the Premises shall be deemed to be
abandoned, at the option of Landlord, except such property as may be mortgaged
to Landlord.

     16.  FREE FROM LIENS:  Tenant shall keep the Premises and the Building free
from any liens arising out of any work performed, materials furnished, or
obligations incurred by Tenant or claimed to have been performed for Tenant. In
the event Tenant fails to discharge any such lien within ten (10) days after
receiving notice of the filing, Landlord shall be entitled to discharge such
lien at Tenant's expense and all resulting costs incurred by Landlord,
including attorney's fees shall be due from Tenant as additional rent.

     17.  COMPLIANCE WITH GOVERNMENTAL REGULATIONS:  Tenant shall, at its sole
cost and expense, comply with all of the requirements of all Municipal, State
and Federal authorities now in force, or which may hereafter be in force,
pertaining to the said Premises, and shall faithfully observe in the use of the
Premises all Municipal ordinances and State and Federal statutes now in force
or which may hereafter be in force. The judgment of any court of competent
jurisdiction, or the admission of Tenant in any action or proceeding against
Tenant, whether Landlord be a party thereto or not, that Tenant has violated
any such ordinance or statute in the use of the Premises, shall be conclusive
of that fact as between Landlord and Tenant.

     18.  TOXIC WASTE AND ENVIRONMENTAL DAMAGE:

          A.  Tenant's Responsibility:  Without the prior written consent of
Landlord, Tenant shall not bring, use, or permit upon the Premises, or
generate, emit, or dispose from the Premises any chemicals, toxic or hazardous
gaseous, liquid or solid materials or waste, including without limitation,
material or substance having characteristics of ignitability, corrosivity,
reactivity, or toxicity or substances or materials which are listed on any of
the Environmental Protection Agency's lists of hazardous wastes or which are
identified in Sections 66680 through 66685 of Title 22 of the California
Administrative Code as the same may be amended from time to time ("Hazardous
Materials"). In order to obtain consent, Tenant shall deliver to Landlord its
written proposal describing the toxic material to be brought onto the Premises,
measures to be taken for storage and disposal thereof, safety measures to be
employed to prevent pollution of the air, ground, surface and ground water.
Landlord's approval may be withheld in its reasonable judgment. In the event
Landlord

                                     Page 6
<PAGE>   28
consents to Tenant's use of Hazardous Materials on the Premises, Tenant
represents and warrants that Tenant will (i) adhere to all reporting and
inspection requirements imposed by Federal, State, County or Municipal laws,
ordinances or regulations and will provide Landlord a copy of any such reports
or agency inspections, (ii) obtain and provide Landlord copies of all necessary
permits required for the use and handling Hazardous Materials on the Premises,
(iii) enforce Hazardous Materials handling and disposal practices consistent
with industry standards, and (iv) properly close the facility with regard to
Hazardous Materials including the removal or decontamination of any process
piping, mechanical ducting, storage tanks, containers, or trenches which have
come into contact with Hazardous Materials and obtain a closure certificate
from the local administering agency prior to the Expiration Date. Landlord may
employ, at Tenant's expense, an independent engineer or consultant to
periodically inspect Tenant's operations to verify that Tenant is complying
with its obligations under this paragraph.

          B.   Tenant's Indemnity Regarding Hazardous Materials: Tenant shall
comply, at its sole cost, with all laws pertaining to, and shall indemnify and
hold Landlord harmless from any claims, liabilities, costs or expenses incurred
or suffered by Landlord arising from such bringing, using, permitting,
generating, emitting or disposing of Hazardous Materials. Tenant's
indemnification and hold harmless obligations include, without limitation, (i)
claims, liability, costs or expenses resulting from or based upon
administrative, judicial (civil or criminal) or other action, legal or
equitable, brought by any private or public person under common law or under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
("CERCLA"), the Resource Conservation and Recovery Act of 1980 ("RCRA") or any
other Federal, State, County or Municipal law, ordinance or regulation, (ii)
claims, liabilities, costs or expenses pertaining to the identification,
monitoring, cleanup, containment, or removal of Hazardous Materials from soils,
riverbeds or aquifers including the provision of an alternative public drinking
water source, and (iii) all costs of defending such claims.

          C.   Environmental Monitoring: Landlord and its agents shall have the
right, at Tenant's sole cost and expense to inspect, investigate, sample and/or
monitor the Premises, including any air, soil, water, groundwater or other
sampling or any other testing, digging, drilling or analysis to determine
whether Tenant is complying with the terms of this paragraph 18. If Landlord
discovers that Tenant is not in compliance with the terms of this paragraph, any
such costs incurred by Landlord, including attorneys' and consultants' fees
shall be due and payable by Tenant to Landlord within five days following
Landlord's written demand therefore.

     19.  INDEMNITY: As a material part of the consideration to be rendered to
Landlord, Tenant hereby waives all claims against Landlord for damages to goods,
wares and merchandise, and all other personal property in, upon or about said
Premises and for injuries to person in or about said Premises, from any cause
arising at any time except due to the negligence or willful misconduct of
Landlord, and Tenant will hold Landlord exempt and harmless from any damage or
injury to any person, or to the goods, wares and merchandise and all other
personal property of any person, arising from the use of the Premises by Tenant,
or from the failure of Tenant to keep the Premises in good condition and repair,
as herein provided. Further, in the event Landlord is made party to any
litigation due to the acts or omission of Tenant, Tenant will indemnify and hold
Landlord harmless from any such claim or liability including Landlord's costs
and expenses and reasonable attorney's fees incurred in defending such claims.

     20.  ADVERTISEMENTS AND SIGNS: Tenant will not place or permit to be
placed, in, upon or about the said Premises any unusual or extraordinary signs,
or any signs not approved by the city or other governing authority. The Tenant
will not place, or permit to be placed, upon the Premises, any signs,
advertisements or notices without the written consent of the Landlord as to
type, size, design, lettering, coloring and location, and such consent will not
be unreasonably withheld. Any sign so placed on the Premises shall be removed
by Tenant, at its expense, prior to the Expiration Date or promptly following
the earlier termination of the lease and Tenant shall repair any damage or
injury to the Premises caused thereby, and if not so removed by Tenant then
Landlord may have same so removed at Tenant's expense.

     21.  ATTORNEY'S FEES: In case suit should be brought for the possession of
the Premises, for the recovery of any sum due hereunder, or because of the
breach of any other covenant herein, the losing party shall pay to the
prevailing party a reasonable attorney's fee


                                     Page 7

<PAGE>   29
as part of its costs which shall be deemed to have accrued on the commencement
of such action.

     22.  TENANT'S DEFAULT: The occurrence of any of the following shall
constitute a material default and breach of this Lease by Tenant: a) Any failure
by Tenant to pay the rental or to make any other payment required to be made by
Tenant hereunder provided however, that Tenant may cure such default by payment
to Landlord of the Base Monthly Rent or other sum due within ten (10) days after
receipt by Tenant of written notice specifying Landlord has failed to receive
the amount in question; b) The abandonment or vacation of the Premises by
Tenant; c) A failure by Tenant to observe and perform any other provision of
this Lease to be observed or performed by Tenant, where such failure continues
for thirty (30) days after written notice thereof by Landlord to Tenant;
provided, however, that if the nature of such default is such that the same
cannot reasonably be cured within such thirty (30) day period Tenant shall not
be deemed to be in default if Tenant shall within such period commence such cure
and thereafter diligently prosecute the same to completion; d) The making by
Tenant of any general assignment for the benefit of creditors; the filing by or
against Tenant of a petition to have Tenant adjudged a bankrupt or of a petition
for reorganization or arrangement under any law relating to bankruptcy (unless,
in the case of a petition filed against Tenant, the same is dismissed after the
filing); the appointment of a trustee or receiver to take possession of
substantially all of Tenant's assets located at the Premises or of Tenant's
interest in this Lease, where possession is not restored to Tenant within thirty
(30) days; or the attachment, execution or other judicial seizure of
substantially all of Tenant's assets located at the Premises or of Tenant's
interest in this Lease, where such seizure is not discharged within thirty (30)
days. The notice requirements set forth herein are in lieu of and not in
addition to the notices required by California Code of Civil Procedure Section
1161.

          A.   Remedies: In the event of any such default by Tenant, then in
addition to any other remedies available to Landlord at law or in equity,
Landlord shall have the immediate option to terminate this Lease and all rights
of Tenant hereunder by giving written notice of such intention to terminate. In
the event that Landlord shall elect to so terminate this Lease then Landlord
may recover from Tenant: a) the worth at the time of award of any unpaid rent
which had been earned at the time of such termination; plus b) the worth at the
time of award of the amount by which the unpaid rent would have been earned
after termination until the time of award exceeds the amount of such rental
loss Tenant proves could have been reasonably avoided; plus c) the worth at the
time of award of the amount by which the unpaid rent for the balance of the
Lease Term after the time of award exceeds the amount of such rental loss that
Tenant proves could be reasonably avoided; plus d) any other amount necessary
to compensate Landlord for all the detriment proximately caused by Tenant's
failure to perform his obligations under this Lease or which in the ordinary
course of things would be likely to result therefrom, and e) at Landlord's
election, such other amounts in addition to or in lieu of the foregoing as may
be permitted from time to time by applicable California law. The term "rent",
as used herein, shall be deemed to be and to mean the minimum monthly
installments of Base Monthly Rent and all other sums required to be paid by
Tenant pursuant to the terms of this Lease, all other such sums being deemed to
be additional rent due hereunder. As used in (a) and (b) above, the "worth at
the time of award" to be computed by allowing interest at the rate of the
discount rate of the Federal Reserve Bank of San Francisco plus five (5%)
percent per annum. As used in (c) above, the "worth at the time of award" to be
computed by discounting such amount at the discount rate of the Federal Reserve
Bank of San Francisco at the time of award plus one (1%) percent.

          B.   Right to Re-enter: In the event of any such default by Tenant,
Landlord shall also have the right with or without terminating this Lease, to
re-enter the Premises and remove all persons and property from the Premises;
such property may be removed and stored in a public warehouse or elsewhere at
the cost of and for the account of Tenant and disposed of by Landlord in any
manner permitted by law.

          C.   Abandonment: In the event of the vacation or abandonment of the
Premises by Tenant or in the event that Landlord shall elect to re-enter as
provided in paragraph 22(B) above or shall take possession of the Premises
pursuant to legal proceeding or pursuant to any notice provided by law, then if
Landlord does not elect to terminate this Lease as provided in paragraph 22(A)
above, then the provisions of California Civil Code Section 1951.4 as amended
from time to time, shall apply and Landlord may from time to time, without
terminating this Lease, either recover all rental as it becomes due or relet
the Premises or any part thereof for such term or terms and at such rental or
rentals and upon such other terms and conditions as Landlord in its sole
discretion may deem advisable with the right to


                                     Page 8
<PAGE>   30
make alterations and repairs to the Premises. In the event that Landlord shall
elect to so relet, then rentals received by Landlord from such reletting shall
be applied: first, to the payment of any indebtedness other than Base Monthly
Rent due hereunder from Tenant to Landlord; second, to the payment of any cost
of such reletting; third, to the payment of the cost of any alterations and
repairs to the Premises; fourth, to the payment of Base Monthly Rent due and
unpaid hereunder; and the residue, if any, shall be held by Landlord and
applied in payment of future Base Monthly Rent as the same may become due and
payable hereunder. Should that portion of such rentals received from such
reletting during any month, which is applied by the payment of rent hereunder,
be less than the rent payable during that month by Tenant hereunder, then
Tenant shall pay such deficiency to Landlord immediately upon demand therefor
by Landlord. Such deficiency shall be calculated and paid monthly. Tenant shall
also pay to Landlord, as soon as ascertained, any costs and expenses incurred
by Landlord in such reletting or in making such alterations and repairs not
covered by the rentals received from such reletting.

        D.  No Termination: No re-entry or taking possession of the Premises by
Landlord pursuant to 22(B) or 22(C) of this Article 22 shall be construed as an
election to terminate this Lease unless a written notice of such intention be
given to Tenant or unless the termination thereof be decreed by a court of
competent jurisdiction. Notwithstanding any reletting without termination by
Landlord because of any default by Tenant, Landlord may at any time after such
reletting elect to terminate this Lease for any such default.

    23. SURRENDER OF LEASE: The voluntary or other surrender of this Lease by
Tenant, or a mutual cancellation thereof, shall not automatically effect a
merger of the Lease with Landlord's ownership of the Building or Premises.
Instead, at the option of Landlord, Tenant's surrender may terminate all or any
existing sublease or subtenancies, or may operate as an assignment to Landlord
of any or all such subleases or subtenancies, thereby creating a direct
Landlord-Tenant relationship between Landlord and any subtenants.

    24. HABITUAL DEFAULT: Notwithstanding anything to the contrary contained in
paragraph 22, 22 (A) (B) (C) and (D), the parties hereto agree that if the
Tenant shall have defaulted in the performance of any (but not necessarily the
same) term or condition of this Lease for three or more times during any twelve
month period during the Lease Term hereof, then such conduct shall, at the
election of the Landlord, represent a separate event of default which cannot be
cured by the Tenant. Tenant acknowledges that the purpose of this provision is
to prevent repetitive defaults by the Tenant under the Lease, which work a
hardship upon the Landlord, and deprive the Landlord of the timely performance
by the Tenant hereunder.

    25. LANDLORD'S DEFAULT: In the event of Landlord's failure to perform any
of its covenants or agreements under this Lease, Tenant shall give Landlord
written notice of such failure and shall give Landlord thirty (30) days or such
other reasonable opportunity to cure or to commence to cure such failure prior
to any claim for breach or for damages resulting from such failure. In
addition, upon any such failure by Landlord, Tenant shall give notice by
registered or certified mail to any person or entity with a security interest
in the Premises ("Mortgagee") that has provided Tenant with notice of its
interest in the Premises, and shall provide such Mortgagee a reasonable
opportunity to cure such failure, including such time to obtain possession of
the Premises by power of sale or judicial foreclosure, if such should prove
necessary to effectuate a cure. Tenant agrees that each of the Mortgagees to
whom this Lease has been assigned is an expressed third party beneficiary
hereof. Tenant shall not make any prepayment of rent more than one (1) month in
advance without the prior written consent of such Mortgagee. Tenant waives any
right under California Civil Code Section 1950.7 or any other present or future
law to the collection of any payment or deposit from such Mortgagee or any
purchaser at a foreclosure sale of such Mortgagee's interest unless such
Mortgagee or such purchaser shall have actually received and not refunded the
applicable payment or deposit.

    26. NOTICES: All notices, demands, requests, or consents required to be
given under this Lease shall be sent in writing by U.S. certified mail, return
receipt requested, or by personal delivery addressed to the party to be
notified at the address for such party specified in paragraph 1 of this Lease,
or to such other place as the party to be notified may from time to time
designate by at least fifteen (15) days prior notice to the notifying party.

    27. ENTRY BY LANDLORD: Tenant shall permit Landlord and his agents to enter
into and upon said Premises at all reasonable times subject to any security
regulations of


                                     Page 9
<PAGE>   31
Tenant for the purpose of inspecting the same or for the purpose of maintaining
the Premises or for the purpose of making repairs, alterations or additions to
any other portion of said Premises or for the purpose of erecting additional
building(s) and improvements on the land where the Premises are situated, or on
adjacent land owned by Landlord, including the erection and maintenance of such
scaffolding, canopies, fences and props as may be required without any abatement
or reduction of Base Monthly Rent or without any liability to Tenant for any
loss of occupation or quiet enjoyment of the Premises thereby occasioned; and
Tenant shall permit Landlord and his agents, at any time within one hundred and
eighty (180) days prior to the Expiration Date (or at any time during the Lease
if Tenant is in default hereunder), to place upon the Premises any "For Sale"
or "For Lease" signs and exhibit the Premises to real estate brokers and
prospective tenants at reasonable hours.

     28.  DESTRUCTION OF PREMISES:

          A.   DESTRUCTION BY AN INSURED CASUALTY: In the event of a partial
destruction of the Premises by a casualty for which Landlord has received
insurance proceeds sufficient to repair the damage or destruction during the
Lease Term from any cause, Landlord shall forthwith repair the same, provided
such repairs can be made within one hundred eighty (180) days from the date of
receipt of all necessary governmental approvals necessary under the laws and
regulations of State, Federal, County or Municipal authorities, such partial
destruction shall in no way annul or void this Lease, except that Tenant shall
be entitled to a proportionate reduction of Base Monthly Rent while such
repairs are being made, such proportionate reduction to be based upon the extent
to which the making of such repairs shall interfere with the business carried on
by Tenant in the Premises, in the reasonable judgment of Landlord. For purposes
of this paragraph "partial destruction" shall mean destruction of no greater
than one-third (1/3) of the replacement cost of the Premises, including the
replacement cost of the Tenant Improvements paid for by Landlord. In the event
the Premises are more than partially destroyed, or in the event the repairs
cannot be made in one hundred eighty (180) days, Landlord or Tenant may elect
to terminate this lease. Landlord shall not be required to restore Alterations
or replace Tenant's fixtures or personal property. In respect to any partial
destruction which Landlord is obligated to repair or may elect to repair under
the terms of this paragraph, the provision of Section 1932, Subdivision 2, and
of Section 1933, Subdivision 4, of the Civil Code of the State of California
and any other similarly enacted statute are waived by Tenant and the provisions
of this paragraph 28 shall govern in the case of such destruction.

          B.   DESTRUCTION BY AN UNINSURED CASUALTY: In the event of a total or
partial destruction of the Premises by an uninsured casualty, the Lease shall
automatically terminate, unless (i) Landlord elects to rebuild, and (ii) the
damage can be repaired within one hundred eighty (180) days. If Landlord elects
to contribute to payment for an uninsured loss, such contributed amount shall be
amortized over the useful life of the improvements and such amortization shall
be reimbursed by Tenant to Landlord as additional rent together with interest at
the prime rate of Union Bank plus two percent (2%).

     29.  ASSIGNMENT OR SUBLEASE:

          A.   CONSENT BY LANDLORD: In the event Tenant desires to assign this
Lease or any interest therein including, without limitation, a pledge, mortgage
or other hypothecation, or sublet the Premises or any part thereof, Tenant
shall deliver to Landlord executed counterparts of any such agreement and of
all ancillary agreements with the proposed assignee or subtenant, financial
statements, and any additional information as reasonably required to determine
whether it will consent to the proposed assignment or sublease. The notice
shall give the name and current address of the proposed assignee/subtenant,
proposed use of the Premises, rental rate and current financial statement; and
upon request to Tenant, Landlord shall be given additional information as
reasonably required to determine whether it will consent to the proposed
assignment or sublease. Landlord shall then have a period of thirty (30) days
following receipt of such notice within which to notify Tenant in writing that
Landlord elects (i) to terminate this Lease as to the space so affected as of
the date so specified by Tenant in which event Tenant will be relieved of all
further obligations hereunder as to such space, (ii) to permit Tenant to assign
or sublet such space to the named assignee/subtenant on the terms and
conditions set forth in the notice, or (iii) to refuse consent. If Landlord
should fail to notify Tenant in writing of such election within said thirty
(30) day period, Landlord shall be deemed to have elected option (ii) above. If
Landlord exercises its option to terminate this Lease in part in the event
Tenant desires to sublet or assign part of the Premises, then (i) this Lease
shall end and expire, with respect to such part

                                    Page 10


<PAGE>   32
of the Premises, on the date upon which the proposed sublease was to commence,
and (ii) from and after such date, the Base Monthly Rent and Tenant's allocable
share of all other costs and charges shall be adjusted, based upon the
proportion that the rentable area of the Premises remaining bears to the total
rentable area of the Premises. If Landlord does not exercise its option to
terminate this Lease, Landlord's consent (which must be in writing and in form
reasonably satisfactory to Landlord) to the proposed assignment or sublease
shall not be unreasonably withheld or delayed, provided and upon condition
that: (j) The proposed assignee or subtenant is engaged in a business that is
limited to the used expressly permitted under this Lease; (ii) The proposed
assignee or subtenant is a company with sufficient financial worth and
management ability to undertake the financial obligation of this Lease, and
Landlord has been furnished with reasonable proof thereof; (iii) The proposed
sublease shall be in form reasonably satisfactory to Landlord; (iv) The amount
of the aggregate rent to be paid by the proposed subtenant is not less than the
then current "Fair Market Value" as defined in paragraph 38 below; (v) Tenant
shall reimburse Landlord on demand for any costs that may be incurred by
Landlord in connection with said assignment or sublease, including the costs of
making investigations as to the acceptability of the proposed assignee or
subtenant and legal costs incurred in connection with the granting of any
requested consent; and (vi) Tenant shall not have advertised or publicized in
any way the availability of the Premises without prior notice to, and approval
by Landlord

          C.  Assignment or Subletting Consideration:  Any rent or other
economic consideration realized by Tenant under any such sublease and assignment
in excess of the rent payable hereunder (including an allocation of the purchase
price attributable to Tenant's leasehold interest in the event of a sale of the
Tenant's business), after the net unamortized cost of the Tenant Improvements
for which Tenant has itself paid, and assignment costs, shall be divided and
paid sixty-seven percent (67%) to the Landlord and thirty-three percent (33%) to
Tenant. Tenant's obligation to pay over Landlord's portion of the consideration
shall constitute an obligation for additional rent hereunder. The above
provisions relating to Landlord's right to terminate the Lease and relating to
the allocation of bonus rent are independently negotiated terms of the Lease,
constitute a material inducement for the Landlord to enter into the Lease, and
are agreed as between the parties to be commercially reasonable. No assignment
or subletting by Tenant shall relieve Tenant of any obligation under this Lease.
Any assignment or subletting by Tenant shall relieve Tenant of any obligation
under this Lease. Any assignment or subletting which conflicts with the
provisions hereof shall be void.

          C.  No Release:  Any assignment or sublease shall be made only if and
shall not be effective until the assignee or subtenant shall execute,
acknowledge and deliver to Landlord an agreement, in form and substance
satisfactory to Landlord, whereby the assignee or subtenant shall assume all of
the obligations of this Lease on the part of Tenant to be performed or observed
and shall be subject to all of the covenants, agreements, terms, provisions and
conditions contained in this Lease. Notwithstanding any such sublease or
assignment and the acceptance of rent or additional rent by Landlord from any
subtenant or assignee, Tenant or any guarantor shall and will remain fully
liable for the payment of the rent and additional rent due, and to become due
hereunder, for the performance of all of the covenants, agreements, terms,
provisions and conditions contained in this Lease on the part of Tenant to be
performed and for all acts and omissions of any licensee, subtenant, assignee
or any other person claiming under or through any subtenant that shall be in
violation of any or the terms and conditions of this Lease, and any such
violation shall be deemed to be a violation by Tenant. Tenant shall further
indemnify, defend and hold Landlord harmless from and against any and all
losses, liabilities, damages, costs and expenses (including reasonable attorney
fees) resulting from any claims that may be made against Landlord by the
proposed assignee or subtenant or by any real estate brokers or other persons
claiming a commission or similar compensation in connection with the proposed
assignment or sublease.

          D.  Effect of Default:  In the event of Tenant's default, Tenant
hereby assigns all rents due from any assignment or subletting to Landlord as
security for performance of its obligations under this Lease and Landlord may
collect such rents as Tenant's Attorney-in-Fact, except that Tenant may collect
such rents unless a default occurs as described in paragraph 22 above. The
termination of this Lease due to Tenant's default shall not automatically
terminate any assignment or sublease then in existence. At the election of
Landlord, the assignee or subtenant shall attorn to Landlord and Landlord shall
undertake the obligations of the Tenant under the sublease or assignment;
provided the Landlord shall not be liable for prepaid rent, security deposits
or other defaults of the Tenant to the subtenant or assignee, or any acts or
omissions of Tenant, its agents, employees or invitees.


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<PAGE>   33


     30. CONDEMNATION: If any part of the Premises shall be taken for any public
or quasi-public use, under any statute or by right of eminent domain or private
purchase in lieu thereof, and a part thereof remains which is susceptible of
occupation hereunder, this Lease shall as to the part so taken, terminate as of
the date title shall vest in the condemnor or purchaser, and the Base Monthly
Rent payable hereunder shall be adjusted so that the Tenant shall be required to
pay for the remainder of the Lease Term only such portion of such rent as the
value of the part remaining after such taking bears to the value of the entire
Premises prior to such taking; but in such event Landlord shall have the option
to terminate this Lease as of the date when title to the part so taken vests in
the condemnor or purchaser. If all of the Premises, or such part thereof be
taken so that there does not remain a portion susceptible for occupation
hereunder, this Lease shall thereupon terminate. If a part or all of the
Premises be taken, all compensation awarded upon such taking shall go to the
Landlord and the Tenant shall have no claim thereto but Landlord shall cooperate
with Tenant to recover compensation for damage to or taking of any Alterations
or for Tenant's moving costs. Tenant hereby waives the provisions of California
Code of Civil Procedures Section 1265.130 and any other similarly enacted statue
are waived by Tenant and the provisions of this paragraph 30 shall govern in the
case of such destruction.

     31. EFFECTS OF CONVEYANCE: The term Landlord as used in this Lease, means
only the owner for the time being of the land and Building, containing the
Premises, so that, in the event of any sale or other conveyance of said land or
Building, or in the event of a master Lease of the Building, the Landlord shall
be and hereby is entirely freed and relieved of all covenants and obligations of
the Landlord hereunder, and it shall be deemed and construed, without further
agreement between the parties and the purchaser at any such sale, or the master
tenant of the Building, that the purchaser or master tenant of the Building has
assumed and agreed to carry out any and all covenants and obligations of the
Landlord hereunder. Landlord shall transfer and deliver Tenant's security
deposit to the purchaser at any such sale or the master tenant of the Building,
and thereupon the Landlord shall be discharged from any further liability in
reference thereto.

     32. SUBORDINATION: In the event Landlord notifies Tenant in writing, this
Lease shall be subordinate to any ground Lease, deed of trust, or other
hypothecation for security now or hereafter placed upon the real property of
which the Premises are a part and to any and all advances made on the security
thereof and to renewals, modifications, replacements and extensions thereof.
Tenant agrees to promptly execute and deliver any documents which may be
required to effectuate such subordination. Notwithstanding such subordination,
Tenant's right to quiet possession of the Premises shall not be disturbed if
Tenant is not in default and so long as Tenant shall pay the rent and observe
and perform all of the provisions of this Lease. At the request of any Lender,
Tenant agrees to execute and deliver any reasonable modifications of this Lease
which do not materially adversely affect Tenant's rights hereunder.

     33. WAIVER: The waiver by Landlord of any breach of any term, covenant or
condition, herein contained shall not be deemed to be a waiver of such term,
covenant or condition or any subsequent breach of the same or any other term,
covenant or condition herein contained. The subsequent acceptance of rent
hereunder by Landlord shall not be deemed to be a waiver of any preceding breach
by Tenant of any term, covenant or condition of this Lease, other than the
failure of Tenant to pay the particular rental so accepted, regardless of
Landlord's knowledge of such preceding breach at the time of acceptance of such
rent. No delay or omission in the exercise of any right or remedy by Landlord
shall impair such right or remedy or be construed as a waiver thereof by
Landlord. No act or conduct of Landlord, including, without limitation, the
acceptance of keys to the Premises shall constitute acceptance of the surrender
of the Premises by Tenant before the Expiration Date. Landlord's consent to or
approval of any act by Tenant which require Landlord's consent or approvals
shall not be deemed to waive or render unnecessary Landlord's consent to or
approval of any subsequent act by Tenant.

     34. HOLDING OVER: Any holding over after the termination or Expiration
Date, shall be construed to be a tenancy from month to month terminable on
thirty (30) days written notice from either party and Tenant shall pay Base
Monthly Rent to Landlord at a rate equal to the greater of (i) one hundred fifty
percent (150%) of the Base Monthly Rent due in the month preceding the
termination or Expiration Date or (ii) one hundred fifty percent (150%) of the
Fair Market Rental (as defined in paragraph 37). Any holding over shall
otherwise be on the terms and conditions herein specified, except those
provisions relating to the Lease Term and any options to extend or renew, which
provisions shall be of no further force and
<PAGE>   34
effect following the expiration of the applicable exercise period. Tenant shall
indemnify, defend, and hold Landlord harmless from all loss or liability
(including, without limitation, any loss or liability resulted from any claim
against Landlord made by any succeeding tenant) founded on or resulting from
Tenant's failure to surrender the Premises and losses to Landlord due to lost
opportunities to lease the Premises to succeeding tenants.

     35.  SUCCESSORS AND ASSIGNS: The covenants and conditions herein contained
shall, subject to the provisions of paragraph 28, apply to and bind the heirs,
successors, executors, administrators and assigns of all the parties hereto; and
all of the parties hereto shall be jointly and severally liable hereunder.

     36.  ESTOPPEL CERTIFICATES: Tenant shall at any time during the Lease Term,
within ten (10) days following written notice from Landlord, execute and deliver
to Landlord a statement in writing certifying that this Lease is unmodified and
in full force and effect (or, if modified, stating the nature of such
modification) and the date to which the rent and other charges are paid in
advance, if any, and acknowledging that there are not, to Tenant's knowledge,
any uncured defaults on the part of Landlord hereunder or specifying such
defaults if they are claimed. Any such statement may be conclusively relied upon
by any prospective purchaser or encumbrancer of the Premises. Tenant's failure
to deliver such statement within such time shall be conclusive upon the Tenant
that: (i) this Lease is in full force and effect, without modification except as
may be represented by Landlord; (ii) there are not uncured defaults in
Landlord's performance. Tenant also agrees to provide the most current three (3)
years of audited financial statements within five (5) days of a request by
Landlord for Landlord's use in financing the Premises with commercial lenders.

     37.  This paragraph intentionally left blank.

     38.  OPTIONS: All Options provided Tenant in this Lease are personal and
granted to original Tenant and are not exercisable by any third party should
Tenant assign or sublet all or a portion of its rights under this Lease, unless
Landlord consents to permit exercise of any option by any assignee or subtenant,
in Landlord's sole discretion. In the event that Tenant hereunder has any
multiple options to extend this Lease, a later option to extend the Lease cannot
be exercised unless the prior option has been so exercised.

     39.  QUIET ENJOYMENT: Upon Tenant's faithful and timely performance of all
the terms and covenants of the Lease, Tenant shall quietly have and hold the
Premises for the Lease Term and any extensions thereof.

     40.  BROKERS: Tenant represents it has not utilized or contacted a real
estate broker or finder with respect to this Lease other than Cornish & Carey
Commercial and Tenant agrees to indemnify and hold Landlord harmless against any
claim, cost, liability or cause of action asserted by any other broker or finder
claiming through Tenant.

     41.  LANDLORD'S LIABILITY: If Tenant should recover a money judgment
against Landlord arising in connection with this Lease, the judgment shall be
satisfied only out of Landlord's interest in the Premises including the
improvements and real property and neither Landlord or any of its partners,
officers, directors or employees shall be liable personally for any deficiency.

     42.  AUTHORITY OF PARTIES:

          A.   CORPORATE AUTHORITY: If Tenant is a corporation, each individual
executing this Lease on behalf of said corporation represents and warrants that
he is duly authorized to execute and deliver this Lease on behalf of said
corporation, in accordance with a duly adopted resolution of the Board of
Directors of said corporation or in accordance with the bylaws of said
corporation, and that this Lease is binding upon said corporation in accordance
with its terms.

          B.   LIMITED PARTNERSHIPS: If the Landlord herein is a limited
partnership, it is understood and agreed that any claims by Tenant on Landlord
shall be limited to the assets of the limited partnership. And furthermore,
Tenant expressly waives any and all rights to proceed against the individual
partners or the officers, directors or shareholders of any corporate partner,
except to the extent of their interest in said limited partnership.

     43.  TRANSPORTATION DEMAND MANAGEMENT PROGRAMS Should a

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<PAGE>   35
government agency or municipality require Landlord to institute TDM
(Transportation Demand Management) facilities and/or program, Tenant hereby
agrees that the cost of TDM imposed facilities required on the Premises,
including but not limited to employee showers, lockers, cafeteria, or lunchroom
facilities, shall be included as Tenant Improvement Costs and any ongoing costs
or expenses associated with a TDM program, such as an on-site TDM coordinator,
which are required for the Premises and not provided by Tenant shall be
provided by Landlord with such costs being included as additional rent and
reimbursed to Landlord by Tenant.

    44. MISCELLANEOUS PROVISIONS:

        A.  RENT: All monetary sums due from Tenant to Landlord under this Lease
shall be deemed to be rent.

        B.  MANAGEMENT FEE: All maintenance and utility services administered
by Landlord and subject to reimbursement by Tenant shall include a property
management fee to Landlord of fifteen percent (15%) of such services.

        C.  PERFORMANCE BY LANDLORD: If Tenant fails to perform any obligation
required under this Lease or by law or governmental regulation, Landlord in its
sole discretion may without notice perform such obligation, in which event
Tenant shall pay Landlord as additional rent all sums paid by Landlord in
connection with such substitute performance within ten (10) days following
Landlord's written notice for such payment.

        D.  INTEREST: All sums due hereunder, including rent and additional
rent, if not paid when due, shall bear interest at the maximum rate permitted
under California law accruing from the date due until the date paid to Landlord.

        E.  RIGHTS AND REMEDIES: All rights and remedies hereunder are
cumulative and not alternative to the extent permitted by law and are in
addition to all other rights and remedies in law and in equity.

        F.  SURVIVAL OF INDEMNITIES: All indemnification, defense, and hold
harmless obligations of Landlord and Tenant under the Lease shall survive the
expiration or sooner termination of the Lease.

        G.  SEVERABILITY: If any term or provision of this Lease is held
unenforceable or invalid by a court of competent jurisdiction, the remainder of
the Lease shall not be invalidated thereby but shall be enforceable in
accordance with its terms, omitting the invalid or unenforceable term.

        H.  CHOICE OF LAW: This Lease shall be governed by and construed in
accordance with California law.

        I.  TIME: Time is of the essence hereunder.

        J.  ENTIRE AGREEMENT: This instrument contains all of the agreements
and conditions made between the parties hereto and may not be modified orally
or in any other manner than by an agreement in writing signed by all of the
parties hereto or their respective successors in interest.

        K.  REPRESENTATIONS: Tenant acknowledges that neither Landlord or its
affiliates or agents have made any agreements, representations, warranties or
promises with respect to the demised Premises or the Building of which they are
a part, or with respect to present or future rents, expenses, operations,
tenancies or any other matter. Except as herein expressly set forth herein,
Tenant relied on no statement of Landlord or its agents for that purpose.

        L.  HEADINGS: The headings or titles to the paragraphs of this Lease
are not a part of this Lease and shall have no effect upon the construction or
interpretation of any part thereof.

IN WITNESS WHEREOF, Landlord and Tenant have executed these presents, the day
and year first above written.

LANDLORD: The Sobrato 1979 Trust    TENANT: Peninsula Engineering Group, Inc.


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