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                                                                   EXHIBIT 10.32

                                      LEASE
                              (SINGLE TENANT; NET)

         THIS LEASE is made as of the 28th day of January, 2004, by and
between THE IRVINE COMPANY, a Delaware corporation hereafter called "LANDLORD,"
and ENDWAVE CORPORATION, a Delaware corporation, hereinafter called "TENANT."

                        ARTICLE I. BASIC LEASE PROVISIONS

         Each reference in this Lease to the "BASIC LEASE PROVISIONS" shall mean
and refer to the following collective terms, the application of which shall be
governed by the provisions in the remaining Articles of this Lease.

1.       Premises: The Premises are more particularly described in Section 2.1.

2.       Address of Building: 776 Palomar, Sunnyvale, California

3.       Use of Premises: General office, marketing, sales, storage, light
         manufacturing , and other legal related uses.

4.       Estimated Commencement Date: Eight (8) weeks from and after the date of
         this Lease.

5.       Term: From and after the Commencement Date through August 31, 2006.

6.       Basic Rent: Twelve Thousand Eight Hundred Ninety-Nine Dollars
         ($12,899.00) per month, based on $.82 per rentable square foot.

         Basic Rent is subject to adjustment as follows:

         Commencing twelve (12) months following the Commencement Date, the
         Basic Rent shall be Thirteen Thousand Three Hundred Seventy-One Dollars
         ($13,371.00) per month, based on $.85 per rentable square foot.

         Commencing twenty-four (24) months following the Commencement Date, the
         Basic Rent shall be Thirteen Thousand Eight Hundred Forty-Two Dollars
         ($13,842.00) per month, based on $.88 per rentable square foot.

7.       Guarantor(s): None

8.       Floor Area: Approximately 15,730 rentable square feet

9.       Security Deposit: $25,798.00

10.      Broker(s): Colliers International

11.      Additional Insureds: None

12.      Address for Payments and Notices:

                 LANDLORD                                       TENANT

         THE IRVINE COMPANY                              ENDWAVE CORPORATION
         dba Office Properties                           776 Palomar
         8105 Irvine Center Drive, Suite 300             Sunnyvale, CA  94085
         Irvine, CA 92618
         Attn: Vice President,Operations,
         Technology Portfolio

         with a copy of notices to:

         THE IRVINE COMPANY
         dba Office Properties
         8105 Irvine Center Drive, Suite 300
         Irvine, CA  92618
         Attn: Senior Vice President,
         Operations
         Office Properties

13.      Tenant's Liability Insurance Requirement: $2,000,000.00

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                              ARTICLE II. PREMISES

         SECTION 2.1. LEASED PREMISES. Landlord leases to Tenant and Tenant
leases from Landlord the premises shown in Exhibit A (the "PREMISES"),
containing approximately the rentable square footage set forth as the "FLOOR
AREA" in Item 8 of the Basic Lease Provisions. The Premises consist of all of
the rentable square footage within the building identified in Item 1 of the
Basic Lease Provisions (the Premises together with such building and the
underlying real property, are called the "BUILDING"). The Building is located on
the site shown on Exhibit Y (the "SITE"). All references to "Floor Area" in this
Lease shall mean the rentable square footage set forth in Item 8 of the Basic
Lease Provisions. The rentable square footage set forth in Item 8 may include or
have been adjusted by various factors, including, without limitation, a load
factor for any vertical penetrations, stairwells or similar features or areas of
the Building. Tenant agrees that the Floor Area set forth in Item 8 shall be
binding on Landlord and Tenant for purposes of this Lease regardless of whether
any future or differing measurements of the Premises or the Building are
consistent or inconsistent with the Floor Area set forth in Item 8.

         SECTION 2.2. ACCEPTANCE OF PREMISES. Tenant acknowledges that, except
as expressly set forth in this Lease, neither Landlord nor any representative of
Landlord has made any representation or warranty with respect to the Premises,
the Building or the Site or their respective suitability or fitness for any
purpose, including without limitation any representations or warranties
regarding the compliance of Tenant's use of the Premises with the applicable
zoning or regarding any other land use matters, and Tenant shall be solely
responsible as to such matters. Further, that neither Landlord nor any
representative of Landlord has made any representations or warranties regarding
(i) what other tenants or uses may be permitted or intended in the Building or
the Site, (ii) any exclusivity of use by Tenant with respect to its permitted
use of the Premises as set forth in Item 3 of the Basic Lease Provisions, or
(iii) any construction of portions of the Site not yet completed. Tenant further
acknowledges that neither Landlord nor any representative of Landlord has agreed
to undertake any alterations or additions or construct any improvements to the
Premises except as expressly provided in this Lease. As of the date of
"Substantial Completion" of the Tenant Improvement Work (as defined in the Work
Letter attached as Exhibit X hereto), Tenant shall be conclusively deemed to
have accepted the Premises and those portions of the Building and Site in which
Tenant has any rights under this Lease, which acceptance shall mean that it is
conclusively established that the Premises and those portions of the Building
and Site in which Tenant has any rights under this Lease were in satisfactory
condition and in conformity with the provisions of this Lease, subject only to
those defective or incomplete portions of the Tenant Improvements constructed by
Landlord pursuant to the Work Letter, if any, attached hereto as Exhibit X
("WORK LETTER"), which Tenant shall have itemized on a written punch list and
delivered to Landlord within thirty (30) days after the Commencement Date (as
defined in Section 3.1). Nothing contained in this Section shall affect the
commencement of the Term or the obligation of Tenant to pay rent. Landlord shall
diligently complete all punch list items of which it is notified as provided
above.

         SECTION 2.3. BUILDING NAME AND ADDRESS. Tenant shall not utilize any
name selected by Landlord from time to time for the Building and/or the Site as
any part of Tenant's corporate or trade name. Landlord shall have the right to
change the name, address, number or designation of the Building or Site without
liability to Tenant.

                                ARTICLE III. TERM

         SECTION 3.1. GENERAL. The term of this Lease ("TERM") shall be for the
period shown in Item 5 of the Basic Lease Provisions. Subject to the provisions
of Section 3.2 below, the Term shall commence ("COMMENCEMENT DATE") on the
earlier of (a) the date Tenant acquires possession of or commences use of the
Premises for any purpose other than any construction permitted to be performed
by Tenant pursuant to the Work Letter, or (b) the date the Premises are tendered
to Tenant, provided that the Premises shall not be tendered to Tenant until the
Substantial Completion of the Tenant Improvement Work and any approvals by
relevant governmental authorities of the tenant improvements constructed by
Landlord pursuant to the Work Letter ("TENANT IMPROVEMENTS") which are required
for occupancy of the Premises have been obtained (as evidenced by written
approval thereof in accordance with the building permits issued for the Tenant
Improvements or issuance of a temporary or final certificate of occupancy for
the Premises). The date on which this Lease is scheduled to terminate as set
forth in Item 5 of the Basic Lease Provisions is referred to as the "EXPIRATION
DATE." Prior to Tenant's taking of possession of the Premises, the parties shall
memorialize on a form provided by Landlord the actual Commencement Date and the
Expiration Date of this Lease. Tenant's failure to execute that form shall not
affect the validity of Landlord's determination of those dates or Tenant's
obligation to pay rent hereunder. Landlord may at its election, provide Tenant
with access to the Premises not less than ten (10) days prior to the
Commencement Date of this Lease to enable Tenant to install fixtures, furniture,
computers, telephone and cabling equipment in the Premises. Such access shall be
subject to all of the terms and conditions of this Lease, except that Tenant's
rental obligation shall not commence to accrue until the Commencement Date
hereof.

         Notwithstanding anything to the contrary contained in this Section 3.2,
if for any reason other than "Tenant Delays" (as defined in the Work Letter
attached hereto), the actual Commencement Date has not occurred by June 15,
2004, then Tenant may, by written notice to Landlord given at any time
thereafter but prior to the actual occurrence of the Commencement Date, elect to
terminate this Lease. Notwithstanding the foregoing, if at any time during the
construction period, Landlord reasonably believes that the Commencement Date
will not occur on or before June 15, 2004, Landlord may notify Tenant in writing
of such fact and of a new outside date on or before which the Commencement Date
will occur, and Tenant must elect within ten (10) days of receipt of such notice
to either terminate this Lease or waive its right to terminate this Lease
provided the Commencement Date occurs on or prior to the new outside date
established by Landlord in such notice to Tenant. Tenant's failure to elect to
terminate this Lease within such ten (10) day period shall be deemed Tenant's
waiver of its right to terminate this Lease as

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provided in this paragraph as to the previous outside date, but not as to the
new outside date established by said notice.

         SECTION 3.2. DELAY IN POSSESSION. If Landlord, for any reason
whatsoever, cannot deliver possession of the Premises to Tenant on or before the
Estimated Commencement Date as set forth in Item 4 of the Basic Lease Provisions
("ESTIMATED COMMENCEMENT DATE"), this Lease shall not be void or voidable nor
shall Landlord be liable to Tenant for any resulting loss or damage. However,
Tenant shall not be liable for any rent and the Commencement Date shall not
occur until Landlord tenders possession of the Premises in accordance with
Section 3.1(b) above, except that if Landlord cannot so tender possession of the
Premises on or before the Estimated Commencement Date due to any action or
inaction of Tenant (including without limitation any Tenant Delay described in
the Work Letter, if any, attached to this Lease), then the Commencement Date
shall be deemed to have occurred and Landlord shall be entitled to full
performance by Tenant (including the payment of rent) from the date Landlord
would have been able to deliver the Premises to Tenant but for Tenant's action
or inaction, including without limitation any Tenant Delay described in the
attached Work Letter, if any.

                     ARTICLE IV. RENT AND OPERATING EXPENSES

         SECTION 4.1. BASIC RENT. From and after the Commencement Date, Tenant
shall pay to Landlord without deduction or offset, the rental amount for the
Premises shown in Item 6 of the Basic Lease Provisions (the "BASIC RENT"),
including subsequent adjustments, if any. Any rental adjustment to Basic Rent
shown in Item 6 shall be deemed to occur on the specified monthly anniversary of
the Commencement Date, whether or not the Commencement Date occurs at the end of
a calendar month. The rent shall be due and payable in advance commencing on the
Commencement Date (as prorated for any partial month) and continuing thereafter
on the first day of each successive calendar month of the Term. No demand,
notice or invoice shall be required for the payment of Basic Rent. An
installment of rent in the amount of one (1) full month's Basic Rent at the
initial rate specified in Item 6 of the Basic Lease Provisions and one (1)
month's estimated Tenant's Share of Operating Expenses (as defined in Section
4.2) shall be delivered to Landlord concurrently with Tenant's execution of this
Lease and shall be applied against the Basic Rent and Operating Expenses first
due hereunder.

         SECTION 4.2. OPERATING EXPENSES.

         (a)      Tenant shall pay to Landlord, as additional rent, Tenant's
Share of all Operating Expenses, as defined in Section 4.2(f), incurred by
Landlord in the operation of the Building and the Site. The term "TENANT'S
SHARE" means one hundred percent (100%) of any Operating Expenses determined by
Landlord to benefit or relate substantially to the Building and/or the Site,
plus an allocated portion of any Operating Expenses, as determined from time to
time by Landlord, which benefit or relate both to the Building or the Site and
to other projects owned by Landlord and/or its affiliates. The full amount of
any management fee payable by Landlord for the management of Tenant's Premises
that is calculated as a percentage of the rent payable by Tenant shall be paid
in full by Tenant as additional rent.

         (b)      Prior to the start of each full Expense Recovery Period (as
defined in this Section 4.2), Landlord shall give Tenant a written estimate of
the amount of Tenant's Share of Operating Expenses for the applicable Expense
Recovery Period. Failure to provide such estimate shall not relieve Tenant from
its obligation to pay Tenant's Share of Operating Expenses or estimated amounts
thereof, if and when Landlord provides such estimate or final payment amount.
Tenant shall pay the estimated amounts to Landlord in equal monthly
installments, in advance concurrently with payments of Basic Rent. If Landlord
has not furnished its written estimate for any Expense Recovery Period by the
time set forth above, Tenant shall continue to pay monthly the estimated
Tenant's Share of Operating Expenses in effect during the prior Expense Recovery
Period; provided that when the new estimate is delivered to Tenant, Tenant
shall, at the next monthly payment date, pay any accrued estimated Tenant's
Share of Operating Expenses based upon the new estimate. For purposes hereof,
"EXPENSE RECOVERY PERIOD" shall mean every twelve month period during the Term
(or portion thereof for the first and last lease years) commencing July 1 and
ending June 30, provided that Landlord shall have the right to change the date
on which an Expense Recovery Period commences in which event appropriate
reasonable adjustments shall be made to Tenant's Share of Operating Expenses so
that the amount payable by Tenant shall not materially vary as a result of such
change.

         (c)      Within one hundred twenty (120) days after the end of each
Expense Recovery Period, Landlord shall furnish to Tenant a statement showing in
reasonable detail the actual or prorated Tenant's Share of Operating Expenses
incurred by Landlord during the period, and the parties shall within thirty (30)
days thereafter make any payment or allowance necessary to adjust Tenant's
estimated payments of Tenant's Share of Operating Expenses, if any, to the
actual Tenant's Share of Operating Expenses as shown by the annual statement.
Any delay or failure by Landlord in delivering any statement hereunder shall not
constitute a waiver of Landlord's right to require Tenant to pay Tenant's Share
of Operating Expenses pursuant hereto. Any amount due Tenant shall be credited
against installments next coming due under this Section 4.2, and any deficiency
shall be paid by Tenant together with the next installment. Should Tenant fail
to object in writing to Landlord's determination of Tenant's Share of Operating
Expenses within sixty (60) days following delivery of Landlord's expense
statement, Landlord's determination of Tenant's Share of Operating Expenses for
the applicable Expense Recovery Period shall be conclusive and binding on the
parties for all purposes and any future claims to the contrary shall be barred.

         (d)      Even though this Lease has terminated and the Tenant has
vacated the Premises, when the final determination is made (pursuant to Section
4.2(c) above) of Tenant's Share of Operating Expenses for the Expense Recovery
Period in which this Lease terminates, Tenant shall within thirty (30) days of
written notice pay the entire

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increase over the estimated Tenant's Share of Operating Expenses already paid.
Conversely, any overpayment by Tenant shall be rebated by Landlord to Tenant not
later than thirty (30) days after such final determination..

         (e)      If, at any time during any Expense Recovery Period, any one or
more of the Operating Expenses are increased to a rate(s) or amount(s) in excess
of the rate(s) or amount(s) used in calculating the estimated Tenant's Share of
Operating Expenses for the year, then the estimate of Tenant's Share of
Operating Expenses may be increased by written notice from Landlord for the
month in which such rate(s) or amount(s) becomes effective and for all
succeeding months by an amount equal to Tenant's Share of the increase. If
Landlord gives Tenant written notice of the amount or estimated amount of the
increase, the month in which the increase will or has become effective, then
Tenant shall pay the increase to Landlord as a part of Tenant's monthly payments
of the estimated Tenant's Share of Operating Expenses as provided in Section
4.2(b), commencing with the month following Tenant's receipt of Landlord's
notice. In addition, Tenant shall pay upon written request any such increases
which were incurred prior to the Tenant commencing to pay such monthly increase.

         (f)      The term "OPERATING EXPENSES" shall mean and include all Site
Costs, as defined in subsection (g), and Property Taxes, as defined in
subsection (h).

         (g)      The term "SITE COSTS" shall include all expenses of operation,
repair and maintenance of the Building and the Site, including without
limitation all appurtenant Common Areas (as defined in Section 6.2), and shall
include the following charges by way of illustration but not limitation: water
and sewer charges; insurance premiums and deductibles and/or reasonable premium
and deductible equivalents should Landlord elect to self-insure all or any
portion of any risk that Landlord is authorized to insure hereunder (provided
that any deductible shall be amortized, if necessary, to insure that Tenant is
not allocated in excess of $100,000.00 during any Expense Recovery Period);
license, permit, and inspection fees; light; power; window washing; trash
pickup; heating, ventilating and air conditioning; supplies; materials;
equipment; tools; the cost of any environmental, insurance, tax or other
consultant utilized by Landlord in connection with the Building and/or Site;
establishment of reasonable reserves for roof replacements; costs incurred in
connection with compliance with any laws or changes in laws applicable to the
Building or the Site; the cost of any capital investments or replacements (other
than tenant improvements for specific tenants) to the extent of the amortized
amount thereof over the useful life of such capital investments or replacements
calculated at a market cost of funds, all as determined by Landlord, for each
such year of useful life during the Term; costs associated with the maintenance
of an air conditioning, heating and ventilation service agreement; labor;
reasonably allocated wages and salaries, fringe benefits, and payroll taxes for
administrative and other personnel directly applicable to the Building and/or
Site, including both Landlord's personnel and outside personnel; any expense
incurred pursuant to Sections 6.1, 6.2, 6.4, 7.2, and 10.2; and a reasonable
overhead/management fee for the professional operation of the Building and the
Site not to exceed those fees charged by owners of similar buildings in the
Sunnyvale, California area. It is understood and agreed that Site Costs may
include competitive charges for direct services (including, without limitation,
management and/or operations services) provided by any subsidiary, division or
affiliate of Landlord.

         (h)      The term "PROPERTY TAXES" as used herein shall include any
form of federal, state, county or local government or municipal taxes, fees,
charges or other impositions of every kind (whether general, special, ordinary
or extraordinary) related to the ownership, leasing or operation of the
Premises, Building or Site, including without limitation, the following: (i) all
real estate taxes or personal property taxes, as such property taxes may be
reassessed from time to time; and (ii) other taxes, charges and assessments
which are levied with respect to this Lease or to the Building and/or the Site,
and any improvements, fixtures and equipment and other property of Landlord
located in the Building and/or the Site, (iii) all assessments and fees for
public improvements, services, and facilities and impacts thereon, including
without limitation arising out of any Community Facilities Districts, "Mello
Roos" districts, similar assessment districts, and any traffic impact mitigation
assessments or fees; (iv) any tax, surcharge or assessment which shall be levied
in addition to or in lieu of real estate or personal property taxes, other than
taxes covered by Article VIII; and (v) taxes based on the receipt of rent
(including gross receipts or sales taxes applicable to the receipt of rent), and
(vi) costs and expenses incurred in contesting the amount or validity of any
Property Tax by appropriate proceedings. Notwithstanding the foregoing, general
net income or franchise taxes and penalties for failure to pay tax installments
imposed against Landlord shall be excluded.

         (i)      Notwithstanding any other provisions of this Lease to the
contrary, in no event shall Operating Expenses include any of the following:

                  (1)      Any ground lease rental affecting all or a portion of
                           the Building;

                  (2)      Costs incurred by Landlord for the repair of damage
                           to the Building or as a result of Landlord's gross
                           negligence or willful misconduct, to the extent that
                           Landlord is reimbursed by a third party or insurance
                           proceeds;

                  (3)      Depreciation, amortization and interest payments,
                           except as provided herein, and except with respect to
                           materials, tools, supplies and vendor-type equipment
                           purchased by Landlord to enable Landlord to supply
                           services Landlord might otherwise contract for with a
                           third party where such depreciation, amortization and
                           interest payments would otherwise have been included
                           in the charge for such third party's services, all as
                           determined in accordance with generally accepted
                           accounting principles, consistently applied, and when
                           depreciation or amortization is permitted or
                           required, the item shall be amortized over its
                           reasonably anticipated useful life;

                  (4)      Overhead and profit increments paid to Landlord or to
                           subsidiaries or affiliates of Landlord for services
                           in the Building to the extent the same exceeds the
                           cost of such

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                           services rendered at the same level of service for
                           similar quality buildings in the Sunnyvale area by
                           unaffiliated third parties on a competitive basis;

                  (5)      Landlord's general corporate overhead and general
                           administrative expenses;

                  (6)      Except for making repairs or keeping permanent
                           systems in operation while repairs are being made,
                           rentals and other related expenses incurred in
                           leasing air conditioning systems, elevators or other
                           equipment ordinarily considered to be of a capital
                           nature, except equipment not affixed to the Building
                           which is used in providing janitorial or similar
                           services;

                  (7)      Costs incurred in connection with upgrading the
                           Building to comply with handicap, life, fire and
                           safety codes in effect prior to the date of this
                           Lease;

                  (8)      Tax penalties incurred as a result of Landlord's
                           negligence or inability or unwillingness to make
                           payments when due or legal fees in connection
                           therewith or incurred contesting such penalties;

                  (9)      All assessments and other taxes which are not
                           specifically charged to Tenant because of what Tenant
                           has done, which can be paid by Landlord in
                           installments, to the extent not paid by Landlord in
                           the maximum number of installments permitted by law
                           and charged only to the applicable Expense Recovery
                           Period;

                  (10)     Any costs, fines or penalties incurred due to
                           violations by Landlord of any government rule or
                           authority; and

                  (11)     Wages, salaries, medical, surgical and general
                           welfare benefits, pension payments, payroll taxes,
                           workers' compensation costs or other compensation
                           paid to or for any executive employees above the
                           grade of building manager.

                  (j)      Provided Tenant is not then in default hereunder,
         Tenant shall have the right to cause a certified public accountant,
         engaged on a non-contingency fee basis, to audit Operating Expenses by
         inspecting Landlord's general ledger of expenses not more than once
         during any Expense Recovery Period. However, to the extent that
         insurance premiums or any other component of Operating Expenses is
         determined by Landlord on the basis of an internal allocation of costs
         utilizing information Landlord in good faith deems proprietary, such
         expense component shall not be subject to audit so long as its does not
         exceed the amount per square foot typically imposed by landlords of
         other first-class office projects in Sunnyvale, California. Tenant
         shall give notice to Landlord of Tenant's intent to audit within sixty
         (60) days after Tenant's receipt of Landlord's expense statement which
         sets forth Landlord's actual Operating Expenses. Such audit shall be
         conducted at a mutually agreeable time during normal business hours at
         the office of Landlord or its management agent where such accounts are
         maintained. If Tenant's audit determines that actual Operating Expenses
         have been overstated by more than five percent (5%), then subject to
         Landlord's right to review and/or contest the audit results, Landlord
         shall reimburse Tenant for the reasonable out-of-pocket costs of such
         audit. Tenant's rent shall be appropriately adjusted to reflect any
         overstatement in Operating Expenses. In addition, if any component of
         Operating Expenses is determined to be either inappropriate or
         excessive during an Expense Recovery Period, and if the Building Cost
         Base or Property Tax Base also included such component, then the
         appropriate Base shall concurrently be adjusted if and to the extent
         appropriate. In the event of a dispute between Landlord and Tenant
         regarding such audit, either party may elect to submit the matter for
         binding arbitration pursuant to Section 22.7 below. All of the
         information obtained by Tenant and/or its auditor in connection with
         such audit, as well as any compromise, settlement, or adjustment
         reached between Landlord and Tenant as a result thereof, shall be held
         in strict confidence and, except as may be required pursuant to
         litigation, shall not be disclosed to any third party, directly or
         indirectly, by Tenant or its auditor or any of their officers, agents
         or employees. Landlord may require Tenant's auditor to execute a
         separate confidentiality agreement affirming the foregoing as a
         condition precedent to any audit. In the event of a violation of this
         confidentiality covenant in connection with any audit, then in addition
         to any other legal or equitable remedy available to Landlord, Tenant
         shall forfeit its right to any reconciliation or cost reimbursement
         payment from Landlord due to said audit (and any such payment
         theretofore made by Landlord shall be promptly returned by Tenant), and
         Tenant shall have no further audit rights under this Lease.
         Notwithstanding the foregoing, Tenant shall have no right of audit with
         respect to any Expense Recovery Period unless the total Operating
         Expenses per square foot for such Expense Recovery Period, as set forth
         in Landlord's annual expense reconciliation, exceed the total Operating
         Expenses per square foot during the Base Year, as increased by the
         percentage change in the United States Department of Labor, Bureau of
         Labor Statistics, Consumer Price Index for all Urban Consumers, Los
         Angeles - Riverside - Orange County Area Average, all items (1982-84 -
         100) (the "INDEX"), which change in the Index shall be measured by
         comparing the Index published for January of the Base Year with the
         Index published for January of the applicable Expense Recovery Period.

         SECTION 4.3. SECURITY DEPOSIT. Subject to the provisions of the next
paragraph of this Section 4.3, Tenant shall deposit with Landlord the sum stated
in Item 9 of the Basic Lease Provisions, to be held by Landlord as security for
the full and faithful performance of all of Tenant's obligations under this
Lease (the "SECURITY DEPOSIT"). Landlord shall not be required to keep this
Security Deposit separate from its general funds, and Tenant shall not be
entitled to interest on the Security Deposit. Subject to the last sentence of
this Section, the Security Deposit shall be understood and agreed to be the
property of Landlord upon Landlord's receipt thereof, and may be utilized by
Landlord in its sole and absolute

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discretion towards the payment of all expenses by Landlord for which Tenant
would be required to reimburse Landlord under this Lease, including without
limitation brokerage commissions and Tenant Improvement costs. Upon any Event of
Default by Tenant (as defined in Section 14.1), Landlord may, in its sole and
absolute discretion, retain, use or apply the whole or any part of the Security
Deposit to pay any sum which Tenant is obligated to pay under this Lease, sums
that Landlord may expend or be required to expend by reason of the Event of
Default by Tenant or any loss or damage that Landlord may suffer by reason of
the Event of Default or costs incurred by Landlord in connection with the repair
or restoration of the Premises pursuant to Section 15.3 of this Lease upon
expiration or earlier termination of this Lease. In no event shall Landlord be
obligated to apply the Security Deposit upon an Event of Default and Landlord's
rights and remedies resulting from an Event of Default, including without
limitation, Tenant's failure to pay Basic Rent, Tenant's Share of Operating
Expenses or any other amount due to Landlord pursuant to this Lease, shall not
be diminished or altered in any respect due to the fact that Landlord is holding
the Security Deposit. If any portion of the Security Deposit is applied by
Landlord as permitted by this Section, Tenant shall within five (5) days after
written demand by Landlord deposit cash with Landlord in an amount sufficient to
restore the Security Deposit to its original amount. If Tenant fully performs
its obligations under this Lease, the Security Deposit shall be returned to
Tenant (or, at Landlord's option, to the last assignee of Tenant's interest in
this Lease) within thirty (30) days after the expiration of the Term, provided
that Tenant agrees that Landlord may retain the Security Deposit to the extent
and until such time as all amounts due from Tenant in accordance with this Lease
have been determined and paid in full and Tenant agrees that Tenant shall have
no claim against Landlord for Landlord's retaining such Security Deposit to the
extent provided in this Section.

         As of the date of this Lease, a "Security Deposit" in the amount of One
Hundred Nineteen Thousand Four Hundred Eighty-Two Dollars ($119,482.00) is being
held by Landlord pursuant to that certain Lease dated July 2, 2001 with Tenant
(the "EXISTING LEASE"). Following the "Termination Date" of the Existing Lease,
Landlord shall continue to hold the amount of Twenty-Five Thousand Seven Hundred
Ninety-Eight Dollars ($25,798.00) of said Security Deposit under the Existing
Lease as the Security Deposit under this Lease, and shall promptly return the
balance to Tenant. At any time following the "Termination Date" of the Existing
Lease, Tenant shall deposit with Landlord, within five (5) days following
written notice from Landlord, funds sufficient to restore the Security Deposit
to the amount stated in Item 9 of the Basic Lease Provisions of this Lease, if
Landlord shall have applied any portion of the Security Deposit towards the
payment of any of Tenant's obligations under the Existing Lease.

                                 ARTICLE V. USES

         SECTION 5.1. USE. Tenant shall use the Premises only for the purposes
stated in Item 3 of the Basic Lease Provisions, all in accordance with
applicable laws and restrictions and pursuant to approvals to be obtained by
Tenant from all relevant and required governmental agencies and authorities. The
parties agree that any contrary use shall be deemed to cause material and
irreparable harm to Landlord and shall entitle Landlord to injunctive relief in
addition to any other available remedy. Tenant, at its expense, shall procure,
maintain and make available for Landlord's inspection throughout the Term, all
governmental approvals, licenses and permits required for the proper and lawful
conduct of Tenant's permitted use of the Premises. Tenant shall not use or allow
the Premises to be used for any unlawful purpose, nor shall Tenant permit any
nuisance or commit any waste in the Premises or the Site. Tenant shall not
perform any work or conduct any business whatsoever in the Site other than
inside the Premises. Tenant shall not do or permit to be done anything which
will invalidate or increase the cost of any insurance policy(ies) covering the
Building, the Site and/or their contents, and shall comply with all applicable
insurance underwriters rules. Tenant shall comply at its expense with all
present and future laws, ordinances, restrictions, regulations, orders, rules
and requirements of all governmental authorities that pertain to Tenant or its
use of the Premises, including without limitation all federal and state
occupational health and safety requirements, whether or not Tenant's compliance
will necessitate expenditures or interfere with its use and enjoyment of the
Premises. Tenant shall comply at its expense with all present and future
covenants, conditions, easements or restrictions now or hereafter affecting or
encumbering the Building and/or Site, and any amendments or modifications
thereto, including without limitation the payment by Tenant of any periodic or
special dues or assessments charged against the Premises or Tenant which may be
allocated to the Premises or Tenant in accordance with the provisions thereof.
Tenant shall promptly upon demand reimburse Landlord for any additional
insurance premium charged by reason of Tenant's failure to comply with the
provisions of this Section, and shall indemnify Landlord from any liability
and/or expense resulting from Tenant's noncompliance.

         SECTION 5.2. SIGNS. Except as approved in writing by Landlord, in its
sole and absolute discretion, Tenant shall have no right to maintain signs in
any location in, on or about the Premises, the Building or the Site and shall
not place or erect any signs that are visible from the exterior of the Building.
The size, design, graphics, material, style, color and other physical aspects of
any permitted sign shall be subject to Landlord's written determination, as
determined solely by Landlord, prior to installation, that signage is in
compliance with any covenants, conditions or restrictions encumbering the
Premises and Landlord's signage program for the Site, as in effect from time to
time and approved by the City in which the Premises are located ("SIGNAGE
CRITERIA"). Prior to placing or erecting any such signs, Tenant shall obtain and
deliver to Landlord a copy of any applicable municipal or other governmental
permits and approvals and comply with any applicable insurance requirements for
such signage. Tenant shall be responsible for the cost of any permitted sign,
including the fabrication, installation, maintenance and removal thereof and the
cost of any permits therefor. If Tenant fails to maintain its sign in good
condition, or if Tenant fails to remove same upon termination of this Lease and
repair and restore any damage caused by the sign or its removal, Landlord may do
so at Tenant's expense. Landlord shall have the right to temporarily remove any
signs in connection with any repairs or maintenance in or upon the Building. The
term "sign" as used in this Section shall include all signs, designs, monuments,
displays, advertising materials, logos, banners, projected images, pennants,
decals, pictures, notices, lettering, numerals or graphics.

                                       6
<PAGE>

         SECTION 5.3. HAZARDOUS MATERIALS.

         (a)      For purposes of this Lease, the term "HAZARDOUS MATERIALS"
includes (i) any "hazardous material" as defined in Section 25501(o) of the
California Health and Safety Code, (ii) hydrocarbons, polychlorinated biphenyls
or asbestos, (iii) any toxic or hazardous materials, substances, wastes or
materials as defined pursuant to any other applicable state, federal or local
law or regulation, and (iv) any other substance or matter which may result in
liability to any person or entity as result of such person's possession, use,
release or distribution of such substance or matter under any statutory or
common law theory.

         (b)      Tenant shall not cause or permit any Hazardous Materials to be
brought upon, stored, used, generated, released or disposed of on, under, from
or about the Premises (including without limitation the soil and groundwater
thereunder) without the prior written consent of Landlord, which consent may be
given or withheld in Landlord's sole and absolute discretion. Notwithstanding
the foregoing, Tenant shall have the right, without obtaining prior written
consent of Landlord, to utilize within the Premises a reasonable quantity of
standard office products that may contain Hazardous Materials (such as photocopy
toner, "White Out", and the like), provided however, that (i) Tenant shall
maintain such products in their original retail packaging, shall follow all
instructions on such packaging with respect to the storage, use and disposal of
such products, and shall otherwise comply with all applicable laws with respect
to such products, and (ii) all of the other terms and provisions of this Section
5.3 shall apply with respect to Tenant's storage, use and disposal of all such
products. Landlord may, in its sole and absolute discretion, place such
conditions as Landlord deems appropriate with respect to Tenant's use of any
such Hazardous Materials, and may further require that Tenant demonstrate that
any such Hazardous Materials are necessary or useful to Tenant's business and
will be generated, stored, used and disposed of in a manner that complies with
all applicable laws and regulations pertaining thereto and with good business
practices. Tenant understands that Landlord may utilize an environmental
consultant to assist in determining conditions of approval in connection with
the storage, generation, release, disposal or use of Hazardous Materials by
Tenant on or about the Premises, and/or to conduct periodic inspections of the
storage, generation, use, release and/or disposal of such Hazardous Materials by
Tenant on and from the Premises, and Tenant agrees that any costs incurred by
Landlord in connection therewith shall be reimbursed by Tenant to Landlord as
additional rent hereunder upon demand, but only to the extent that Landlord
discovers that Tenant has failed to comply with its obligations hereunder,
otherwise, Landlord shall bear such costs and expenses.

         (c)      Prior to the execution of this Lease, Tenant shall complete,
execute and deliver to Landlord an Environmental Questionnaire and Disclosure
Statement (the "ENVIRONMENTAL QUESTIONNAIRE") in the form of Exhibit B attached
hereto. The completed Environmental Questionnaire shall be deemed incorporated
into this Lease for all purposes, and Landlord shall be entitled to rely fully
on the information contained therein. On each anniversary of the Commencement
Date until the expiration or sooner termination of this Lease, upon the request
of Landlord, Tenant shall disclose to Landlord in writing the names and amounts
of all Hazardous Materials which were stored, generated, used, released and/or
disposed of on, under or about the Premises for the twelve-month period prior
thereto, and which Tenant desires to store, generate, use, release and/or
dispose of on, under or about the Premises for the succeeding twelve-month
period. In addition, to the extent Tenant is permitted to utilize Hazardous
Materials upon the Premises, Tenant shall promptly provide Landlord with
complete and legible copies of all the following environmental documents
relating thereto: reports filed pursuant to any self-reporting requirements;
permit applications, permits, monitoring reports, emergency response or action
plans, workplace exposure and community exposure warnings or notices and all
other reports, disclosures, plans or documents (even those which may be
characterized as confidential) relating to water discharges, air pollution,
waste generation or disposal, and underground storage tanks for Hazardous
Materials; orders, reports, notices, listings and correspondence (even those
which may be considered confidential) of or concerning the release,
investigation of, compliance, cleanup, remedial and corrective actions, and
abatement of Hazardous Materials; and all complaints, pleadings and other legal
documents filed by or against Tenant related to Tenant's use, handling, storage,
release and/or disposal of Hazardous Materials.

         (d)      At Landlord's sole cost and expense, Landlord and its agents
shall have the right, but not the obligation, to inspect, sample and/or monitor
the Premises and/or the soil or groundwater thereunder at any time to determine
whether Tenant is complying with the terms of this Section 5.3, and in
connection therewith Tenant shall provide Landlord with full access to all
facilities, records and personnel related thereto. If Tenant is not in
compliance with any of the provisions of this Section 5.3, or in the event of a
release of any Hazardous Material on, under or about the Premises caused or
permitted by Tenant, its agents, employees, contractors, licensees or invitees,
Tenant shall reimburse Landlord for the costs and expenses of such
investigations and Landlord and its agents shall have the right, but not the
obligation, without limitation upon any of Landlord's other rights and remedies
under this Lease, to immediately enter upon the Premises without notice and to
discharge Tenant's obligations under this Section 5.3 at Tenant's expense,
including without limitation the taking of emergency or long-term remedial
action. Landlord and its agents shall use commercially reasonable efforts to
minimize interference with Tenant's business in connection therewith, but shall
not be liable for any such interference. In addition, Landlord, at Tenant's
expense, shall have the right, but not the obligation, to join and participate
in any legal proceedings or actions initiated in connection with any claims
arising out of the storage, generation, use, release and/or disposal by Tenant
or its agents, employees, contractors, licensees or invitees of Hazardous
Materials on, under, from or about the Premises.

         (e)      If the presence of any Hazardous Materials on, under, from or
about the Premises or the Site caused or permitted by Tenant or its agents,
employees, contractors, licensees or invitees results in (i) injury to any
person, (ii) injury to or any contamination of the Premises or the Site, or
(iii) injury to or contamination of any real or personal property wherever
situated, Tenant, at its expense, shall promptly take all actions necessary to
return the Premises and the Site and any other affected real or personal
property owned by Landlord to the condition existing prior to the introduction
of such Hazardous Materials and to remedy or repair any such injury or
contamination, including without limitation, any cleanup, remediation, removal,
disposal, neutralization or other treatment of any

                                       7
<PAGE>

such Hazardous Materials. Notwithstanding the foregoing, Tenant shall not,
without Landlord's prior written consent, which consent may be given or withheld
in Landlord's sole and absolute discretion, take any remedial action in response
to the presence of any Hazardous Materials on, from, under or about the Premises
or the Site or any other affected real or personal property owned by Landlord or
enter into any similar agreement, consent, decree or other compromise with any
governmental agency with respect to any Hazardous Materials claims; provided
however, Landlord's prior written consent shall not be necessary in the event
that the presence of Hazardous Materials on, under or about the Premises or the
Site or any other affected real or personal property owned by Landlord (i)
imposes an immediate threat to the health, safety or welfare of any individual
and (ii) is of such a nature that an immediate remedial response is necessary
and it is not possible to obtain Landlord's consent before taking such action.
To the fullest extent permitted by law, Tenant shall indemnify, hold harmless,
protect and defend (with attorneys acceptable to Landlord) Landlord and any
successors to all or any portion of Landlord's interest in the Premises and the
Site and any other real or personal property owned by Landlord from and against
any and all liabilities, losses, damages, diminution in value, judgments, fines,
demands, claims, recoveries, deficiencies, costs and expenses (including without
limitation attorneys' fees, court costs and other professional expenses),
whether foreseeable or unforeseeable, arising directly or indirectly out of the
use, generation, storage, treatment, release, on- or off-site disposal or
transportation of Hazardous Materials on, into, from, under or about the
Premises, the Building or the Site and any other real or personal property owned
by Landlord which are caused or permitted by Tenant, its agents, employees,
contractors, licensees or invitees. Such indemnity obligation shall specifically
include, without limitation, the cost of any required or necessary repair,
restoration, cleanup or detoxification of the Premises, the Building and the
Site and any other real or personal property owned by Landlord, the preparation
of any closure or other required plans, whether or not such action is required
or necessary during the Term or after the expiration of this Lease and any loss
of rental due to the inability to lease the Premises or any portion of the
Building or Site as a result of such Hazardous Material or remediation thereof.
If it is at any time discovered that Tenant or its agents, employees,
contractors, licensees or invitees may have caused or permitted the release of a
Hazardous Material on, under, from or about the Premises, the Building or the
Site or any other real or personal property owned by Landlord, Tenant shall, at
Landlord's request, immediately prepare and submit to Landlord a comprehensive
plan, subject to Landlord's approval, specifying the actions to be taken by
Tenant to return the Premises, the Building or the Site or any other real or
personal property owned by Landlord to the condition existing prior to the
introduction of such Hazardous Materials. Upon Landlord's approval of such
cleanup plan, Tenant shall, at its expense, and without limitation of any rights
and remedies of Landlord under this Lease or at law or in equity, immediately
implement such plan and proceed to cleanup such Hazardous Materials in
accordance with all applicable laws and as required by such plan and this Lease.
The provisions of this Section 5.3(e) shall expressly survive the expiration or
sooner termination of this Lease.

         (f)      Landlord hereby discloses to Tenant, and Tenant hereby
acknowledges, certain facts relating to Hazardous Materials at the Site known by
Landlord to exist as of the date of this Lease, as more particularly described
in Exhibit C attached hereto. Tenant shall have no liability or responsibility
with respect to the Hazardous Materials facts described in Exhibit C, nor with
respect to any Hazardous Materials which Tenant proves were neither released on
the Premises during the Term nor caused or permitted by Tenant, its agents,
employees, contractors, licensees or invitees. Notwithstanding the preceding two
sentences, Tenant agrees to notify its agents, employees, contractors,
licensees, and invitees of any exposure or potential exposure to Hazardous
Materials at the Premises that Landlord brings to Tenant's attention. Tenant
hereby acknowledges that this disclosure satisfies any obligation of Landlord to
Tenant pursuant to California Health & Safety Code Section 25359.7, or any
amendment or substitute thereto or any other disclosure obligations of Landlord.

                       ARTICLE VI. COMMON AREAS; SERVICES

         SECTION 6.1. UTILITIES AND SERVICES. Tenant shall be responsible for
and shall pay promptly, directly to the appropriate supplier, all charges for
water, gas, electricity, sewer, heat, light, power, telephone,
telecommunications service, refuse pickup, janitorial service, interior
landscape maintenance and all other utilities, materials and services furnished
directly to Tenant or the Premises or used by Tenant in, on or about the
Premises during the Term, together with any taxes thereon. If any utilities or
services are not separately metered or assessed to Tenant, Landlord shall make a
reasonable determination of Tenant's proportionate share of the cost of such
utilities and services, and Tenant shall pay such amount to Landlord, as an item
of additional rent, within ten (10) days after receipt of Landlord's statement
or invoice therefor. Alternatively, Landlord may elect to include such cost in
the definition of Site Costs in which event Tenant shall pay Tenant's
proportionate share of such costs in the manner set forth in Section 4.2.
Landlord shall not be liable for damages or otherwise for any failure or
interruption of any utility or other service furnished to the Premises, and no
such failure or interruption shall be deemed an eviction or entitle Tenant to
terminate this Lease or withhold or abate any rent due hereunder. Landlord shall
at all reasonable times have free access to the Building and Premises to
install, maintain, repair, replace or remove all electrical and mechanical
installations of Landlord.

         SECTION 6.2. OPERATION AND MAINTENANCE OF COMMON AREAS. During the
Term, Landlord shall operate all Common Areas within the Site. The term "COMMON
AREAS" shall mean all areas of the Site which are not held for exclusive use by
persons entitled to occupy space including Tenant, and their respective
employees and invitees, including without limitation parking areas and
structures, driveways, sidewalks, landscaped and planted areas, and electrical
and utility rooms and roof access entries, if any, in the Building.

         SECTION 6.3. USE OF COMMON AREAS. The occupancy by Tenant of the
Premises shall include the use of the Common Areas as provided in this Article
VI, subject, however, to compliance with all rules and regulations as are
prescribed from time to time by Landlord. Landlord shall operate and maintain
the Common Areas in a "first class" manner as Landlord may

                                       8
<PAGE>

determine to be appropriate. All costs incurred by Landlord for the maintenance
and operation of the Common Areas shall be included in Site Costs. Landlord
shall at all times during the Term have exclusive control of the Common Areas,
and may restrain or permit any use or occupancy, except as authorized by
Landlord's rules and regulations. Tenant shall keep the Common Areas clear of
any obstruction or unauthorized use related to Tenant's operations or use of
Premises, including without limitation, planters and furniture. Nothing in this
Lease shall be deemed to impose liability upon Landlord for any damage to or
loss of the property of, or for any injury to, Tenant, its invitees or
employees. Landlord may temporarily close any portion of the Common Areas for
repairs, remodeling and/or alterations, to prevent a public dedication or the
accrual of prescriptive rights, or for any other reason deemed sufficient by
Landlord, without liability to Landlord.

         SECTION 6.4. PARKING. Tenant shall be entitled to use its allocated
share of the vehicle parking spaces on those portions of the Common Areas
designated by Landlord for parking on an unreserved and unassigned basis. For
purposes of this Section 6.4 Tenant's allocated share shall mean vehicle parking
spaces equal to the same portion of all vehicle parking spaces available for the
Site as the ratio of Floor Area to the total rentable square footage of the
Site. Tenant shall not use more than its allocated share of vehicle parking
spaces. All parking spaces shall be used only for parking of vehicles no larger
than full size passenger automobiles, sports utility vehicles or pickup trucks.
Tenant shall not permit or allow any vehicles that belong to or are controlled
by Tenant or Tenant's employees, suppliers, shippers, customers or invitees to
be loaded, unloaded or parked in areas other than those designated by Landlord
for such activities. If Tenant permits or allows any of the prohibited
activities described above, then Landlord shall have the right, without notice,
in addition to such other rights and remedies that Landlord may have, to remove
or tow away the vehicle involved and charge the costs to Tenant. Parking within
the Common Areas shall be limited to striped parking stalls, and no parking
shall be permitted in any driveways, access ways or in any area which would
prohibit or impede the free flow of traffic within the Common Areas. There shall
be no parking of any vehicles for longer than a forty-eight (48) hour period
unless otherwise authorized by Landlord, and vehicles which have been abandoned
or parked in violation of the terms hereof may be towed away at the owner's
expense. Nothing contained in this Lease shall be deemed to create liability
upon Landlord for any damage to motor vehicles of visitors or employees, for any
loss of property from within those motor vehicles, or for any injury to Tenant,
its visitors or employees, unless ultimately determined to be caused by the sole
active negligence or willful misconduct of Landlord. Landlord shall have the
right to establish, and from time to time amend, and to enforce against all
users all reasonable rules and regulations (including the designation of areas
for employee parking) that Landlord may deem necessary and advisable for the
proper and efficient operation and maintenance of parking within the Common
Areas. Landlord shall have the right to construct, maintain and operate lighting
facilities within the parking areas; to change the area, level, location and
arrangement of the parking areas and improvements therein; to restrict parking
by tenants, their officers, agents and employees to employee parking areas; to
enforce parking charges (by operation of meters or otherwise); and to do and
perform such other acts in and to the parking areas and improvements therein as,
in the use of good business judgment, Landlord shall determine to be advisable.
Any person using the parking area shall observe all directional signs and arrows
and any posted speed limits. Parking areas shall be used only for parking
vehicles. Washing, waxing, cleaning or servicing of vehicles, or the storage of
vehicles for longer than 48-hours, is prohibited unless otherwise authorized by
Landlord. Tenant shall be liable for any damage to the parking areas caused by
Tenant or Tenant's employees, suppliers, shippers, customers or invitees,
including without limitation damage from excess oil leakage. Tenant shall have
no right to install any fixtures, equipment or personal property in the parking
areas.

         SECTION 6.5. CHANGES AND ADDITIONS BY LANDLORD. Landlord reserves the
right to make alterations or additions to the Building or the Site, or to the
attendant fixtures, equipment and Common Areas. Landlord may at any time
relocate or remove any of the driveways, sidewalks, landscaped and planted areas
and parking areas of the Common Areas, from time to time. No change shall
entitle Tenant to any abatement of rent or other claim against Landlord,
provided that the change does not materially reduce Tenant's parking rights nor
deprive Tenant of reasonable access to or use of the Premises.

                      ARTICLE VII. MAINTAINING THE PREMISES

         SECTION 7.1. TENANT'S MAINTENANCE AND REPAIR. Tenant at its sole
expense shall maintain and make all repairs and replacements necessary to keep
the Premises and the Building in the condition as existed on the Commencement
Date (or on any later date that the improvements may have been installed),
excepting ordinary wear and tear, including without limitation all interior
glass, doors, door closures, hardware, fixtures, electrical, plumbing, fire
extinguisher equipment and other equipment installed in the Premises and all
Alterations constructed by Tenant pursuant to Section 7.3 below. Any damage or
deterioration of the Premises shall not be deemed ordinary wear and tear if the
same could have been prevented by good maintenance practices by Tenant. As part
of its maintenance obligations hereunder, Tenant shall, at Landlord's request,
provide Landlord with copies of all maintenance schedules, reports and notices
prepared by, for or on behalf of Tenant. All repairs and replacements shall be
at least equal in quality to the original work, shall be made only by a licensed
contractor approved in writing in advance by Landlord and shall be made only at
the time or times approved by Landlord. Any contractor utilized by Tenant shall
be subject to Landlord's standard requirements for contractors, as modified from
time to time. Landlord may impose reasonable restrictions and requirements with
respect to repairs, as provided in Section 7.3, and the provisions of Section
7.4 shall apply to all repairs. Alternatively, Landlord may elect to perform any
repair and maintenance of the electrical and mechanical systems and any air
conditioning, ventilating or heating equipment serving the Premises and include
the cost thereof as part of Tenant's Share of Operating Expenses. If Tenant
fails to properly maintain and/or repair the Premises or the Building as herein
provided following Landlord's notice and the expiration of the applicable cure
period (or earlier if Landlord determines that such work must be performed prior
to such time in order to avoid damage to the Premises or Building or other
detriment), then Landlord may elect, but shall have no obligation, to perform
any repair or maintenance required hereunder on behalf of Tenant and at

                                       9
<PAGE>

Tenant's expense, and Tenant shall reimburse Landlord upon demand for all costs
incurred upon submission of an invoice.

         SECTION 7.2. LANDLORD'S MAINTENANCE AND REPAIR. Subject to Section 7.1
and Article XI, Landlord shall provide service, maintenance and repair with
respect to any air conditioning, ventilating or heating equipment which serves
the Premises (exclusive, however, of supplemental HVAC equipment installed by
Tenant and serving only the Premises) and shall maintain in good repair the
roof, foundations, footings, the exterior surfaces of the exterior walls of the
Building (including exterior glass), and the structural, electrical and
mechanical systems, except that Tenant at its expense shall make all repairs
which Landlord deems reasonably necessary as a result of the act or negligence
of Tenant, its agents, employees, invitees, subtenants or contractors. Landlord
shall have the right to employ or designate any reputable person or firm,
including any employee or agent of Landlord or any of Landlord's affiliates or
divisions, to perform any service, repair or maintenance function. Landlord need
not make any other improvements or repairs except as specifically required under
this Lease, and nothing contained in this Section shall limit Landlord's right
to reimbursement from Tenant for maintenance, repair costs and replacement costs
as provided elsewhere in this Lease. Tenant understands that it shall not make
repairs at Landlord's expense or by rental offset. Tenant further understands
that Landlord shall not be required to make any repairs to the roof,
foundations, footings, the exterior surfaces of the exterior walls of the
Building (excluding exterior glass), or structural, electrical or mechanical
systems unless and until Tenant has notified Landlord in writing of the need for
such repair and Landlord shall have a reasonable period of time thereafter to
commence and complete said repair, if warranted. All costs of any maintenance,
repairs and replacement on the part of Landlord provided hereunder shall be
considered part of Site Costs. Tenant further agrees that if Tenant fails to
report any such need for repair in writing within sixty (60) days of its
discovery by Tenant, Tenant shall be responsible for any costs and expenses and
other damages related to such repair which are in excess of those which would
have resulted had such need for repair been reported to Landlord within such
sixty (60) day period.

         SECTION 7.3. ALTERATIONS. Except as otherwise provided in this Section,
Tenant shall make no alterations, additions, fixtures or improvements (excluding
the initial buildout of the Tenant Improvements described in Exhibit X)
("ALTERATIONS") to the Premises or the Building without the prior written
consent of Landlord, which consent may be granted or withheld in Landlord's sole
and absolute discretion. In the event that any requested Alteration would result
in a change from Landlord's building standard materials and specifications
("STANDARD IMPROVEMENTS"), Landlord may withhold consent to such Alteration in
its sole and absolute discretion. In the event Landlord so consents to a change
from the Standard Improvements (such change being referred to as a "NON-STANDARD
IMPROVEMENT"), Tenant shall be responsible for the cost of replacing such
Non-Standard Improvement with the applicable Standard Improvement
("REPLACEMENTS") which Replacements shall be completed prior to the Expiration
Date or earlier termination of this Lease. Landlord shall not unreasonably
withhold its consent to any Alterations which cost less than ($1.00) per square
foot of the improved portions of the Premises (excluding warehouse square
footage) and do not (i) affect the exterior of the Building or outside areas (or
be visible from adjoining sites), or (ii) affect or penetrate any of the
structural portions of the Building, including but not limited to the roof, or
(iii) require any change to the basic floor plan of the Premise (including,
without limitation, the adding of any additional "office" square footage) or any
change to any structural or mechanical systems of the Premises, or (iv) fail to
comply with any applicable governmental requirements or require any governmental
permit as a prerequisite to the construction thereof, or (v) result in the
Premises requiring building services beyond the level normally provided to other
tenants, or (vi) interfere in any manner with the proper functioning of, or
Landlord's access to, any mechanical, electrical, plumbing or HVAC systems,
facilities or equipment located in or serving the Building, or (vii) diminish
the value of the Premises including, without limitation, using lesser quality
materials than those existing in the Premises, or (viii) alter or replace
Standard Improvements. Landlord may impose any condition to its consent,
including but not limited to a requirement that the installation and/or removal
of all Alterations and Replacements be covered by a lien and completion bond
satisfactory to Landlord in its sole and absolute discretion and requirements as
to the manner and time of performance of such work. Landlord shall in all
events, whether or not Landlord's consent is required, have the right to approve
the contractor performing the installation and removal of Alterations and
Replacements and Tenant shall not permit any contractor not approved by Landlord
to perform any work on the Premises or on the Building. Tenant shall obtain all
required permits for the installation and removal of Alterations and
Replacements and shall perform the installation and removal of Alterations and
Replacements in compliance with all applicable laws, regulations and ordinances,
including without limitation the Americans with Disabilities Act, all covenants,
conditions and restrictions affecting the Site, and the Rules and Regulations as
described in Article XVII. Tenant understands and agrees that Landlord shall be
entitled to a supervision fee in the amount of five percent (5%) of the cost of
such Alterations either requiring a permit from the City of Sunnyvale or
affecting any mechanical, electrical, plumbing or HVAC systems, facilities or
equipment locted in or serving the Building. Under no circumstances shall Tenant
make any Alterations or Replacements which incorporate any Hazardous Materials,
including without limitation asbestos-containing construction materials into the
Premises, the Building or the Common Area. If any governmental entity requires,
as a condition to any proposed Alterations by Tenant, that improvements be made
to the Common Areas, and if Landlord consents to such improvements to the Common
Areas (which consent may be withheld in the sole and absolute discretion of
Landlord), then Tenant shall, at Tenant's sole expense, make such required
improvements to the Common Areas in such manner, utilizing such materials, and
with such contractors, architects and engineers as Landlord may require in its
sole and absolute discretion. Any request for Landlord's consent to any proposed
Alterations shall be made in writing and shall contain architectural plans
describing the work in detail reasonably satisfactory to Landlord. Landlord may
elect to cause its architect to review Tenant's architectural plans, and the
reasonable cost of that review shall be reimbursed by Tenant. Should the work
proposed by Tenant and consented to by Landlord modify the basic floor plan of
the Premises, then Tenant shall, at its expense, furnish Landlord with as-built
drawings and CAD disks compatible with Landlord's systems and standards. Unless
Landlord otherwise agrees in writing, all Alterations made or affixed to the
Premises, the Building or to the Common Area (excluding moveable trade fixtures
and furniture), including without limitation all Tenant Improvements constructed
pursuant to the Work Letter (except as otherwise provided in the Work Letter),
shall

                                       10
<PAGE>

become the property of Landlord and shall be surrendered with the Premises at
the end of the Term; except that Landlord may, by notice to Tenant given
concurrently with approving the applicable Alterations, require Tenant to remove
by the Expiration Date, or sooner termination date of this Lease, all or any of
the Alterations installed either by Tenant or by Landlord at Tenant's request,
including without limitation all Tenant Improvements constructed pursuant to the
Work Letter (except as otherwise provided in the Work Letter), and to repair any
damage to the Premises, the Building or the Common Area arising from that
removal and restore the Premises to their condition prior to making such
Alterations.

         SECTION 7.4. MECHANIC'S LIENS. Tenant shall keep the Premises and the
Site free from any liens arising out of any work performed, materials furnished,
or obligations incurred by or for Tenant. Upon request by Landlord, Tenant shall
promptly (but in no event later than five (5) business days following such
request) cause any such lien to be released by posting a bond in accordance with
California Civil Code Section 3143 or any successor statute. In the event that
Tenant shall not, within thirty (30) days following the imposition of any lien,
cause the lien to be released of record by payment or posting of a proper bond,
Landlord shall have, in addition to all other available remedies, the right to
cause the lien to be released by any means it deems proper, including payment of
or defense against the claim giving rise to the lien. All expenses so incurred
by Landlord, including Landlord's attorneys' fees, and any consequential or
other damages incurred by Landlord arising out of such lien, shall be reimbursed
by Tenant upon demand, together with interest from the date of payment by
Landlord at the maximum rate permitted by law until paid. Tenant shall give
Landlord no less than twenty (20) days' prior notice in writing before
commencing construction of any kind on the Premises or Common Area and shall
again notify Landlord that construction has commenced, such notice to be given
on the actual date on which construction commences, so that Landlord may post
and maintain notices of nonresponsibility on the Premises or Common Area, as
applicable, which notices Landlord shall have the right to post and which Tenant
agrees it shall not disturb. Tenant shall also provide Landlord notice in
writing within ten (10) days following the date on which such work is
substantially completed. The provisions of this Section shall expressly survive
the expiration or sooner termination of this Lease.

         SECTION 7.5. ENTRY AND INSPECTION. Landlord shall at all reasonable
times, upon written or oral notice (except in emergencies, when no notice shall
be required) have the right to enter the Premises to inspect them, to supply
services in accordance with this Lease, to have access to install, repair,
maintain, replace or remove all electrical and mechanical installations of
Landlord and to protect the interests of Landlord in the Premises, and to submit
the Premises to prospective or actual purchasers or encumbrance holders (or,
during the last one hundred and eighty (180) days of the Term or when an uncured
Tenant Event of Default exists, to prospective tenants), all without being
deemed to have caused an eviction of Tenant and without abatement of rent except
as provided elsewhere in this Lease. Landlord shall have the right, if desired,
to retain a key which unlocks all of the doors in the Premises, excluding
Tenant's vaults and safes, and Landlord shall have the right to use any and all
means which Landlord may deem proper to open the doors in an emergency in order
to obtain entry to the Premises, and any entry to the Premises obtained by
Landlord shall not under any circumstances be deemed to be a forcible or
unlawful entry into, or a detainer of, the Premises, or any eviction of Tenant
from the Premises.

            ARTICLE VIII. TAXES AND ASSESSMENTS ON TENANT'S PROPERTY

         Tenant shall be liable for and shall pay, at least ten (10) days before
delinquency, all taxes and assessments levied against all personal property of
Tenant located in the Premises, and, if required by Landlord, against all Non
Standard Improvements to the Premises (as defined in Section 7.3) made by
Landlord or Tenant, and against any Alterations (as defined in Section 7.3) made
to the Premises or the Building by or on behalf of Tenant. If requested by
Landlord, Tenant shall cause its personal property, Non-Standard Improvements
and Alterations to be assessed and billed separately from the real property of
which the Premises form a part. If any taxes required to be paid by Tenant on
Tenant's personal property, Non-Standard Improvements and/or Alterations are
levied against Landlord or Landlord's property and if Landlord pays the same, or
if the assessed value of Landlord's property is increased by the inclusion of a
value placed upon the personal property, Non-Standard Improvements and/or
Alterations and if Landlord pays the taxes based upon the increased assessment,
Landlord shall have the right to require that Tenant pay to Landlord the taxes
so levied against Landlord or the proportion of the taxes resulting from the
increase in the assessment. In calculating what portion of any tax bill which is
assessed against Landlord separately, or Landlord and Tenant jointly, is
attributable to Tenant's Non-Standard Improvements, Alterations and personal
property, Landlord's reasonable determination shall be conclusive.

                      ARTICLE IX. ASSIGNMENT AND SUBLETTING

         SECTION 9.1.      RIGHTS OF PARTIES.

         (a)      Notwithstanding any provision of this Lease to the contrary,
and except as to transfers expressly permitted without Landlord's consent
pursuant to Section 9.4, Tenant will not, either voluntarily or by operation of
law, assign, sublet, encumber, or otherwise transfer all or any part of Tenant's
interest in this Lease or the Premises, or permit the Premises to be occupied by
anyone other than Tenant, without Landlord's prior written consent, which
consent shall not unreasonably be withheld in accordance with the provisions of
Section 9.1(b). Except as to transfers expressly permitted without Landlord's
consent pursuant to Section 9.4, no assignment (whether voluntary, involuntary
or by operation of law) and no subletting shall be valid or effective without
Landlord's prior written consent and, at Landlord's election, any such
assignment or subletting shall be void and of no force and effect and any such
attempted assignment or subletting shall constitute an Event of Default of this
Lease. Landlord shall not be deemed to have given its consent to any assignment
or subletting by any course of action other than written consent.

                                       11
<PAGE>

To the extent not prohibited by provisions of the Bankruptcy Code, 11 U.S.C.
Section 101 et seq., (the "BANKRUPTCY CODE"), including Section 365(f)(1),
Tenant on behalf of itself and its creditors, administrators and assigns waives
the applicability of Section 365(e) of the Bankruptcy Code unless the proposed
assignee of the Trustee for the estate of the bankrupt meets Landlord's standard
for consent as set forth in Section 9.1(b) of this Lease. If this Lease is
assigned to any person or entity pursuant to the provisions of the Bankruptcy
Code, any and all monies or other considerations to be delivered in connection
with the assignment shall be delivered to Landlord, shall be and remain the
exclusive property of Landlord and shall not constitute property of Tenant or of
the estate of Tenant within the meaning of the Bankruptcy Code. Any person or
entity to which this Lease is assigned pursuant to the provisions of the
Bankruptcy Code shall be deemed to have assumed all of the obligations arising
under this Lease on and after the date of the assignment, and shall upon demand
execute and deliver to Landlord an instrument confirming that assumption.

         (b)      If Tenant desires to transfer an interest in this Lease or the
Premises, except as to transfers expressly permitted without Landlord's consent
pursuant to Section 9.4, it shall first notify Landlord of its desire and shall
submit in writing to Landlord: (i) the name and address of the proposed
transferee; (ii) the nature of any proposed transferee's business to be carried
on in the Premises; (iii) the terms and provisions of any proposed sublease,
assignment or other transfer, including a copy of the proposed assignment,
sublease or transfer form; (iv) evidence that the proposed assignee, subtenant
or transferee will comply with the requirements of Exhibit D hereto; (v) a
completed Environmental Questionnaire from the proposed assignee, subtenant or
transferee; (vi) any other information requested by Landlord and reasonably
related to the transfer and (vii) the fee described in Section 9.1(e). Except as
provided in Section 9.1 (c), Landlord shall not unreasonably withhold its
consent, provided that the parties agree that it shall be reasonable for
Landlord to withhold its consent if: (1) the use of the Premises will not be
consistent with the provisions of this Lease; (2) the proposed assignee or
subtenant has been required by any prior landlord, lender or governmental
authority to take remedial action in connection with Hazardous Materials
contaminating a property arising out of the proposed assignee's or subtenant's
actions or use of the property in question or is subject to any enforcement
order issued by any governmental authority in connection with the use, disposal
or storage of a Hazardous Material; (3) insurance requirements of the proposed
assignee or subtenant may not be brought into conformity with Landlord's then
current leasing practice; (4) a proposed subtenant or assignee has not
demonstrated to the reasonable satisfaction of Landlord that it is financially
responsible or has failed to submit to Landlord all reasonable information as
requested by Landlord concerning the proposed subtenant or assignee, including,
but not limited to, a balance sheet of the proposed subtenant or assignee as of
a date within ninety (90) days of the request for Landlord's consent, statements
of income or profit and loss of the proposed subtenant or assignee for the
two-year period preceding the request for Landlord's consent, and/or a
certification signed by the proposed subtenant or assignee that it has not been
evicted or been in arrears in rent at any other leased premises for the 3-year
period preceding the request for Landlord's consent; (5) any proposed subtenant
or assignee has not demonstrated to Landlord's reasonable satisfaction a record
of successful experience in business; (6) the proposed assignee or subtenant is
a prospect with whom Landlord is negotiating to become a tenant at the Site; or
(7) the proposed transfer will impose additional burdens or adverse tax effects
on Landlord. If Tenant has any exterior sign rights under this Lease, such
rights are personal to Tenant and may not be assigned or transferred to any
assignee of this Lease or subtenant of the Premises without Landlord's prior
written consent, which may be withheld in Landlord's sole and absolute
discretion.

         If Landlord consents to the proposed transfer, Tenant may within ninety
(90) days after the date of the consent effect the transfer upon the terms
described in the information furnished to Landlord; provided that any material
change in the terms shall be subject to Landlord's consent as set forth in this
Section 9.1. Landlord shall approve or disapprove any requested transfer within
thirty (30) days following receipt of Tenant's written request, the information
set forth above, and the fee set forth below.

         (c)      Except as to transfers expressly permitted without Landlord's
consent pursuant to Section 9.4, notwithstanding the provisions of Section
9.1(b) above, in lieu of consenting to a proposed assignment or subletting,
Landlord may elect, within the thirty (30) day period permitted for Landlord to
approve or disapprove a requested transfer, to (i) sublease the Premises (or the
portion proposed to be subleased), or take an assignment of Tenant's interest in
this Lease, upon substantially the same terms as offered to the proposed
subtenant or assignee (excluding terms relating to the purchase of personal
property, the use of Tenant's name or the continuation of Tenant's business), or
(ii) terminate this Lease as to the portion of the Premises proposed to be
subleased or assigned with a proportionate abatement in the rent payable under
this Lease, effective thirty (30) days' following written notice by Landlord of
its election to so sublease or terminate. Landlord may thereafter, at its
option, assign, sublet or re-let any space so sublet, obtained by assignment or
obtained by termination to any third party, including without limitation the
proposed transferee of Tenant.

         (d)      In the event that Landlord approves the requested assignment
or subletting, Tenant agrees that fifty percent (50%) of any amounts paid by the
assignee or subtenant, however described, in excess of (i) the Basic Rent
payable by Tenant hereunder, or in the case of a sublease of a portion of the
Premises, in excess of the Basic Rent reasonably allocable to such portion as
determined by Landlord, plus (ii) Tenant's direct out-of-pocket costs which
Tenant certifies to Landlord have been paid to provide occupancy related
services to such assignee or subtenant of a nature commonly provided by
landlords of similar space, shall be the property of Landlord and such amounts
shall be payable directly to Landlord by the assignee or subtenant or, at
Landlord's option, by Tenant within ten (10) days of Tenant's receipt thereof.
Landlord shall have the right to review or audit the books and records of
Tenant, or have such books and records reviewed or audited by an outside
accountant, to confirm any such direct out-of-pocket costs. In the event that
such direct out-of-pocket costs claimed by Tenant are overstated by more than
five percent (5%), Tenant shall reimburse Landlord for any of Landlord's costs
related to such review or audit. At Landlord's request, a written agreement
shall be entered into by and among Tenant, Landlord and the proposed assignee or
subtenant confirming the requirements of this Section 9.1(d).

                                       12
<PAGE>

         (e)      Tenant shall pay to Landlord a fee equal to the greater of (i)
Landlord's actual and reasonable costs related to such assignment, subletting or
other transfer or (ii) Five Hundred Dollars ($500.00), to process any request by
Tenant for an assignment, subletting or other transfer under this Lease. Tenant
shall pay Landlord the sum of Five Hundred Dollars ($500.00) concurrently with
Tenant's request for consent to any assignment, subletting or other transfer,
and Landlord shall have no obligation to consider such request unless
accompanied by such payment. Tenant shall pay Landlord upon demand any actual
and reasonable costs in excess of such payment to the extent Landlord's actual
and reasonable costs related to such request exceeds $500.00. Such fee is hereby
acknowledged as a reasonable amount to reimburse Landlord for its costs of
review and evaluation of a proposed transfer.

         SECTION 9.2. EFFECT OF TRANSFER. No subletting or assignment, even with
the consent of Landlord, shall relieve Tenant of its obligation to pay rent and
to perform all its other obligations under this Lease. Moreover, Tenant shall
indemnify and hold Landlord harmless, as provided in Section 10.3, for any act
or omission by an assignee or subtenant. Each assignee, other than Landlord,
shall assume all obligations of Tenant under this Lease and shall be liable
jointly and severally with Tenant for the payment of all rent, and for the due
performance of all of Tenant's obligations, under this Lease. No assignment or
subletting shall be effective or binding on Landlord unless documentation in
form and substance satisfactory to Landlord in its reasonable discretion
evidencing the transfer, and in the case of an assignment, the assignee's
assumption of the obligations of Tenant under this Lease, is delivered to
Landlord and both the assignee/subtenant and Tenant deliver to Landlord an
executed consent to transfer instrument prepared by Landlord and consistent with
the requirements of this Article. The acceptance by Landlord of any payment due
under this Lease from any other person shall not be deemed to be a waiver by
Landlord of any provision of this Lease or to be a consent to any transfer.
Consent by Landlord to one or more transfers shall not operate as a waiver or
estoppel to the future enforcement by Landlord of its rights under this Lease or
as a consent to any subsequent transfer.

         SECTION 9.3. SUBLEASE REQUIREMENTS. The following terms and conditions
shall apply to any subletting by Tenant of all or any part of the Premises and
shall be deemed included in each sublease:

         (a)      Each and every provision contained in this Lease (other than
with respect to the payment of rent hereunder) is incorporated by reference into
and made a part of such sublease, with "LANDLORD" hereunder meaning the
sublandlord therein and "TENANT" hereunder meaning the subtenant therein.

         (b)      Tenant hereby irrevocably assigns to Landlord all of Tenant's
interest in all rentals and income arising from any sublease of the Premises,
and Landlord may collect such rent and income and apply same toward Tenant's
obligations under this Lease; provided, however, that until there is an Event of
Default by Tenant, Tenant shall have the right to receive and collect the
sublease rentals. Landlord shall not, by reason of this assignment or the
collection of sublease rentals, be deemed liable to the subtenant for the
performance of any of Tenant's obligations under the sublease. Tenant hereby
irrevocably authorizes and directs any subtenant, upon receipt of a written
notice from Landlord stating that an uncured Event of Default exists in the
performance of Tenant's obligations under this Lease, to pay to Landlord all
sums then and thereafter due under the sublease. Tenant agrees that the
subtenant may rely on that notice without any duty of further inquiry and
notwithstanding any notice or claim by Tenant to the contrary. Tenant shall have
no right or claim against the subtenant or Landlord for any rentals so paid to
Landlord.

         (c)      In the event of the termination of this Lease for any reason,
including without limitation as the result of an Event of Default by Tenant or
by the mutual agreement of Landlord and Tenant, Landlord may, at its sole
option, take over Tenant's entire interest in any sublease and, upon notice from
Landlord, the subtenant shall attorn to Landlord. In no event, however, shall
Landlord be liable for any previous act or omission by Tenant under the sublease
or for the return of any advance rental payments or deposits under the sublease
that have not been actually delivered to Landlord, nor shall Landlord be bound
by any sublease modification executed without Landlord's consent or for any
advance rental payment by the subtenant in excess of one month's rent. The
general provisions of this Lease, including without limitation those pertaining
to insurance and indemnification, shall be deemed incorporated by reference into
the sublease despite the termination of this Lease. In the event Landlord does
not elect to take over Tenant's interest in a sublease in the event of any such
termination of this Lease, such sublease shall terminate concurrently with the
termination of this Lease and such subtenant shall have no further rights under
such sublease and Landlord shall have no obligations to such subtenant.

         SECTION 9.4. CERTAIN TRANSFERS. The following shall be deemed to
constitute an assignment of this Lease; (a) the sale of all or substantially all
of Tenant's assets (other than bulk sales in the ordinary course of business),
(b) if Tenant is a corporation, an unincorporated association, a limited
liability company or a partnership, the transfer, assignment or hypothecation of
any stock or interest in such corporation, association, limited liability
company or partnership in the aggregate of twenty-five percent (25%) (except for
publicly traded shares of stock. Notwithstanding the foregoing, Landlord's
consent shall not be required for a transfer to any affiliate of Tenant, nor to
the assignment of this Lease as a result of a merger by Tenant with or into
another entity or a reorganization of Tenant, so long as (i) the net worth of
the successor or reorganized entity after such merger is at least equal to the
greater of the net worth of Tenant as of the execution of this Lease by Landlord
or the net worth of Tenant immediately prior to the date of such merger or
reorganization, evidence of which, satisfactory to Landlord, shall be presented
to Landlord prior to such merger or reorganization (unless applicable law
precludes such disclosure in which case it shall be made promptly following the
merger), (ii) Tenant shall provide to Landlord, prior to such merger or
reorganization, written notice of such merger or reorganization and such
assignment documentation and other information as Landlord may require in
connection therewith (unless applicable law precludes such disclosure in which
case it shall be made promptly following the merger), and (iii) all of the other
terms and requirements Section 9.2 and 9.3 shall apply with respect to such
assignment.

                                       13
<PAGE>

                       ARTICLE X. INSURANCE AND INDEMNITY

         SECTION 10.1. TENANT'S INSURANCE. Tenant, at its sole cost and expense,
shall provide and maintain in effect the insurance described in Exhibit D.
Evidence of that insurance must be delivered to Landlord prior to the
Commencement Date.

         SECTION 10.2. LANDLORD'S INSURANCE. Landlord may, at its election,
provide any or all of the following types of insurance, with or without
deductible and in amounts and coverages as may be determined by Landlord in its
sole and absolute discretion: property insurance, subject to standard
exclusions, covering the Building and/or Site, and such other risks as Landlord
or its mortgagees may from time to time deem appropriate, including coverage for
the Tenant improvements constructed by Landlord pursuant to the Work Letter (if
any) attached hereto, and commercial general liability coverage. Landlord shall
not be required to carry insurance of any kind on Tenant's Alterations or on
Tenant's other property, including, without limitation, trade fixtures,
furnishings, equipment, signs and all other items of personal property, and
shall not be obligated to repair or replace that property should damage occur.
All proceeds of insurance maintained by Landlord upon the Building and/or Site
shall be the property of Landlord, whether or not Landlord is obligated to or
elects to make any repairs. At Landlord's option, Landlord may self-insure all
or any portion of the risks for which Landlord elects to provide insurance
hereunder.

         SECTION 10.3. TENANT'S INDEMNITY. To the fullest extent permitted by
law, Tenant shall defend, indemnify, protect, save and hold harmless Landlord,
its agents, and any and all affiliates of Landlord, including, without
limitation, any corporations or other entities controlling, controlled by or
under common control with Landlord, from and against any and all claims,
liabilities, costs or expenses arising either before or after the Commencement
Date from Tenant's use or occupancy of the Premises, the Building or the Common
Areas, including, without limitation, the use by Tenant, its agents, employees,
invitees or licensees of any recreational facilities within the Common Areas, or
from the conduct of its business, or from any activity, work, or thing done,
permitted or suffered by Tenant or its agents, employees, invitees or licensees
in or about the Premises, the Building or the Common Areas, or from any Event of
Default in the performance of any obligation on Tenant's part to be performed
under this Lease, or from any act or negligence of Tenant or its agents,
employees, visitors, patrons, guests, invitees or licensees. Landlord may, at
its option, require Tenant to assume Landlord's defense in any action covered by
this Section through counsel satisfactory to Landlord. The provisions of this
Section shall expressly survive the expiration or sooner termination of this
Lease. Tenant's obligations under this Section shall not apply in the event that
the claim, liability, cost or expense to the extent caused by the active
negligence or willful misconduct of Landlord.

         SECTION 10.4. LANDLORD'S NONLIABILITY. Landlord shall not be liable to
Tenant, its employees, agents and invitees, and Tenant hereby waives all claims
against Landlord and knowingly assumes the risk of for loss of or damage to any
property, or loss or interruption of business or income, or any other loss,
cost, damage, injury or liability whatsoever (including without limitation any
consequential damages and lost profit or opportunity costs) resulting from, but
not limited to, Acts of God, acts of civil disobedience or insurrection, acts or
omissions of third parties and/or of other tenants within the Site or their
agents, employees, contractors, guests or invitees, fire, explosion, falling
plaster, steam, gas, electricity, water or rain which may leak or flow from or
into any part of the Premises or from the breakage, leakage, obstruction or
other defects of the pipes, sprinklers, wires, appliances, plumbing, air
conditioning, electrical works, roof, windows or other fixtures in the Building,
whether the damage or injury results from conditions arising in the Premises or
in the Building. It is understood that any such condition may require the
temporary evacuation or closure of all or a portion of the Building. Landlord
shall have no liability (including without limitation consequential damages and
lost profit or opportunity costs) and, except as provided in Sections 11.1 and
12.1 below, there shall be no abatement of rent, by reason of any injury to or
interference with Tenant's business arising from the making of any repairs,
alterations or improvements to any portion of the Building, including repairs to
the Premises, nor shall any related activity by Landlord constitute an actual or
constructive eviction; provided, however, that in making repairs, alterations or
improvements, Landlord shall interfere as little as reasonably practicable with
the conduct of Tenant's business in the Premises. Should Tenant elect to receive
any service or products from a concessionaire, license or third party tenant of
Landlord, Landlord shall have no liability for any services or products so
provided or for any breach of contract by such third party provider. Neither
Landlord nor its agents shall be liable for interference with light or other
similar intangible interests. Tenant shall immediately notify Landlord in case
of fire or accident in the Premises, the Building or the Site and of defects in
any improvements or equipment.

         SECTION 10.5. WAIVER OF SUBROGATION. Landlord and Tenant each hereby
waives all rights of recovery against the other and the other's agents on
account of loss and damage occasioned to the property of such waiving party to
the extent that the waiving party is entitled to proceeds for such loss or
damage under any property insurance policies carried or required to be carried
by the provisions of this Lease; provided however, that the foregoing waiver
shall not apply to the extent of Tenant's obligations to pay deductibles under
any such policies and this Lease. By this waiver it is the intent of the parties
that neither Landlord nor Tenant shall be liable to any insurance company (by
way of subrogation or otherwise) insuring the other party for any loss or damage
insured against under any property insurance policies contemplated by this
Lease, even though such loss or damage might be occasioned by the negligence of
such party, its agents, employees, contractors, guests or invitees.

                                       14
<PAGE>

                        ARTICLE XI. DAMAGE OR DESTRUCTION

                           SECTION 11.1. RESTORATION.

         (a)      If the Premises or the Building or a part thereof are
materially damaged by any fire, flood, earthquake or other casualty, Landlord
shall have the right to terminate this Lease upon written notice to Tenant if:
(i) Landlord reasonably determines that proceeds necessary to pay the full cost
of repair is not available from Landlord's insurance, including without
limitation earthquake insurance, plus such additional amounts Tenant elects, at
its option, to contribute, excluding however the deductible (for which Tenant
shall be responsible for Tenant's Share); (ii) Landlord reasonably determines
that the Premises cannot, with reasonable diligence, be fully repaired by
Landlord (or cannot be safely repaired because of the presence of hazardous
factors, including without limitation Hazardous Materials, earthquake faults,
and other similar dangers) within two hundred seventy (270) days after the date
of the damage; (iii) an uncured Event of Default by Tenant has occurred; or (iv)
the material damage occurs during the final twelve (12) months of the Term.
Landlord shall notify Tenant in writing ("LANDLORD'S NOTICE") within sixty (60)
days after the damage occurs as to (A) whether Landlord is terminating this
Lease as a result of such material damage and (B) if Landlord is not terminating
this Lease, the number of days within which Landlord has estimated that the
Premises, with reasonable diligence, are likely to be fully repaired. In the
event Landlord elects to terminate this Lease, this Lease shall terminate as of
the date specified for termination by Landlord's Notice (which termination date
shall in no event be later than sixty (60) days following the date of the
damage, or, if no such date is specified, such termination shall be the date of
Landlord's Notice).

         (b)      If Landlord has the right to terminate this Lease pursuant to
Section 11.1(a) and does not elect to so terminate this Lease, and provided that
at the time of Landlord's Notice neither an Event of Default exists nor has
Landlord delivered Tenant a notice of any failure by Tenant to fulfill an
obligation under this Lease which, unless cured by Tenant within the applicable
grace period, would constitute an Event of Default, then within ten (10) days
following delivery of Landlord's Notice pursuant to Section 11.1(a), Tenant may
elect to terminate this Lease by written notice to Landlord, but only if (i)
Landlord's Notice specifies that Landlord has determined that the Premises
cannot be repaired, with reasonable diligence, within two hundred seventy (270)
days after the date of damage or (ii) the casualty has occurred within the final
twelve (12) months of the Term and such material damage has a materially adverse
impact on Tenant's continued use of the Premises. If Tenant fails to provide
such termination notice within such ten (10) day period, Tenant shall be deemed
to have waived any termination right under this Section 1l.1(b) or any other
applicable law.

         (c)      In the event that neither Landlord nor Tenant terminates this
Lease pursuant to this Section 11.1 as a result of material damage to the
Building or Premises resulting from a casualty, Landlord shall repair all
material damage to the Premises or the Building as soon as reasonably possible
and this Lease shall continue in effect for the remainder of the Term. Subject
to any provision to the contrary in the Work Letter, such repair by Landlord
shall include repair of material damage to the Tenant Improvements constructed
pursuant to the Work Letter, so long as insurance proceeds from insurance
required to be carried by Tenant are made available to Landlord. Landlord shall
have the right, but not the obligation, to repair or replace any other leasehold
improvements made by Tenant or any Alterations (as defined in Section 7.3)
constructed by Tenant. If Landlord elects to repair or replace such leasehold
improvements and/or Alterations, all insurance proceeds available for such
repair or replacement shall be made available to Landlord. Landlord shall have
no liability to Tenant in the event that the Premises or the Building has not
been fully repaired within the time period specified by Landlord in Landlord's
Notice to Tenant as described in Section 11.1(a). Notwithstanding the foregoing,
the repair of damage to the Premises to the extent such damage is not material
shall be governed by Sections 7.1 and 7.2.

         (d)      Commencing on the date of such material damage to the
Building, and ending on the sooner of the date the damage is repaired or the
date this Lease is terminated, the rental to be paid under this Lease shall be
abated in the same proportion that the Floor Area of the Premises that is
rendered unusable by the damage from time to time bears to the total Floor Area
of the Premises, as determined by Landlord, but only to the extent that any
business interruption insurance proceeds are received by Landlord therefor from
Tenant's insurance described in Exhibit D.

         (e)      Landlord shall not be required to repair or replace any
improvements or fixtures that Tenant is obligated to repair or replace pursuant
to Section 7.1 or any other provision of this Lease and Tenant shall continue to
be obligated to so repair or replace any such improvements or fixtures,
notwithstanding any provisions to the contrary in this Article XI. In addition,
but subject to the provisions of Section 10.5, in the event the damage or
destruction to the Premises or Building are due in substantial part to the fault
or neglect of Tenant or its employees, subtenants, invitees or representatives,
the costs of such repairs or replacement to the Premises or Building shall be
borne by Tenant and in addition, Tenant shall not be entitled to terminate this
Lease as a result, notwithstanding the provisions of Section 11.1(b).

         (f)      Tenant shall fully cooperate with Landlord in removing
Tenant's personal property and any debris from the Premises to facilitate all
inspections of the Premises and the making of any repairs. Notwithstanding
anything to the contrary contained in this Lease, if Landlord in good faith
believes there is a risk of injury to persons or damage to property from entry
into the Building or Premises following any damage or destruction thereto,
Landlord may restrict entry into the Building or the Premises by Tenant, its
employees, agents and contractors in a non-discriminatory manner, without being
deemed to have violated Tenant's rights of quiet enjoyment to, or made an
unlawful detainer of, or evicted Tenant from, the Premises. Upon request,
Landlord shall consult with Tenant to determine if there are safe methods of
entry into the Building or the Premises solely in order to allow Tenant to
retrieve files, data in computers, and necessary inventory, subject however to
all indemnities and waivers of liability from Tenant to Landlord contained in
this Lease and any additional indemnities and waivers of liability which
Landlord may require.

                                       15
<PAGE>

         SECTION 11.2. LEASE GOVERNS. Tenant agrees that the provisions of this
Lease, including without limitation Section 11.1, shall govern any damage or
destruction and shall accordingly supersede any contrary statute or rule of law.

                           ARTICLE XII. EMINENT DOMAIN

         SECTION 12.1. TOTAL OR PARTIAL TAKING. If all or a material portion of
the Premises is taken by any lawful authority by exercise of the right of
eminent domain, or sold to prevent a taking, either Tenant or Landlord may
terminate this Lease effective as of the date possession is required to be
surrendered to the authority. In the event neither party has elected to
terminate this Lease as provided above, then Landlord shall promptly, after
receipt of a sufficient condemnation award, proceed to restore the Premises to
substantially their condition prior to the taking, and a proportionate allowance
shall be made to Tenant for the rent corresponding to the time during which, and
to the part of the Premises of which, Tenant is deprived on account of the
taking and restoration. In the event of a taking, Landlord shall be entitled to
the entire amount of the condemnation award without deduction for any estate or
interest of Tenant; provided that nothing in this Section shall be deemed to
give Landlord any interest in, or prevent Tenant from seeking any award against
the taking authority for, the taking of personal property and fixtures belonging
to Tenant or for relocation or business interruption expenses recoverable from
the taking authority.

         SECTION 12.2. TEMPORARY TAKING. No temporary taking of the Premises
shall terminate this Lease or give Tenant any right to abatement of rent, and
any award specifically attributable to a temporary taking of the Premises shall
belong entirely to Tenant. A temporary taking shall be deemed to be a taking of
the use or occupancy of the Premises for a period of not to exceed ninety (90)
days.

         SECTION 12.3. TAKING OF PARKING AREA. In the event there shall be a
taking of the parking area of the Site such that more than ten percent (10%) of
the vehicle parking spaces are taken, Landlord may substitute reasonably
equivalent parking in a location reasonably close to the Building; provided that
if Landlord fails to make that substitution within ninety (90) days following
the taking and if the taking materially impairs Tenant's use and enjoyment of
the Premises, Tenant may, at its option, terminate this Lease by written notice
to Landlord. If this Lease is not so terminated by Tenant, there shall be no
abatement of rent and this Lease shall continue in effect.

          ARTICLE XIII. SUBORDINATION; ESTOPPEL CERTIFICATE; FINANCIALS

         SECTION 13.1. SUBORDINATION. At the option of Landlord or any lender of
Landlord's that obtains a security interest in the Building, this Lease shall be
either superior or subordinate to all ground or underlying leases, mortgages and
deeds of trust, if any, which may hereafter affect the Building, and to all
renewals, modifications, consolidations, replacements and extensions thereof;
provided, that so long as no Event of Default exists under this Lease, Tenant's
possession and quiet enjoyment of the Premises shall not be disturbed and this
Lease shall not terminate in the event of termination of any such ground or
underlying lease, or the foreclosure of any such mortgage or deed of trust, to
which this Lease has been subordinated pursuant to this Section. Tenant shall
execute and deliver any documents or agreements requested by Landlord or such
lessor or lender which provide Tenant with the non-disturbance protections set
forth in this Section. In the event of a termination or foreclosure, Tenant
shall become a tenant of and attorn to the successor-in-interest to Landlord
upon the same terms and conditions as are contained in this Lease, and shall
execute any instrument reasonably required by Landlord's successor for that
purpose. Tenant shall also, upon written request of Landlord, execute and
deliver all instruments as may be required from time to time to subordinate the
rights of Tenant under this Lease to any ground or underlying lease or to the
lien of any mortgage or deed of trust (provided that such instruments include
the nondisturbance and attornment provisions set forth above), or, if requested
by Landlord, to subordinate, in whole or in part, any ground or underlying lease
or the lien of any mortgage or deed of trust to this Lease. Tenant agrees that
any purchaser at a foreclosure sale or lender taking title under a deed-in-lieu
of foreclosure shall not be responsible for any act or omission of a prior
landlord, shall not be subject to any offsets or defenses Tenant may have
against a prior landlord, and shall not be liable for the return of the security
deposit to the extent it is not actually received by such purchaser or bound by
any rent paid for more than the current month in which the foreclosure occurred.

         SECTION 13.2. ESTOPPEL CERTIFICATE.

         (a)      Tenant shall, at any time upon not less than ten (10) days
prior written notice from Landlord, execute, acknowledge and deliver to
Landlord, in any form that Landlord may reasonably require, a statement in
writing (i) certifying that this Lease is unmodified and in full force and
effect (or, if modified, stating the nature of the modification and certifying
that this Lease, as modified, is in full force and effect) and the dates to
which the rental, additional rent and other charges have been paid in advance,
if any, and (ii) acknowledging that, to Tenant's knowledge, there are no uncured
defaults on the part of Landlord, or specifying each default if any are claimed,
and (iii) setting forth all further information that Landlord or any purchaser
or encumbrancer may reasonably require. Tenant's statement may be relied upon by
any prospective purchaser or encumbrancer of all or any portion of the Building
or Site.

         (b)      Notwithstanding any other rights and remedies of Landlord,
Tenant's failure to deliver any estoppel statement within the provided time
shall be conclusive upon Tenant that (i) this Lease is in full force and

                                       16
<PAGE>

effect, without modification except as may be represented by Landlord, (ii)
there are no uncured Events of Default in Landlord's performance, and (iii) not
more than one month's rental has been paid in advance.

         SECTION 13.3. FINANCIALS.

         (a)      Tenant shall deliver to Landlord, prior to the execution of
this Lease and thereafter at any time upon Landlord's request, Tenant's current
tax returns and financial statements, certified true, accurate and complete by
the chief financial officer of Tenant, including a balance sheet and profit and
loss statement for the most recent prior year, or, in the event Tenant is a
publicly traded corporation on a nationally recognized stock exchange, Tenant's
current financial reports filed with the Securities and Exchange Commission
(collectively, the "STATEMENTS"), which Statements shall accurately and
completely reflect the financial condition of Tenant. Landlord agrees that it
will keep the Statements confidential, except that Landlord shall have the right
to deliver the same to any proposed purchaser of the Building or Site, and to
any encumbrancer of all or any portion of the Building or Site.

         (b)      Tenant acknowledges that Landlord is relying on the Statements
in its determination to enter into this Lease, and Tenant represents to
Landlord, which representation shall be deemed made on the date of this Lease
and again on the Commencement Date, that no material change in the financial
condition of Tenant, as reflected in the Statements, has occurred since the date
Tenant delivered the Statements to Landlord. The Statements are represented and
warranted by Tenant to be correct and to accurately and fully reflect Tenant's
true financial condition as of the date of submission by any Statements to
Landlord.

                   ARTICLE XIV. EVENTS OF DEFAULT AND REMEDIES

         SECTION 14.1. TENANT'S DEFAULTS. In addition to any other breaches of
this Lease which are defined as Events of Default in this Lease, the occurrence
of any one or more of the following events shall constitute an Event of Default
by Tenant:

         (a)      The failure by Tenant to make any payment of Basic Rent or
additional rent required to be made by Tenant, as and when due, where the
failure continues for a period of three (3) days after written notice from
Landlord to Tenant; provided, however, that any such notice shall be in lieu of,
and not in addition to, any notice required under California Code of Civil
Procedure Section 1161 and 1161(a) as amended. For purposes of these Events of
Default and remedies provisions, the term "ADDITIONAL RENT" shall be deemed to
include all amounts of any type whatsoever other than Basic Rent to be paid by
Tenant pursuant to the terms of this Lease.

         (b)      The assignment, sublease, encumbrance or other transfer of
this Lease by Tenant, either voluntarily or by operation of law, whether by
judgment, execution, transfer by intestacy or testacy, or other means, without
the prior written consent of Landlord when consent is required by this Lease.

         (c)      The discovery by Landlord that any financial statement
provided by Tenant, or by any affiliate, successor or guarantor of Tenant, was
materially false.

         (d)      The failure of Tenant to timely and fully provide any
subordination agreement, estoppel certificate or financial statements in
accordance with the requirements of Article XIII, which failure remains uncured
ten (10) days following written notice from Landlord.

         (e)      The abandonment of the Premises by Tenant.

         (f)      The failure or inability by Tenant to observe or perform any
of the express or implied covenants or provisions of this Lease to be observed
or performed by Tenant, other than as specified in this Section 14.1, where the
failure continues for a period of thirty (30) days after written notice from
Landlord to Tenant or such shorter period as is specified in any other provision
of this Lease; provided, however, that any such notice shall be in lieu of, and
not in addition to, any notice required under California Code of Civil Procedure
Section 1161 and 1161(a) as amended. However, if the nature of the failure is
such that more than thirty (30) days are reasonably required for its cure, then
Tenant shall not be deemed to have committed an Event of Default if Tenant
commences the cure within thirty (30) days, and thereafter diligently pursues
the cure to completion.

         (g)      (i) The making by Tenant of any general assignment for the
benefit of creditors; (ii) the filing by or against Tenant of a petition to have
Tenant adjudged a Chapter 7 debtor under the Bankruptcy Code or to have debts
discharged or 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 within thirty (30) days); (iii) 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, if possession is
not restored to Tenant within thirty (30) days; (iv) 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 the seizure is not
discharged within thirty (30) days; (v) Tenant's convening of a meeting of its
creditors for the purpose of effecting a moratorium upon or composition of its
debts or (vi) the failure of Tenant to pay its material obligations to creditors
as and when they become due and payable, other than as a result of a good faith
dispute by Tenant as to the amount due to such creditors. Landlord shall not be
deemed to have knowledge of any event described in this Section 14.1(g) unless
notification in writing is received by Landlord, nor shall there be any
presumption attributable to Landlord of Tenant's insolvency. In the event that
any provision of this Section 14.1(g) is contrary to applicable law, the
provision shall be of no force or effect.

                                       17
<PAGE>

         SECTION 14.2. LANDLORD'S REMEDIES.

         (a)      If an Event of Default by Tenant occurs, then in addition to
any other remedies available to Landlord, Landlord may exercise the following
remedies:

                  (i)      Landlord may terminate Tenant's right to possession
of the Premises by any lawful means, in which case this Lease shall terminate
and Tenant shall immediately surrender possession of the Premises to Landlord.
Such termination shall not affect any accrued obligations of Tenant under this
Lease. Upon termination, Landlord shall have the right to reenter the Premises
and remove all persons and property. Landlord shall also be entitled to recover
from Tenant:

                           (1)      The worth at the time of award of the unpaid
Basic Rent and additional rent which had been earned at the time of termination;

                           (2)      The worth at the time of award of the amount
by which the unpaid Basic Rent and additional rent which would have been earned
after termination until the time of award exceeds the amount of such loss that
Tenant proves could have been reasonably avoided;

                           (3)      The worth at the time of award of the amount
by which the unpaid Basic Rent and additional rent for the balance of the Term
after the time of award exceeds the amount of such loss that Tenant proves could
be reasonably avoided;

                           (4)      Any other amount necessary to compensate
Landlord for all the detriment proximately caused by Tenant's failure to perform
its obligations under this Lease or which in the ordinary course of things would
be likely to result from Tenant's Event of Default, including, but not limited
to, the cost of recovering possession of the Premises, refurbishment of the
Premises, marketing costs, commissions and other expenses of reletting,
including necessary repair, the unamortized portion of any tenant improvements
and brokerage commissions funded by Landlord in connection with this Lease,
reasonable attorneys' fees, and any other reasonable costs; and

                           (5)      At Landlord's election, all other amounts in
addition to or in lieu of the foregoing as may be permitted by law. The term
"rent" as used in the Lease shall be deemed to mean the Basic Rent, Tenant's
Share of Operating Expenses and any other sums required to be paid by Tenant to
Landlord pursuant to the terms of this Lease, including, without limitation, any
sums that may be owing from Tenant pursuant to Section 4.3 of this Lease. Any
sum, other than Basic Rent, shall be computed on the basis of the average
monthly amount accruing during the twenty-four (24) month period immediately
prior to the Event of Default, except that if it becomes necessary to compute
such rental before the twenty-four (24) month period has occurred, then the
computation shall be on the basis of the average monthly amount during the
shorter period. As used in Sections 14.2(a)(i) (1) and (2) above, the "worth at
the time of award" shall be computed by allowing interest at the rate of ten
percent (10%) per annum. As used in Section 14.2(a)(i)(3) above, the "worth at
the time of award" shall be computed by discounting the amount at the discount
rate of the Federal Reserve Bank of San Francisco at the time of award plus one
percent (1%).

                  (ii)     Landlord may elect not to terminate Tenant's right to
possession of the Premises, in which event Landlord may continue to enforce all
of its rights and remedies under this Lease, including the right to collect all
rent as it becomes due. Efforts by the Landlord to maintain, preserve or relet
the Premises, or the appointment of a receiver to protect the Landlord's
interests under this Lease, shall not constitute a termination of the Tenant's
right to possession of the Premises. In the event that Landlord elects to avail
itself of the remedy provided by this Section 14.2(a)(ii), Landlord shall not
unreasonably withhold its consent to an assignment or subletting of the Premises
subject to the reasonable standards for Landlord's consent as are contained in
this Lease.

         (b)      Landlord shall be under no obligation to observe or perform
any covenant of this Lease on its part to be observed or performed which accrues
after the date of any Event of Default by Tenant unless and until the Event of
Default is cured by Tenant, it being understood and agreed that the performance
by Landlord of its obligations under this Lease are expressly conditioned upon
Tenant's full and timely performance of its obligations under this Lease. The
various rights and remedies reserved to Landlord in this Lease or otherwise
shall be cumulative and, except as otherwise provided by California law,
Landlord may pursue any or all of its rights and remedies at the same time.

         (c)      No delay or omission of Landlord to exercise any right or
remedy shall be construed as a waiver of the right or remedy or of any breach or
Event of Default by Tenant. The acceptance by Landlord of rent shall not be a
(i) waiver of any preceding breach or Event of Default by Tenant of any
provision of this Lease, other than the failure of Tenant to pay the particular
rent accepted, regardless of Landlord's knowledge of the preceding breach or
Event of Default at the time of acceptance of rent, or (ii) a waiver of
Landlord's right to exercise any remedy available to Landlord by virtue of the
breach or Event of Default. The acceptance of any payment from a debtor in
possession, a trustee, a receiver or any other person acting on behalf of Tenant
or Tenant's estate shall not waive or cure a breach or Event of Default under
Section 14.1. No payment by Tenant or receipt by Landlord of a lesser amount
than the rent required by this Lease shall be deemed to be other than a partial
payment on account of the earliest due stipulated rent, nor shall any
endorsement or statement on any check or letter be deemed an accord and
satisfaction and Landlord shall accept the check or payment without prejudice to
Landlord's right to recover the balance of the rent or pursue any other remedy
available to it. No act or thing done by Landlord or Landlord's agents during
the Term shall be deemed an acceptance of a surrender of the Premises, and no
agreement to accept a surrender shall be valid unless in writing and signed by
Landlord. No employee of Landlord or of Landlord's agents

                                       18
<PAGE>

shall have any power to accept the keys to the Premises prior to the termination
of this Lease, and the delivery of the keys to any employee shall not operate as
a termination of this Lease or a surrender of the Premises.

         (d)      Any agreement for free or abated rent or other charges, or for
the giving or paying by Landlord to or for Tenant of any cash or other bonus,
inducement or consideration for Tenant's entering into this Lease ("INDUCEMENT
PROVISIONS") shall be deemed conditioned upon Tenant's full and faithful
performance of the terms, covenants and conditions of this Lease. Upon an Event
of Default under this Lease by Tenant, any such Inducement Provisions shall
automatically be deemed deleted from this Lease and of no further force or
effect and the amount of any rent reduction or abatement or other bonus or
consideration already given by Landlord or received by Tenant as an Inducement
shall be immediately due and payable by Tenant to Landlord, notwithstanding any
subsequent cure of said Event of Default by Tenant. The acceptance by Landlord
of rent or the cure of the Event of Default which initiated the operation of
this Section 14.1 shall not be deemed a waiver by Landlord of the provisions of
this Section 14.2(d).

         SECTION 14.3. LATE PAYMENTS.

         (a)      Any payment due to Landlord under this Lease, including
without limitation Basic Rent, Tenant's Share of Operating Expenses or any other
payment due to Landlord under this Lease, that is not received by Landlord
within five (5) days following the date due shall bear interest at the maximum
rate permitted by law from the date due until fully paid. The payment of
interest shall not cure any breach or Event of Default by Tenant under this
Lease. In addition, Tenant acknowledges that the late payment by Tenant to
Landlord of Basic Rent and Tenant's Share of Operating Expenses will cause
Landlord to incur costs not contemplated by this Lease, the exact amount of
which will be extremely difficult and impracticable to ascertain. Those costs
may include, but are not limited to, administrative, processing and accounting
charges, and late charges which may be imposed on Landlord by the terms of any
ground lease, mortgage or trust deed covering the Premises. Accordingly, if any
Basic Rent or Tenant's Share of Operating Expenses due from Tenant shall not be
received by Landlord or Landlord's designee within five (5) days following the
date due, then Tenant shall pay to Landlord, in addition to the interest
provided above, a late charge, which the Tenant agrees is reasonable, in a sum
equal to the greater of five percent (5%) of the amount overdue or Two Hundred
Fifty Dollars ($250.00) for each delinquent payment. Acceptance of a late charge
by Landlord shall not constitute a waiver of Tenant's breach or Event of Default
with respect to the overdue amount, nor shall it prevent Landlord from
exercising any of its other rights and remedies.

         (b)      Following each second installment of Basic Rent and/or the
payment of Tenant's Share of Operating Expenses within any twelve (12) month
period that is not paid within five (5) days following the date due, Landlord
shall have the option (i) to require that beginning with the first payment of
Basic Rent next due, Basic Rent and the Tenant's Share of Operating Expenses
shall no longer be paid in monthly installments but shall be payable quarterly
three (3) months in advance and/or (ii) to require that Tenant increase the
amount, if any, of the Security Deposit by one hundred percent (100%). Should
Tenant deliver to Landlord, at any time during the Term, two (2) or more
insufficient checks, the Landlord may require that all monies then and
thereafter due from Tenant be paid to Landlord by cashier's check. If any check
for any payment to Landlord hereunder is returned by the bank for any reason,
such payment shall not be deemed to have been received by Landlord and Tenant
shall be responsible for any applicable late charge, interest payment and the
charge to Landlord by its bank for such returned check. Nothing in this Section
shall be construed to compel Landlord to accept Basic Rent, Tenant's Share of
Operating Expenses or any other payment from Tenant if there exists an Event of
Default unless such payment fully cures any and all such Event of Default. Any
acceptance of any such payment shall not be deemed to waive any other right of
Landlord under this Lease. Any payment by Tenant to Landlord may be applied by
Landlord, in its sole and absolute discretion, in any order determined by
Landlord to any amounts then due to Landlord.

         SECTION 14.4. RIGHT OF LANDLORD TO PERFORM. All covenants and
agreements to be performed by Tenant under this Lease shall be performed at
Tenant's sole cost and expense and without any abatement of rent or right of
set-off. If Tenant fails to pay any sum of money, other than rent payable to
Landlord, or fails to perform any other act on its part to be performed under
this Lease, and the failure continues beyond any applicable grace period set
forth in Section 14.1, then in addition to any other available remedies,
Landlord may, at its election make the payment or perform the other act on
Tenant's part and Tenant hereby grants Landlord the right to enter onto the
Premises in order to carry out such performance. Landlord's election to make the
payment or perform the act on Tenant's part shall not give rise to any
responsibility of Landlord to continue making the same or similar payments or
performing the same or similar acts nor shall Landlord be responsible to Tenant
for any damage caused to Tenant as the result of such performance by Landlord.
Tenant shall, promptly upon demand by Landlord, reimburse Landlord for all sums
paid by Landlord and all necessary incidental costs, together with interest at
the maximum rate permitted by law from the date of the payment by Landlord.

         SECTION 14.5. DEFAULT BY LANDLORD. Landlord shall not be deemed to be
in default in the performance of any obligation under this Lease, and Tenant
shall have no rights to take any action against Landlord, unless and until
Landlord has failed to perform the obligation within thirty (30) days after
written notice by Tenant to Landlord specifying in reasonable detail the nature
and extent of the failure; provided, however, that if the nature of Landlord's
obligation is such that more than thirty (30) days are required for its
performance, then Landlord shall not be deemed to be in default if it commences
performance within the thirty (30) day period and thereafter diligently pursues
the cure to completion. In the event of Landlord's default under this Lease,
Tenant's sole remedies shall be to seek damages or specific performance from
Landlord, provided that any damages shall be limited to Tenant's actual
out-of-pocket expenses and shall in no event include any consequential damages,
lost profits or opportunity costs.

                                       19
<PAGE>

         SECTION 14.6. EXPENSES AND LEGAL FEES. All sums reasonably incurred by
Landlord in connection with any Event of Default by Tenant under this Lease or
holding over of possession by Tenant after the expiration or earlier termination
of this Lease, or any action related to a filing for bankruptcy or
reorganization by Tenant, including without limitation all costs, expenses and
actual accountants, appraisers, attorneys and other professional fees, and any
collection agency or other collection charges, shall be due and payable to
Landlord on demand, and shall bear interest at the rate of ten percent (10%) per
annum. Should either Landlord or Tenant bring any action in connection with this
Lease, the prevailing party shall be entitled to recover as a part of the action
its reasonable attorneys' fees, and all other costs. The prevailing party for
the purpose of this Section shall be determined by the trier of the facts.

         SECTION 14.7. WAIVER OF JURY TRIAL. LANDLORD AND TENANT EACH
ACKNOWLEDGES THAT IT IS AWARE OF AND HAS HAD THE ADVICE OF COUNSEL OF ITS CHOICE
WITH RESPECT TO ITS RIGHTS TO TRIAL BY JURY, AND EACH PARTY DOES HEREBY
EXPRESSLY AND KNOWINGLY WAIVE AND RELEASE ALL SUCH RIGHTS TO TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER PARTY HERETO AGAINST
THE OTHER (AND/OR AGAINST ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, OR
SUBSIDIARY OR AFFILIATED ENTITIES) ON ANY MATTERS WHATSOEVER ARISING OUT OF OR
IN ANY WAY CONNECTED WITH THIS LEASE, TENANT'S USE OR OCCUPANCY OF THE PREMISES,
AND/OR ANY CLAIM OF INJURY OR DAMAGE. FURTHERMORE, THIS WAIVER AND RELEASE OF
ALL RIGHTS TO A JURY TRIAL IS DEEMED TO BE INDEPENDENT OF EACH AND EVERY OTHER
PROVISION, COVENANT, AND/OR CONDITION SET FORTH IN THIS LEASE.

         SECTION 14.8. SATISFACTION OF JUDGMENT. The obligations of Landlord do
not constitute the personal obligations of the individual partners, trustees,
directors, officers or shareholders of Landlord or its constituent partners.
Should Tenant recover a money judgment against Landlord, such judgment shall be
satisfied only from the interest of Landlord in the Site and out of the rent or
other income from such property receivable by Landlord or out of consideration
received by Landlord from the sale or other disposition of all or any part of
Landlord's right, title or interest in the Site and no action for any deficiency
may be sought or obtained by Tenant.

         SECTION 14.9. LIMITATION OF ACTIONS AGAINST LANDLORD. Any claim, demand
or right of any kind by Tenant which is based upon or arises in connection with
this Lease, including without limitation any arising under a tort or contract
cause of action, shall be barred unless Tenant commences an action thereon
within six (6) months after the date that the act, omission, event or default
upon which the claim, demand or right arises, has occurred.

                             ARTICLE XV. END OF TERM

         SECTION 15.1. HOLDING OVER. This Lease shall terminate without further
notice upon the expiration of the Term, and any holding over by Tenant after the
expiration shall not constitute a renewal or extension of this Lease, or give
Tenant any rights under this Lease, except when in writing signed by both
parties. Any period of time following the Expiration Date or earlier termination
of this Lease required for Tenant to remove its property or to place the
Premises in the condition required pursuant to Section 15.3 (or for Landlord to
do so if Tenant fails to do so) shall be deemed a holding over by Tenant. If
Tenant holds over for any period after the Expiration Date (or earlier
termination) of the Term without the prior written consent of Landlord, such
possession shall constitute a tenancy at sufferance only and an Event of Default
under this Lease; such holding over with the prior written consent of Landlord
shall constitute a month-to-month tenancy commencing on the first (1st) day
following the termination of this Lease and terminating thirty (30) days
following delivery of written notice of termination by either Landlord or Tenant
to the other . In either of such events, possession shall be subject to all of
the terms of this Lease, except that the monthly Basic Rent shall be one hundred
fifty percent (150%) of the Basic Rent for the month immediately preceding the
date of termination, which amount shall be subject to increase by Landlord
during the holdover period upon thirty (30) days written notice from Landlord.
If Tenant fails to surrender the Premises upon the expiration of this Lease
despite demand to do so by Landlord, Tenant shall indemnify and hold Landlord
harmless from all loss or liability, including without limitation, any claims
made by any succeeding tenant relating to such failure to surrender. Acceptance
by Landlord of rent after the termination shall not constitute a consent to a
holdover or result in a renewal of this Lease. The foregoing provisions of this
Section are in addition to and do not affect Landlord's right of re-entry or any
other rights of Landlord under this Lease or at law.

         SECTION 15.2. MERGER ON TERMINATION. The voluntary or other surrender
of this Lease by Tenant, or a mutual termination of this Lease, shall terminate
any or all existing subleases unless Landlord, at its option, elects in writing
to treat the surrender or termination as an assignment to it of any or all
subleases affecting the Premises.

         SECTION 15.3. SURRENDER OF PREMISES; REMOVAL OF PROPERTY. Subject to
the provisions of 7.3 of this Lease, upon the Expiration Date or upon any
earlier termination of this Lease, Tenant shall quit and surrender possession of
the Premises to Landlord in as good order, condition and repair as when received
or as hereafter may be improved by Landlord or Tenant, reasonable wear and tear
and repairs which are Landlord's obligation excepted, and shall, without expense
to Landlord, remove or cause to be removed from the Premises all personal
property and debris, except for any items that Landlord may by written
authorization allow to remain. Tenant shall repair all damage to the Premises
resulting from the removal, which repair shall include the patching and filling
of holes and repair of structural damage, provided that Landlord may instead
elect to repair any structural

                                       20
<PAGE>

damage at Tenant's expense. If Tenant shall fail to comply with the provisions
of this Section, Landlord may effect the removal and/or make any repairs, and
the cost to Landlord shall be additional rent payable by Tenant upon demand. If
Tenant fails to remove Tenant's personal property from the Premises upon the
expiration of the Term, Landlord may remove, store, dispose of and/or retain
such personal property, at Landlord's option, in accordance with then applicable
laws, all at the expense of Tenant. If requested by Landlord, Tenant shall
execute, acknowledge and deliver to Landlord an instrument in writing releasing
and quitclaiming to Landlord all right, title and interest of Tenant in the
Premises.

                        ARTICLE XVI. PAYMENTS AND NOTICES

         All sums payable by Tenant to Landlord shall be deemed to be rent under
this Lease and shall be paid, without deduction or offset, in lawful money of
the United States to Landlord at its address set forth in Item 12 of the Basic
Lease Provisions, or at any other place as Landlord may designate in writing.
Unless this Lease expressly provides otherwise, as for example in the payment of
Basic Rent and the Tenant's Share of Operating Costs pursuant to Sections 4.1
and 4.2, all payments shall be due and payable within five (5) days after
demand. All payments requiring proration shall be prorated on the basis of a
thirty (30) day month and a three hundred sixty (360) day year. Any notice,
election, demand, consent, approval or other communication to be given or other
document to be delivered by either party to the other may be delivered in person
or by courier or overnight delivery service to the other party, or may be
deposited in the United States mail, duly registered or certified, postage
prepaid, return receipt requested, and addressed to the other party at the
address set forth in Item 12 of the Basic Lease Provisions, or if to Tenant, at
that address or, from and after the Commencement Date, at the Premises (whether
or not Tenant has departed from, abandoned or vacated the Premises). Either
party may, by written notice to the other, served in the manner provided in this
Article, designate a different address. If any notice or other document is sent
by mail, it shall be deemed served or delivered seventy-two (72) hours after
mailing. If more than one person or entity is named as Tenant under this Lease,
service of any notice upon any one of them shall be deemed as service upon all
of them.

                       ARTICLE XVII. RULES AND REGULATIONS

         Tenant agrees to observe faithfully and comply strictly with the Rules
and Regulations, attached as Exhibit E, and any reasonable and nondiscriminatory
amendments, modifications and/or additions as may be adopted and published by
written notice to tenants by Landlord for the safety, care, security, good
order, or cleanliness of the Premises, Building, Site and Common Areas. Landlord
shall not be liable to Tenant for any violation of the Rules and Regulations or
the breach of any covenant or condition in any lease by any other tenant or such
tenant's agents, employees, contractors, guests or invitees. One or more waivers
by Landlord of any breach of the Rules and Regulations by Tenant or by any other
tenant(s) shall not be a waiver of any subsequent breach of that rule or any
other. Tenant's failure to keep and observe the Rules and Regulations shall
constitute a breach of this Lease. In the case of any conflict between the Rules
and Regulations and this Lease, this Lease shall be controlling.

                       ARTICLE XVIII. BROKER'S COMMISSION

         The parties recognize as the broker(s) who negotiated this Lease the
firm(s), if any, whose name(s) is (are) stated in Item 10 of the Basic Lease
Provisions, and agree that Landlord shall be responsible for the payment of
brokerage commissions to those broker(s) unless otherwise provided in this
Lease. Tenant and Landlord warrant that they have had no dealings with any other
real estate broker or agent in connection with the negotiation of this Lease,
and each party agrees to indemnify and hold the other party harmless from any
cost, expense or liability (including reasonable attorneys' fees) for any
compensation, commissions or charges claimed by any other real estate broker or
agent employed or claiming to represent or to have been employed by the
indemnifying party in connection with the negotiation of this Lease. The
foregoing agreement shall survive the termination of this Lease. If Tenant fails
to take possession of the Premises or if this Lease otherwise terminates prior
to the Expiration Date as the result of failure of performance by Tenant,
Landlord shall be entitled to recover from Tenant the unamortized portion of any
brokerage commission funded by Landlord in addition to any other damages to
which Landlord may be entitled.

                  ARTICLE XIX. TRANSFER OF LANDLORD'S INTEREST

         In the event of any transfer of Landlord's interest in the Premises,
the transferor shall be automatically relieved of all further obligations on the
part of Landlord accruing from and after the effective date of such transfer,
and the transferor shall be relieved of any obligation to pay any funds in which
Tenant has an interest to the extent that such funds have been turned over,
subject to that interest, to the transferee and Tenant is notified of the
transfer as required by law . No beneficiary of a deed of trust to which this
Lease is or may be subordinate, and no landlord under a so-called
sale-leaseback, shall be responsible in connection with the Security Deposit,
unless the mortgagee or beneficiary under the deed of trust or the landlord
actually receives the Security Deposit. It is intended that the covenants and
obligations contained in this Lease on the part of Landlord shall, subject to
the foregoing, be binding on Landlord, its successors and assigns, only during
and in respect to their respective successive periods of ownership.

                                       21
<PAGE>

                           ARTICLE XX. INTERPRETATION

         SECTION 20.1. GENDER AND NUMBER. Whenever the context of this Lease
requires, the words "LANDLORD" and "TENANT" shall include the plural as well as
the singular, and words used in neuter, masculine or feminine genders shall
include the others.

         SECTION 20.2. HEADINGS. The captions and headings of the articles and
sections of this Lease are for convenience only, are not a part of this Lease
and shall have no effect upon its construction or interpretation.

         SECTION 20.3. JOINT AND SEVERAL LIABILITY. If more than one person or
entity is named as Tenant, the obligations imposed upon each shall be joint and
several and the act of or notice from, or notice or refund to, or the signature
of, any one or more of them shall be binding on all of them with respect to the
tenancy of this Lease, including, but not limited to, any renewal, extension,
termination or modification of this Lease.

         SECTION 20.4. SUCCESSORS. Subject to Articles IX and XIX, all rights
and liabilities given to or imposed upon Landlord and Tenant shall extend to and
bind their respective heirs, executors, administrators, successors and assigns.
Nothing contained in this Section is intended, or shall be construed, to grant
to any person other than Landlord and Tenant and their successors and assigns
any rights or remedies under this Lease.

         SECTION 20.5. TIME OF ESSENCE. Time is of the essence with respect to
the performance of every provision of this Lease.

         SECTION 20.6. CONTROLLING LAW/VENUE. This Lease shall be governed by
and interpreted in accordance with the laws of the State of California. Any
litigation commenced concerning any matters whatsoever arising out of or in any
way connected to this Lease shall be initiated in the Superior Court of the
county in which the Site is located.

         SECTION 20.7. SEVERABILITY. If any term or provision of this Lease, the
deletion of which would not adversely affect the receipt of any material benefit
by either party or the deletion of which is consented to by the party adversely
affected, shall be held invalid or unenforceable to any extent, the remainder of
this Lease shall not be affected and each term and provision of this Lease shall
be valid and enforceable to the fullest extent permitted by law.

         SECTION 20.8. WAIVER AND CUMULATIVE REMEDIES. One or more waivers by
Landlord or Tenant of any breach of any term, covenant or condition contained in
this Lease shall not be a waiver of any subsequent breach of the same or any
other term, covenant or condition. Consent to any act by one of the parties
shall not be deemed to render unnecessary the obtaining of that party's consent
to any subsequent act. No breach by Tenant of this Lease shall be deemed to have
been waived by Landlord unless the waiver is in a writing signed by Landlord.
The rights and remedies of Landlord under this Lease shall be cumulative and in
addition to any and all other rights and remedies which Landlord may have.

         SECTION 20.9. INABILITY TO PERFORM. In the event that either party
shall be delayed or hindered in or prevented from the performance of any work or
in performing any act required under this Lease by reason of any cause beyond
the reasonable control of that party, other than financial inability, then the
performance of the work or the doing of the act shall be excused for the period
of the delay and the time for performance shall be extended for a period
equivalent to the period of the delay. The provisions of this Section shall not
operate to excuse Tenant from the prompt payment of rent or from the timely
performance of any other obligation under this Lease within Tenant's reasonable
control.

         SECTION 20.10. ENTIRE AGREEMENT. This Lease and its exhibits and other
attachments cover in full each and every agreement of every kind between the
parties concerning the Premises, the Building and the Site, and all preliminary
negotiations, oral agreements, understandings and/or practices, except those
contained in this Lease, are superseded and of no further effect. Tenant waives
its rights to rely on any representations or promises made by Landlord or others
which are not contained in this Lease. No verbal agreement or implied covenant
shall be held to modify the provisions of this Lease, any statute, law, or
custom to the contrary notwithstanding.

         SECTION 20.11. QUIET ENJOYMENT. Upon the observance and performance of
all the covenants, terms and conditions on Tenant's part to be observed and
performed, and subject to the other provisions of this Lease, Tenant shall have
the right of quiet enjoyment and use of the Premises for the Term without
hindrance or interruption by Landlord or any other person claiming by or through
Landlord.

         SECTION 20.12. SURVIVAL. All covenants of Landlord or Tenant which
reasonably would be intended to survive the expiration or sooner termination of
this Lease, including without limitation any warranty or indemnity hereunder,
shall so survive and continue to be binding upon and inure to the benefit of the
respective parties and their successors and assigns.

                                       22
<PAGE>

         SECTION 20.13. INTERPRETATION. This Lease shall not be construed in
favor of or against either party, but shall be construed as if both parties
prepared this Lease.

                      ARTICLE XXI. EXECUTION AND RECORDING

         SECTION 21.1. COUNTERPARTS. This Lease may be executed in one or more
counterparts, each of which shall constitute an original and all of which shall
be one and the same agreement.

         SECTION 21.2. CORPORATE, LIMITED LIABILITY COMPANY AND PARTNERSHIP
AUTHORITY. If Tenant is a corporation, limited liability company or partnership,
each individual executing this Lease on behalf of the corporation, limited
liability company or partnership represents and warrants that he or she is duly
authorized to execute and deliver this Lease on behalf of the corporation,
limited liability company or partnership, and that this Lease is binding upon
the corporation, limited liability company or partnership in accordance with its
terms. Tenant shall, at Landlord's request, deliver a certified copy of its
board of directors' resolution, operating agreement or partnership agreement or
certificate authorizing or evidencing the execution of this Lease.

         SECTION 21.3. EXECUTION OF LEASE; NO OPTION OR OFFER. The submission of
this Lease to Tenant shall be for examination purposes only, and shall not
constitute an offer to or option for Tenant to lease the Premises. Execution of
this Lease by Tenant and its return to Landlord shall not be binding upon
Landlord, notwithstanding any time interval, until Landlord has in fact executed
and delivered this Lease to Tenant, it being intended that this Lease shall only
become effective upon execution by Landlord and delivery of a fully executed
counterpart to Tenant.

         SECTION 21.4. RECORDING. Tenant shall not record this Lease without the
prior written consent of Landlord. Tenant, upon the request of Landlord, shall
execute and acknowledge a "SHORT FORM" memorandum of this Lease for recording
purposes.

         SECTION 21.5. AMENDMENTS. No amendment or termination of this Lease
shall be effective unless in writing signed by authorized signatories of Tenant
and Landlord, or by their respective successors in interest. No actions,
policies, oral or informal arrangements, business dealings or other course of
conduct by or between the parties shall be deemed to modify this Lease in any
respect.

         SECTION 21.6. EXECUTED COPY. Any fully executed photocopy or similar
reproduction of this Lease shall be deemed an original for all purposes.

         SECTION 21.7. ATTACHMENTS. All exhibits, amendments, riders and addenda
attached to this Lease are hereby incorporated into and made a part of this
Lease.

                           ARTICLE XXII. MISCELLANEOUS

         SECTION 22.1. NONDISCLOSURE OF LEASE TERMS. Tenant acknowledges and
agrees that the terms of this Lease are confidential and constitute proprietary
information of Landlord. Disclosure of the terms could adversely affect the
ability of Landlord to negotiate other leases and impair Landlord's relationship
with other tenants. Accordingly, Tenant agrees that it, and its partners,
officers, directors, employees and attorneys, shall not intentionally and
voluntarily disclose the terms and conditions of this Lease ("Confidential
Information") to any third party, either directly or indirectly, without the
prior written consent of Landlord, which consent may be given or withheld in
Landlord's sole and absolute discretion. The foregoing restriction shall not
apply if either: (i) Tenant is required to disclose the Confidential Information
in connection with its SEC filings or in response to a subpoena or other
regulatory, administrative or court order, (ii) independent legal counsel to
Tenant delivers a written opinion to Landlord that Tenant is required to
disclose the Confidential Information to, or file a copy of this Lease with, any
governmental agency or any stock exchange; provided however, that in such event,
Tenant shall, before making any such disclosure (A) provide Landlord with prompt
written notice of such required disclosure, (B) at Tenant's sole cost, take all
reasonable legally available steps to resist or narrow such requirement,
including without limitation preparing and filing a request for confidential
treatment of the Confidential Information and (C) if disclosure of the
Confidential Information is required by subpoena or other regulatory,
administrative or court order, Tenant shall provide Landlord with as much
advance notice of the possibility of such disclosure as practical so that
Landlord may attempt to stop such disclosure or obtain an order concerning such
disclosure. The form and content of a request by Tenant for confidential
treatment of the Confidential Information shall be provided to Landlord at least
five (5) business days before its submission to the applicable governmental
agency or stock exchange and is subject to the prior written approval of
Landlord. In addition, Tenant may disclose the terms of this Lease to
prospective assignees of this Lease and prospective subtenants under this Lease
with whom Tenant is actively negotiating such an assignment or sublease.

                                       23
<PAGE>

         SECTION 22.2. GUARANTY. [Intentionally Omitted]

         SECTION 22.3. CHANGES REQUESTED BY LENDER. If, in connection with
obtaining financing for the Site, the lender shall request reasonable
modifications in this Lease as a condition to the financing, Tenant will not
unreasonably withhold or delay its consent, provided that the modifications do
not materially increase the obligations of Tenant or materially and adversely
affect the leasehold interest created by this Lease.

         SECTION 22.4. MORTGAGEE PROTECTION. No act or failure to act on the
part of Landlord which would otherwise entitle Tenant to be relieved of its
obligations hereunder shall result in such a release or termination unless (a)
Tenant has given notice by registered or certified mail to any beneficiary of a
deed of trust or mortgage covering the Building whose address has been furnished
to Tenant and (b) such beneficiary is afforded a reasonable opportunity to cure
the default by Landlord (which in no event shall be less than sixty (60) days),
including, if necessary to effect the cure, time to obtain possession of the
Building by power of sale or judicial foreclosure provided that such foreclosure
remedy is diligently pursued. Tenant agrees that each beneficiary of a deed of
trust or mortgage covering the Building is an express third party beneficiary
hereof, Tenant shall have no right or claim for the collection of any deposit
from such beneficiary or from any purchaser at a foreclosure sale unless such
beneficiary or purchaser shall have actually received and not refunded the
deposit, and Tenant shall comply with any written directions by any beneficiary
to pay rent due hereunder directly to such beneficiary without determining
whether a default exists under such beneficiary's deed of trust.

         SECTION 22.5. COVENANTS AND CONDITIONS. All of the provisions of this
Lease shall be construed to be conditions as well as covenants as though the
words specifically expressing or imparting covenants and conditions were used in
each separate provision.

         SECTION 22.6. SECURITY MEASURES. Tenant hereby acknowledges that
Landlord shall have no obligation whatsoever to provide guard service or other
security measures for the benefit of the Premises or the Site. Tenant assumes
all responsibility for the protection of Tenant, its employees, agents, invitees
and property from acts of third parties. Nothing herein contained shall prevent
Landlord, at its sole option, from providing security protection for the Site or
any part thereof, in which event the cost thereof shall be included within the
definition of Site Costs.

         SECTION 22.7. JAMS.

         (a)      All claims or disputes between Landlord and Tenant arising out
of, or relating to the Lease which either party is expressly authorized by a
provision hereof to submit to arbitration, shall be decided by the
JAMS/ENDISPUTE, or its successor, in Orange, California ("JAMS"), unless the
parties mutually agree otherwise. Within ten (10) business days following
submission to JAMS, JAMS shall designate three arbitrators and each party may,
within five (5) business days thereafter, veto one of the three persons so
designated. If two different designated arbitrators have been vetoed, the third
arbitrator shall hear and decide the matter. Any arbitration pursuant to this
Section 22.7 shall be decided within thirty (30) days of submission of JAMS. The
decision of the arbitrator shall be final and binding on the parties. In no
event shall the arbitrator be empowered or authorized to award consequential or
punitive damages (including any award for lost profit or opportunity costs or
loss or interruption of business or income). All costs associated with
arbitration shall be awarded to the prevailing party as determined by the
arbitrator.

         (b)      Notice of the demand for arbitration by either party to the
Lease shall be filed in writing with the other party to the Lease and with JAMS
and shall be made within a reasonable time after the dispute has arisen. The
award rendered by the arbitrators shall be final, and judgment may be entered
upon it in accordance with applicable law in any court having jurisdiction
thereof. Except by written consent of the person or entity sought to be joined,
no arbitration arising out of or relating to the Lease shall include, by
consolidation, joinder or in any other manner, any person or entity not a party
to the Lease under which such arbitration is filed unless (1) such person or
entity is substantially involved in a common question of fact or law, (2) the
presence of such person or entity is required if complete relief is to be
accorded in the arbitration, or (3) the interest or responsibility of such
person or entity in the matter is not insubstantial.

         (c)      The agreement herein among the parties to the Lease and any
other written agreement to arbitrate referred to herein shall be specifically
enforceable under prevailing law.

                                       24
<PAGE>

LANDLORD:                                  TENANT:

THE IRVINE COMPANY                         ENDWAVE CORPORATION
                                           a Delaware corporation

By: /s/William R. Halford                  By: /s/Julianne M. Biagini
    ------------------------------------       --------------------------------
    William R. Halford                         Name (Print): Julianne M. Biagini
                                                             -------------------
    President, Office Properties               Title (Print): CFO & SVP
                                                              ------------------
By: /s/Donald S. McNutt                    By: /s/Edward A. Keible
    ------------------------------------       --------------------------------
    Donald S. McNutt, Senior Vice              Name: Edward A. Keible
                                                     ---------------------------
    President Leasing, Office Properties       Title: CEO
                                                      --------------------------
                                       25
<PAGE>

                                 INDEX TO LEASE

<TABLE>
<S>                                                                                                                 <C>
ARTICLE I.  BASIC LEASE PROVISIONS...............................................................................    1

ARTICLE II.  PREMISES............................................................................................    2
          SECTION 2.1.              LEASED PREMISES..............................................................    2
          SECTION 2.2.              ACCEPTANCE OF PREMISES.......................................................    2
          SECTION 2.3.              BUILDING NAME AND ADDRESS....................................................    2

ARTICLE III.  TERM...............................................................................................    2
          SECTION 3.1.              GENERAL......................................................................    2
          SECTION 3.2.              DELAY IN POSSESSION..........................................................    3

ARTICLE IV.  RENT AND OPERATING EXPENSES.........................................................................    3
          SECTION 4.1.              BASIC RENT...................................................................    3
          SECTION 4.2.              OPERATING EXPENSES...........................................................    3
          SECTION 4.3.              SECURITY DEPOSIT.............................................................    5

ARTICLE V.  USES.................................................................................................    6
          SECTION 5.1.              USE..........................................................................    6
          SECTION 5.2.              SIGNS........................................................................    6
          SECTION 5.3.              HAZARDOUS MATERIALS..........................................................    7

ARTICLE VI.  COMMON AREAS; SERVICES..............................................................................    8
          SECTION 6.1.              UTILITIES AND SERVICES.......................................................    8
          SECTION 6.2.              OPERATION AND MAINTENANCE OF COMMON AREAS....................................    8
          SECTION 6.3.              USE OF COMMON AREAS..........................................................    8
          SECTION 6.4.              PARKING......................................................................    9
          SECTION 6.5.              CHANGES AND ADDITIONS BY LANDLORD............................................    9

ARTICLE VII.  MAINTAINING THE PREMISES...........................................................................    9
          SECTION 7.1.              TENANT'S MAINTENANCE AND REPAIR..............................................    9
          SECTION 7.2.              LANDLORD'S MAINTENANCE AND REPAIR............................................   10
          SECTION 7.3.              ALTERATIONS..................................................................   10
          SECTION 7.4.              MECHANIC'S LIENS.............................................................   11
          SECTION 7.5.              ENTRY AND INSPECTION.........................................................   11

ARTICLE VIII.  TAXES AND ASSESSMENTS ON TENANT'S PROPERTY........................................................   11

ARTICLE IX.  ASSIGNMENT AND SUBLETTING...........................................................................   11
          SECTION 9.1.              RIGHTS OF PARTIES............................................................   11
          SECTION 9.2.              EFFECT OF TRANSFER...........................................................   13
          SECTION 9.3.              SUBLEASE REQUIREMENTS........................................................   13
          SECTION 9.4.              CERTAIN TRANSFERS............................................................   13

ARTICLE X.  INSURANCE AND INDEMNITY..............................................................................   14
          SECTION 10.1.             TENANT'S INSURANCE...........................................................   14
          SECTION 10.2.             LANDLORD'S INSURANCE.........................................................   14
          SECTION 10.3.             TENANT'S INDEMNITY...........................................................   14
          SECTION 10.4.             LANDLORD'S NONLIABILITY......................................................   14
          SECTION 10.5.             WAIVER OF SUBROGATION........................................................   14

ARTICLE XI.  DAMAGE OR DESTRUCTION...............................................................................   15
          SECTION 11.1.             RESTORATION..................................................................   15
          SECTION 11.2.             LEASE GOVERNS................................................................   16

ARTICLE XII.  EMINENT DOMAIN.....................................................................................   16
          SECTION 12.1.             TOTAL OR PARTIAL TAKING......................................................   16
          SECTION 12.2.             TEMPORARY TAKING.............................................................   16
          SECTION 12.3.             TAKING OF PARKING AREA.......................................................   16

ARTICLE XIII.  SUBORDINATION; ESTOPPEL CERTIFICATE; FINANCIALS...................................................   16
          SECTION 13.1.             SUBORDINATION................................................................   16
          SECTION 13.2.             ESTOPPEL CERTIFICATE.........................................................   16
          SECTION 13.3.             FINANCIALS...................................................................   17

ARTICLE XIV.  EVENTS OF DEFAULT AND REMEDIES.....................................................................   17
          SECTION 14.1.             TENANT'S DEFAULTS............................................................   17
          SECTION 14.2.             LANDLORD'S REMEDIES..........................................................   18
          SECTION 14.3.             LATE PAYMENTS................................................................   19
          SECTION 14.4.             RIGHT OF LANDLORD TO PERFORM.................................................   19
          SECTION 14.5.             DEFAULT BY LANDLORD..........................................................   19
          SECTION 14.6.             EXPENSES AND LEGAL FEES......................................................   20
</TABLE>

                                       i
<PAGE>

<TABLE>
<S>                                                                                                                 <C>
          SECTION 14.7.             WAIVER OF JURY TRIAL.........................................................   20
          SECTION 14.8.             SATISFACTION OF JUDGMENT.....................................................   20
          SECTION 14.9.             LIMITATION OF ACTIONS AGAINST LANDLORD.......................................   20

ARTICLE XV.  END OF TERM.........................................................................................   20
          SECTION 15.1.             HOLDING OVER.................................................................   20
          SECTION 15.2.             MERGER ON TERMINATION........................................................   20
          SECTION 15.3.             SURRENDER OF PREMISES; REMOVAL OF PROPERTY...................................   20

ARTICLE XVI.  PAYMENTS AND NOTICES...............................................................................   21

ARTICLE XVII.  RULES AND REGULATIONS.............................................................................   21

ARTICLE XVIII.  BROKER'S COMMISSION..............................................................................   21

ARTICLE XIX.  TRANSFER OF LANDLORD'S INTEREST....................................................................   21

ARTICLE XX.  INTERPRETATION......................................................................................   22
          SECTION 20.1.             GENDER AND NUMBER............................................................   22
          SECTION 20.2.             HEADINGS.....................................................................   22
          SECTION 20.3.             JOINT AND SEVERAL LIABILITY..................................................   22
          SECTION 20.4.             SUCCESSORS...................................................................   22
          SECTION 20.5.             TIME OF ESSENCE..............................................................   22
          SECTION 20.6.             CONTROLLING LAW/VENUE........................................................   22
          SECTION 20.7.             SEVERABILITY.................................................................   22
          SECTION 20.8.             WAIVER AND CUMULATIVE REMEDIES...............................................   22
          SECTION 20.9.             INABILITY TO PERFORM.........................................................   22
          SECTION 20.10.            ENTIRE AGREEMENT.............................................................   22
          SECTION 20.11.            QUIET ENJOYMENT..............................................................   22
          SECTION 20.12.            SURVIVAL.....................................................................   22
          SECTION 20.13.            INTERPRETATION...............................................................   23

ARTICLE XXI.  EXECUTION AND RECORDING............................................................................   23
          SECTION 21.1.             COUNTERPARTS.................................................................   23
          SECTION 21.2.             CORPORATE, LIMITED LIABILITY COMPANY AND PARTNERSHIP AUTHORITY...............   23
          SECTION 21.3.             EXECUTION OF LEASE; NO OPTION OR OFFER.......................................   23
          SECTION 21.4.             RECORDING....................................................................   23
          SECTION 21.5.             AMENDMENTS...................................................................   23
          SECTION 21.6.             EXECUTED COPY................................................................   23
          SECTION 21.7.             ATTACHMENTS..................................................................   23

ARTICLE XXII.  MISCELLANEOUS.....................................................................................   23
          SECTION 22.1.             NONDISCLOSURE OF LEASE TERMS.................................................   23
          SECTION 22.2.             GUARANTY.  [INTENTIONALLY OMITTED]...........................................   24
          SECTION 22.3.             CHANGES REQUESTED BY LENDER..................................................   24
          SECTION 22.4.             MORTGAGEE PROTECTION.........................................................   24
          SECTION 22.5.             COVENANTS AND CONDITIONS.....................................................   24
          SECTION 22.6.             SECURITY MEASURES............................................................   24
          SECTION 22.7.             JAMS.........................................................................   24

EXHIBITS

  EXHIBIT A          DESCRIPTION OF PREMISES
  EXHIBIT B          ENVIRONMENTAL QUESTIONNAIRE
  EXHIBIT C          LANDLORD'S DISCLOSURES
  EXHIBIT D          INSURANCE REQUIREMENTS
  EXHIBIT E          RULES AND REGULATIONS
  EXHIBIT X          WORK LETTER
  EXHIBIT Y          SITE PLAN
</TABLE>

                                       ii

<PAGE>

                                    EXHIBIT B

                THE IRVINE COMPANY - INVESTMENT PROPERTIES GROUP

                         HAZARDOUS MATERIAL SURVEY FORM

         The purpose of this form is to obtain information regarding the use of
hazardous substances on Investment Properties Group ("IPG") property.
Prospective tenants and contractors should answer the questions in light of
their proposed activities on the premises. Existing tenants and contractors
should answer the questions as they relate to ongoing activities on the premises
and should update any information previously submitted.

         If additional space is needed to answer the questions, you may attach
separate sheets of paper to this form. When completed, the form should be sent
to the following address:

                      THE IRVINE COMPANY MANAGEMENT OFFICE
                       8105 Irvine Center Drive, Suite 350
                                Irvine, CA 92618

         Your cooperation in this matter is appreciated. If you have any
questions, please call your property manager at (949) 720-4400 for assistance.

1.       GENERAL INFORMATION.

         Name of Responding Company:  __________________________________________
         Check all that apply:          Tenant       (  )  Contractor  (  )
                                        Prospective  (  )  Existing    (  )

         Mailing Address: ______________________________________________________
         Contact person & Title: _______________________________________________
         Telephone Number:  (  ) _____________

         Current TIC Tenant(s):

         Address of Lease Premises:  ___________________________________________

         Length of Lease or Contract Term: _____________________________________

         Prospective TIC Tenant(s):

         Address of Leased Premises:  __________________________________________

         Address of Current Operations:  _______________________________________

         Describe the proposed operations to take place on the property,
         including principal products manufactured or services to be conducted.
         Existing tenants and contractors should describe any proposed changes
         to ongoing operations.

         _______________________________________________________________________
         _______________________________________________________________________
         _______________________________________________________________________

<PAGE>

2.       HAZARDOUS MATERIALS. For the purposes of this Survey Form, the term
         "hazardous material" means any raw material, product or agent
         considered hazardous under any state or federal law. The term does not
         include wastes which are intended to be discarded.

         2.1      Will any hazardous materials be used or stored on site?

                  Chemical Products      Yes  (  )  No  (  )
                  Biological Hazards/
                     Infectious Wastes   Yes  (  )  No  (  )
                  Radioactive Materials  Yes  (  )  No  (  )
                  Petroleum Products     Yes  (  )  No  (  )

         2.2      List any hazardous materials to be used or stored, the
                  quantities that will be on-site at any given time, and the
                  location and method of storage (e.g., bottles in storage
                  closet on the premises).

                                         Location and Method
                  Hazardous Materials        of Storage              Quantity
                  -------------------    -------------------    ----------------
                  ___________________    ___________________    ________________
                  ___________________    ___________________    ________________
                  ___________________    ___________________    ________________

         2.3      Is any underground storage of hazardous materials proposed or
                  currently conducted on the premises? Yes (  ) No (  )

                  If yes, describe the materials to be stored, and the size and
                  construction of the tank. Attach copies of any permits
                  obtained for the underground storage of such substances.

                  ______________________________________________________________
                  ______________________________________________________________
                  ______________________________________________________________

3.       HAZARDOUS WASTE. For the purposes of this Survey Form, the term
         "hazardous waste" means any waste (including biological, infectious or
         radioactive waste) considered hazardous under any state or federal law,
         and which is intended to be discarded.

         3.1      List any hazardous waste generated or to be generated on the
                  premises, and indicate the quantity generated on a monthly
                  basis.

                                         Location and Method
                  Hazardous Materials        of Storage            Quantity
                  -------------------    -------------------     --------------
                  ___________________    ___________________     _______________
                  ___________________    ___________________     _______________
                  ___________________    ___________________     _______________

         3.2      Describe the method(s) of disposal (including recycling) for
                  each waste. Indicate where and how often disposal will take
                  place.

<PAGE>

                                         Location and Method
                  Hazardous Materials         of Storage         Disposal Method
                  -------------------    -------------------     --------------
                  ___________________    ___________________     _______________
                  ___________________    ___________________     _______________
                  ___________________    ___________________     _______________

         3.3      Is any treatment or processing of hazardous, infectious or
                  radioactive wastes currently conducted or proposed to be
                  conducted on the premise? Yes (  )  No  (  )

                  If yes, please describe any existing or proposed treatment
                  methods.

                  ______________________________________________________________
                  ______________________________________________________________
                  ______________________________________________________________

                  3.4      Attach copies of any hazardous waste permits or
                  licenses issued to your company with respect to its operations
                  on the premises.

4.                SPILLS

                  4.1      During the past year, have any spills or releases of
                  hazardous materials occurred on the premises?
                  Yes  (  )  No  (  )

                           If so, please describe the spill and attach the
                  results of any testing conducted to determine the extent of
                  such spills.

                  ______________________________________________________________
                  ______________________________________________________________
                  ______________________________________________________________

                  4.2      Were any agencies notified in connection with such
                  spills?  Yes  (  )  No  (  )

                           If so, attach copies of any spill reports or other
                  correspondence with regulatory agencies.

                  4.3      Were any clean-up actions undertaken in connection
                  with the spills?  Yes  (  )  No  (  )

                           If so, briefly describe the actions taken. Attach
                  copies of any clearance letters obtained from any regulatory
                  agencies involved and the results of any final soil or
                  groundwater sampling done upon completion of the clean-up
                  work.

                  ______________________________________________________________
                  ______________________________________________________________
                  ______________________________________________________________

5.                WASTEWATER TREATMENT/DISCHARGE

                  5.1      Do you discharge industrial wastewater to:

                           _____storm drain?       _____sewer?
                           _____surface water?     _____no industrial discharge

                  5.2      Is your industrial wastewater treated before
                  discharge?  Yes  (  )  No  (  )

                           If yes, describe the type of treatment conducted.

                  ______________________________________________________________

<PAGE>

                  ______________________________________________________________
                  ______________________________________________________________

         5.3      Attach copies of any wastewater discharge permits issued to
                  your company with respect to its operations on the premises.

6.       AIR DISCHARGES.

         6.1      Do you have any air filtration systems or stacks that
                  discharge into the air?  Yes  (  )  No  (  )

         6.2      Do you operate any equipment that require air emissions
                  permits?  Yes  (  )  No  (  )

         6.3      Attach copies of any air discharge permits pertaining to these
                  operations.

7.       HAZARDOUS MATERIALS DISCLOSURES.

                  7.1      Does your company handle an aggregate of at least 500
                  pounds, 55 gallons or 200 cubic feet of hazardous material at
                  any given time?  Yes  (  )  No  (  )

                  7.2      Has your company prepared a Hazardous Materials
                  Disclosure - Chemical Inventory and Business Emergency Plan or
                  similar disclosure document pursuant to state or county
                  requirements?  Yes  (  )  No  (  )

                           If so, attach a copy.

                  7.3      Are any of the chemicals used in your operations
                  regulated under Proposition 65?

                           If so, describe the procedures followed to comply
                  with these requirements.

                  ______________________________________________________________
                  ______________________________________________________________
                  ______________________________________________________________

                  7.4      Is your company subject to OSHA Hazard Communication
                  Standard Requirements?  Yes  (  )  No  (  )

                           If so, describe the procedures followed to comply
                  with these requirements.

                  ______________________________________________________________
                  ______________________________________________________________
                  ______________________________________________________________

8.                ANIMAL TESTING.

                  8.1      Does your company bring or intend to bring live
                  animals onto the premises for research or development
                  purposes?  Yes  (  )  No  (  )

                           If so, describe the activity.

                  ______________________________________________________________
                  ______________________________________________________________
                  ______________________________________________________________

                  8.2      Does your company bring or intend to bring animal
                  body parts or bodily fluids onto the premises for research or
                  development purposes?  Yes  (  )  No  (  )

                           If so, describe the activity.

                  ______________________________________________________________

<PAGE>

                  ______________________________________________________________
                  ______________________________________________________________

9.                ENFORCEMENT ACTIONS, COMPLAINTS.

                  9.1      Has your company ever been subject to any agency
                  enforcement actions, administrative orders, lawsuits, or
                  consent orders/decrees regarding environmental compliance or
                  health and safety?  Yes  (  )  No  (  )

                           If so, describe the actions and any continuing
                  obligations imposed as a result of these actions.

                  ______________________________________________________________
                  ______________________________________________________________
                  ______________________________________________________________

                  9.2      Has your company ever received any request for
                  information, notice of violation or demand letter, complaint,
                  or inquiry regarding environmental compliance or health and
                  safety?  Yes  (  )  No  (  )

                  9.3      Has an environmental audit ever been conducted which
                  concerned operations or activities on premises occupied by
                  you?  Yes  (  )  No  (  )

                  9.4      If you answered "yes" to any questions in this
                  section, describe the environmental action or complaint and
                  any continuing compliance obligation imposed as a result of
                  the same.

                  ______________________________________________________________
                  ______________________________________________________________
                  ______________________________________________________________
                  ______________________________________________________________
                  ______________________________________________________________

                                           _____________________________________
                                           _____________________________________

                                           By: _________________________________
                                                Name: __________________________
                                                Title: _________________________
                                                Date: __________________________

<PAGE>

                                SUNNYVALE LEASES

                                    EXHIBIT C

                         HAZARDOUS MATERIALS DISCLOSURE

Tenant acknowledges the following disclosures by Landlord with respect to
Hazardous Materials at the Premises. Tenant agrees to comply with the
precautionary requirements and other provisions, set forth below, that are
associated with these Hazardous Materials.

         (1)      Portions of the structures on the Premises may contain
                  asbestos-containing materials. Accordingly, Tenant agrees that
                  it will not make any repairs or alterations to the structures
                  on the Premises: (a) without inquiring from landlord whether
                  Tenant's planned repairs or alterations are likely to disturb
                  asbestos-containing materials in the structures, and (b) if,
                  in Landlord's judgment, the planned repairs or alterations
                  will disturb the asbestos-containing judgment, the planned
                  repairs or alterations will disturb the asbestos-containing
                  materials, without securing Landlord's prior consent to the
                  repairs or alterations.

         (2)      Portions of the groundwater in the City of Sunnyvale contain
                  volatile organic compounds and/or solvents. These substances
                  may be present in the groundwater beneath the Premises.

                  Landlord in unaware of any practical impediment to the use or
                  occupancy of the Premises as a result of the presence of these
                  substances in the groundwater.

 Tenant agrees that its exemption in Section 5.3(f) of the Lease from liability
  or responsibility with respect to the Hazardous Materials described in this
  Exhibit C shall not extend to any such Hazardous Material whose presence was
  caused or permitted by Tenant, its agents, employees, contractors, licensees,

<PAGE>

                                    EXHIBIT D

                               TENANT'S INSURANCE

         The following requirements for Tenant's insurance shall be in effect at
the Building, and Tenant shall also cause any subtenant to comply with these
requirements. Landlord reserves the right to adopt reasonable nondiscriminatory
modifications and additions to these insurance requirements. Tenant agrees to
obtain and present evidence to Landlord that it has fully complied with the
insurance requirements.

         1.       Tenant shall, at its sole cost and expense, commencing on the
date Tenant is given access to the Premises for any purpose and during the
entire Term, procure, pay for and keep in full force and effect: (i) commercial
general liability insurance with respect to the Premises and the operations of
or on behalf of Tenant in, on or about the Premises, including but not limited
to coverage for personal injury, independent contractors, broad form property
damage, fire and water legal liability, products liability (if a product is sold
from the Premises), and liquor law liability (if alcoholic beverages are sold,
served or consumed within the Premises), which policy(ies) shall be written on
an "occurrence" basis and for not less than the amount set forth in Item 13 of
the Basic Lease Provisions, with a combined single limit (with a $50,000 minimum
limit on fire legal liability) per occurrence for bodily injury, death, and
property damage liability, or the current limit of liability carried by Tenant,
whichever is greater, and subject to such increases in amounts as Landlord may
determine from time to time; (ii) workers' compensation insurance coverage as
required by law, together with employers' liability insurance of at least One
Million Dollars ($1,000,000.00); (iii) with respect to Alterations and the like
required or permitted to be made by Tenant under this Lease, builder's risk
insurance, in an amount equal to the replacement cost of the work; (iv)
insurance against fire, vandalism, malicious mischief and such other additional
perils as may be included in a standard "special form" policy, insuring Tenant's
Alterations, trade fixtures, furnishings, equipment and items of personal
property of Tenant located in the Premises, in an amount equal to not less than
ninety percent (90%) of their actual replacement cost (with replacement cost
endorsement); and (v) business interruption insurance in amounts satisfactory to
cover one (1) year of loss. In no event shall the limits of any policy be
considered as limiting the liability of Tenant under this Lease.

         2.       In the event Landlord consents to Tenant"s use, generation or
storage of Hazardous Materials on, under or about the Premises pursuant to
Section 5.3 of this Lease, Landlord shall have the continuing right to require
Tenant, at Tenant"s sole cost and expense (provided the same is available for
purchase upon commercially reasonable terms), to purchase insurance specified
and approved by Landlord, with coverage not less than Three Million Dollars
($3,000,000.00), insuring (i) any Hazardous Materials shall be removed from the
Premises, (ii) the Premises shall be restored to a clean, healthy, safe and
sanitary condition, and (iii) any liability of Tenant, Landlord and Landlord"s
officers, directors, shareholders, agents, employees and representatives,
arising from such Hazardous Materials.

         3.       All policies of insurance required to be carried by Tenant
pursuant to this Exhibit D containing a deductible exceeding Ten Thousand
Dollars ($10,000.00) per occurrence must be approved in writing by Landlord
prior to the issuance of such policy. Tenant shall be solely responsible for the
payment of all deductibles.

         4.       All policies of insurance required to be carried by Tenant
pursuant to this Exhibit D shall be written by responsible insurance companies
authorized to do business in the State of California and with a general
policyholder rating of not less than "A-" and financial rating of not less than
"VIII" in the most current Best's Insurance Report. Any insurance required of
Tenant may be furnished by Tenant under any blanket policy carried by it or
under a separate policy. A true and exact copy of each paid up policy evidencing
the insurance (appropriately authenticated by the insurer) or a certificate of
insurance, certifying that the policy has been issued, provides the coverage
required by this Exhibit D and contains the required provisions, together with
endorsements acceptable to Landlord evidencing the waiver of subrogation and
additional insured provisions required below, shall be delivered to Landlord
prior to the date Tenant is given the right of possession of the Premises.
Proper evidence of the renewal of any insurance coverage shall also be delivered
to Landlord not less than thirty (30) days prior to the expiration of the
coverage. Landlord may at any time, and from time to time, inspect and/or copy
any and all insurance policies required by this Lease.

         5.       Each policy evidencing insurance required to be carried by
Tenant pursuant to this Exhibit D shall contain the following provisions and/or
clauses satisfactory to Landlord: (i) with respect to Tenant's commercial
general liability insurance, a provision that the policy and the coverage
provided shall be primary and that any coverage carried by Landlord shall be
noncontributory with respect to any policies carried by Tenant, together with a
provision including Landlord, the Additional Insureds identified in Item 11 of
the Basic Lease Provisions, and any other parties in interest designated by
Landlord, as additional insureds; (ii) except with respect to Tenant's
commercial general liability insurance, a waiver by the insurer of any right to
subrogation against Landlord, its agents, employees, contractors and
representatives which arises or might arise by reason of any payment under the
policy or by reason of any act or omission of Landlord, its agents, employees,
contractors or representatives; and (iii) a provision that the insurer will not
cancel or change the coverage provided by the policy without first giving
Landlord thirty (30) days prior written notice.

         6.       In the event that Tenant fails to procure, maintain and/or pay
for, at the times and for the durations specified in this Exhibit D, any
insurance required by this Exhibit D, or fails to carry insurance required by
any governmental authority, Landlord may at its election procure that insurance
and pay the premiums, in which event Tenant shall repay Landlord all sums paid
by Landlord, together with interest at the maximum rate permitted by law and any
related costs or expenses incurred by Landlord, within ten (10) days following
Landlord's written demand to Tenant.

<PAGE>

                  NOTICE TO TENANT: IN ACCORDANCE WITH THE TERMS OF THIS LEASE,
TENANT MUST PROVIDE EVIDENCE OF THE REQUIRED INSURANCE TO LANDLORD'S MANAGEMENT
AGENT PRIOR TO BEING AFFORDED ACCESS TO THE PREMISES.

<PAGE>

                                    EXHIBIT E

                              RULES AND REGULATIONS

                  This Exhibit sets forth the rules and regulations governing
Tenant's use of the Premises leased to Tenant pursuant to the terms, covenants
and conditions of the Lease to which this Exhibit is attached and therein made
part thereof. In the event of any conflict or inconsistency between this Exhibit
and the Lease, the Lease shall control.

                  1.       Tenant shall not place anything or allow anything to
be placed near the glass of any window, door, partition or wall, which may
appear unsightly from outside the Premises.

                  2.       The walls, walkways, sidewalks, entrance passages,
elevators, stairwells, courts and vestibules shall not be obstructed or used for
any purpose other than ingress and egress of pedestrian travel to and from the
Premises, and shall not be used for smoking, loitering or gathering, or to
display, store or place any merchandise, equipment or devices, or for any other
purpose. The walkways, sidewalks, entrance passageways, courts, vestibules and
roof are not for the use of the general public and Landlord shall in all cases
retain the right to control and prevent access thereto by all persons whose
presence in the judgment of the Landlord shall be prejudicial to the safety,
character, reputation and interests of the Building and its tenants, provided
that nothing herein contained shall be construed to prevent such access to
persons with whom Tenant normally deals in the ordinary course of Tenant's
business unless such persons are engaged in illegal activities. Smoking is
permitted outside the building and within the project only in areas designated
by Landlord. No tenant or employee or invitee or agent of any tenant shall be
permitted upon the roof of the Building without prior written approval from
Landlord.

                  3.       No awnings or other projection shall be attached to
the outside walls of the Building. No security bars or gates, curtains, blinds,
shades or screens shall be attached to or hung in, or used in connection with,
any window or door of the Premises without the prior written consent of
Landlord. Neither the interior nor exterior of any windows shall be coated or
otherwise sunscreened without the express written consent of Landlord.

                  4.       Tenant shall not mark, nail, paint, drill into, or in
any way deface any part of the Premises or the Building except to affix standard
pictures or other wall hangings on the interior walls of the premises so long as
they are not visible from the exterior of the building. Tenant shall not lay
linoleum, tile, carpet or other similar floor covering so that the same shall be
affixed to the floor of the Premises in any manner except as approved by
Landlord in writing. The expense of repairing any damage resulting from a
violation of this rule or removal of any floor covering shall be borne by
Tenant.

                  5.       The toilet rooms, urinals, wash bowls and other
plumbing apparatus shall not be used for any purpose other than that for which
they were constructed and no foreign substance of any kind whatsoever shall be
thrown therein. Any pipes or tubing used by Tenant to transmit water to an
appliance or device in the Premises must be made of copper or stainless steel,
and in no event shall plastic tubing be used for that purpose. The expense of
any breakage, stoppage or damage resulting from the violation of this rule shall
be borne by the tenant who, or whose employees or invitees, caused it.

                  6.       Landlord shall direct electricians as to the manner
and location of any future telephone wiring. No boring or cutting for wires will
be allowed without the prior consent of Landlord. The locations of the
telephones, call boxes and other office equipment affixed to the Premises shall
be subject to the prior written approval of Landlord.

                  7.       The Premises shall not be used for manufacturing or
for the storage of merchandise except as such storage may be incidental to the
permitted use of the Premises. No exterior storage shall be allowed at any time
without the prior written approval of Landlord. The Premises shall not be used
for cooking or washing clothes without the prior written consent of Landlord, or
for lodging or sleeping or for any immoral or illegal purposes.

                  8.       Tenant shall not make, or permit to be made, any
unseemly or disturbing noises or disturb or interfere with occupants of this or
neighboring buildings or premises or those having business with them, whether by
the use of any musical instrument, radio, phonograph, noise, or otherwise.
Tenant shall not use, keep or permit to be used, or kept, any foul or obnoxious
gas or substance in the Premises or permit or suffer the Premises to be used or
occupied in any manner offensive or objectionable to Landlord or other occupants
of this or neighboring buildings or premises by reason of any odors, fumes or
gases.

                  9.       No animals, except for seeing eye dogs, shall be
permitted at any time within the Premises.

                  10.      Tenant shall not use the name of the Building or the
Project in connection with or in promoting or advertising the business of
Tenant, except as Tenant's address, without the written consent of Landlord.
Landlord shall have the right to prohibit any advertising by any Tenant which,
in Landlord's reasonable opinion, tends to impair the reputation of the Project
or its desirability for its intended uses, and upon written notice from Landlord
any Tenant shall refrain from or discontinue such advertising.

<PAGE>

                  11.      Canvassing, soliciting, peddling, parading,
picketing, demonstrating or otherwise engaging in any conduct that unreasonably
impairs the value or use of the Premises or the Project are prohibited and each
Tenant shall cooperate to prevent the same. Landlord shall have full and
absolute authority to regulate or prohibit the entrance to the Premises of any
vendor, supplier, purveyor, petitioner, proselytizer or other similar person if,
in the good faith judgment of Landlord, such person will be involved in general
solicitation activities, or the proselytizing, petitioning, or disturbance of
other tenants or their customers or invitees, or engaged or likely to engage in
conduct which may in Landlord's opinion distract from the use of the Premises
for its intended purpose. Notwithstanding the foregoing, Landlord reserves the
absolute right and discretion to limit or prevent access to the Buildings by any
food or beverage vendor, whether or not invited by Tenant, and Landlord may
condition such access upon the vendor's execution of an entry permit agreement
which may contain provisions for insurance coverage and/or the payment of a fee
to Landlord.

                  12.      No equipment of any type shall be placed on the
Premises which in Landlord's opinion exceeds the load limits of the floor or
otherwise threatens the soundness of the structure or improvements of the
Building.

                  13.      [Intentionally Omitted]

                  14.      The entire Premises, including vestibules, entrances,
parking areas, doors, fixtures, windows and plate glass, shall at all times be
maintained in a safe, neat and clean condition by Tenant. All trash, refuse and
waste materials shall be regularly removed from the Premises by Tenant and
placed in the containers at the locations designated by Landlord for refuse
collection. All cardboard boxes must be "broken down" prior to being placed in
the trash container. All styrofoam chips must be bagged or otherwise contained
prior to placement in the trash container, so as not to constitute a nuisance.
Pallets must be immediately disposed of by tenant and may not be disposed of in
the Landlord provided trash container or enclosures. Pallets may be neatly
stacked in an exterior location on a temporary basis (no longer than 5 days) so
long as Landlord has provided prior written approval. The burning of trash,
refuse or waste materials is prohibited.

                  15.      Tenant shall use at Tenant's cost such pest
extermination contractor as Landlord may direct and at such intervals as
Landlord may require.

                  16.      All keys for the Premises shall be provided to Tenant
by Landlord and Tenant shall return to Landlord any of such keys so provided
upon the termination of the Lease. Tenant shall not change locks or install
other locks on doors of the Premises, without the prior written consent of
Landlord. In the event of loss of any keys furnished by Landlord for Tenant,
Tenant shall pay to Landlord the costs thereof. Upon the termination of its
tenancy, Tenant shall deliver to Landlord all the keys to lobby(s), suite(s) and
telephone & electrical room(s) which have been furnished to Tenant or which
Tenant shall have had made.

                  17. No person shall enter or remain within the Project while
intoxicated or under the influence of liquor or drugs. Landlord shall have the
right to exclude or expel from the Project any person who, in the absolute
discretion of Landlord, is under the influence of liquor or drugs.

                  18.      The moving of large or heavy objects shall occur only
between those hours as may be designated by, and only upon previous written
notice to, Landlord, and the persons employed to move those objects in or out of
the Building must be reasonably acceptable to Landlord. Without limiting the
generality of the foregoing, no freight, furniture or bulky matter of any
description shall be received into or moved out of the lobby of the Building or
carried in the elevator.

                  19.      Tenant shall not install equipment, such as but not
limited to electronic tabulating or computer equipment, requiring electrical or
air conditioning service in excess of that to be provided by Landlord under the
Lease without prior written consent of Landlord.

                  20.      Landlord may from time to time grant other tenants of
the project individual and temporary variances from these Rules, provided that
any variance does not have a material adverse effect on the use and enjoyment of
the Premises by Tenant.

                  Landlord reserves the right to amend or supplement the
foregoing Rules and Regulations and to adopt and promulgate additional rules and
regulations applicable to the Premises. Notice of such rules and regulations and
amendments and supplements thereto, if any, shall be given to the Tenant.

<PAGE>

                                    EXHIBIT X

                             INDUSTRIAL WORK LETTER

                                DOLLAR ALLOWANCE

The tenant improvement work to be contracted for by Landlord hereunder ("TENANT
IMPROVEMENT WORK") shall consist of the design and construction of all tenant
improvements ("TENANT IMPROVEMENTS"), including work in place as of the date
hereof, required for the Premises pursuant to the approved final Working
Drawings and Specifications (as hereinafter defined). All of the Tenant
Improvement Work shall be performed by a contractor selected by Landlord and in
accordance with the procedures and requirements set forth below.

I.       ARCHITECTURAL AND CONSTRUCTION PROCEDURES.

         A.       Tenant and Landlord have approved both (i) a detailed space
                  plan for the Premises, prepared by Landlord's architect, a
                  copy of which approved plan is attached as Schedule 1 to this
                  Work Letter ("PRELIMINARY PLAN"), and (ii) an estimate of the
                  cost to complete the Tenant Improvements in accordance with
                  the Preliminary Plan, prepared by Landlord's construction
                  representative, a copy of which estimate is attached as
                  Schedule 2 to this Work Letter ("PRELIMINARY COST ESTIMATE").
                  The Preliminary Plan includes Landlord's building standard
                  tenant improvements, materials and specifications for the
                  Project ("BUILDING STANDARD IMPROVEMENTS"), except for any
                  additions or variations to Building Standard Improvements
                  noted on the Preliminary Plan (any such addition or variation
                  from the Standard Improvements shall be referred to herein as
                  a ("NON-STANDARD IMPROVEMENT").

         B.       Within five (5) days following Landlord's request therefor,
                  Tenant shall provide in writing to Landlord or Landlord's
                  architect all specifications and information requested by
                  Landlord for the preparation of final construction documents
                  and costing, including without limitation Tenant's final
                  selection of paint and floor finishes, complete specifications
                  and locations (including electrical, load and HVAC
                  requirements) of Tenant's equipment, and details of all
                  Non-Standard Improvements (as defined above) which have been
                  approved by Landlord as part of the Preliminary Plan
                  (collectively, "PROGRAMMING INFORMATION"). Tenant's failure to
                  so provide the Programming Information shall constitute a
                  Tenant Delay for purposes of this Lease. Tenant understands
                  that final construction documents for the Tenant Improvements
                  shall be predicated on the Programming Information, and
                  accordingly that such information must be accurate and
                  complete and that any defects or problems due to incomplete or
                  inaccurate Programming Information shall be the responsibility
                  of the Tenant and that the Landlord shall have no obligation
                  or liability for such defects or problems arising from any
                  incomplete or inaccurate Programming Information. Any delays
                  in the completion of the Tenant Improvements due to incomplete
                  or inaccurate Programming Information shall constitute a
                  Tenant Delay.

         C.       Landlord's architect and engineers shall prepare and deliver
                  to Tenant working drawings and specifications ("WORKING
                  DRAWINGS AND SPECIFICATIONS"), and Landlord's contractor shall
                  prepare a final construction cost estimate ("FINAL COST
                  ESTIMATE") for the Tenant Improvements in conformity with the
                  Working Drawings and Specifications. A copy of the Final Cost
                  Estimate shall be delivered to Tenant for its approval unless
                  there are no Non-Standard Tenant Improvements and Tenant is
                  not responsible for any Tenant's Contribution. Tenant shall
                  have five (5) days from the receipt thereof to approve or
                  disapprove the Working Drawings and Specifications and (if
                  delivered to Tenant) the Final Cost Estimate. Tenant shall not
                  unreasonably withhold or delay its approval, and any
                  disapproval or requested modification shall be limited to
                  items not consistent with the approved Preliminary Plan or
                  Preliminary Cost Estimate. Should Tenant disapprove the
                  Working Drawings and Specifications or the Final Cost
                  Estimate, such disapproval shall be accompanied by specific
                  reasons for disapproval and a detailed list of requested
                  revisions. Any revision requested by Tenant and accepted by
                  Landlord, in its sole and absolute discretion, shall be
                  incorporated into a revised set of Working Drawings and
                  Specifications and the Final Cost Estimate, and Tenant shall
                  approve same in writing within five (5) days of receipt
                  without further revision. Tenant's failure to comply in a
                  timely manner with any of the requirements of this paragraph
                  shall constitute a Tenant Delay as defined below.

         D.       In the event that Tenant requests in writing a revision to the
                  Working Drawings and Specifications ("CHANGE"), and Landlord
                  so approves such Change as provided in Section I.E. herein,
                  Landlord shall advise Tenant by written change order as soon
                  as is practical of any increase in the Completion Cost and/or
                  any Tenant Delay such Change would cause. Tenant shall approve
                  or disapprove such change order and Tenant Delay, if any, in
                  writing within two (2) days following Tenant's receipt of such
                  change order. If Tenant approves any such change order,
                  Landlord, at its election, may either (i) require as a
                  condition to the effectiveness of such change order that
                  Tenant pay the increase in the Completion Cost attributable to
                  such change order concurrently with delivery of Tenant's
                  approval of the change order, or (ii) defer Tenant's payment
                  of such increase until the date ten (10) days after delivery
                  of invoices for same, provided however, that the Tenant
                  Contribution must in any event be paid in full prior to
                  Tenant's commencing occupancy of the Premises. If Tenant
                  disapproves any such change order, Tenant shall nonetheless be
                  responsible for the reasonable architectural and/or planning
                  fees incurred in preparing such change order. Landlord shall
                  have no obligation to interrupt or modify the Tenant
                  Improvement Work pending Tenant's approval of a change order,
                  but if Tenant

<PAGE>

                  fails to timely approve a change order, Landlord may (but
                  shall not be required to) suspend the applicable Tenant
                  Improvement Work, in which event any related critical path
                  delays because of such suspension shall constitute Tenant
                  Delays hereunder.

         E.       Landlord may consent in writing, in its sole and absolute
                  discretion, to Tenant's request for a Change, including any
                  modification of a Standard Improvement to a Non-Standard
                  Improvement in the Preliminary Plan or any other modification
                  of the Working Drawings and Specifications, if requested in
                  writing by Tenant. In addition, Landlord agrees that it shall
                  not unreasonably withhold its consent to Tenant's requested
                  Changes to previously approved Non-Standard Improvements,
                  unless Landlord determines, in its sole and reasonable
                  absolute discretion, that such requested Change to the
                  Non-Standard Improvements (i) is of a lesser quality than the
                  Non-Standard Improvements previously approved by Landlord,
                  (ii) fails to conform to applicable governmental requirements,
                  (iii) would result in the Premises requiring building services
                  beyond the level normally provided to other tenants, (iv)
                  would delay construction of the Tenant Improvements beyond the
                  Estimated Commencement Date and Tenant declines to accept such
                  delay in writing as a Tenant Delay, (v) interferes in any
                  manner with the proper functioning of, or Landlord's access
                  to, any mechanical, electrical, plumbing or HVAC systems,
                  facilities or equipment in or serving the Building, or (vi)
                  would have an adverse aesthetic impact to the Premises or
                  cause additional expenses to Landlord in reletting the
                  Premises. Unless Landlord otherwise agrees in writing, in its
                  sole and absolute discretion: (a) the cost of any Non-Standard
                  Improvements shall be part of Tenant's Contribution (as
                  hereinafter defined), and (b) all Standard Tenant Improvements
                  and Non-Standard Improvements shall become the property of
                  Landlord and shall be surrendered with the Premises at the end
                  of the Term; except that Landlord may, by notice to Tenant
                  given concurrently with Landlord's approval of the applicable
                  Non-Standard Improvements, require Tenant either to remove all
                  or any of the Non-Standard Improvements, to repair any damage
                  to the Premises or the Common Area arising from such removal,
                  and to replace such Non-Standard Improvements with the
                  applicable Building Standard, or to reimburse Landlord for the
                  reasonable cost of such removal, repair and replacement upon
                  demand. Any such removals, repairs and replacements by Tenant
                  shall be completed by the Expiration Date, or sooner
                  termination of this Lease.

         F.       Notwithstanding any provision in the Lease to the contrary,
                  and not by way of limitation of any other rights or remedies
                  of Landlord, if Tenant fails to comply with any of the time
                  periods specified in this Work Letter, fails otherwise to
                  approve or reasonably disapprove any submittal within the time
                  period specified herein for such response (or if no time
                  period is so specified, within five (5) days following
                  Tenant's receipt thereof), fails to provide all of the
                  Programming Information requested by Landlord within the time
                  provided herein, fails to approve in writing the Working
                  Drawings and Specifications or the Final Cost Estimate within
                  the time provided herein, fails to timely deliver the Tenant's
                  Contribution as required hereunder, requests any Changes,
                  furnishes inaccurate or erroneous Programming Information,
                  specifications or other information, or otherwise delays in
                  any manner the completion of the Tenant Improvements
                  (including without limitation by specifying materials that are
                  not readily available) or the issuance of an occupancy
                  certificate (any of the foregoing being referred to in this
                  Lease as a "TENANT DELAY"), then Tenant shall bear any
                  resulting additional construction cost or other expenses, and
                  the Commencement Date of this Lease shall be deemed to have
                  occurred for all purposes, including without limitation
                  Tenant's obligation to pay rent, as of the date that Landlord
                  would have been able to deliver the Premises to Tenant but for
                  the collective Tenant Delays. Should Landlord determine that
                  the Commencement Date should be advanced in accordance with
                  the foregoing, it shall so notify Tenant in writing.
                  Landlord's determination shall be conclusive unless Tenant
                  notifies Landlord in writing, within five (5) days thereafter,
                  of Tenant's election to contest same by arbitration pursuant
                  to Paragraph III below. Pending the outcome of such
                  arbitration proceedings, Tenant shall make timely payment of
                  all rent due under this Lease based upon the Commencement Date
                  set forth in the aforesaid notice from Landlord.

         G.       Landlord shall permit Tenant and its agents to enter the
                  Premises prior to the Commencement Date of the Lease in order
                  that Tenant may install fixtures, furniture and cabling
                  through Tenant's own contractors prior to the Commencement
                  Date. Any such work shall be subject to Landlord's prior
                  written approval, and shall be performed in a manner and upon
                  terms and conditions and at times satisfactory to Landlord's
                  representative. The foregoing license to enter the Premises
                  prior to the Commencement Date is, however, conditioned upon
                  Tenant's contractors and their subcontractors and employees
                  working in harmony and not interfering with the work being
                  performed by Landlord as determined by Landlord in Landlord's
                  sole and absolute discretion. If at any time that entry shall
                  cause disharmony or interfere with the work being performed by
                  Landlord as defined by Landlord in Landlord's sole and
                  absolute discretion, this license may be withdrawn by Landlord
                  upon twenty-four (24) hours written notice to Tenant. That
                  license is further conditioned upon the compliance by Tenant's
                  contractors with all requirements imposed by Landlord on third
                  party contractors, including without limitation the
                  maintenance by Tenant and its contractors and subcontractors
                  of workers' compensation and public liability and property
                  damage insurance in amounts and with companies and on forms
                  satisfactory to Landlord, with certificates of such insurance
                  being furnished to Landlord prior to proceeding with any such
                  entry. The entry shall be deemed to be under all of the
                  provisions of the Lease except as to the covenants to pay
                  rent. Landlord shall not be liable in any way for any injury,
                  loss or damage which may occur to any such work being
                  performed by Tenant, the same being solely at Tenant's risk.
                  In no event shall the failure of Tenant's contractors to
                  complete any work in the Premises extend the Commencement Date
                  of this Lease beyond the date that Landlord has completed its
                  Tenant Improvement Work and tendered the Premises to Tenant.

<PAGE>

         H.       Tenant hereby designates _____________________ ("TENANT'S
                  CONSTRUCTION REPRESENTATIVE"), Telephone No. (___) __________,
                  as its representative, agent and attorney-in-fact for all
                  matters related to the Tenant Improvement Work, including but
                  not by way of limitation, for purposes of receiving notices,
                  approving submittals and issuing requests for Changes, and
                  Landlord shall be entitled to rely upon authorizations and
                  directives of such person(s) as if given directly by Tenant.
                  The foregoing authorization is intended to provide assurance
                  to Landlord that it may rely upon the directives and decision
                  making of the Tenant's Construction Representative with
                  respect to the Tenant Improvement Work and is not intended to
                  limit or --- reduce Landlord's right to reasonably rely upon
                  any decisions or directives given by other officers or
                  representatives of Tenant. Tenant may amend the designation of
                  its Tenant's Construction Representative(s) at any time upon
                  delivery of written notice to Landlord.

II.      COST OF TENANT IMPROVEMENTS

         A.       Landlord shall complete, or cause to be completed, the Tenant
Improvements, at the construction cost shown in the Final Cost Estimate (subject
to increases for Landlord approved Changes and as otherwise provided in this
Work Letter), in accordance with final Working Drawings and Specifications
approved by both Landlord and Tenant, in a good and workmanlike manner. The
foregoing substantial completion of the Tenant Improvements, but for minor punch
list matters, is referred to as the "SUBSTANTIAL COMPLETION" of the Tenant
Improvement Work.

         B.       Landlord shall pay up to One Hundred Fifty-Seven Thousand
                  Three Hundred Dollars ($157,300.00), based on $10.00 per
                  useable square foot of the Premises ("LANDLORD'S MAXIMUM
                  CONTRIBUTION"), of the final "Completion Cost" (as defined
                  below), but applicable only to "Building Standard
                  Improvements" (as defined below). Tenant acknowledges that the
                  Landlord's Maximum Contribution is intended only as the
                  maximum amount Landlord will pay toward Building Standard
                  Improvements, and not by way of limitation, any partitions,
                  modular office stations, fixtures, cabling, furniture and
                  equipment requested by Tenant are not included in Building
                  Standards and are in --- no event subject to payment as part
                  of Landlord's Contribution. In the event the sum of the cost
                  of the Building Standard Improvements for the Tenant
                  Improvements is less than the Landlord's Maximum Contribution,
                  Landlord's actual contribution toward the Completion Cost
                  ("LANDLORD'S CONTRIBUTION") shall equal such lesser amount,
                  and Tenant shall have no right to receive any credit, refund
                  or allowance of any kind for any unused portion of the
                  Landlord's Maximum Contribution nor shall Tenant be allowed to
                  make revisions to an approved Preliminary Plan, Working
                  Drawings and Specifications or request a Change in an effort
                  to apply any unused portion of Landlord's Maximum
                  Contribution.

         C        Tenant shall pay all Completion Costs attributable to
                  Non-Standard Improvements ("NON-STANDARD IMPROVEMENT COSTS"),
                  including, but not by way of limitation: (i) costs for each
                  variance or upgrade which increases the cost of a Building
                  Standard Improvement, and (ii) the entire cost of any
                  improvements or work which are additions (as opposed to
                  variances or upgrades) to the Standard Improvements (e.g.,
                  supplemental or back-up power or HVAC, extra finishes or
                  millwork or partitions). In addition, Tenant shall pay all
                  Completion Costs attributable to any Changes requested by the
                  Tenant, any costs due to inaccurate or incomplete Programming
                  Information and the amount, if any, by which aggregate costs
                  for the Building Standard Improvements exceeds the Maximum
                  Landlord Contribution. The amounts to be paid by Tenant for
                  the Tenant Improvements pursuant to this Section II.C. are
                  sometimes cumulatively referred to herein as the "TENANT'S
                  CONTRIBUTION".

         D.       The "COMPLETION COST" shall mean all costs of Landlord in
                  completing the Tenant Improvements in accordance with the
                  approved Working Drawings and Specifications, including but
                  not limited to the following: (i) payments made to architects,
                  engineers, contractors, subcontractors and other third party
                  consultants in the performance of the work, (ii) salaries and
                  fringe benefits of persons, if any, in the direct employ of
                  Landlord in proportion to the amount of time spent by them
                  performing any part of the construction work, (iii) permit
                  fees and other sums paid to governmental agencies, and (iv)
                  costs of all materials incorporated into the work or used in
                  connection with the work. The Completion Cost shall also
                  include an administrative/supervision fee to be paid to
                  Landlord or to Landlord's management agent in the amount of
                  five percent (5%) of the Completion Cost. Unless expressly
                  authorized in writing by Landlord, the Completion Cost shall
                  not include (and no portion of the Landlord Contribution shall
                  be paid for) any costs incurred by Tenant, including without
                  limitation, any costs for space planners, managers, advisors
                  or consultants retained by Tenant in connection with the
                  Tenant Improvements.

         E.       If the actual Completion Cost of the Tenant Improvements is
                  greater than the Final Cost Estimate because of Changes,
                  modifications or extras not reflected on the approved Working
                  Drawings and Specifications, or because of Tenant Delays, then
                  Tenant shall pay all such additional costs (together with the
                  "Tenant's Contribution" and the balance of any other sums due
                  from Tenant under this Work Letter) within ten (10) days after
                  Landlord's written demand for same following the Substantial
                  Completion of the Tenant Improvements Work. If Tenant defaults
                  in the payment of any sums due under this Work Letter,
                  Landlord shall (in addition to all other remedies) have the
                  same rights as in the case of Tenant's failure to pay rent
                  under the Lease, including, without limitation, the right to
                  terminate this Lease and recover damages from Tenant and/or to
                  charge a late payment fee and to collect interest on
                  delinquent payments, and Landlord may (but shall not be
                  required to) suspend the

<PAGE>

                  Tenant Improvement Work following such default, in which event
                  any delays because of such suspension shall constitute Tenant
                  Delays hereunder.

III.     DISPUTE RESOLUTION

                  A.       All claims or disputes between Landlord and Tenant
                  arising out of, or relating to, this Work Letter shall be
                  decided by the JAMS/ENDISPUTE ("JAMS"), or its successor, with
                  such arbitration to be held in Orange County, California,
                  unless the parties mutually agree otherwise. Within ten (10)
                  business days following submission to JAMS, JAMS shall
                  designate three arbitrators and each party may, within five
                  (5) business days thereafter, veto one of the three persons so
                  designated. If two different designated arbitrators have been
                  vetoed, the third arbitrator shall hear and decide the matter.
                  If less than two (2) arbitrators are timely vetoed, JAMS shall
                  select a single arbitrator from the non-vetoed arbitrators
                  originally designated by JAMS, who shall hear and decide the
                  matter. Any arbitration pursuant to this section shall be
                  decided within thirty (30) days of submission to JAMS. The
                  decision of the arbitrator shall be final and binding on the
                  parties. In no event shall the arbitrator be empowered or
                  authorized to award consequential or punitive damages
                  (including any award for lost profit or opportunity costs or
                  loss or interruption of business or income). All costs
                  associated with the arbitration shall be awarded to the
                  prevailing party as determined by the arbitrator.

                  B.       Notice of the demand for arbitration by either party
                  to the Work Letter shall be filed in writing with the other
                  party to the Work Letter and with JAMS and shall be made
                  within a reasonable time after the dispute has arisen. The
                  award rendered by the arbitrator shall be final, and judgment
                  may be entered upon it in accordance with applicable law in
                  any court having jurisdiction thereof. Except by written
                  consent of the person or entity sought to be joined, no
                  arbitration arising out of or relating to this Work Letter
                  shall include, by consolidation, joinder or in any other
                  manner, any person or entity not a party to the Work Letter
                  unless (1) such person or entity is substantially involved in
                  a common question of fact or law, (2) the presence of such
                  person or entity is required if complete relief is to be
                  accorded in the arbitration, or (3) the interest or
                  responsibility of such person or entity in the matter is not
                  insubstantial.

                  C.       The agreement herein among the parties to arbitrate
                  shall be specifically enforceable under prevailing law. The
                  agreement to arbitrate hereunder shall apply only to disputes
                  arising out of, or relating to, this Work Letter, and shall
                  not apply to other matters of dispute under the Lease except
                  as may be expressly provided in the Lease.


<PAGE>

                                      LEASE
                        (SINGLE TENANT; STAND-ALONE; NET)

                                     BETWEEN

                               THE IRVINE COMPANY

                                       AND

                               ENDWAVE CORPORATION