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                                                                   EXHIBIT 10.41

                                  OFFICE LEASE

                             BASIC LEASE INFORMATION


Date: April 15, 1999

Landlord: Malibu Canyon Office Partners, LLC, a California
          limited liability company.

Tenant: ACT Networks, Inc., a Delaware corporation.

Section l(a) - Buildings: (i) Building A, commonly known as 26701 W. Agoura
        Road, Calabasas, CA 91302 and (ii) Building B, commonly known as 26707
        W. Agoura Road, Calabasas, CA 91302.

Section l(b) - Premises: (i) Building A, Suite 100, containing twenty-one
        thousand five hundred and three (21,503) square feet of Rentable Area
        located on the first (1st) floor of said Building, (ii) Building B,
        Suite 100, containing thirty-four thousand three hundred fifty-six
        (34,356) square feet of Rentable Area located on the first (1st) floor
        of said Building, and (iii) Building B, Suite 203, containing three
        thousand one hundred twenty (3,120) square feet of Rentable Area located
        on the second (2nd) floor of said Building.

Section l(c) - Intentionally Omitted.

Section l(j) - Tenant's Percentage Share: (i) One hundred percent (100%), as to
        Building A and (ii) forty-nine and sixty-eight hundredths percent
        (49.68%) as to Building B; provided, however, that Tenant's Percentage
        Share as to Building B shall be increased to fifty-four and nineteen
        hundredths percent (54.19%) once the Premises are increased to include
        the second floor space in Building B described in Section 1(b) above.

Section 2 - Term: Seven (7) years.

Section 2(a) - Estimated Commencement Date: June 1, 1999.

Section 3 - Base Rent: One and thirty-eight hundredths dollars ($1.38) per month
        per square foot of Rentable Area contained in the premises (triple net).

Section 3(g) - Escalations to Base Rent: Three percent (3%) increase on each
        twelve (12) month anniversary of the Commencement Date during the Term
        and any extension and/or renewal thereof.

Section 29 - Security Deposit: An amount equal to one (1) month's Base Rent.

Section 31 - Landlord's and Tenant's Address for Notices:

Landlord:                                    Tenant:

c/o The Johnston Group                       ACT Networks, Inc.
26635 W. Agoura Road, Suite 105              26701 W. Agoura Road, Ste 100
Calabasas, CA 91302                          Calabasas, CA 91302
Attn: Mr. Jeff Johnston, President           Attn: General Counsel

With a copy to:                              With a copy to:

Kenneth S. Fields, Esq.                      Xylan Corporation
Fields & Pearl                               26801 W. Agoura Road
1875 Century Park East, 14th Floor           Calabasas, CA 91302
Los Angeles, CA 90067                        Attn: Mr. John Yi


Section 34 - Brokers: Richard Abbitt, of Lee & Associates, for Tenant, and The
        Johnston Group, for Landlord.

Section 35 - Parking: Three point eight (3.8) non-exclusive surface parking
        spaces per each one thousand square feet of Usable Area contained in the
        Premises (prorated and rounded to the nearest whole number to the extent
        Usable Area is not evenly divisible by 1,000).

Section 38 - Guarantor: Xylan Corporation, a California corporation.

Exhibit(s) and Addendum:
        Exhibit "A" - Site Plan of Project





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        Exhibit "B" - Floor Plan of Premises
        Exhibit "C" - Improvement of the Premises
        Exhibit "D" - Rules and Regulations
        Exhibit "E" - Guaranty

This Basic Lease Information shall be a part of this Lease, provided that in the
event of any conflict between any Basic Lease Information and the provisions
contained in the body of this Lease, the latter shall control.





















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<PAGE>   3

                                TABLE OF CONTENTS



<TABLE>
<S>     <C>                                                                                 <C>
1.      Definitions..........................................................................1

2.      Term; Condition of Premises..........................................................4

3.      Base Rent............................................................................4

4.      Escalation Rent......................................................................5

5.      Use..................................................................................8

6.      Services.............................................................................9

7.      Impositions Payable by Tenant.......................................................11

8.      Alterations.........................................................................11

9.      Liens...............................................................................12

10.     Repairs.............................................................................12

11.     Destruction or Damage...............................................................13

12.     Insurance...........................................................................13

13.     Indemnification.....................................................................15

14.     Compliance with Legal Requirements..................................................15

15.     Assignment and Subletting...........................................................15

16.     Rules...............................................................................17

17.     Entry by Landlord...................................................................17

18.     Tenant's Default....................................................................17

19.     Landlord's Remedies.................................................................18

20.     Landlord's Default and Tenant's Remedies............................................19

21.     Attorneys' Fees.....................................................................19

22.     Eminent Domain......................................................................20

23.     Subordination.......................................................................20

24.     Sale................................................................................21

25.     Estoppel Certificate................................................................21

26.     Intentionally Omitted...............................................................21

27.     No Light, Air, or View Easement.....................................................21

28.     Holding Over........................................................................21

29.     Security Deposit....................................................................21

30.     Waiver..............................................................................22

31.     Notices and Consents.  .............................................................22

32.     Complete Agreement..................................................................22

33.     Authority...........................................................................23

34.     Brokers.............................................................................23

35.     Parking.............................................................................23

36.     Force Majeure.......................................................................23

37.     Waiver of Trial by Jury.............................................................23

38.     Guaranty of Lease...................................................................23

39.     Recapture...........................................................................24

40.     Expansion Space.....................................................................24

41.     Signage; Roof Rights................................................................24

42.     Surrender by Existing Tenants.......................................................25

43.     Miscellaneous.......................................................................25
</TABLE>








                                      iii


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                                  OFFICE LEASE

        THIS OFFICE LEASE (this "Lease"), dated April 14, 1999 for purposes of
reference only, is made and entered into by and between Malibu Canyon Office
Partners, LLC, a California limited liability company ("Landlord") and ACT
Networks, Inc., a Delaware corporation ("Tenant").


                                   WITNESSETH:

        Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord
the "Premises" described in Section l(b) below for the "Term" and subject to the
terms, covenants, agreements and conditions hereinafter set forth, to each and
all of which Landlord and Tenant hereby mutually agree.

        1.     Definitions.  Unless the context otherwise specifies or requires.
The following terms shall have the meanings herein specified:

               (a) The term "Building" shall mean the building specified in the
Basic Lease Information located in an unincorporated area within the County of
Los Angeles, and having a postal address within Calabasas, California.
References in this Lease to the Building shall be deemed to mean the Building or
any portion thereof, if the context so requires. The term "Project" shall mean
that certain commercial project generally depicted on Exhibit "A" attached
hereto, including, without limitation, the Building and other buildings, "Common
Areas" (as hereinafter defined), the land upon which the Building, such other
buildings and the Common Areas are located, and, at Landlord's discretion, such
additional real property, areas, land, buildings or other improvements as may
from time to time be hereafter added to the Project. References in this Lease to
the Project shall be deemed to mean the Project or any portion thereof, as the
same exists from time to time, if the context so requires. The depiction of the
Project on Exhibit "A" does not constitute a representation, covenant or
warranty of any kind by Landlord, and Landlord and/or any owner of all or any
part of the Project reserve the right from time to time to change the size,
layout and dimensions of the Project or any of the buildings therein, the
parking areas, and/or identity and type of use of other tenants; provided,
however, that (i) no such change(s) shall substantially reduce Tenant's ability
to use the Premises on a permanent basis, (ii) Landlord shall use commercially
reasonable efforts to ensure that the number of parking stalls in Corporate
Center (as depicted on Exhibit "A") is not substantially reduced on a permanent
basis, and provided further that if any such change(s) to the size, layout and
dimensions of the Project substantially reduces Tenant's use of the Premises for
more than five (5) consecutive business days, Tenant shall be entitled to an
abatement of Base Rent and Escalation Rent to the extent the Premises is
actually not used by Tenant. Tenant hereby waives any claim for damages for any
inconvenience to or interference with Tenant's business or any loss of occupancy
or quiet enjoyment of the Premises by reason of the foregoing. Landlord and/or
any owner of all or any portion of the Project shall have the right to convey
its ownership of all or any part of the Project to one or more third parties,
and thereafter the third party shall have the right to remove such conveyed
portion from the definition of "Project" set forth in this Lease.

               (b) The term "Premises" shall mean the suite(s) within the
Building, containing the square footage, and located on the floor(s), specified
in the Basic Lease Information, which is shown as cross-hatched on the floor
plan(s) attached hereto as Exhibit "B". References in this Lease to the Premises
shall be deemed to mean the Premises or any portion thereof, if the context so
requires.

               (c) Intentionally Omitted.

               (d) The term "Operating Expenses" shall mean all costs of
ownership, management, operation, maintenance, repair and replacement of the
Project, including, without limitation: wages, salaries and other compensation
and benefits of all persons engaged in the operation, maintenance and security
of the Project; property management, legal, accounting and consulting fees in
the maintenance, management, operation and/or repair of the Project; janitorial,
alarm, security and other services; roof repair and re-roofing; Project
management office rent or rental value; rent or rental value for Project space
occupied by Common Area facilities, such as restaurants/cafeterias, fitness
centers and other amenities; cost of power, water, waste disposal, telephone,
elevator, sprinkler and other utilities usage and facilities maintenance and
service; materials and supplies; costs of maintenance and repairs including with
respect to systems and equipment; costs of permits, licenses, certificates and







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inspections; insurance premiums for all insurance carried by Landlord in
connection with the Project as reasonably determined by Landlord and the
deductible portion of any insured loss thereunder; depreciation on personal
property; the cost of landscaping, relamping and all supplies, tools, equipment
and materials used in the operation, repair, restoration and maintenance of the
Project; and the cost of capital repairs, replacements or other improvements or
other costs incurred in connection with the Project, including, without
limitation, those (i) which are intended to effect economies in the operation or
maintenance of the Project, (ii) that are required to comply with present or
anticipated conservation programs, (iii) which are replacements or modifications
of nonstructural items located in the Common Areas required to keep the Common
Areas in good order and condition, (iii) that are required under any applicable
"Laws" (as hereinafter defined) enacted following the construction of the
applicable portion of the Project; provided, however, that any capital
expenditure shall be amortized over its useful life as Landlord shall reasonably
determine, and the unamortized cost thereof shall bear interest at the rate of
ten percent (10%) per annum or such higher rate as was paid by Landlord on funds
borrowed for the purposes of purchasing, installing and/or constructing such
capital improvements. Operating Expenses shall not include: Tax Expenses;
depreciation (except as provided above); cost of tenants' improvements; real
estate brokers' commissions; legal fees in connection with the leasing of the
Project; costs reimbursed by policies of insurance, the premiums of which are
included in Operating Expenses; interest on or amortization of any Mortgage, as
defined in Section 23 below; financing costs (except for interest on
amortization of any items included within Operating Expenses on an amortized
basis); franchise taxes and net income taxes of Landlord; the cost of any item
or items for which Landlord is reimbursed by other tenants of the Project (other
than by payment of such tenant's share of Operating Expenses or Tax Expenses),
by third parties or which are paid directly by third parties; rent under any
ground lease and/or underlying leases; direct compensation of any kind paid to
officers and executives of Landlord above the level of project manager; any
costs stated in Operating Expenses representing an amount paid to a corporation
or entity which is controlled by or under common control with Landlord to the
extent in excess of the amount which would be paid in the absence of such
relationship (provided that Tenant acknowledges that construction supervision
and management fee of ten percent (10%) and five percent (5%), respectively, are
reasonable, and that such fees do not constitute such an excess amount);
advertising and promotional expenses incurred in the leasing of the Building or
any portion of the Project; any bad debt loss, rent loss or reserves for bad
debts or rent loss; any and all costs associated with the operation of the
business of Landlord, including operation of Landlord as a limited liability
company or other legal entity, as the same are distinguished from costs of
operation, maintenance, repair, restoration and/or management of the Building
and/or Project; all charges for complying with laws, codes, regulations or
ordinances relating to Hazardous Materials caused to be located upon the Project
by Landlord and/or its employees; costs of special services (which shall not
cover normal variations in repairs or the need for repairs) for tenants, but
only to the extent that such services are not offered to Tenant; tenant
concessions and any other costs associated with the leasing or sale of the
Project or any portion thereof; costs incurred in removing and storing the
property of former tenants or occupants of the Project; penalties or fines
incurred by Landlord as a direct and sole result of Landlord's gross negligence
or willful misconduct in operating the Project; costs and expenses attributable
to a restaurant and/or fitness center (including, without limitation, rental
value for the space occupied by each such facility(ies)), except to the extent
that such costs and expenses exceed the net income actually received by Landlord
from the operation of each such facility(ies); legal or accounting fees, costs
and disbursements for negotiating leases or enforcing the lease obligations of
other tenants in the Building; Landlord's expenses relating to any parking
facilities on or about the Project, except to the extent that such expenses
exceed the revenues received by Landlord as a result of such facilities; costs
for acquisition of sculpture, paintings, other objects of art with a cost
exceeding $1,000.00 per item; any costs, fees, dues, contributions or similar
expenses for political, charitable, industry associations or similar
organizations; capital expenditures for initial building construction or
architectural additions to the Building that result in a larger building; the
costs of correcting latent defects in the construction of the base, core or
shell of the Building (provided that the foregoing shall not exclude the costs
of normal repair, maintenance and replacement). Actual Operating Expenses for
each calendar year shall be adjusted to equal Landlord's reasonable estimate of
Operating Expenses had the total Rentable Area of the Project been occupied. If
Landlord is not furnishing any particular work or service (the cost of which, if
performed by Landlord, would be included in Operating Expenses) to a tenant who
has undertaken to perform such work or service in lieu of the performance
thereof







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by Landlord, Operating Expenses shall be deemed to be increased by an amount
equal to the additional Operating Expenses which would reasonably have been
incurred during such period by Landlord if Landlord had at its own expense
furnished such work or service. Notwithstanding the foregoing, Landlord shall
not recover through Operating Expenses any item of cost more than once.

               (e) The term "Tax Expenses" shall mean all federal, state,
county, municipal or local governmental taxes, fees, charges or other
impositions of every kind and nature, whether general, special, ordinary or
extraordinary, including, without limitation, real estate taxes, general and
special taxes and/or assessments (including, without limitation, any assessment,
tax, fee, levy or charge by any school, agricultural, lighting, drainage,
transportation, community facilities, improvement or other district), transit
taxes, personal property taxes imposed upon the fixtures, machinery, equipment,
apparatus, systems and equipment, appurtenances, furniture and other personal
property used in connection with the Project, which shall be paid during any
calendar year (without regard to any different fiscal year used by such
governmental authority) because of or in connection with the ownership, leasing
and/or operation of the Project. Tax Expenses shall include any assessment, tax,
fee, levy or charge in addition to, or in substitution, partially or totally, of
any assessment, tax, fee, levy or charge previously included within the
definition of Tax Expenses, and all consultants' and attorneys' fees and
expenses incurred for the purpose of maintaining an equitable assessed valuation
of the Building and/or attempting to protest, reduce or minimize Tax Expenses;
provided, however, that attorneys' fees and expenses incurred for the purposes
of maintaining an equitable assessed valuation of the Building and/or attempting
to protest, reduce or minimize Tax Expenses shall be amortized over sixty (60)
months (with interest at the rate of six percent (6%) per annum).
Notwithstanding the foregoing, Tax Expenses shall not include franchise taxes,
gift taxes, capital stock taxes, inheritance and succession taxes, estate taxes,
federal and state income taxes, and other taxes to the extent applicable to
Landlord's general or net income (as opposed to rents or receipts). If any Tax
Expenses can be paid by Landlord in installments, then, for the purpose of
calculating Tenant's obligation to pay Tax Expenses, any such Tax Expense shall
be deemed to be paid by Landlord in the maximum allowable number of
installments, regardless of the manner in which Landlord actually pays such Tax
Expenses.

               (f) The term "Building Operating Expenses" shall mean the portion
of Operating Expenses allocated to the Building pursuant hereto. The term
"Building Tax Expenses" shall mean the portion of Tax Expenses allocated to the
Building pursuant hereto. The parties acknowledge that the Building is a part of
a multi-building project and that the costs and expenses incurred in connection
with the Project should be shared between the tenants of the Building and the
tenants of the other buildings of the Project. Accordingly, Operating Expenses
and Tax Expenses are determined annually for the Project as a whole, and a
portion of the Operating Expenses and Tax Expenses, respectively, which portion
shall be determined by Landlord on an equitable basis, shall be allocated to the
tenants of the Building (as opposed to the tenants of any other buildings of the
Project) and such portion shall be the Building Operating Expenses and Building
Tax Expenses, respectively, for purposes of this Lease. Such portion of
Operating Expenses and Tax Expenses allocated to the tenants of the Building
shall include all Operating Expenses and Tax Expenses, respectively,
attributable solely to the Building, and an equitable portion of the Operating
Expenses and Tax Expenses, respectively, attributable to the Project as a whole.
In addition, Landlord shall have the right, from time to time, to equitably
allocate some or all of the Operating Expenses and/or Tax Expenses for the
Project among different portions or occupants of the Project, in Landlord's
discretion.

               (g) The term "Rentable Area" shall mean the area or areas of
space within any building in the Project determined as follows: (i) the amount
of Rentable Area on a single tenancy floor is determined by measuring from the
inside surface of the outer glass and extensions of the plane thereof in
nonglass areas and shall include all areas within the outside walls, excluding
vertical penetrations such as building stairs, elevators shafts, flues, vents,
stacks, pipe shafts and vertical ducts, provided, however, that vertical
penetrations which are for the specific use of the tenant, such as special
stairs or elevators, shall be included within Rentable Area; (ii) the amount of
Rentable Area for a partial floor shall include all space within the demising
walls (measured from the mid-point of demising walls, and in the case of
exterior walls, measured as defined in clause (i) above), plus the tenant's
share of any Common Areas on such floor (such share being equal to the
percentage which the amount of Rentable Area within the Premises bears to the
total amount of Rentable Area on the floor); and (iii) the amount of Rentable
Area for either a single







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tenancy floor or a partial floor shall include Tenant's Percentage of Common
Areas devoted to or serving more than one floor of the applicable building or
such building as a whole. No deductions shall be made in calculating the amount
of Rentable Area for columns or projections necessary to the Building.
Notwithstanding the foregoing or anything elsewhere contained in this Lease, the
parties hereby agree that for all purposes of this Lease, the Premises shall be
deemed to contain the amount of Rentable Area, and Tenant's Base Rent,
Percentage Share, Security Deposit, and all other matters determined by the
amount of Rentable Area contained in the Premises, shall be the amount set forth
in the Basic Lease Information, notwithstanding any deviation therefrom.

               (h) The term "Usable Area" shall mean all floor area in a tenant
space, measured from the inside surface of the outer glass and extensions of the
plane thereof in non-glass areas and shall include all areas within the outside
walls, excluding vertical penetrations such as building stairs, elevators
shafts, flues, vents stacks, pipe shafts and vertical ducts, provided, however,
that vertical penetrations which are for the specific use of the tenant, such as
special stairs or elevators, shall be included within Usable Area. In
calculating Usable Area, deductions shall not be made for columns or projections
necessary to the Building. Notwithstanding the foregoing, Landlord shall use a
load factor of thirteen point seven percent (13.7%) in calculating Rentable Area
and Usable Area.

               (i) The term "Common Areas" shall mean those portions of the
Project which are provided, from time to time, for use in common by Landlord,
Tenant and any other tenants of the Project, which may include, without
limitation, public entrances, lobbies and rest rooms, fitness centers,
restaurants and cafeterias, elevators, stairways and access ways, loading docks,
ramps, drives and platforms and any passageways and service ways thereto, common
pipes, conduits, wires and appurtenant equipment serving the Project or any
portion thereof, loading and unloading areas, trash areas, parking areas,
roadways, sidewalks, walkways, parkways, driveways and landscaped areas.

               (j) The term "Tenant's Percentage Share" shall mean the product
obtained by multiplying (i) 100 by (ii) the quotient obtained by dividing the
Rentable Area of the Premises by the total Rentable Area of the Building.
Tenant's Percentage Share shall initially be as specified in the Basic Lease
Information and shall be subject to adjustment in the event of a subsequent
change in the Rentable Area of the Premises and/or the Building (with Tenant's
Percentage Share as to the calendar year in which any such change occurs being
determined on a pro rata basis based on the number of days during such calendar
year at each such percentage share). Notwithstanding the foregoing or anything
contained in this Lease to the contrary, Tenant's Percentage Share of Operating
Expenses attributable to a restaurant, fitness center and/or similar
facility(ies) located at the Project shall be (i) separately determined with
respect to each such facility and (ii) obtained by multiplying (i) 100 by (ii)
the quotient obtained by dividing the Rentable Area of the Premises by the total
Rentable Area occupied by tenants of the Project who also pay their respective
share of such Operating Expenses (ie space occupied by tenants who do not
participate in such costs shall be excluded).

               (k) The term "Laws" shall mean, collectively, any applicable
federal, state, local and/or municipal laws, statutes, ordinances, codes, rules,
regulations and/or other governmental requirements.

        2.     Term; Condition of Premises. (a) The "Term" of this Lease shall
commence on the "Commencement Date" (as defined in Exhibit "C" attached hereto)
and, unless sooner terminated as hereinafter provided, shall be for the period
specified in the Basic Lease Information. If without fault of Tenant the
Commencement Date of this Lease has not occurred by the date which is one
hundred twenty (120) days following the Estimated Commencement Date set forth
above (subject to Force Majeure), this Lease shall terminate without further
action by the parties, and neither party shall have any further liability or
obligation hereunder. Except to the extent specifically otherwise provided in
this Lease, Landlord shall deliver the Premises to Tenant on the Commencement
Date in an "as is" condition with no alterations or improvements being made by
Landlord. Following the Commencement Date, Landlord may deliver to Tenant a
notice confirming the actual Commencement Date and the date of the expiration of
the Term specified in the Basic Lease Information, which notice shall be
executed by Tenant and returned to Landlord within five (5) days following
Tenant's receipt thereof.

               (b) Provided Tenant is not in default under this Lease (which
shall







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include any matter which would constitute a default either with the passage of
time or the giving of notice) at any time prior to the time the "Extension
Notice" (as hereinafter defined) is received by Landlord or thereafter until the
commencement of the "Option Term" (as hereinafter defined) (subject to
applicable cure periods, if any), Tenant shall have the option to extend the
Term of this Lease for one (1) additional term (an "Option Term") of five (5)
years following the expiration of the initial Term, exercisable by delivering
written notice (the "Extension Notice") to Landlord of Tenant's desire to so
extend the Term by the Option Term, no later than nine (9) months, and no
earlier than twelve (12) months (except as permitted under Section 40 below),
prior to the expiration of the initial Term. Tenant's occupancy of the Premises
during the Option Term shall be subject to all of the terms and conditions of
this Lease, except that (i) the monthly Base Rent payable by Tenant shall be
adjusted as of the commencement date of the Option Term be adjusted to equal
ninety-five percent (95%) of Landlord's then published Base Rental rate for
comparable space, as reasonably determined by Landlord, in the Project, but in
no event will the Base Rent payable by Tenant during the Option Term be less
then the Base Rent payable by Tenant immediately prior to the commencement of
the Option Term, and (ii) Landlord shall have no obligation to improve or alter
the Premises for the benefit of Tenant. Wherever in this Lease the phrase the
"initial Term" appears, the provision to which such phrase pertains shall apply
only to the initial Term and not to the Option Term. The Base Rent payable by
Tenant during the Option Term shall be increased at the time and in the manner
set forth in Section 3(g) below.

        3.     Base Rent.

               (a) Tenant shall pay to Landlord from and after the Commencement
Date during the Term of this Lease as "Base Rent" for the Premises, the monthly
amount specified in the Basic Lease Information.

               (b) Base Rent shall be paid to Landlord, in advance, on or before
the first day of each calendar month during the Term, except that Base Rent for
the initial full month during the Term for which Base Rent is due shall be paid
upon the execution of this Lease (provided that such payment shall be subject to
adjustment payment or reimbursement, as applicable, in the event the actual
Rentable Area of the Premises is determined to be other than as set forth in the
Basic Lease Information). In the event the Term commences on a day other than
the first day of a calendar month or ends on a day other than the last day of a
calendar month, the monthly Base Rent for the first and last fractional months
of the Term shall be appropriately prorated.

               (c) All sums of money due to Landlord under this Lease not
specifically characterized as rental shall constitute additional rent, and if
any such sum is not paid when due it shall nonetheless be collectible as
additional rent with the next installment of Base Rent thereafter falling due,
but nothing contained herein shall be deemed to suspend or delay the payment of
any sum of money at the time it becomes due and payable hereunder, or to limit
any other remedy of Landlord

               (d) Tenant hereby acknowledges that late payment by Tenant to
Landlord of rent and other sums due hereunder will cause Landlord to incur costs
not contemplated by this Lease, the exact amount of which will be difficult to
ascertain. Such costs include, but are not limited to, processing and accounting
charges, and late charges which may be imposed on Landlord by the terms of any
trust deed covering the Premises. Accordingly, if any installment of rent or any
other sums due from Tenant shall not be received by Landlord within ten (10)
days following written notice from Landlord that the same is due, Tenant shall
pay to Landlord a late charge equal to the greater of (i) 6% of such overdue
amount or (ii) $100.00. The parties hereby agree that such late charge
represents a fair and reasonable estimate of the costs Landlord will incur by
reason of late payment by Tenant. Acceptance of such late charge by Landlord
shall in no event constitute a waiver of Tenant's default with respect to such
overdue amount, nor prevent Landlord from exercising any of the other rights and
remedies granted hereunder. If a late charge becomes payable for three (3)
payments of any element of rent within any twelve (12) month period, all
subsequent payments of rent shall immediately and automatically become payable
by Tenant quarterly, in advance, instead of monthly. Tenant acknowledges that
its payment of Base Rent and additional rent is a condition to Landlord's
obligation to perform any of its covenants under this Lease.

               (e) Any amount due to Landlord pursuant to this Lease, if not
paid when due, shall bear interest from the date due until paid at a rate (the







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"Interest Rate") equal to the lesser of (i) 2% over the "prime" or "reference"
rate then most recently published by Bank of America N.T. & S.A. (or a
substitute prime rate of a comparable lending institution reasonably selected by
Landlord if Bank of America N.T. & S.A. no longer publishes a "prime" or
"reference" rate), or (ii) the maximum rate permitted by applicable Laws.
Payment of interest shall not excuse or cure any default hereunder by Tenant.

               (f) All payments of Base Rent, Escalation Rent and other monetary
obligations due from Tenant to Landlord pursuant to this Lease shall be paid to
Landlord, without deduction, abatement, counterclaim or offset, in lawful money
of the United States of America at Landlord's address for notices hereunder, or
to such other person or at such other place as Landlord may from time to time
designate by notice to Tenant.

               (g) On each twelve (12) month anniversary of the Commencement
Date during the Term, including, without limitation, any extension(s) and/or
renewal(s) thereof (each such day hereinafter referred to as an "Adjustment
Date"), the Base Rent payable by Tenant on the date immediately preceding the
applicable Adjustment Date shall be increased by three percent (3%) and such
increased amount shall constitute the Base Rent until the next Adjustment Date.
Landlord's failure to request payment of an estimated or actual rent adjustment
shall not constitute a waiver of the right to any adjustment provided for in
this Lease.

        4.     Escalation Rent.

               (a) Tenant shall pay to Landlord as "Escalation Rent" for the
Premises, during each full or partial calendar year during the Term, (i)
Tenant's Percentage Share of all Building Operating Expenses for such year, plus
(ii) Tenant's Percentage Share of all Building Tax Expenses for such year.
Escalation Rent shall be paid monthly on an estimated basis, with subsequent
annual reconciliation, in accordance with the procedures set forth in this
Section 4. Tenant acknowledges that this Lease is what is commonly referred to
as a "triple net" lease, and that Tenant will be responsible for its Percentage
Share of all Building Operating Expenses and Building Tax Expenses, without
reference to any Base Year concept.

               (b) During December each calendar year, or as soon thereafter as
practicable, Landlord shall give Tenant notice of its estimate of any Escalation
Rent due for the ensuing calendar year. On or before the first day of each month
during the ensuing calendar year, Tenant shall pay to Landlord 1/12th of such
estimated Escalation Rent, provided that if such notice is not given in
December, Tenant shall continue to pay on the basis of the prior year's estimate
until such revised estimate is delivered, from and after which time (commencing
with the first day of the next calendar month after such notice is given; or if
such first day is less than fifteen (15) days after the date of Landlord's
notice, then on
























                                       6

<PAGE>   10

the first day of the second calendar month after such notice is given) Tenant
shall pay such amount as is necessary to bring Tenant current with respect to
such revised estimate for such calendar year, as if such revised estimate had
been delivered in December, and thereafter monthly payments shall be based on
such revised estimate, unless and until further revised in accordance herewith.
If at any time or times it appears to Landlord that the Escalation Rent for the
current calendar year will vary from its estimate, Landlord may, by notice to
Tenant, revise its estimate for such year, and subsequent payments by Tenant for
such year shall be based upon such revised estimate.

               (c) Within 90 days after the close of each calendar year or as
soon after such 90-day period as practicable, Landlord shall deliver to Tenant a
statement of the actual Escalation Rent for such calendar year, accompanied by a
statement showing the Building Operating Expenses and Building Tax Expenses on
the basis of which the actual Escalation Rent was determined. Except as
expressly provided to the contrary in Section 4(c)(i) below, such statement
shall be final and binding upon Landlord and Tenant as to the amount of the
Building Operating Expenses and Building Tax Expenses. If Landlord's statement
discloses that Tenant owes an amount that is less than the estimated payments
for such calendar year previously made by Tenant, Landlord shall credit such
excess first against any sums then owed by Tenant to Landlord and then against
the next payments of rental due hereunder; provided, however, that if the amount
of credit exceeds the rent due for the balance of the term of this Lease,
Landlord shall pay any excess to Tenant within thirty (30) days after the
expiration of the term of this Lease; provided, further, that Landlord shall
have the right to retain any such excess and apply the same against any sums
which Landlord would otherwise be entitled to receive under this Lease as a
result of any default by Tenant. If Landlord's statement discloses that Tenant
owes an amount that is more than the estimated payments for such calendar year
previously made by Tenant, Tenant shall pay the deficiency to Landlord within
thirty (30) days after delivery of the statement. The failure of Landlord to
timely furnish the statement for any calendar year shall not prejudice Landlord
from enforcing its rights hereunder.

                   (i) Provided that Tenant is not in default in its obligations
under this Lease (including any matter which would constitute a default with
either the passage of time or the giving of notice)(subject to applicable cure
periods, if any), Tenant may, within ninety (90) days following the delivery by
Landlord to Tenant of the statement of Escalation Rent described above, request
in writing an audit of the Building Operating Expenses and Building Tax Expenses
which form the basis upon which Landlord determines the actual Escalation Rent.
As a condition to Tenant's audit rights hereunder, such notice must be
accompanied by Tenant's payment in full to Landlord of all amounts due from
Tenant to Landlord as specified in the Landlord's statement. Tenant shall have
no right to withhold, deduct, or offset any monetary obligation of Tenant to
Landlord under the Lease (including, without limitation, Tenant's obligation to
make all rental payments owing under this Lease, including, without limitation,
all Escalation Rent) pending the completion of and regardless of the results of
any audit of records under this Section. The right of Tenant under this Section
4(c)(i) may only be exercised once for each Landlord's statement of Escalation
Rent, and if Tenant fails to meet any of the above conditions as a prerequisite
to the exercise of such right, the right of Tenant under this Section as to a
particular Landlord's statement of Escalation Rent shall be deemed waived.
Tenant may cause any audit requested by it under this Section 4(c)(i) to be
performed by either its own staff or otherwise by an independent firm of
certified public accountants. Tenant must complete its audit within ninety (90)
days of the date of Tenant's audit request.

                   (ii) Tenant acknowledges that Landlord maintains its records
for Building Operating Expenses and Building Tax Expenses at its offices (as the
same may be located from time to time) and Tenant therefore agrees that any
review of records under Section 4(c)(i) above shall occur at such location and,
except as provided in Section 4(c)(vii) below, be at the sole expense of Tenant.
If Tenant discovers a discrepancy, then, at Landlord's option, a further review
shall be conducted in accordance with the provisions of Section 4(c)(iv) below.

                   (iii) Tenant acknowledges and agrees that any records
reviewed under Section 4(c)(i) constitute confidential information of Landlord,
which shall not be disclosed to anyone other than the accountants performing the
review and the principals of Tenant who receive the results of the review;
except in the event of any litigation concerning the same, in which case, Tenant
will use its best efforts to keep such information confidential. Except as set
forth in this Section 4(c)(iii), Tenant's disclosure of such information to any
other person







                                       7
<PAGE>   11

shall constitute a material breach of this Lease.


                   (iv) Any errors disclosed by the review of records under
Section 4(c)(i) shall be promptly corrected, provided that Landlord shall have
the right to cause another review of the records to be made by an independent
firm of certified public accountants selected by Landlord. In the event of a
disagreement between Landlord's accounting firm and Tenant's accounting firm or
Tenant's staff, as applicable, a third review by an independent firm of
certified public accountants of national standing jointly chosen by Landlord and
Tenant shall be made and the determination of such accounting firm shall be
deemed to be correct. The costs of the third accounting firm shall be shared
equally between Landlord and Tenant, and Tenant's failure to pay its share of
such costs shall be a default under this Lease.

                   (v) In the event that the results of the review of records
(taking into account, if applicable, the results of any additional review caused
by Landlord), reveal that Tenant has overpaid obligations for a preceding
period, the amount of such overpayment shall be credited by Landlord against
subsequent installment obligations to pay its share of estimated Building
Operating Expenses and Building Tax Expenses; provided, however, that if the
amount of credit exceeds the rent due for the balance of the term of this Lease,
Landlord shall pay any excess to Tenant within thirty (30) days after the
expiration of the term of this Lease; provided, further, that Landlord shall
have the right to retain any such excess and apply the same against any sums
which Landlord would otherwise be entitled to receive under this Lease as a
result of any default by Tenant. In the event that such results show that Tenant
has underpaid its obligations for a preceding period, the amount of such
underpayment shall be paid by Tenant to Landlord with the next succeeding
installment obligation of estimated Building Operating Expenses and Building Tax
Expenses.

                   (vi) If the results of the audit procedures described in this
Section 4 disclose that Landlord has overstated the aggregate amount of Building
Operating Expenses and Building Tax Expenses by more than five percent (5%) and
the parties do not reach agreement on some amount prior to retaining the third
accounting firm described in Section 4(c)(iv) above, Landlord shall pay Tenant's
reasonable and hourly third party audit costs (as shown on invoices or other
reasonable evidence submitted to Landlord) not to exceed two thousand five
hundred dollars ($2,500.00). If the results of the audit procedures described in
this Section 4 above disclose that Landlord has understated the aggregate amount
of Building Operating Expenses and Building Tax Expenses by less than five
percent (5%) and the parties do not reach agreement on some amount prior to
retaining the third accounting firm described in Section 4(c)(iv) above, then
Landlord's reasonable and hourly audit costs (not to exceed two thousand five
hundred dollars ($2,500.00)) shall be included in Operating Expenses and Tenant
shall pay its Percentage Share thereof.

                   (vii) In the event that Tenant becomes in default of its
obligations under this Lease at any time during the pendency of a review of
records under this Section (subject to applicable cure periods, if any), said
right to review shall immediately cease and the matters originally set forth in
the Landlord's Statement shall be deemed to be correct.

               (d) The amount of Escalation Rent for any partial calendar year
in the Term shall be appropriately prorated. The termination of this Lease shall
not affect the obligations of Landlord and Tenant pursuant to Section 4(c) above
to be performed after such termination.

        5.     Use.

               (a) The Premises shall be used for general office and, with
respect to Tenant's computer business only, warehousing, light manufacturing and
assembly purposes, purposes and no other use or purpose. Tenant shall not do or
permit to be done in or about the Premises, nor bring to keep or permit to be
brought or kept therein, anything which is prohibited by or will in any way
conflict with any Laws now in force or which may hereafter be enacted or
promulgated, or which is prohibited by the standard form of fire insurance
policy, or will in any way increase the existing rate of or affect any fire or
other insurance upon the Building or any of its contents, or cause a
cancellation of any insurance policy covering the Project, the Building or any
of its contents. Tenant shall not do or permit anything to be done in or about
the Premises which will in any way obstruct or interfere with the rights of
other tenants of the Building, or injure or annoy them, or use or allow the
Premises to be used for any improper, immoral, unlawful or objectionable
purpose, nor shall Tenant cause, maintain or permit any







                                       8
<PAGE>   12

nuisance or waste in, on or about the Premises.

               (b) Except general office supplies typically used in an office
area in the ordinary course of business, such as copier toner, liquid paper,
glue, ink, and cleaning solvents, for use in the manner for which they were
designed, in such amounts as may be normal for the office business operations
conducted by Tenant in the Premises, neither Tenant nor its agents, employees,
contractors, licensees, subtenants, assignees, concessionaires or invitees shall
use, handle, store or dispose of any "Hazardous Materials" (as hereinafter
defined) in, on, under or about the Premises, the Building or the Project. In
the event of a breach of the foregoing covenant, in addition to and without
limitation upon any other rights or remedies of Landlord under this Lease,
Tenant or, at Landlord's election, Landlord, in each case at Tenant's sole cost,
shall promptly take all actions as are necessary to return the Premises,
Building and/or Project to the condition existing prior to the introduction of
any such Hazardous Materials, provided Landlord's approval of such actions shall
first be obtained and Tenant shall fully cooperate in connection with any such
clean-up, restoration or other work. Furthermore, Tenant shall immediately
notify Landlord of any inquiry, test, investigation or enforcement proceeding by
or against Tenant or the Premises concerning the presence of any Hazardous
Materials. Tenant acknowledges that Landlord, at Landlord's election, shall have
the sole right, at Tenant's expense, to negotiate, defend, approve and appeal
any action taken or order issued by any governmental authority with regard to
any Hazardous Materials contamination which Tenant is obligated hereunder to
remediate. As used herein, "Hazardous Materials" shall mean asbestos, and
petroleum fuel, and any hazardous or toxic substance, material or waste (or
subparts thereof) which is or become regulated by any local governmental
authority, the State of California or the United States Government, including,
but not limited to, any material or substance defined as a "hazardous waste,"
"extremely hazardous waste," "restricted hazardous waste," "hazardous
substance," "hazardous material" or "toxic pollutant" under the California
Health and Safety Code and/or under the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. 9601, et seq. Landlord has no current
actual knowledge (without inquiry or investigation) that Hazardous Materials
exist on the land on which the Project is located, and Tenant shall not be
responsible for any cost or expense, either as an Operating Expense or
otherwise, for remediating any Hazardous Materials which are brought onto the
Project by Landlord or any third parties, except to the extent caused by or
contributed to by Tenant, its officers, directors, principals, employees or
agents, in which case Tenant shall be responsible therefor.

        6.     Services.

               (a) Landlord shall maintain the Common Areas of the Project, the
exterior facing windows in the Building, the mechanical, plumbing and electrical
equipment serving the Building, and the Building structure itself in good order
and condition except for damage occasioned by the act of Tenant and/or any of
Tenant's employees, agents, representatives, contractors and/or invitees, which
damage shall be repaired by Landlord at Tenant's expense.

               (b) Landlord shall cause to be furnished (1) elevator service,
(2) lighting replacement (for building standard lights located in any Common
Areas), (3) Common Area rest room supplies, and (4) security measures and/or
services and janitor service during the times and in the manner that such
services are customarily furnished in comparable office buildings in the area;
provided that janitor service shall be provided five (5) days a week. The
Premises shall be separately metered for electricity use (including, without
limitation, electricity to provide HVAC service to the Premises) and other
utilities at Tenant's cost, and Tenant shall pay the fees charged for such
utility costs, as additional rent, either (1) prior to delinquency directly to
the utility provider, or (2) if Landlord is billed for such usage by the utility
provider, Tenant shall make such payments to Landlord within ten (10) days
following Landlord's billing of Tenant therefor. Tenant shall also be
responsible for the costs of any and all services, including, without
limitation, maintenance, repair, or replacement, provided to the Premises.
Landlord may establish reasonable measures to conserve energy, including, but
not limited to, automatic switching of lights after hours and more efficient
forms of lighting, so long as such measures do not unreasonably interfere with
Tenant's use of the Premises. Landlord shall not be in default hereunder or be
liable for any damages directly or indirectly resulting from, nor shall the
rental herein reserved be abated by reason of (i) the installation, use or
interruption of use of any equipment in connection with the furnishing of any of
the foregoing services, (ii) failure to furnish or delay in furnishing any such
services when such failure or delay is







                                       9
<PAGE>   13

caused by accident or any condition beyond the reasonable control of Landlord or
by the making of necessary repairs or improvements to the Premises, Building or
Project, or (iii) the limitation, curtailment, rationing or restrictions on use
of water, electricity, gas or any other form of energy or utility serving the
Premises, Building or Project. Landlord shall use reasonable efforts diligently
to remedy any interruption in the furnishing of such services. Notwithstanding
the foregoing, if failure to provide any service or utility required of Landlord
under this Lease is due to the gross negligence or wilful misconduct of Landlord
and such failure shall continue for five (5) consecutive business days or more,
and provided such failure to provide the required service precludes Tenant from
occupying all or any portion of the Premises, then Base Rent shall be abated
hereunder at the rate of one day's Base Rent for each day following the fifth
(5th) business day of such interruption; provided, that in the event Tenant
occupies some, but not all of the Premises during such interruption in services,
the abatement afforded Tenant shall be a proportion of daily Base Rent equal to
a fraction, the denominator of which is the Rentable Area of the Premises and
the numerator of which is the Rentable Area of the portion of the Premises that
is not occupied by Tenant during such interruption.

               To Landlord's current actual knowledge, all "Computer Controlled
Facility Components" (as hereinafter defined) existing at the Project as of the
date of this Lease and necessary for the operation of mechanical and life safety
systems at the Project are "Year 2000 Compliant" (as hereinafter defined).
Landlord's knowledge is based solely upon an ongoing investigation of some or
all such Computer Controlled Facility Components being undertaken by a computer
consultant retained by Landlord and/or Landlord's management company. Tenant
acknowledges that said investigation is still continuing, and that Landlord
cannot ensure that the consultant will not hereafter discover or otherwise
inform Landlord that some Computer Controlled Facility Components are in fact
not Year 2000 Compliant. Tenant further acknowledges that (i) the foregoing is
provided for informational purposes only, (ii) Landlord shall have no liability
to Tenant by reason thereof, and (iii) the foregoing shall not apply to (x)
modifications to Computer Controlled Facility Components, (y) Computer
Controlled Facility Components hereafter placed at the Project after the date of
this Lease, or (z) any Computer Controlled Facility Components installed or
placed at the Project by or on behalf of Tenant. Tenant shall ensure that any
and all Computer Controlled Facility Components placed at the Project by or on
behalf of Tenant or its affiliates shall be Year 2000 Compliant. Landlord shall
permit Tenant to review the final written report generated by Landlord's
consultant solely with respect to Computer Controlled Facility Components which
affect mechanical and life safety systems serving the Premises and/or Common
Areas of the Project; provided, however, that (i) Tenant must give Landlord two
(2) business days' written notice of its desire o review the report, (ii) such
investigation shall occur in Landlord's office during Landlord's regular
business hours, (iii) Tenant shall not be permitted to make copies of said
report, (iv) Landlord may have a representative present throughout Tenant's
review process, and (v) Tenant's representatives (who shall not exceed two (2)
in number) shall, upon request by Landlord and as a condition to reviewing said
report, execute and deliver to Landlord a confidentiality and non-disclosure
agreement in a form and manner reasonably acceptable to Landlord.

               The term "Computer Controlled Facility Components" refers to
software driven technology and embedded microchip technology, and shall include,
without limitation, programmable thermostats, HVAC controllers, auxiliary
elevator controllers, utility monitoring and control systems, fire detection and
suppression systems, alarms, security systems, and any other facilities control
systems utilizing microcomputer, minicomputer, or programmable logic
controllers. "Year 2000 Compliant" means Computer Controlled Facility Components
that accurately process date/time data (including, without limitation,
calculating, comparing, and sequencing) from, into, and between the twentieth
and twenty-first centuries, and the years 1999 and 2000 and leap year
calculations.

               (c) If heat-generating equipment or lighting other than building
standard lights are installed or used in the Premises and such equipment or
lighting affects the temperature otherwise maintained by the air conditioning
system, or if equipment is installed in the Premises which requires separate
temperature-controlled room, at Landlord's election after notice to Tenant,
Landlord shall install supplementary air conditioning facilities in the Premises
or otherwise modify the ventilating and air conditioning system serving the
Premises, and the capital and maintenance costs of such facilities and
modifications shall be borne by Tenant.

               (d) Tenant shall reimburse Landlord, upon billing thereof, for
the






                                       10
<PAGE>   14

cost of (i) all electricity, power and cooling energy for heat or air
conditioning provided to the Premises. Tenant shall also pay the cost of any
transformers, additional risers, panel boards and other facilities if and to the
extent required to furnish power for supplementary air conditioning facilities
in or serving the Premises or power for lighting and office equipment.

               (e) In the event that Landlord, at Tenant's request, provides
services to Tenant that are not otherwise provided for in this Lease, Tenant
shall pay Landlord's reasonable charges for such services upon billing thereof.

               (f) As of the Commencement Date, the Building has in place a key
card access system which, subject to Landlord's rights and other provisions of
this Lease, will permit Tenant to control which employees have access to the
Building after normal Building hours. Landlord shall maintain such key card
system in good operating condition and repair; provided, however, that Landlord
may in its sole and absolute discretion remove any such key card access system
from the Building.

               (g) As of the date of this Lease, contemplates (i) incorporating
a restaurant and fitness center into the Project and (ii) that said restaurant
and fitness center shall be operated as an amenity Landlord's tenants and not as
profit making centers. Although Landlord has no reason to believe at this time
that it will be unable to move forward with its plans for a restaurant and
fitness center, it cannot guaranty that it will be able to do so, or even if it
does, that it will be able to maintain said facilities in operation throughout
the Term of this Lease. Furthermore, Landlord may determine in the future that
it is necessary or reasonable to convert one or both of said facilities into
"for profit" operations or to otherwise arrange for third party operators to do
so; provided, however, that in such event, Landlord shall at that time
discontinue including the costs and expenses associated with the applicable
facility in Operating Expenses.

               (h) Tenant acknowledges that this Lease is what is commonly known
as a "triple net" lease, and that Tenant shall be responsible for the payment of
any and all costs and expenses of any and all services provided to the Premises
by Landlord or others, regardless of whether or not this Lease states that such
costs shall be paid by Tenant.

        7.     Impositions Payable by Tenant. In addition to the monthly rental
and other charges to be paid by Tenant hereunder, Tenant shall pay or reimburse
Landlord for any and all of the following items (hereinafter collectively
referred to as "Impositions"), whether or not now customary or in the
contemplation of the parties hereto: taxes (other than local, state and federal
personal or corporate income taxes measured by the net income of Landlord from
all sources), assessments (including, without limitation, all assessments for
public improvements, services or benefits, irrespective of when commenced or
completed), excises, levies, business taxes, license, permit, inspection and
other authorization fees, transit development fees, assessments or charges for
housing funds, service payments in lieu of taxes and any other fees or charges
of any kind, which are levied, assessed, confirmed or imposed by any public
authority, but only to the extent the Impositions are (a) upon, measured by or
reasonably attributable to the cost or value of Tenant's equipment, furniture,
fixtures and other personal property located in the Premises, or the cost or
value of any leasehold improvements made in or to the Premises by or for Tenant,
regardless of whether title to such improvements shall be in Tenant or Landlord
(b) upon or measured by the monthly rental or other charges payable hereunder,
including, without limitation, any gross receipts tax levied with respect to the
receipt of such rental (c) upon, with respect to or by reason of the
development, possession, leasing, operation, management, maintenance,
alteration, repair, use or occupancy by Tenant of the Premises or any portion
thereof or (d) upon this transaction or any document to which Tenant is a party
creating or transferring an interest or an estate in the Premises. In the event
that it shall not be lawful for Tenant to reimburse Landlord for the Impositions
but it is lawful to increase the monthly rental to take into account Landlord's
payment of the Impositions, the monthly rental payable to Landlord shall be
revised to net Landlord the same net return without reimbursement of the
Impositions as would have been received by Landlord with reimbursement of the
Impositions. If any Imposition can be paid by Landlord in installments, then,
for the purpose of calculating Tenant's obligation to pay Impositions, any such
Imposition shall be deemed to be paid by Landlord in monthly installments over
the remaining Term of this Lease, regardless of the manner in which Landlord
actually pays such Imposition.







                                       11
<PAGE>   15

        8.     Alterations.

               (a) Tenant shall not make or suffer to be made any alterations,
additions or improvements to the Premises (collectively, "Alterations"), without
Landlord's prior consent, which consent shall not be unreasonably withheld
(except that such consent may be granted or withheld in Landlord's sole and
absolute discretion as to any proposed Alterations which would affect the
Building exterior, structural components or utility or life-safety systems). For
purposes hereof, "Alterations" shall include, without limitation, air lines,
power panels, electrical distribution, security, fire protection systems,
communications (including, without limitation, telephone lines), lighting
fixtures, heating, ventilating and air conditioning equipment, plumbing, and
fencing, in, on or about the Premises. Notwithstanding the foregoing, Tenant may
make cosmetic alterations to the Premises, the individual cost of which does not
exceed twenty-five thousand dollars ($25,000.00)(but in no event more than an
aggregate cost of fifty thousand dollars ($50,000.00) during any twelve (12)
month period), without Landlord's consent as long as (i) Tenant provides
Landlord with at least thirty (30) days' notice thereof and (ii) such changes
are not visible from outside the Building and do not affect in any way the
Building exterior, structural components or utility or life-safety systems of
the Building (in each case a "Permitted Alteration"; the term "Alterations"
shall include "Permitted Alterations"). All Alterations shall be made by
Landlord for Tenant's account in accordance with the procedures set forth in
this Section. All Alterations shall immediately become Landlord's property and,
at the end of the Term hereof, shall remain on the Premises without compensation
to Tenant unless Landlord elects by notice to Tenant to require the removal of
any such Alterations, in which event Tenant shall be responsible for the cost of
Landlord's removal of such Alterations and restoration of the Premises to its
condition prior to the installation of such Alterations. Notwithstanding the
foregoing, Tenant may include the following notice (in bold, all capitalized
twelve point type) in its request for consent to an Alteration: "LANDLORD'S
RESPONSE TO THIS REQUEST FOR CONSENT MUST INCLUDE LANDLORD'S ELECTION TO REQUIRE
TENANT TO REMOVE THE SUBJECT ALTERATION AT THE EXPIRATION OF THE LEASE TERM OR
LANDLORD WILL BE DEEMED TO HAVE WAIVED ITS RIGHT TO REQUIRE TENANT TO REMOVE
SAID ALTERATION". Tenant shall not be required to remove the Alteration at the
expiration of the Term if the foregoing language was included in Tenant's
request for consent and Landlord failed to make such election in its response
thereto; provided, however, that Landlord's waiver, if any, shall automatically
(and retroactively) be void if this Lease terminates as a result of Tenant's
default.

               (b) Plans and specifications for the Alterations shall be
prepared at Tenant's expense by either its architect or Landlord's architect if
Tenant so elects, and by engineers approved by Landlord where mechanical or
electrical engineering services are required by the nature of the Alterations.
Tenant shall cause any architect retained by it to follow the standard
construction administration procedures and to utilize the standard
specifications and details promulgated by Landlord for the Building. The plans
and specifications shall be subject to approval by Landlord and Tenant, which
approval shall not be unreasonably withheld by either party, and following such
approval Landlord shall obtain quotations of the cost of the Alterations as
reflected by the approved plans and specifications from one or more general
contractors approved by Landlord for construction in the Building. Landlord
shall submit the quotations to Tenant, shall accept the quotations approved by
Tenant, and shall proceed to enter into a contract for the construction or
installation of the Alterations with the contractor whose quotation was approved
by Tenant. Landlord itself does not warrant the cost of the Alterations or the
timeliness of performance or the quality of the contractor's work, but Landlord
shall use reasonable efforts to secure performance of the construction contract
for Tenant's benefit.

               (c) In the event Landlord or the contractor is instructed by
Tenant to proceed with any changes to the alterations without a prior
determination of any increased costs resulting from such changes and without
approval of such increases by Tenant, or in the event Tenant is responsible for
increased costs attributable to a delay or acceleration in the time for
construction, the amount of any increased costs shall be as reasonably
determined by Landlord upon completion of the Alterations, subject only to
Landlord's reasonable efforts in causing the contractor to furnish Tenant
appropriate back-up information concerning increased costs, if any.

               (d) The cost of the Alterations to be paid by Tenant, excluding
the Tenant Improvements (as defined in Exhibit "C", which shall governed by
Exhibit "C") shall include a reasonable charge for the administration by
Landlord or its agent of the construction or installation of the Alterations,
which Landlord and







                                       12
<PAGE>   16

Tenant agree shall be ten percent (10%) of the total costs of design and
construction; provided, however, that Tenant shall not be required to pay said
administration charge in connection with Permitted Alterations if Tenant (i)
selects its contractor from Landlord's then current list of approved licensed
contractors or (ii) uses a licensed contractor approved by Landlord in advance,
and such approval expressly provides that Landlord waives its right to said
administration charge.

               (e) Tenant shall pay to Landlord all amounts payable by Tenant
pursuant to this Section within fifteen (15) days after billing by Landlord.
Bills may be rendered in advance of or during the progress of the Alterations so
as to enable Landlord to pay the contractor, architect or engineer without
advancing Landlord's own funds. At Landlord's election, Tenant shall deposit
with Landlord prior to the commencement of the Alterations the estimated cost
thereof or such lesser portion as Landlord shall specify, to be held and applied
to the cost as incurred. Any surplus funds shall be returned to Tenant when the
Alterations have been paid for in full.

               (f) Landlord may delegate some or all of its authority and
responsibilities under this Section 8 to its managing agent, which may be an
affiliate of Landlord.

        9.     Liens. Tenant shall keep the Premises, Building and Project free
from any liens arising out of any work performed, materials furnished or
obligations incurred by or on behalf of Tenant. Landlord shall have the right to
post and keep posted on the Premises any notices that may be provided by law or
which Landlord may deem to be proper for the protection of Landlord, the
Premises, Building and/or Project from such liens. Tenant shall remove any such
lien by bond or otherwise within ten (10) days after notice from Landlord, and
if Tenant shall fail to do so, Landlord may, but shall not be obligated to, pay
the amount necessary to remove such lien without being responsible for
investigating the validity thereof. Any amount so paid by Landlord shall be
deemed additional rent under this Lease payable upon demand, without limitation
as to other remedies available to Landlord under this Lease. Nothing contained
in this Lease shall authorize Tenant to do any act which shall subject
Landlord's title to the Premises, Building or Project to any liens whether
claimed by operation of law or express or implied contract.

        10.    Repairs. By entry hereunder Tenant accepts the Premises as being
in the condition in which Landlord is obligated to deliver the Premises, subject
to any applicable provisions of Exhibit "C"; except for any defects which Tenant
describes in any "punch-list" described in Exhibit "C" and latent Building
defects. Tenant shall deliver written notice of any latent Building defect to
Landlord within ten (10) business days following Tenant's discovery thereof, and
Tenant's failure to deliver such notice shall be deemed an admission by Tenant
that the subject defect was not a latent defect. Landlord shall promptly
investigate and repair any defects identified in the Latent Building Defect
Notice which exist and shall diligently pursue such repair to completion. Tenant
shall, at all times during the Term and at Tenant's sole cost and expense, keep
the Premises (including, without limitation, any Tenant Improvements,
Alterations (including the antennae described in Section 42 below) and Tenant's
furniture, fixtures, equipment and personal property in the Premises) in good
condition and repair (regardless of the cost therefor and/or the time remaining
on the Term), ordinary wear and tear, damage thereto by fire (unless caused by
or contributed to by Tenant), earthquake, act of God or the elements excepted.
Tenant hereby waives all rights to make repairs at the expense of Landlord or in
lieu thereof to vacate the Premises and all rights under Sections 1932(1), 1941
and 1942 of the California Civil Code or any successor statute. Tenant shall at
the end of the Term surrender to Landlord the Premises and all Alterations
thereto that are to remain in the Premises in the same condition as when
received, ordinary wear and tear and damage by fire (unless the same is caused
by or contributed to by Tenant), earthquake, act of God or the elements
excepted. Tenant shall remove all of its personal property and equipment from
the Premises prior to the expiration of the Term or earlier termination of this
Lease, and if Tenant fails to remove the same, Landlord may do so and store or
dispose of the same at Tenant's sole cost. Landlord has no obligation and has
made no promise to alter, remodel, improve, repair, decorate or paint the
Premises, except as specifically otherwise provided in this Lease. No
representations respecting the condition of the Premises, the Building or the
Project have been made by Landlord to Tenant, except as specifically provided in
this Lease.

        11.    Destruction or Damage.






                                       13
<PAGE>   17

               (a) In the event the Premises or the portion of the Building
necessary for Tenant's occupancy are damaged by fire, earthquake, act of God,
the elements or other casualty, within sixty (60) days after such event,
Landlord shall notify Tenant of the estimated time, in Landlord's reasonable
judgment, required for repair or restoration. If such estimated time for repair
or restoration is less than one hundred eighty (180) days after the date of
casualty and the cost of repair is covered by insurance maintained by Landlord,
Landlord shall forthwith repair or restore the Premises or the portion of the
Building necessary for Tenant's occupancy, to the extent of insurance proceeds
received on account of such casualty. If the time for repair or restoration is
in excess of one hundred eighty (180) days after the date of casualty or the
cost of repair is not covered by Landlord's insurance, Landlord shall elect, in
the same notice Tenant, either (i) to repair or restore the Premises or the
portion of the building necessary for Tenant's occupancy, in which event this
Lease shall continue in full force and effect (unless Tenant exercises its right
to terminate this Lease as provided below), or (ii) to terminate this Lease, in
which event this Lease shall terminate as of the date of such fire or other
casualty. In the event Landlord is obligated or elects to repair the Premises
pursuant to this Section 11 (unless Tenant exercises its right to terminate this
Lease as provided below), this Lease shall remain in full force and effect
except that, if such damage is not the result of the act or omission of Tenant
or Tenant's employees, agents, representatives, contractors or invitees, an
abatement of rental shall be allowed Tenant for such part of the Premises as
shall be rendered unusable by Tenant (but only to the extent actually not used
by Tenant) in the conduct of its business during the time such part is so
unusable. Notwithstanding the foregoing, if (i) Landlord's estimate states that
the repair or restoration of the subject casualty damage will take longer than
twelve (12) calender months to substantially complete and (ii) no default by
Tenant has occurred (including any matter which would constitute a default
either with the passage of time or the giving of notice, then Tenant shall have
the right to terminate this Lease by written notice delivered to Landlord within
five (5) days following the date of Landlord's estimate, and Tenant's failure to
deliver such termination notice shall be deemed an election by Tenant not to
terminate the Lease.

               (b) Notwithstanding anything to the contrary contained in this
Section 11, in the event of casualty to the Premises or the portion of the
Building necessary for Tenant's occupancy during the final 12 months of the Term
which is estimated by Landlord in good faith to require in excess of thirty (30)
days to repair or restore (with respect to Landlord's termination right) or
ninety (90) days to repair or restore (with respect to Tenant's termination
right), then either Landlord or Tenant may elect to terminate this Lease by
written notice to Tenant delivered within five (5) days of the date of
Landlord's estimate.

               (c) If the Premises or the Building are to be repaired or
restored under this Section 11, Landlord shall repair or restore the Building
and all improvements in the Premises other than any of Tenant's furniture,
fixtures, equipment, personal property, and any Tenant Improvements and
Alterations made by or for Tenant. Tenant shall be responsible for the repair or
restoration of any such Tenant's furniture, fixtures, equipment, personal
property, and any Tenant Improvements and Alterations made by or for Tenant,
provided that any repair of such Tenant Improvements or Alterations shall be
performed by Landlord, at Tenant's cost.

               (d) Landlord and Tenant acknowledge that their respective rights
and obligations in the event of any damage to or destruction of the Premises or
the Building are to be governed exclusively by this Lease and waive their
respective rights under Sections 1932(2) and 1933(4) of the California Civil
Code or any successor statute.

        12.    Insurance.

               (a) Tenant shall, during the Term hereof and any other period of
occupancy, at its sole cost and expense, keep in full force and effect the
following insurance:

                   (1) All Risk insurance (including, without limitation,
sprinkler leakage and earthquake sprinkler leakage endorsements) upon property
of every description and kind owned by Tenant and located in the Building or for
which Tenant is legally liable or installed by or on behalf of Tenant,
including, without limitation, furniture, fixtures, personal property, any
Tenant Improvements (pursuant to Exhibit "C") and Alterations, in an amount not
less than ninety-five percent (95%) of the full replacement cost thereof, and







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<PAGE>   18

providing business interruption coverage for a period of one year. All such
insurance policies shall name Tenant as named insured thereunder, shall name
Landlord, and, at Landlord's request, Landlord's "Mortgagees" (as defined in
Section 23 below), as loss payees thereunder, all as their respective interests
may appear. Not less frequently than once every three (3) years, Landlord shall
have the right to notify Tenant that it elects to have the replacement value
redetermined by an insurance company or insurance consultant. The
redetermination shall be made promptly and in accordance with the rules and
practices of the Board of Fire Underwriters, or a like board recognized and
generally accepted by the insurance company, and each party shall be promptly
notified of the results by the company. The insurance required under this Lease
shall be adjusted according to the redetermination. All vendors, movers and
contractors engaged by or on behalf of Tenant to perform work in or about the
Premises shall deliver proof of insurance to Landlord before said person or
entity will be permitted to commence work, which insurance must be reasonably
acceptable to Landlord.

                   (2) Commercial general liability insurance coverage,
including personal injury, bodily injury, broad form property damage and
contractual liability (covering the indemnity contained in Section 13), in
amount not less than $1,000,000.00 per occurrence, $2,000,000.00 aggregate. All
such insurance policies shall name Tenant as named insured thereunder and shall
name Landlord and Landlord's managing agent and Mortgagees as additional
insureds thereunder. Such insurance shall be written as primary coverage and
non-contributing with respect to any insurance maintained by Landlord.

                   (3) Workers' Compensation and Employer's Liability Insurance
in form and amounts not less than that required by applicable law, but in no
event will the coverage provided under Tenant's Employer's Liability Insurance
be less than five hundred thousand dollars ($500,000.00) or such other amount as
Landlord may be reasonably require.

                   (4) Any other form or forms of insurance as Landlord may
reasonably require from time to time in form, in amounts, and for insurance
risks against which a prudent tenant of a comparable size and in a comparable
business would protect itself.

               (b) All policies shall be written in a form reasonably
satisfactory to Landlord and shall be taken out with insurance companies
admitted in the State of California holding a General Policyholders Rating of
"A-" and a Financial Rating of VII or better, as set forth in the most current
issue of Best's Insurance Reports. Prior to the date Tenant takes possession of
any part of the Premises, Tenant shall deliver to Landlord copies of policies or
certificates evidencing the existence of the amounts and forms of coverage
required hereunder, and said certificates shall provide that no such policy
shall be cancelable or reducible in coverage except after thirty (30) days'
prior written notice to Landlord and any additional insureds or loss payees
thereunder. Tenant shall, within ten (10) days prior to the expiration of such
policies, furnish Landlord with renewals or binders thereof, or if Tenant fails
to do so, Landlord may order such insurance and charge the cost thereof shall be
due from Tenant to Landlord upon demand as additional rent.

               (c) During the Term, Landlord shall insure the Project
(excluding, at Landlord's option, any property which Tenant is obligated to
insure under Sections 12(a) above) against damage with All Risk insurance and
commercial general liability insurance, in such amounts and with such
deductibles as would be carried by prudent landlords of comparable properties
(Tenant acknowledges that a deductible of ten thousand dollars ($10,000.00) is
reasonable). Landlord may, but shall not be obligated to, obtain and carry any
other form or forms of insurance as it deems advisable. Notwithstanding any
contribution by Tenant to the cost of insurance premiums as provided herein,
Tenant acknowledges that it has no right to receive any proceeds from any
insurance policies carried by Landlord.

               (d) If Tenant's occupancy or business in or upon the Premises,
whether or not Landlord has consented to the same, results in any increase in
premiums for the insurance periodically carried by Landlord with respect to the
Building or the Project, Tenant shall pay as additional rent any such increase
in premiums within ten (10) days after being billed therefor by Landlord.

               (e) All policies of insurance required hereunder, including,
without limitation, Workers' Compensation and Employer's Liability insurance,
shall include a clause or endorsement denying the insurer any rights of
subrogation






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<PAGE>   19

against the other party to the extent rights have been waived by the insured
before the occurrence of injury or loss. Landlord and Tenant waive any rights of
recovery against the other for injury or loss due to hazards covered by policies
of insurance, including, without limitation, Workers' Compensation and
Employers' Liability insurance, to the extent insurance proceeds cover the
injury or loss.

        13.    Indemnification. Tenant hereby waives all claims against Landlord
for damage to any property or injury or death of any person in, upon or about
the Premises or Project arising at any time and from any cause other than by
reason of gross negligence or wilful misconduct of Landlord, its employees,
agents or representatives. Tenant shall indemnify, defend and hold harmless
Landlord from and against any and all claims, demands, losses, liabilities,
damages, costs and/or expenses (including, without limitation, reasonable
attorneys' fees and expenses) arising out of (a) any injury to or death of any
person or damage to or destruction of property attributable to or resulting from
the use of the Premises by Tenant, except such as is caused by gross negligence
or willful misconduct of Landlord, its employees, agents or representatives, (b)
the acts or omissions of Tenant or any of Tenant's employees, agents,
representatives or invitees (including, without limitation, acts or omissions
with respect to Hazardous Materials), and/or (c) any breach of this Lease by
Tenant. The provisions of this Section shall survive the expiration of the Term
or earlier termination of this Lease.

        14.    Compliance with Legal Requirements. Tenant, at its sole cost and
expense (regardless of the cost therefor or the time remaining on the term),
shall promptly comply with all Laws (including, without limitation, Laws
respecting accessibility or use of the Premises by disabled persons) now in
force or which may hereafter be in force, with the requirements of any board of
fire underwriters or other similar body now or hereafter constituted, with any
directive or occupancy certificate issued pursuant to any Law by any public
officer or officers, as well as the provisions of all recorded documents
affecting the Premises, insofar as any thereof relate to or affect the
condition, use or occupancy of the Premises, excluding structural changes to the
Premises or Building required to comply therewith, which structural changes
shall be performed by Landlord as an item of Operating Expenses in accordance
with Section l(d) above (except that Tenant shall be solely responsible for the
cost of such structural changes as additional rent within ten (10) days
following Landlord's demand, to the extent such structural changes are required
as a result of Tenant's acts, specific use of the Premises, or improvements or
Alterations made by or for Tenant). Notwithstanding the foregoing, Tenant shall
not be required to pay any cost or expense for causing the Premises, or any
portion thereof, as the same exist on the Commencement Date, to comply with the
Americans with Disabilities Act, as in effect on the Commencement Date;
provided, however, that Tenant will be responsible for any such compliance costs
which result from Tenant's specific use of the Premises and/or from the
existence of any improvements and/or Alterations constructed by or on behalf of
Tenant.

        15.    Assignment and Subletting.

               (a) Tenant shall not, without the prior consent of Landlord,
which consent shall not be unreasonably withheld, assign or hypothecate this
Lease or any interest herein, sublet the Premises or any part thereof, or permit
the use of the Premises by any party other than Tenant. This Lease shall not,
nor shall any interest herein, be assignable as to the interest of Tenant by
operation of law without the consent of Landlord, which consent shall not be
unreasonably withheld. Any of the foregoing acts without such consent shall be
void and shall, at the option of Landlord, terminate this Lease. For purposes
hereof, in the event Tenant is a partnership, a withdrawal or change of the
managing partner, or partners owning more than a controlling interest in the
partnership in one or more transfers, or if Tenant is a corporation, any
transfer of a majority of its stock in one or more transfers, or the transfer by
the controlling shareholder of so much of its stock that it is no longer the
controlling shareholder, shall constitute a voluntary assignment and shall be
subject to the provisions of this Section 15; provided, however, that if
Tenant's stock is publicly traded on either the American, New York or NASDAQ
stock exchanges, then in the case of a transfer of a majority (or other amount
sufficient to cause a change in control) of the Tenant's stock to another
company (whose net worth is equal to or greater than Tenant's then current net
worth), Landlord's consent to such voluntary assignment shall not be required.
In connection with each consent requested by Tenant, Tenant shall submit to
Landlord not less than twenty (20) days prior to the effective date of the
proposed transaction, the terms of the proposed transaction, the







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<PAGE>   20

identity of the parties to the transaction, the proposed documentation for the
transaction and all other information reasonably requested by Landlord
concerning the proposed transaction and the parties involved therein. Within
sixty (60) days of receipt of such request for consent and other required
information, Landlord shall elect either to: (i) consent to such proposed
transaction (ii) refuse such consent, which refusal shall be on reasonable
grounds or (iii) elect to terminate this Lease effective as of the date Tenant
proposes to assign this Lease or sublet all of the Premises, or in the case of
sublease or subleases which, in the aggregate, affect twenty-five percent (25%)
or more of the Rentable Area of the Premises for the time remaining of the then
current Term, terminate this Lease as to the portion of the Premises proposed to
be sublet as of the date of such proposed partial sublease. Nothing contained in
this Section 15 shall be deemed a waiver of Landlord's right to elect to
terminate this Lease in accordance with clause (iii) of the foregoing sentence
including, but not limited to, Landlord's failure to exercise its right to
terminate this Lease with respect to any previous assignment or subletting.
Further, Tenant understands and acknowledges that Landlord's option to terminate
this Lease rather than approve the assignment thereof or the subletting of all
or any portion of the Premises, is a material inducement for Landlord's agreeing
to lease the Premises to Tenant upon the terms and conditions herein set forth.

               (b) Without limiting the other instances in which it may be
reasonable for Landlord to withhold its consent to an assignment or subletting,
Landlord and Tenant acknowledge that it shall be reasonable for Landlord to
withhold its consent in the following instances: (1) if at the time consent is
requested or at any time prior to the granting of consent, Tenant is in default
under this lease or would be in default under this Lease but for the pendency of
any grace or cure period under Section 18 below (2) if the proposed assignee or
subtenant is a governmental agency (3) if the proposed assignee or subtenant is
an existing tenants in the Project or Landlord is then or within the prior 6
months has been negotiating with such assignee or subtenant for the lease of
space within the Project (4) if, in Landlord's reasonable judgment, the use of
the Premises by the proposed assignee or subtenant would not be comparable to
the types of office use by other tenants in the Project, would entail any
alterations which would lessen the value of the leasehold improvements in the
Premises, would result in more than a reasonable number of occupants per floor,
or would require increased services by Landlord or (5) if, in Landlord's
reasonable judgment, the financial worth of the proposed assignee or subtenant
does not meet the credit standards applied by Landlord for other tenants under
leases with comparable terms, or the character, reputation, or business of the
proposed assignee or subtenant is not consistent with the quality of the other
tenancies in the Building.

               (c) In the case of an assignment, one-half of any sums or other
economic consideration received by Tenant as a result of such assignment shall
be paid to Landlord after first deducting the unamortized cost of leasehold
improvements paid for by Tenant, and the cost of any real estate commissions and
other generally recognized and available concessions incurred by Tenant in
connection with such assignment. In the case of a subletting, one-half of any
sums or economic consideration received by Tenant as a result of such subletting
shall be paid to Landlord after first deducting (1) the rental due hereunder,
prorated to reflect only rental allocable to the sublet portion of the Premises,
(2) the cost of leasehold improvements made to the sublet portion of the
Premises at Tenant's cost, amortized over the term of the applicable sublease
except for leasehold improvements made for the specific benefit of the
subtenant, which shall be amortized over the term of the sublease, and (3) the
cost of any real estate commissions and other generally recognized and available
concessions incurred by Tenant in connection with such subletting, amortized
over the term of the sublease.

               (d) Regardless of Landlord's consent, no subletting or assignment
shall release Tenant of Tenant's obligation or alter the primary liability of
Tenant to pay the rental and to perform all other obligations to be performed by
Tenant hereunder. The acceptance of rental by Landlord from any other person
shall not be deemed to be a waiver by Landlord of any provision hereof. Consent
to one assignment or subletting shall not be deemed consent to any subsequent
assignment or subletting or a waiver of any of the terms of this Lease. No
assignee or subtenant shall have a right further to assign or sublet without
Landlord's prior consent in accordance with this Section 15. No sublease, once
consented to by Landlord, shall be modified or terminated by Tenant without
Landlord's prior consent, which consent shall not be unreasonably withheld. In
the event of default by any assignee of Tenant or any successor of Tenant in the
performance of any of the terms hereof, Landlord may proceed directly against






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<PAGE>   21

Tenant without the necessity of exhausting remedies against such assignee or
successor. Landlord may consent to subsequent assignments or subletting of this
Lease or amendments or modifications to this Lease with assignees of Tenant,
without notifying Tenant, or any successor of Tenant, and without obtaining its
or their consent thereto, and such action shall not relieve Tenant of liability
under this Lease.

               (e) A condition to Landlord's consent to any assignment or other
transfer of this Lease shall be the delivery to Landlord of a true copy of the
fully executed instrument of assignment or transfer, and the delivery to
Landlord of an agreement executed by the assignee or transferee in form and
substance satisfactory to Landlord and expressly enforceable by Landlord,
whereby the assignee or transferee assumes and agrees to be bound by all of the
provisions of this Lease and to perform all of the obligations of Tenant
hereunder. As a condition to Landlord's consent to any sublease, Landlord may
require that such sublease include among other items, provisions stating (i)
that it is subject and subordinate to this Lease and to all Mortgages and ground
leases affecting the Project, (ii) Landlord shall be a third party beneficiary
of the obligations of Tenant's subtenant and may enforce the terms of said
sublease against said subtenant, and (iii) that in the event of a termination of
this Lease for any reason, including without limitation, a voluntary surrender
by Tenant or mutual cancellation by Landlord and Tenant, or in the event of any
re-entry or repossession of the Premises by Landlord, such sublease shall
terminate, except that Landlord, at its option, may elect to continue such
sublease in effect and require that such subtenant attorn to and recognize
Landlord as its landlord under such sublease.

               (f) In the event Tenant shall assign this Lease or sublet the
Premises or request the consent of Landlord to any assignment, subletting,
hypothecation or other action requiring Landlord's consent hereunder, then
Tenant shall pay Landlord's reasonable attorneys' fees incurred in connection
therewith.

               (g) Notwithstanding subsection (a) above, the original Tenant
hereunder may without Landlord's consent assign its interest in this Lease or
sublet all or a portion of the Premises to any affiliate of Tenant provided that
(i) Tenant gives Landlord thirty (30) days prior written notice and delivers to
Landlord concurrently with such notice all of the information which would
otherwise be required in connection with a request for consent, (ii) the
transaction complies with the provisions of Section 15(e) above and (iii) the
assignee or subtenant has a financial worth sufficient, in Landlord's reasonable
good faith determination, to fulfil the obligations of Tenant under this Lease.
For purposes of this Section 15(g), an "affiliate" means any person or entity
that directly, or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, Tenant. The original Tenant
hereunder shall also have the right without Landlord's consent to assign its
interest in this Lease to a corporation (or other business entity) into which it
may merge or which may otherwise succeed to all or substantially all of said
original Tenant's assets, provided that (i) the assignment complies with the
conditions stated above with respect to assignments or sublettings to an
affiliate and (ii) the assignee, after giving effect to said merger, has a
financial worth sufficient, in Landlord's reasonable good faith determination,
to fulfil the obligations of Tenant under this Lease. An affiliate of the
original Tenant hereunder shall have all rights of the original Tenant under
this Lease.

        16.    Rules. Tenant shall faithfully observe and comply with the rules
and regulations attached hereto as Exhibit "D", and after notice thereof, all
reasonable modifications thereof and additions thereto from time to time
promulgated in writing by Landlord, which may include parking regulations
designed to ensure more orderly and efficient parking at the Project. Landlord
shall not be responsible to Tenant for the nonperformance by any other tenant or
occupant of the Building or the Project of any such rules and regulations.
Landlord shall endeavor to apply and enforce its rules and regulations in a
non-discriminatory manner; provided, however, that Tenant is aware that the
rules and regulations under this Lease and other Project leases are not
identical.

        17.    Entry by Landlord. Landlord may enter the Premises at reasonable
hours and, except in the case of a perceived emergency, after reasonable notice
(but in no event shall more than one (1) day's notice be required), to (a)
inspect the same (b) exhibit the same to prospective purchasers, lenders or,
during the last nine (9) months of the Term, tenants (c) determine whether
Tenant is complying with its obligations under this Lease (d) supply janitor
service and any other service to be provided by Landlord to Tenant hereunder (e)
post notices






                                       18
<PAGE>   22

on non-responsibility (f) make repairs or perform maintenance required of
Landlord under the terms hereof, make repairs to any adjoining space or utility
services, or make repairs, alterations or improvements to any other portion of
the Building or (g) cure any default in the performance of Tenant's obligations
under this Lease pursuant to Section 19 (c) below provided, however, that all
such work shall be done as promptly as reasonably possible and so as to minimize
unreasonable interference with the operation of Tenant's business from the
Premises to the extent reasonably practicable. Tenant hereby waives any claim
for damages for any inconvenience to or interference with Tenant's business or
any loss of occupancy or quiet enjoyment of the Premises occasioned by such
entry, except to the extent caused by Landlord's gross negligence or wilful
misconduct. Landlord shall at all times have and retain a key with which to
unlock all of the doors in, on or about the Premises (excluding Tenant's vaults,
safes and similar areas designated in writing by Tenant in advance) and Landlord
shall have the right to use any and all means which Landlord may deem proper to
open Tenant's doors in an emergency in order to obtain entry to the Premises,
and any entry to the Premises obtained by Landlord in an emergency shall not be
construed or deemed to be a forcible or unlawful entry into or a detainer of the
Premises or an eviction, actual or constructive, of Tenant from the Premises or
any portion thereof.

        18.    Tenant's Default. The following events shall constitute events of
default under this Lease:

               (a) a failure by Tenant to pay when due any rent or other sum
payable hereunder and the continuation of such default for a period of three (3)
days after written notice that the same is due;

               (b) a failure by Tenant to perform any of the other terms,
covenants, agreements or conditions contained herein, and, if the failure is
curable, the continuation of such failure for a period of thirty (30) days after
notice by Landlord; provided, however, that if the nature of Tenant's obligation
is such that more than thirty (30) days are required for performance, then
Tenant shall not be in default if Tenant commences performance within such
thirty (30) day period and thereafter diligently prosecutes the same to
completion; provided, Tenant's cure period shall automatically be shortened to a
reasonable time (ie less than thirty (30) days) in the case of an emergency;

               (c) the bankruptcy or insolvency of Tenant, transfer by Tenant in
fraud of creditors, an assignment by Tenant for the benefit of creditors, or the
commencement of any proceedings of any kind by or against Tenant under any
provision of the Federal Bankruptcy Act or under any other insolvency,
bankruptcy or reorganization act unless, in the event any such proceedings are
involuntary, Tenant is discharged from the same within sixty (60) days
thereafter;

               (d) the appointment of a receiver for a substantial part of the
assets of Tenant;

               (e) the abandonment of the Premises for a period of twenty (20)
consecutive days or more (or an aggregate of forty (40) days during any three
(3) calendar months) and a concurrent failure to pay rent;

               (f) the levy upon this Lease or any estate of Tenant hereunder by
any attachment or execution and the failure to have such attachment or execution
vacated within thirty (30) days thereafter; or

               (g) the breach or default by Tenant or an affiliate of Tenant
under any other lease or other agreement under which Tenant or such affiliate
occupies or previously occupied other space at the Project.

        Any notice of default to be given pursuant to this Section 18 shall be
in lieu of, and not in addition to, any notice required under California Code of
Civil Procedure Section 1161 or any similar or successor statute.

        19.    Landlord's Remedies.

               (a) In the event of any default by Tenant pursuant to Section 18
above, in addition to any other remedies available to Landlord at law or in
equity, Landlord shall have the immediate option to terminate this Lease and all
rights of Tenant hereunder. In the event that Landlord shall elect to so
terminate this Lease, then Landlord may recover from Tenant: (i) the worth at
the time of award of any unpaid rent which had been earned at the time of such
termination plus (ii) the worth at the time of award of the amount by which the







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<PAGE>   23

unpaid rent which would have been earned after termination until the time of
award exceeds the amount of such rental loss that Tenant proves could have been
reasonably avoided plus (iii) the worth at the time of award of the amount by
which the unpaid rent for the balance of the Term after the time of award
exceeds the amount of such rental loss that Tenant proves could be reasonably
avoided plus (iv) any other amount necessary to compensate Landlord for all the
detriment proximately caused by Tenant's failure to perform Tenant's obligations
under this Lease or which in the ordinary course of things would be likely to
result therefrom.

               As used in clauses (i) and (ii) of this Section 19(a) above, the
"worth at the time of award" is computed by allowing interest at the Interest
Rate. As used in clause (iii) of this Section 19(a) above, the "worth at the
time of award" is computed by discounting such amount at the discount rate of
the Federal Reserve Bank of San Francisco at the time of award plus 1%.

               (b) In the event of any such default by Tenant, Landlord shall
also have the right to reenter the Premises and remove all persons and property
therefrom by summary proceedings or otherwise such property may be removed and
stored in a public warehouse or elsewhere at the cost of and for the account of
Tenant or disposed of in a reasonable manner by Landlord. In the event Landlord
shall elect to reenter as provided above, or shall take possession of the
Premises pursuant to legal proceedings or pursuant to any notice provided by
law, and if Landlord does not elect to terminate this Lease as provided by law,
then Landlord may from time to time, without terminating this Lease, either
recover all rental as it becomes due or relet the Premises or any part thereof
for such term and at such rental or rentals and upon such other terms and
conditions as Landlord in its sole discretion may deem advisable, with the right
to make alterations and repairs to the Premises. It is the intention of the
parties that in addition to, and without limitation upon, all other rights and
remedies set forth in this Lease, Landlord shall have the remedy described in
California Civil Code Section 1951.4 (lessor may continue lease in effect after
lessee's breach and abandonment and recover rent as it becomes due). In the
event that Landlord shall elect to relet, then rentals received by Landlord from
such reletting shall be applied first, to the payment of any indebtedness, other
than Base Rent due hereunder, owed by Tenant to Landlord second, to the payment
of any cost of such reletting third, to the payment of the cost of any
alterations and repairs to the Premises fourth, to the payment of Base Rent due
and unpaid hereunder and the residue, if any, shall be held by Landlord and
applied in payment of future rent as the same may become due and payable
hereunder. Should that portion of such rentals received from such reletting
during any month, which is applied to the payment of rent hereunder, be less
than the rent payable during that month by Tenant hereunder, then Tenant shall
pay such deficiency to Landlord. Such deficiency shall be calculated and paid
monthly. Tenant shall also pay to Landlord, as soon as ascertained, any costs
and expenses incurred by Landlord in such reletting, including but not limited
to brokerage commissions, or in making alterations and repairs not covered by
the rentals received from such reletting. No reentry or taking possession of the
Premises by Landlord pursuant to this Section 19, shall be construed as an
election to terminate this Lease unless a written notice of such intention be
given by Landlord to Tenant or unless the termination thereof be decreed by a
court of competent jurisdiction. Landlord may at any time after such reletting
elect to terminate this Lease for any such default by Tenant.

               (c) If Tenant fails to perform any covenant or condition to be
performed by Tenant, Landlord may, but without obligation to do so, perform such
covenant or condition at its option, after notice to Tenant. All costs incurred
by Landlord in so performing shall immediately be reimbursed to Landlord by
Tenant, together with interest at the Interest Rate computed from the due date.
Any performance by Landlord of Tenant's obligations shall not waive or cure such
default. Landlord may perform Tenant's defaulted obligations at Tenant's sole
cost and expense without notice in the case of any emergency. All costs and
expenses incurred by Landlord, including reasonable attorneys' fees (whether or
not legal proceedings are instituted), in collecting rent or enforcing the
obligations of Tenant under the Lease shall be paid by Tenant to Landlord upon
demand. Tenant's obligations pursuant to this Section 19 (c) shall survive the
expiration or earlier termination of this Lease.

               (d) Tenant hereby waives, for itself and all persons claiming by
and under Tenant, all rights and privileges which it might have under any
present or future Laws to redeem the Premises or reinstate or to continue the
Lease after being dispossessed or ejected from the Premises. All rights, options
and remedies of Landlord contained in this Lease shall be construed and held to
be







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<PAGE>   24

cumulative, and no one of them shall be exclusive of the other, and Landlord
shall have the right to pursue any one or all of such remedies or any other
remedy or relief which may be provided by law, whether or not stated in this
Lease.

               (e) In addition to the remedies described in Sections 19(a)-(d)
above, Landlord shall be entitled to recover from Tenant under this Lease all
amounts necessary to compensate Landlord for all the detriment proximately
caused by any breach or default described in Section 18(g) above. The remedy
provided for in this Section 19(e) shall be in addition to any and all remedies
available in the other lease or agreement to which such breach or default
pertains.

        20.    Landlord's Default and Tenant's Remedies. Landlord shall not be
in default hereunder unless Landlord fails to perform the obligations required
of Landlord within a reasonable time, but in no event later than thirty (30)
days after written notice by Tenant to Landlord specifying wherein Landlord has
failed to perform such obligation provided, however, that if the nature of
Landlord's obligation is such that more than thirty (30) days are required for
performance, then Landlord shall not be in default if Landlord commences
performance within such 30 day period and thereafter diligently prosecutes the
same to completion. In no event shall Tenant have the right to terminate this
Lease or withhold rent as a result of Landlord's default and Tenant's remedies
shall be limited to an action for damages, injunction or specific performance of
this Lease. Notwithstanding anything contained in this Lease to the contrary,
Tenant and all successors and assigns covenant and agree that, in the event of
any actual or alleged failure, breach or default hereunder by Landlord, their
sole and exclusive remedy shall be against Landlord's interest in the Project.
Tenant and all such successors and assigns agree that the obligations of
Landlord under this Lease do not constitute personal obligations of the
individual partners, whether general or limited, members, directors, officers or
shareholders of Landlord, and Tenant shall not seek recourse against the
individual partners, directors, officers or shareholders of Landlord or any of
their personal assets for satisfaction of any liability with respect to this
Lease.

        21.    Attorneys' Fees. In the event of any dispute between Landlord or
Tenant, whether or not suit is filed, or if either Landlord or Tenant shall
institute any action or proceeding against the other party relating to this
Lease, the non-prevailing party in such action or proceeding shall reimburse the
prevailing party for its disbursements incurred in connection therewith and for
its reasonable attorneys' fees, whether or not such action or proceeding is
pursued to judgment. In addition to the foregoing award of attorneys' fees to
the prevailing party, the prevailing party in any action or proceeding on this
Lease shall be entitled to its reasonable attorneys' fees incurred in any post-
judgment proceedings to collect or enforce any such judgment. This provision is
separate and several and shall survive (i) the expiration or earlier termination
of this Lease and (ii) the merger of this Lease into any judgment on this Lease.

        22.    Eminent Domain. If all or any part of the Premises shall be
taken as a result of the exercise of the power of eminent domain or sale in lieu
of such taking (collectively, any "Taking"), this Lease shall terminate as to
the part so taken as of the date of Taking, and, in the case of a partial
Taking, either Landlord or Tenant shall have the right to terminate this Lease
as to the balance of the Premises by notice to the other within thirty (30) days
after such date, provided, however, that a condition to the exercise by Tenant
of such right to terminate shall be that the portion of the Premises taken shall
be of such extent and nature as substantially to handicap, impede or impair
Tenant's use of the balance of the Premises. In the event of the Taking of a
material portion of the Project (whether or not the Premises is affected
thereby), Landlord shall have the right to terminate this Lease by notice to
Tenant within 30 days following such Taking. In the event of any Taking,
Landlord shall be entitled to any and all compensation, damages, income, rent,
awards, or any interest therein whatsoever which may be paid or made in
connection therewith, and Tenant shall have no claim against Landlord for the
value of any unexpired Term of this Lease or otherwise. Notwithstanding the
foregoing, Tenant may apply to the condemning party for a separate award for
Tenant's relocation costs, loss of good will and the unamortized cost of any
Alterations paid for by Tenant which Tenant would otherwise be entitled to
remove at the expiration or earlier termination of the Term, unless such award
diminishes the award otherwise payable to Landlord, in which case Tenant shall
be precluded from making such an application. In the event of a partial Taking
of the Premises which does not result in a termination of this Lease, the
monthly rental thereafter to be paid shall be equitably reduced. The parties
agree that their respective rights and obligations in the event of any Taking
shall be governed by the terms of this







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<PAGE>   25

Lease and hereby waive any and all rights under Section 1265.130 of the
California Code of Civil Procedure.

        23.    Subordination.

               (a) This Lease and Tenant's rights hereunder shall be subject and
subordinate to any ground lease, mortgage, deed of trust, or other hypothecation
or security device (collectively, any "Mortgage"), now or hereafter placed by
Landlord upon the Project, Building or other real property of which the Premises
is a part, to any and all advances made on the security thereof, and to all
renewals, modifications, consolidations, replacements and extensions thereof.
Tenant agrees that the ground lessors, mortgagees, trust deed beneficiaries and
other lienholders under any such Mortgages (collectively, "Mortgagees") shall
have no duty, liability or obligation to perform any of the obligations of
Landlord under this Lease, but that in the event of Landlord's default with
respect to any such obligation, Tenant will give any Mortgagee whose name and
address have been furnished Tenant in writing for such purpose notice of
Landlord's default and allow such Mortgagee thirty (30) days (or if more than
thirty (30) days is required to effect such cure, such additional time as may be
necessary) following receipt of such notice for the cure of said default before
invoking any remedies Tenant may have by reason thereof. If any Mortgagee shall
elect to have this Lease and/or Tenant's rights hereunder superior to the lien
of its Mortgage and shall give written notice thereof to Tenant, this Lease and
such rights shall be deemed prior to such Mortgage, notwithstanding the relative
dates of the documentation or recordation thereof

               (b) Notwithstanding any such subordination, and at the election
of a Mortgagee or any other party who acquires ownership of the Premises by
reason of the exercise of rights under a Mortgage or through a deed in lieu of
foreclosure, Tenant agrees to attorn to such Mortgagee or other party, and in
the event of such exercise of remedies and such election, such new owner shall
not: (i) be liable for any act or omission of any prior landlord or with respect
to events occurring prior to acquisition of ownership, (ii) be subject to any
offsets or defenses which Tenant might have against any prior landlord, (iii) be
bound by prepayment of more than one month's rent, or (iv) be required to
perform any obligations of any prior landlord under the Lease.

               (c) The agreements contained in this Section 23 shall be
effective without the execution of any further documents and shall survive the
exercise of remedies under a Mortgage provided, however, that, upon written
request from Landlord or a Mortgagee, Tenant and Landlord shall execute such
further writings as may be reasonably required to separately document any of the
matters provided for herein.

               (d) Notwithstanding Sections 23(a) and (b) above, Tenant's
obligation to subordinate this Lease to any Mortgage(s) entered into after the
date of this Lease shall be subject to Tenant's receiving assurance (a
"Non-Disturbance Agreement") from the Mortgagee that Tenant's possession and
this Lease shall not be disturbed as long as (i) no default by Tenant (or event
which would constitute a default with the passage of time or the giving of
notice) has occurred and (ii) Tenant attorns to said Mortgagee as provided
above. Landlord shall also use its best efforts to obtain a Non-Disturbance
Agreement from the Mortgagee, if any, holding a Mortgage against the Project as
of the date of this Lease; provided, however, that Tenant shall pay all costs
and expenses, including, without limitation, attorneys' fees, incurred by
Landlord in connection with such efforts. The form and content of any
Non-Disturbance Agreement required under this Section 23(d) shall be determined
by the Mortgagee.

        24.    Sale. In the event the original Landlord hereunder, or any
successor owner of the Project, shall sell or convey the Project, all
liabilities and obligations on the part of the original Landlord, or such
successor owner, under this Lease accruing thereafter shall terminate, and
thereupon all such liabilities and obligations shall be binding upon the new
owner. Tenant agrees to attorn to such new owner.

        25.    Estoppel Certificate. At any time and from time to time, but in
no event later than ten (10) business days after request by Landlord, Tenant
shall execute, acknowledge, and deliver to Landlord, promptly upon request, a
certificate certifying (a) that this Lease is unmodified and in full force and
effect (or, if there have been modifications, that this Lease is in full force
and effect, as modified, and stating the date and nature of the modification),
(b) the amount of the Base Rent and most recent Escalation Rent, if any, and the
date to which such rental has been paid, (c) that no notice has been received by







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<PAGE>   26

Tenant of any default which has not been cured, except as to defaults specified
in the certificate, (d) that no default of Landlord is claimed by Tenant, except
as to defaults specified in the certificate, and (e) such other matters as may
be reasonably requested by Landlord. Any such certificate may be relied upon by
any prospective purchaser or existing or prospective Mortgagee under any
Mortgage on the project or Building. Tenant's failure to deliver such statement
within such time shall constitute a default by Tenant under this Lease and shall
be conclusive upon Tenant (i) that this Lease is in full force and effect,
without modification except as may be represented by Landlord, (ii) that not
more than one (1) monthly installment of Base Rent and Escalation Rent in the
amount specified by Landlord has been paid in advance, and (iii) that there are
no uncured defaults in Landlord's performance. Within ten (10) days following
Landlord's request from time to time during the Term, Tenant shall deliver to
Landlord Tenant's current financial statement and financial statements for the
two (2) years prior to the current financial statement year, prepared in
accordance with generally accepted accounting principles, consistently applied.
Notwithstanding the foregoing, during such time that Tenant stock is publicly
traded, Tenant need only endeavor to deliver a copy of the financial reports
most recently published with the SEC. Landlord shall use reasonable efforts not
to divulge any confidential financial information of Tenant contained in an
estoppel certificate to any third parties (other than Landlord's officers,
directors, employees, accountants, attorneys and others as reasonably required
in the conduct of Landlord's business, or as otherwise required by applicable
securities Laws); except in the case of any litigation concerning this Lease, in
which event Landlord shall use reasonable efforts to keep such financial terms
confidential.

        26.    Intentionally Omitted.

        27.    No Light, Air, or View Easement. Any diminution or shutting off
of light, air or view by any structure which may be erected on lands adjacent to
the Building shall in no way affect this Lease or impose any liability on
Landlord.

        28.    Holding Over. If Tenant holds possession of the Premises after
expiration of the Term of this Lease or any termination of this Lease, Tenant
shall become a tenant at sufferance only, at a monthly rental equivalent to 150%
of the then prevailing monthly rental paid by Tenant at the expiration of the
Term or termination of this Lease, payable in advance on or before the first day
of each month, and otherwise subject to the terms, covenants and conditions
herein specified, so far as applicable. Acceptance by Landlord of rent after
such expiration or earlier termination shall not result in a renewal or
extension of this Lease. If Tenant fails to surrender the Premises within thirty
(30) days following the expiration of this Lease despite demand to do so by
Landlord, Tenant shall indemnify, defend and hold harmless Landlord from and
against any and all claims, demands, losses, liabilities, damages, costs and/or
expenses (including, without limitation, reasonable attorneys, fees and
expenses) arising out of such failure to surrender including, without
limitation, any claim made by any succeeding tenant.

        29.    Security Deposit. Concurrently with its execution of this Lease,
Tenant shall deposit with Landlord the sum specified in the Basic Lease
Information (the "Security Deposit"). The Security Deposit shall be held by
Landlord as security for the faithful performance by Tenant of all the
provisions of this Lease to be performed or observed by Tenant. If Tenant fails
to pay rent or other sums due hereunder, or otherwise defaults with respect to
any provision of this Lease, Landlord may use, apply or retain all or any
portion of the Security Deposit for the payment of any rent or other sum in
default or for the payment of any other sum to which Landlord may become
obligated by reason of Tenant's default, or to compensate Landlord for any loss
or damage which Landlord may suffer thereby. If Landlord so uses or applies all
or any portion of the Security Deposit, Tenant shall within ten (10) days after
demand therefor deposit cash with Landlord in an amount sufficient to restore
the Security Deposit to the full amount thereof and Tenant's failure to do so
shall be a material breach of this Lease. Landlord shall not be required to keep
the Security Deposit separate from its general accounts. If Tenant performs all
of Tenant's obligations hereunder, the Security Deposit, or so much thereof as
has not theretofore been applied by Landlord, shall be returned, without
interest (except as provided below), to Tenant (or, at Landlord's option, to the
last assignee, if any, of Tenant's interest hereunder) at the expiration of the
Term hereof, and after Tenant has vacated the Premises. No trust relationship is
created herein between Landlord and Tenant with respect to the Security Deposit.
If this Lease provides for periodic increases in Base Rent, Lessee shall, within
ten (10) days after demand by Landlord, increase the amount of the Security
Deposit to equal the Base Rent then in effect.







                                       23
<PAGE>   27

        Notwithstanding the foregoing, provided that no default by Tenant has
occurred by Tenant under the Lease (including any matter which would constitute
a default either with the giving of notice or the passage of time), Landlord
shall refund a portion of Tenant's Security Deposit to Tenant as follows:

        (i) If Tenant's business generates three million dollars ($3,000,000.00)
in gross sales during any calendar year during the Term, Landlord shall refund
thirty thousand dollars ($30,000.00) of Tenant's Security Deposit to Tenant,
plus interest on said portion of the Security Deposit at the rate of five and
one-half percent (5 1/2%) per annum; and

        (ii) If Tenant's business generates three million dollars
($3,000,000.00) in net profits during any calendar year during the Term,
Landlord shall refund an additional forty thousand dollars ($40,000.00) of
Tenant's Security Deposit to Tenant, plus interest on said portion of the
Security Deposit at the rate of five and one-half percent (5 1/2%) per annum;

        provided, however, that in no event will Landlord be required at any
time before the expiration of the Term to refund or otherwise release to Tenant
any portion of the Security Deposit if such refund or release would result in
the remaining Security Deposit held by Landlord being less than thirty thousand
dollars ($30,000.00), and no interest shall at any time be payable by Landlord
with respect to said remaining Security Deposit. Tenant shall demonstrate that
it has meet the gross revenue and/or net profit thresholds set forth above by
delivering to Landlord either (i) audited financial statements in a form and
manner reasonably acceptable to Landlord or (ii) copies of Tenant's federal
income tax returns, certified by Tenant's President and Secretary as true and
accurate copies of the tax returns filed by Tenant with the Internal Revenue
Service. Landlord shall refund the applicable portion of the Security Deposit,
together with interest thereon as provided above, within thirty (30) days
following Landlord's receipt from Tenant of the aforementioned evidence that the
applicable financial threshold has been met.

        30.    Waiver. The waiver by Landlord of any agreement, condition or
provision herein contained shall not be deemed to be a waiver of any subsequent
breach of the same or any other agreement, condition or provision herein
contained, nor shall any custom or practice which may grow up between the
parties in the administration of the terms hereof be construed to waive or to
lessen the right of Landlord to insist upon the performance by Tenant in strict
accordance with such terms. The subsequent acceptance of rental hereunder by
Landlord shall not be deemed to be a waiver of any preceding breach by Tenant of
any agreement, condition or provision of this Lease, other than the failure of
Tenant to pay the particular rental so accepted, regardless of Landlord's
knowledge of the preceding breach at the time of acceptance of the rental.

        31.    Notices and Consents. All notices, consents, demands and other
communications from one party to the other that are given pursuant to the terms
of this Lease shall be in writing and shall be deemed to have been fully given
two (2) full business days following deposit in the United States mail,
certified or registered, postage prepaid, or one (1) business day following
transmittal by reputable overnight courier (such as Federal Express), or when
hand delivered, to the respective addresses for delivery of notices specified in
the Basic Lease Information, or to such other place as either party may from
time to time designate in a notice to the other party. Notwithstanding the
foregoing, Tenant hereby appoints as its agent to receive the service of all
dispossessory or distraint proceedings and notices thereunder the person in
charge of or occupying the Premises at the time, and, if no person shall be in
charge of or occupying the same, then such service may be made by attaching the
same on the main entrance of the Premises. Failure to deliver a copy of any
notice as provided in the Basic Lease Information shall not invalidate any
notice or extend the time for performance if the notice is given to the primary
recipient listed in the Basic Lease Information.

        32.    Complete Agreement. There are no oral agreements between Landlord
and Tenant affecting this Lease, and this Lease supersedes and cancels any and
all previous negotiations, arrangements, brochures, agreements, and
understandings if any, between Landlord and Tenant or displayed by Landlord to
Tenant with respect to the subject matter of this Lease or the Project. There
are no representations between Landlord and Tenant other than those contained in
this Lease. All implied warranties, including implied warranties of
merchantability and fitness, are excluded.

        33.    Authority. If either party signs as a corporation, each of the






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<PAGE>   28

persons executing this Lease on behalf of said party warrants that it is a duly
authorized and existing corporation, that said party has and is qualified to do
business in California, that the corporation has the full right and authority to
enter into this Lease, and that each and both of the persons signing on behalf
of the corporation were authorized to do so. If either party signs as a
partnership, each of the persons executing this Lease on behalf of said party
warrants that said party is a partnership, that the partnership has the full
right and authority to enter into this Lease, and that each person signing on
behalf of the partnership is authorized to do so. If either party signs as a
limited liability company, trust, or some other entity, each of the persons
executing this Lease on behalf of said party warrants that said party is the
type of entity stated, that the entity has the full right and authority to enter
into this Lease, and that each person signing on behalf of said entity is
authorized to do so.

        34.    Brokers. Landlord shall be responsible for the payment of any
commissions owing in connection with this Lease to the brokers specified in the
Basic Lease Information, if any (collectively, "Broker"), pursuant to separate
agreement. Landlord and Tenant each represent and warrant that it has had no
dealings with any real estate broker or agent in connection with the negotiation
of this Lease, other than the Broker, and that it knows of no other real estate
broker, agent or finder who is or might be entitled to a commission or fee in
connection with this Lease. If either party has dealt with any other person or
real estate broker with respect to leasing or renting space in the Project other
than Broker, such party shall be solely responsible for the payment of any fees
due said person or firm, and shall indemnify, defend and hold harmless the other
party from and against any liabilities, damages or claims with respect thereto,
including attorneys' fees and costs.

        35.    Parking. Tenant shall be entitled, without charge therefor, to
the use of the number of nonexclusive surface parking spaces indicated in the
Basic Lease Information in such portion of the Common Areas as may be provided
by Landlord from time to time for the purpose of parking motor vehicles. Monthly
parking fees payable for any additional parking spaces requested by Tenant shall
be the prevailing rates within the Project for such spaces, if any, and shall be
payable one month in advance prior to the first day of each calendar month.
Tenant acknowledges, however, that Landlord may provide or not provide any
additional parking spaces requested by Tenant in Landlord's sole and absolute
discretion. Landlord may assign any unreserved and unassigned parking spaces
and/or make all or a portion of such spaces preferred and/or reserved, if it
determines in its sole discretion that it is necessary for orderly and efficient
parking. Tenant shall not use any spaces which have been specifically assigned
by Landlord including, without limitation, spaces assigned for uses such as
visitor parking or which have been designated by governmental entities with
competent jurisdiction as being restricted to certain uses. The use by Tenant
and its employees, visitors and invitees of the parking facilities of the
Project shall be on the terms and conditions set forth herein as well as on the
parking rules and regulations as established and modified by Landlord from time
to time. Landlord shall not be responsible to Tenant for the violation or
non-performance by any other tenant or occupant of the Project of any of such
parking rules and regulations. 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. Notwithstanding the
foregoing, Landlord shall have the right to designate specific parking areas or
parking stalls within the Project and in reasonable proximity to the Building
for guest parking and for Tenant's parking spaces in excess of 3 parking spaces
per one thousand (1,000) square feet of Useable Area.

        36.    Force Majeure. The time for performance by either party of any
obligation under this Lease (other than the payment of rent or other monetary
obligations) shall be extended for the period of delay resulting from fire,
earthquake, explosion, flood, the elements, acts of God or the public enemy,
strike, other labor trouble, interference of governmental authorities or agents,
or shortages of fuel, supplies or labor resulting therefrom or any other cause,
whether similar or dissimilar to the above, beyond the reasonable control of the
party obligated for such performance, financial inability excepted
(collectively, any "Force Majeure Event").

        37.    Waiver of Trial by Jury. Landlord and Tenant hereby waive trial
by jury in any action, proceeding or counterclaim brought by either of the
parties hereto against the other or any matter whatsoever arising out of or in
any way connected with this Lease, the relationship of Landlord and Tenant,
Tenant's use







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<PAGE>   29

or occupancy of the Premises, or any claim of injury or damage, or the
enforcement of any remedy under any statute, or otherwise.

        38.    Guaranty of Lease. It shall be a condition precedent to the
effectiveness of this Lease that the Guarantor(s) referenced in the Basic Lease
Information, execute a guaranty of Tenant's Obligations under this Lease in the
form attached hereto as Exhibit "E" and incorporated herein by this reference.

        39.    Recapture. Any agreement by Landlord contained herein for free or
abated rent or other charges applicable to the Premises, 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 the Lease, all of which concessions are
hereinafter referred to as "Inducement Provisions," shall be deemed conditioned
upon Tenant's full and faithful performance of all of the terms, covenants and
conditions to be performed by Tenant under this Lease. Upon the occurrence of a
breach or default of this Lease by Tenant, or upon the filing by or against
Tenant of any petition under the United States Bankruptcy Code (Title 11 U.S.C.)
or any similar statute or law for the reorganization or liquidation of debt, or
upon any voluntary or involuntary assignment by Tenant for the benefit of its
creditors, (i) any such Inducement Provision shall automatically be deemed
deleted and of no further force or effect, and any rent, other charge, bonus,
inducement or consideration theretofore abated, given or paid by Landlord under
such Inducement Provision shall be immediately due and payable by Tenant to
Landlord, and shall be recoverable as additional rent due under the Lease,
notwithstanding any subsequent cure of said default or breach by Tenant. The
acceptance by Landlord of rent or the cure of the default or breach which
initiated the operation of this paragraph shall not be deemed a waiver by
Landlord of the provisions of this paragraph unless specifically so stated in
writing by Landlord at the time of such acceptance.

        40.    Expansion Space. Provided that Tenant is not in default under
this Lease (which shall include any mater which would constitute a default
either with the passage of time or the giving of notice) at any time prior to
the time the "Expansion Space Notice" (as such term is defined below) is
received by Landlord or thereafter until the date on which the "Tenant's
Exercise Notice" (as such term is defined below) is received by Landlord, Tenant
shall have the ongoing option for the lease of any leaseable space in the
Building (the "Expansion Space") to the extent the same becomes available for
lease to Tenant (which for purposes hereof shall mean that such space is not
then occupied or subject to lease or option or right for lease extension or
premises expansion by any other tenant or person) during the Term, exercisable
as follows: If Tenant desires to expand the Premises to include any Expansion
Space, Tenant shall during the initial Term deliver at least ninety (90) days'
written notice of such desire to Landlord (the "Expansion Space Notice").
Promptly following receipt of the Expansion Space Notice, Landlord shall deliver
to Tenant written notice of any configurations of then available of Expansion
Space and Expansion Space which will become available during the twelve (12)
month period following the date of Tenant's Expansion Space Notice, and Tenant
shall have ten (10) days following the date of such notice from Landlord to
elect by written notice to Landlord ("Tenant's Exercise Notice") to notify
Landlord, in writing, of which configuration of Expansion Space, if any, Tenant
desires to lease (commencing immediately upon availability) from Landlord, which
lease shall be for a term co-terminus with the Lease Term and otherwise subject
to all applicable terms and conditions of this Lease; provided, however, that
Landlord shall have no obligation to improve the Expansion Space for Tenant. If
(i) Tenant does not deliver an Expansion Space Notice, or (ii) after delivery of
Tenant's Expansion Space Notice and receipt of notice of any available space
from Landlord, Tenant does not deliver Tenant's Exercise Notice within such ten
(10) day period electing to lease such Expansion Space, Landlord may proceed to
lease such Expansion Space to any party upon any terms and conditions as
Landlord desires. If Tenant delivers the Expansion Space Notice and actually
leases the Expansion Space, then (i) the "Premises" shall thereafter be deemed
for all purposes to include the Expansion Space and (ii) Tenant's Base Rent,
Percentage Share of Building Operating Expenses, and Building Tax Expenses,
Security Deposit, and other matters in this Lease pertaining to the amount of
Rentable Area contained within the Premises shall be adjusted accordingly, as
reasonably determined by Landlord. Landlord and Tenant shall within thirty (30)
days following Landlord's receipt of the Tenant's Exercise Notice execute an
amendment to this Lease prepared by Landlord to reflect the addition to the
Premises of the Expansion Space, and Landlord may, but without obligation to do
so, declare the Tenant's Exercise Notice to be null and void if Tenant fails to
execute such amendment. Notwithstanding anything to the contrary contained in
this paragraph, Tenant may not exercise its rights under this Section 40 after
the last day of the sixtieth







                                       26
<PAGE>   30

(60th) month of the initial Term unless it concurrently exercises its option to
extend the Term by the Option Term as provided in Section 2 above.

        41.    Signage; Roof Rights. (a) Tenant, at its cost and expense, may
place signage identifying Tenant's business name on (i) the freeway facing side
of the Building and (ii) on a monument sign to be constructed by Tenant (or, at
Landlord's option, by Landlord at Tenant's cost) which is to be located in front
of the Building adjacent to its main entry area. With the exception of the
freeway facing building signage, the signage rights granted in this Section 41
are non-exclusive, and each signage right (including freeway facing signage)
granted hereunder shall automatically terminate if such signage is not placed
within one (1) year of the Commencement Date. All signage, including, without
limitation, the design, size, color, and type, shall be subject to (i)
Landlord's prior written consent, which shall not be unreasonably withheld, (ii)
Building signage standards, if any, and (iii) all applicable Laws. Subject to
the foregoing, Tenant's freeway facing signage may be illuminated. The location
of Tenant's freeway facing signage (as opposed to the other characteristics
thereof) shall be mutually acceptable to Landlord and Tenant, and Landlord shall
not permit other tenants at the Project to utilize said location (as opposed to
other locations on the exterior of the Buildings) unless Tenant's right to the
same has terminated as provided above.

               (b) Landlord shall permit Tenant to install up to three (3)
VHF/UHF microwave antennae on the roof of the Building; provided, however, that
said antennae and the installation thereof shall be subject to Landlord's prior
written consent, which shall not be unreasonably withheld, as to the size,
weight, type, and placement of said antennae, the impact the same have on the
Building and Building Systems, and visibility from outside of the Building. Such
antennae and Tenant's use thereof shall comply in all respects with all
applicable Laws. Provided that Tenant is not in default under this Lease
(including any matter which would constitute a default either with the passage
of time or the giving of notice), Tenant may upon the expiration of the Term
remove all of said antennae from the Building; provided that Tenant restores the
Building to the condition in which it existed prior to the placement of the
same. If instructed by Landlord, Tenant shall also remove said antennae from the
Building no later than the expiration or earlier termination of the Term.
Tenant's use and occupancy use thereof shall be subject to all of the terms and
conditions of this Lease, including without limitation, Section 8, and Section
11.

        42.    Surrender by Existing Tenants. Tenant is aware that the Premises
which is the subject of this Lease is currently leased to other tenant(s) of
Landlord (the "Existing Tenants"). Tenant acknowledges and agrees that
Landlord's obligation to deliver possession of the Premises to Tenant, and to
otherwise complete the transaction contemplated under this Lease, shall be
subject to Landlord's ability to cause the Existing Tenants of the Premises to
surrender the same to Landlord, on such terms and conditions as are acceptable
to Landlord in its sole and absolute discretion. If Landlord is able to
effectuate surrender of the portion of the Premises located on the first floor
of the Building before the portion located on the second floor, Tenant shall
first accept such Premises from Landlord and shall accept when available that
portion of the Premises located on the second floor of the Building, but Tenant
shall not be required to pay Base Rent or Escalation Rent with respect to the
second floor space until such time that Landlord makes the same available for
use by Tenant. If Landlord is unable to make the second floor space available
for use by Tenant concurrently with availability of the portion of the Premises
located in the first floor of the Building, Landlord shall use reasonable
efforts to make alternate premises available for use by Tenant, and Tenant shall
not be required to pay Base Rent for its use of the alternate premises. However,
if Landlord determines that it will be unable to make the originally designated
second floor space available for use by Tenant within ninety (90) days following
Landlord's delivery of the alternate premises, Landlord shall deliver written
notice thereof to Tenant within sixty (60) days following its delivery of the
alternate premises, and Tenant shall have thirty (30) days from its receipt of
such notice to elect by written notice to Landlord to lease the alternate
premises in place of the originally designated second floor space. If Tenant
elects to lease the alternate premises as provided above, then (i) the
"Premises" shall thereafter be deemed for all purposes to include the alternate
premises (as opposed to the originally designated second floor space) and (ii)
Tenant's Base Rent, Percentage Share of Building Operating Expenses, and
Building Tax Expenses, Security Deposit, and other matters in this Lease
pertaining to the amount of Rentable Area contained within the Premises shall be
adjusted accordingly, as reasonably determined by Landlord. Landlord and Tenant
shall within thirty (30)







                                       27
<PAGE>   31

days following Landlord's receipt of Tenant's election to lease the alternate
premises execute an amendment to this Lease prepared by Landlord to reflect the
addition to the Premises of the alternate premises, and Landlord may, but
without obligation to do so, declare the Tenant's election to be null and void
if Tenant fails to execute such amendment. If Tenant does not elect to lease the
alternate premises as provided above, Tenant shall vacate and surrender the same
to Landlord within thirty (30) days following the date on which delivery of
Tenant's election notice was required, and Landlord shall have no further
obligation to lease the originally designated second floor premises to Tenant
(except as provided in Section 40 above). This Lease shall automatically and
without further action by Landlord or Tenant terminate if Landlord does not
deliver written notice to Tenant on or before April 23, 1999 stating that
Landlord has entered into an agreement by which the Existing Tenant(s) agree to
surrender possession of that portion of the Premises located on the first floor
of the Building.

        43.    Miscellaneous. The words "Landlord" and "Tenant" as used herein
shall include the plural as well as the singular. If there be more than one
Tenant, the obligations hereunder imposed upon Tenant shall be joint and
several. Time is of the essence of this Lease and each and all of its
provisions. Submission of this instrument for examination or signature by Tenant
does not constitute a reservation of or option for lease, and it is not
effective as a lease or otherwise until execution and delivery by both Landlord
and Tenant. The agreements, conditions and provisions herein contained shall,
subject to the provisions as to assignment, apply to and bind the heirs,
executors, administrators, successors and assigns of the parties hereto.
Notwithstanding the fact that certain references in this Lease to acts required
to be performed by Tenant hereunder, or to breaches or defaults of this Lease by
Tenant, omit to state that such acts shall be performed at Tenant's sole cost
and expense, or omit to state that such breaches or defaults by Tenant are
material, unless the context clearly implies to the contrary, each and every act
to be performed or obligations to be fulfilled by Tenant shall be performed at
Tenant's sole cost and expense, and all breaches or defaults by Tenant hereunder
shall be deemed material. Upon request by Landlord, Tenant agrees to modify this
Lease to meet the requirements of any or all lenders or ground lessors selected
by Landlord who request such modification as a condition precedent to providing
any loan or financing or to entering into any ground lease affecting or
encumbering the Project or any portion thereof, provided that such modification
does not (i) increase Base Rent, (ii) alter the Term, or (iii) materially and
adversely affect Tenants' rights hereunder. Tenant shall not, without the
consent of Landlord, use the name of the Building or Project for any purpose
other than as the address of the business to be conducted by Tenant in the
Premises. Any option, right or first refusal, right of first negotiation/offer,
or other similar right granted to Tenant in this Lease (collectively, an
"Option") is personal to the original Tenant executing this Lease and cannot be
voluntarily or involuntarily assigned or exercised by any person or entity other
than said Tenant (or Tenant's affiliate under Section 15(g) above), and even
then only when Tenant (or such affiliate) is in full possession of the Premises
and has no intention of thereafter assigning or subletting. Except for
affiliates (as defined in Section 15 above) of the original Tenant hereunder,
the Options, if any, herein granted to Tenant are not assignable, either as part
of an assignment of this Lease or separately or apart therefrom, and no Option
may be separated from this Lease in any manner, by reservation or otherwise. If
any provision of this Lease shall be determined to be illegal or unenforceable,
such determination shall not affect any other provision of this Lease and all
such other provisions shall remain in full force and effect. This Lease shall be
governed by and construed pursuant to the laws of the State of California.
Tenant shall not record this Lease nor a short form memorandum hereof. Prior
drafts of this Lease shall not be used in interpreting the meaning of provisions
contained in this Lease. The exhibits and addendum, if any, specified in the
Basic Lease Information are attached to this Lease and by this reference made a
part hereof. This Lease may be executed in any number of counterparts, each of
which shall be deemed to be an original, but any number of which, taken
together, shall constitute one and the same instrument. Tenant acknowledges that
this Lease is subject to Landlord's receiving from its Mortgagee(s) approval of
all of the terms contained herein.



                                       28
<PAGE>   32

        IN WITNESS WHEREOF, the parties have executed this Lease on the
respective dates indicated below:

LANDLORD:


MALIBU CANYON OFFICE PARTNERS, LLC,          By:  MB REAL ESTATE, INC., a
a California limited liability company            California corporation



By:                                          TENANT:
   --------------------------------
Calvin H. Johnston, President

                                             ACT NETWORKS, INC., a
                                             Delaware corporation

                                             By: /s/ SUSAN N. CAYLEY
                                                 -------------------------------
                                             Print Name: Susan N. Cayley
                                             Its: Vice President Legal Affairs
                                                  and Secretary

                                             By: /s/ MARTIN A. WOLL
                                                 -------------------------------
                                             Print Name: Martin A. Woll
                                             Its: Chief Financial Officer

                                             If Tenant is a corporation, this
                                             instrument must be executed by the
                                             chairman of the board, the
                                             president or any vice president and
                                             the secretary, any assistant
                                             secretary, the chief financial
                                             officer or any assistant financial
                                             officer or any assistant treasurer
                                             of such corporation, unless the
                                             bylaws or a resolution of the board
                                             of directors shall otherwise
                                             provide, in which case the bylaws
                                             or a certified copy of the
                                             resolution, as the case may be,
                                             must be attached to this
                                             instrument. If Tenant is a limited
                                             liability company, this instrument
                                             must be executed by Tenant's
                                             manager, unless another person or
                                             entity is authorized pursuant to
                                             Tenant's Operating Agreement or a
                                             member's resolution, in which case
                                             a certified copy of the Operating
                                             Agreement or resolution, as the
                                             case may be, must be attached to
                                             this instrument.



                                       29

<PAGE>   33

                                   EXHIBIT "C"

                           IMPROVEMENT OF THE PREMISES

         1. Plans. Landlord and Tenant hereby approve the space plans and
Building standard specifications (collectively, the "Space Plans") for the
construction of certain improvements, which shall not include Tenant's
telephone, computer, and data systems, furniture, or other personal improvements
desired by Tenant (the "Tenant Improvements") to be permanently affixed to the
Premises, which Space Plans are described on Schedule 1 attached hereto and
incorporated herein by this reference. Promptly following the execution of this
Lease, Landlord shall cause Landlord's architect to prepare final plans and
specifications (the "Final Plans") for the Tenant Improvements, in accordance
with the Space Plans. Such Final Plans shall be submitted by Landlord's
architect to Landlord and Tenant for approval, which approval shall not be
unreasonably withheld and shall be granted so long as such Final Plans are in
accordance with the approved Space Plans; provided, however, that any deviation
from the Space Plans requested by Tenant as a part of the Final Plans shall be
subject to the provisions of Section 3 of this Exhibit "C" respecting "Change
Orders" (as hereinafter defined). Upon written approval of the Final Plans by
the parties, Landlord shall be authorized to proceed with the construction of
the Tenant Improvements in accordance with the Final Plans.

         2. Construction of the Tenant Improvements. Subject to the provisions
of Section 3 below, Landlord shall construct, or cause the construction of, the
Tenant Improvements in accordance with the approved Final Plans, at Landlord's
sole cost and expense. In addition, Landlord shall pay to The Johnston Group, a
affiliate of Landlord, a construction administration fee in an amount equal to
ten percent (10%) of the total costs of construction.

         3. Deviations from the Final Plans. Tenant shall be liable for the
increased cost of the design and construction of the Tenant Improvements
resulting from any Change Orders in accordance with the provisions of this
Section 3, plus a construction administration fee to The Johnston Group, an
affiliate of Landlord, in an amount equal to ten percent (10%) of such cost. In
the event of any deviation from the Space Plans requested by Tenant as a part of
the Final Plans pursuant to Section 1 above, and/or any change to any item of
Final Plans following the approval thereof by Landlord pursuant to Section 1
above, Tenant shall submit to Landlord a written request for a change order (the
"Change Order Request"), detailing the desired change. If Landlord approves
Tenant's Change Order Request, Landlord shall promptly thereafter issue to
Tenant a statement (the "Change Order Statement") indicating the net increase in
the cost of design and construction of the Tenant Improvements resulting from
the implementation of such Change Order Request (including, without limitation,
reasonable contractor's fees for profit, overhead and general conditions in
connection with such Change Order Request). Within 3 days following receipt of
such Change Order Statement from Landlord, Tenant shall notify Landlord in
writing whether Tenant elects to incorporate the Change Order Request into the
Final Plans, provided that it shall be a condition to the effectiveness of such
an election to so incorporate the Change Order Request that Tenant pay to
Landlord the amount specified on the Change Order Statement. If Tenant so elects
to incorporate the Change Order Request into the Final Plans, the Change Order
Request shall become a "Change Order" and Landlord may retain the amount
delivered by Tenant pursuant to the Change Order Statement therefor as Tenant's
contribution to the cost of such Change Order. If the adoption of a Change Order
causes a delay in the Commencement Date that would have otherwise been
established in the absence of such Change Order, such delay shall be a "Tenant
Delay" (as defined in Section 4(b) below). In addition, in the event that the
net cost of construction of the Tenant Improvements increases due to changes
requested by any applicable governmental authority in the Tenant Improvements as
set forth in the Final Plans approved by Landlord and Tenant pursuant to Section
1 above, Tenant shall be pay to Landlord the amount of such increased costs
within 10 days after Tenant's receipt from Landlord of written notice thereof.

         4.  Commencement Date.

         (a) The "Commencement Date" shall mean the earlier of (i) the date on
which Tenant takes possession of any portion of the Premises for any purpose
other than those permitted under Section 5(a) below, and (ii) the date of
"Substantial Completion" of the Tenant Improvements, which for purposes hereof
shall be the date upon which the Tenant Improvements have been substantially
completed pursuant to the Final Plans (as determined by Landlord's architect or
space planner), with the exception of any punch list items and Tenant's
controlled improvements, if any (e.g., Tenant's fixtures, telephones, data
lines, computers, furniture, etc.) to be installed by Tenant and/or under the
supervision of Landlord's contractor).







                             EXHIBIT "C" -- PAGE 1
<PAGE>   34

         (b) If there shall be a delay or there are delays in the occurrence of
the Commencement Date as a direct, indirect, partial, or total result of any of
the following (in any such case, a "Tenant Delay"): (i) Tenant's failure to
timely perform its obligations under this Exhibit "C" or the other provisions of
this Lease requiring Tenant's approval, (ii) Tenant's request for any Change
Orders and/or the implementation thereof, (iii) Tenant's requirement for
materials, components, finishes or improvements which are not available in a
commercially reasonable time given the anticipated date of substantial
completion of the Premises, or which are different from Building standards, or
(iv) any other acts or omissions of Tenant, or its agents, employees and/or
contractors, then, notwithstanding anything to the contrary set forth in this
Lease (including, without limitation, this Exhibit "C") and regardless of the
actual date of the Commencement Date, the Commencement Date shall be the date on
which the Commencement Date would have occurred if no Tenant Delay or Tenant
Delays, as set forth above, had occurred. If Tenant Delays exist, then upon the
substantial completion of the Premises, Landlord shall notify Tenant of (1) the
aggregate period of the Tenant Delays and (2) the Commencement Date as
determined pursuant hereto. Tenant shall, within five (5) days following receipt
of such notice, perform or cause to be performed all obligations under this
Lease (including, without limitation, the payment of rent) that have accrued
from the Commencement Date as determined pursuant hereto, to the date on which
Tenant received Landlord's notice, and the Commencement Date shall, for all
purposes under this Lease, be the Commencement Date as determined pursuant
hereto. Nothing contained herein shall be deemed to relieve Landlord of its
obligation to use diligent efforts to complete the Tenant Improvements in a
timely manner subject to Tenant Delays and delays due to the occurrence of any
Force Majeure Events.

         5.  Miscellaneous.

         (a) Provided that Tenant and its agents do not interfere with the
construction of the Tenant Improvements, upon reasonable prior written notice to
Landlord, Tenant shall be permitted access to the Premises thirty (30) days
before the date of substantial completion of the Tenant Improvements for the
purpose of installing over-standard equipment or fixtures (including Tenant's
data and telephone equipment) in the Premises. Prior to any such entry upon the
Premises, Tenant shall deliver to Landlord evidence of the satisfaction of
Tenant's insurance obligations set forth in this Lease. Any such occupancy of
the Premises by Tenant prior to the Commencement Date shall be subject to all
applicable provisions of the Lease (including, without limitation, the indemnity
and insurance provisions of Lease Sections 12 and 13) other than the obligation
for the payment of Base Rent and Escalation Rent. Prior to any such entry upon
the Premises, Tenant shall deliver to Landlord evidence of the satisfaction of
Tenant's insurance obligations set forth in Lease Section 12.

         (b) Tenant has designated Steven Watts as its sole representative with
respect to the matters set forth in this Exhibit "C", who, until further notice
to Landlord, shall have full authority and responsibility to act on behalf of
the Tenant as required in this Exhibit "C".

         (c) Landlord has designated Jeff Johnston as its sole representative
with respect to the matters set forth in this Exhibit "C", who, until further
notice to Tenant, shall have full authority and responsibility to act on behalf
of the Landlord as required in this Exhibit "C".

         (d) At Landlord's option, all subcontractors, laborers, materialmen,
and suppliers retained directly by Tenant shall be union labor in compliance
with the master labor agreements existing between trade unions and the Southern
California Chapter of the Associated General Contractors of America.

         (e) All references herein to a number of days shall mean and refer to
calendar days. In all instances where Tenant is required to approve or deliver
an item, if no written notice of approval is given or the item is not delivered
within the stated time period, at Landlord's sole option, at the end of such
period the item shall automatically be deemed approved or delivered by Tenant
and the next succeeding time period shall commence.









                             EXHIBIT "C" -- PAGE 2
<PAGE>   35


                                   SCHEDULE 1

Space Plans by Bena Design Partnership dated 4/1/99 for Buildings A & B, with
revisions dated 4/8/99 (first floor), with the plan for the space on the second
floor dated 4/13/99. Notwithstanding the foregoing, Landlord shall have no
responsibility regarding any of the systems furniture, or any other furniture
located, or to be located at the Premises. Tenant shall also be responsible to
purchase the projection screen at its own cost. Landlord will install the screen
at its cost.
<PAGE>   36

                                   EXHIBIT "D"

                              RULES AND REGULATIONS

         1. The sidewalks, halls, passages, exits, entrances, shopping malls,
elevators, escalators and stairways of the Building shall not be obstructed by
Tenant or used by Tenant for any purpose other than for ingress to and egress
from the Premises. The halls, passages, exits, entrances, shopping malls,
elevators, escalators and stairways are not for the general public, and Landlord
shall in all cases retain the right to control and prevent access thereto of all
persons whose presence in the judgment of Landlord would be prejudicial to the
safety, character, reputation and interests of the Project 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 its
business, unless such persons are engaged in illegal activities. Neither Tenant
nor any employee or invitee of Tenant shall go upon the roof of the Building.

         2. No sign, placard, picture, name, advertisement or notice visible
from the exterior of Tenant's Premises shall be inscribed, painted, affixed or
otherwise displayed by Tenant on any part of the Building without the prior
written consent of Landlord in its sole and absolute discretion. Landlord will
adopt and furnish to tenants general guidelines relating to signs inside the
Building on the office floors. All approved signs or lettering on doors shall be
printed, painted, affixed or inscribed at the expense of Tenant by Landlord.
Material visible from outside the Building will not be permitted.

         3. The Premises shall not be used for the storage of merchandise held
for sale to the general public or for lodging. No cooking shall be done or
permitted by Tenant on the Premises, except that use by Tenant of food and
beverage vending machines and Underwriters' Laboratory approved microwave ovens
and equipment for brewing coffee, tea, hot chocolate and similar beverages shall
be permitted, provided that such use is in accordance with all applicable Laws.
No food or drink shall be permitted in the common areas of the Project without
the express approval of Landlord. Food or drink shall never be permitted in the
common areas of any building. Tenant shall be responsible for any damage to the
improvements in any building due to food or drink spillage. If the Premises or
any portion of the Project shall become infected with vermin as a result of
Tenant's violation of the foregoing, Tenant, at its sole cost and expense, shall
cause the same to be exterminated as may be required by contractors approved by
Landlord.

         4. Tenant shall not employ any person or persons other than Landlord's
janitorial service for the purpose of cleaning the Premises, unless otherwise
specifically approved by Landlord. No person or persons other than those
approved by Landlord shall be permitted to enter the Building for the purpose of
cleaning the same. Tenant shall not cause any unnecessary labor by reason of
carelessness or indifference in the preservation of good order and cleanliness.
Janitor service will not be furnished on nights when rooms are occupied after
9:30 P.M. unless, by prior arrangement with Landlord, service is extended to a
later hour for specifically designated rooms.

         5. Landlord will furnish Tenant free of charge two keys to each door
lock in its Premises. Landlord may make a reasonable charge for any additional
keys. Tenant shall not have any keys made. Tenant shall not alter any lock or
install a new or additional lock or any bolt on any door of its Premises without
the prior consent of Landlord. Tenant shall in each case furnish Landlord with a
key for any such lock. Tenant, upon the termination of its tenancy, shall
deliver to Landlord all keys to doors in the Building which shall have been
furnished to Tenant.

         6. The freight elevator shall be available for use by all tenants in
the Building, subject to such reasonable scheduling as Landlord in its
discretion shall deem appropriate. The persons employed to move such equipment
in or out of the Building must be acceptable to Landlord. Landlord shall have
the right to prescribe the weight, size and position of all equipment,
materials, furniture or other properly brought into the Building. Heavy objects
shall, if considered necessary by Landlord, stand on wood strips of such
thickness as is necessary to properly distribute the weight. Landlord will not
be responsible for loss of or damage to any such property from any cause, and
all damage done to the Building by moving or maintaining such property shall be
repaired at the expense of








                             EXHIBIT "D" -- PAGE 1
<PAGE>   37

Tenant.

         7. Tenant shall not use or keep in the Premises or the Building any
kerosene, gasoline or inflammable or combustible fluid or material other than
limited quantities thereof reasonably necessary for the operation or maintenance
of office equipment, or use any method of heating or air conditioning other than
that supplied by Landlord. Tenant shall not use or keep or permit to be used or
kept any foul, noxious or hazardous gas or substance in the Premises, or permit
or suffer the Premises to be occupied or used in a manner offensive or
objectionable to Landlord or other occupants of the Building by reason of noise,
odors, or vibrations, or interfere in any way with other tenants or those having
business therein. No pets shall be kept in the Premises.

         8. Landlord shall have the right, exercisable without notice and
without liability to any tenant, to change the name and street address of the
Building and/or Project.

         9. Landlord reserves the right to exclude from the Building and/or
Project between the hours of 6 P.M. and 7 A.M. and at all hours on Saturdays,
Sundays and legal holidays any person who does not present a proper access card
or other identification as a tenant or an employee of a tenant, or who does not
otherwise present proper authorization by a tenant for access to its premises.
Tenant shall be responsible for all persons for whom it authorizes access and
shall be liable to Landlord for all acts of such persons. Landlord shall in no
case be liable for damages for any error with regard to the admission to or
exclusion from the Building and/or Project of any person. In the case of
invasion, mob, riot, public excitement or other circumstances rendering such
action advisable in Landlord's opinion, Landlord reserves the right to prevent
access to the Building and/or Project during the continuance of the same by such
action as Landlord may deem appropriate.

         10. The directory of the Building will be provided for the display of
the name and location of Tenant, and Landlord reserves the right to exclude any
other names therefrom. Any additional name which Tenant desires to have added to
the directory shall be subject to Landlord's approval and may be subject to a
charge therefor

         11. No curtains, draperies, blinds, shutters, shades, screens or other
coverings, hangings or decorations shall be attached to, hung or placed in, or
used in connection with any exterior window in the Building other than Building
standard window coverings.

         12. Messenger services and suppliers of bottled water, food, beverages,
and other products or services shall be subject to such reasonable regulations
as may be adopted by Landlord. Landlord may establish a central receiving
station in the Building for delivery and pick-up by all messenger services, and
may limit delivery and pick-up at Tenant's Premises to Building personnel.

         13. Tenant shall see that the doors of its Premises are closed and
locked and that all water faucets or apparatus, cooking facilities and office
equipment (excluding office equipment required to be operative at all times) are
shut off before Tenant or its employees leave the Premises at night, so as to
prevent waste or damage, and for any default or carelessness in this regard,
Tenant shall be responsible for any damage sustained by other tenants or
occupants of the Building or Landlord. If the Premises is located in whole or
part on a multipletenancy floor, Tenant shall keep the doors to its Premises and
Building corridors closed at all times except for ingress and egress.

         14. The toilets, urinals, wash bowls and other restroom facilities
shall not be used for any purpose other than that for which they were
constructed, no foreign substance of any kind whatsoever shall be thrown therein
and 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,
shall have caused it.

         15. Tenant shall not sell, or permit the retail sale of newspapers,
magazines, periodicals, theater tickets or any other goods or merchandise to the
general public in or on the Premises, nor shall Tenant carry on, or permit or
allow any employee or other person to carry on, the business of stenography,







                             EXHIBIT "D" -- PAGE 2
<PAGE>   38

typewriting or any similar business in or from the Premises for the service or
accommodation of occupants of any other portion of the Building, nor shall the
Premises be used for manufacturing of any kind, or any business or activity
other than that specifically provided for in the Lease.

         16. Tenant shall not install any antenna, loudspeaker, or other device
on the roof or exterior walls of the Building except as provided for in Section
41(b) of the Lease.

         17. In order to ensure more orderly and efficient parking at the
Project, Tenant shall within ten (10) days after request by Landlord deliver to
Landlord a written list of all of Tenant's full and part-time employees and
independent contractors, which list shall include the make, model, year, color
and license plate number of each such person's vehicle(s). In addition, if
Landlord determines that Tenant and its officers, directors, employees, and
agents are using more parking spaces than are allotted to Tenant under the Basic
Lease Information, Landlord may require Tenant, at Tenant's expense, to locate
off-site parking for such persons (to the extent they exceed Tenant's
allotment), and to implement an off-site parking plan reasonably acceptable to
Tenant, which plan shall if necessary include a shuttle service. No motorcycles
or motor scooters shall be parked or stored anywhere in the Project other than
in the designated areas therefor in the Common Areas of the Project, and no
bicycles may be parked or stored anywhere in the Building other than in
facilities provided therefor in the Common Areas of the Project.

         18. Neither Tenant nor its invitees shall use in any portion of the
Building, any hand trucks or other material handling equipment except those
equipped with rubber tires and side guards.

         19. Tenant shall store its refuse within its Premises. No material
shall be placed in the refuse boxes or receptacles if such material is of such
nature that it may not be disposed of in the ordinary and customary manner of
removing and disposing of refuse in the municipality having jurisdiction over
the Premises without being in violation of any law or ordinance governing such
disposal. All refuse disposal shall be made only through entryways and elevators
provided for such purposes and at such times as Landlord shall designate.

         20. Canvassing, peddling, soliciting, and distribution of handbills or
any other written materials in the Building are prohibited, and Tenant shall
cooperate to prevent the same.

         21. The requirements of Tenant will be attended to only upon
application by telephone or in person at the office of the Project. Employees of
Landlord shall not perform any work or do anything outside of their regular
duties unless under special instructions from Landlord.

         22. Smoking shall be prohibited within the building and shall be
permitted within the exterior areas of the Project only in locations designated
by Landlord.

         23. Landlord may waive any one or more of these Rules and Regulations
for the benefit of any particular tenant or tenants, but no such waiver by
Landlord shall be construed as a waiver of such Rules and Regulations in favor
of any other tenant or tenants, nor prevent Landlord from thereafter enforcing
any such Rules and Regulations against any or all of the tenants of the Project.

         24. These Rules and Regulations are in addition to, and shall not be
construed to in any way modify or amend, in whole or in part, the terms,
covenants, agreements and conditions of the Lease.

         25. Landlord reserves the right to make such other and reasonable rules
and regulations as in its judgment may from time to time be needed for the
safety, care and cleanliness of the Project and/or Building, and for the
preservation of good order therein.







                             EXHIBIT "D" -- PAGE 3
<PAGE>   39

                                   EXHIBIT "E"

                                GUARANTY OF LEASE

THIS GUARANTY OF LEASE ("Guaranty") is made by Xylan Corporation, a California
corporation ("Guarantor"), in favor of Malibu Canyon Office Partners, LLC, a
California limited liability company ("Landlord"), in connection with that
certain lease dated on or about the date hereof (the "Lease"), pursuant to which
Landlord leases to ACT Networks, Inc., a Delaware corporation ("Tenant"), among
other things, those premises generally referred to as 26701 W. Agoura Road,
Suite 100, Calabasas, California and 26707 W. Agoura Road, Suite 100, Calabasas,
CA (collectively, the "Premises"). Landlord has previously delivered an
unexecuted draft of the Lease to Guarantor, and shall deliver an executed copy
of said Lease to Guarantor promptly after Landlord and ACT execute the same. As
a material inducement to and in consideration of Landlord's (i) entering into
the Lease and (ii) releasing Guarantor (which release must be evidenced by
separate written agreement) from its obligations with respect to the Building
A/B Contraction Space and the Building A Contraction Space (as such terms are
defined below), Landlord having indicated that it would not enter into the Lease
or agree to such release without the execution of this Guaranty, Guarantor does
hereby agree with Landlord as follows:

         1. Guarantor does hereby unconditionally and irrevocably guarantee, as
a primary obligor and not as a surety, and promise to perform and be liable for
Tenant's obligation to make the monthly payments of Base Rent and Escalation
Rent as and when due under the terms of the Lease (without regard to any
acceleration provisions contained therein), subject only to the limitation
stated in this Guaranty. Notwithstanding the foregoing, the obligations and
liabilities of Tenant guaranteed by Guarantor (as opposed to Guarantor's
obligation for costs and expenses, including, without limitation, attorneys'
fees, for which Guarantor shall be responsible as provided in paragraph 13
below) shall (i) only include Base Rent and Escalation Rent which accrues under
the Lease through and including the "Outside Accrual Date" (as defined below)
and (ii) at no time exceed fifty percent (50%) of the combined projected income
which Landlord would have realized with respect to (x) the "Building A/B
Contraction Space", as defined in the Third Amendment to Lease dated April 15,
1999 by and between Landlord and Guarantor, as tenant, and (y) the "Building A
Contraction Space" as defined in the Fifth Amendment to Lease dated April 15,
1999 by and between Landlord and Guarantor, as tenant. For purposes hereof,
projected income with respect to the Building A/B Contraction Space and the
Building A Contraction Space shall mean the combined Base Rent and Escalation
Rent for said space, and shall be calculated from the date of the default by
Tenant which gives rise to applicable obligation of Guarantor hereunder through
and including the "Outside Accrual Date". For example, if (i) Tenant's remaining
obligations and liabilities under the Lease at the time of its default are one
hundred thousand dollars ($100,000.00)(after application of Tenant's security
deposit, if any, as provided below) and (ii) Landlord would have realized fifty
thousand dollars ($50,000.00) in income from Guarantor, as tenant, for both the
Building A/B Contraction Space and the Building A Contraction Space from the
date of Tenant's default through the Outside Accrual Date, then Guarantor's
guaranty obligations hereunder (as opposed to its obligation to pay costs and
expenses as provided in paragraph 13 below) would be limited to twenty-five
thousand dollars ($25,000.00). The foregoing example is intended to be
illustrative but not exhaustive. The term "Outside Accrual Date" shall mean the
earlier of (i) August 31, 2002 (notwithstanding the fact that Guarantor's term
with respect to the Building A/B Contraction Space or the Building A Contraction
Space may or could have terminated or expired before such date, other than as
described in subparagraph (ii) immediately following) or (ii) the date on which
the term of Guarantor's lease, as tenant, of the Building A/B Contraction Space
or the Building A Contraction Space, as applicable, would have terminated for
any reason, other than the voluntary exercise of a termination right by
Guarantor as tenant under the September 20, 1996 Office Lease or the April 14,
1994 Office Lease under which Tenant occupied said space. Landlord shall apply
any then remaining security deposit held under the ACT Lease before calculating
Guarantor's obligations under this Guaranty and before proceeding against
Guarantor as provided in paragraph 19 below.

         If Guarantor makes any monthly payment of Base Rent or Escalation Rent
required by Tenant under the Lease as required under this Guaranty and (i)
Landlord subsequently collects such monthly payment from Tenant and (ii) such
payment by Tenant exceeds the then current and outstanding obligations owing by
Tenant under the Lease (including, without limitation, any obligation to
replenish Tenant's security deposit), then Landlord shall promptly refund such
monthly payment to Guarantor to the extent of such excess, less Landlord's
reasonable collection costs. Guarantor shall also be relieved of its obligations
under this Guaranty to the extent (but not to exceed) the amount by which
Landlord actually mitigates its damages under the Lease.

         If a court of competent jurisdiction orders Landlord to refund or
otherwise disgorge any payment of Base Rent or Escalation Rent made by Tenant
under the Lease, such payment obligation under the Lease shall be deemed to be
reinstated as of the date refunded or disgorged by Landlord.

         2. Subject to the last sentence of this paragraph 2, Guarantor does
hereby agree that, without the consent of or notice to Guarantor and without
affecting any of the obligations of Guarantor hereunder: (a) any term, covenant
or condition of the Lease may be amended, compromised, released or otherwise
altered by Landlord and Tenant, and Guarantor does guarantee and promise to
perform as



                             EXHIBIT "E" -- PAGE 1
<PAGE>   40

provided herein all the obligations of Tenant to pay Base Rent and Escalation
Rent under the Lease as so amended, compromised, released or altered; (b) any
guarantor of or party to the Lease may be released, substituted or added; (c)
any right or remedy under the Lease may be exercised, not exercised, impaired,
modified, limited, destroyed or suspended; (d) Landlord or any other person
acting on Landlord's behalf may deal in any manner with Tenant, any guarantor,
any party to the Lease or any other person; and (e) all or any part of the
Premises or of Tenant's rights or liabilities under the Lease may be sublet,
assigned or assumed. This is a continuing guaranty. The exercise by Landlord of
any of its rights under clauses (a)-(e) above shall not, however, increase or
adversely affect the nature or extent of Guarantor's obligations beyond those
which would have existed in the absence of such exercise.

         3. Except as expressly provided to the contrary in paragraph 18 below,
Guarantor hereby waives and agrees not to assert or take advantage of: (a) any
right to require Landlord to proceed against Tenant or any other person or to
pursue any other remedy before proceeding against Guarantor; (b) any right or
defense that may arise by reason of the incapacity, lack of authority, death or
disability of Tenant or any other person; and (c) any right or defense arising
by reason of the absence, impairment, modification, limitation, destruction or
cessation (in bankruptcy, by an election of remedies, or otherwise) of the
liability of Tenant, of the subrogation rights of Guarantor or of the right of
Guarantor to proceed against Tenant for reimbursement; provided, however, that
Guarantor may proceed against Tenant for reimbursement until such time that
Landlord commences collection efforts against Tenant, at which time Tenant shall
cease its collection efforts and dismiss or otherwise stay any action or
proceeding pending against Tenant until Landlord's collection efforts are
concluded. Landlord shall pursue its collection efforts against Tenant in a
reasonably diligent manner and without regard to this Guaranty; provided,
however, that Guarantor may not allege Landlord's failure to do so as a defense
to its obligations hereunder unless Guarantor can establish that such failure
constitutes gross negligence or wilful misconduct on the part of Landlord.
Without in any manner limiting the generality of the foregoing, Guarantor hereby
waives the benefits of the provisions of Sections 2809 (to the extent provided
in this paragraph 3), 2810, 2819 (except as provided in the last sentence of
paragraph 2 above), 2845, 2849 (except to the extent that Landlord is obligated
to apply Tenant's security deposit as provided above), 2850, 2899 and 3433 of
the California Civil Code and any similar or analogous statutes of California or
any other jurisdiction.

         4. Except as otherwise provided in paragraph 18 below, Guarantor hereby
waives and agrees not to assert or take advantage of any right or defense based
on the absence of any or all presentments, demands (including demands for
performance), notices (including notices of adverse change in the financial
status of Tenant or other facts which increase the risk to Guarantor, notices of
non-performance and notices of acceptance of this Guaranty) and protests of each
and every kind.

         5. Until all Tenant's obligations under the Lease are fully performed,
Guarantor: (a) shall have no right of subrogation against the Tenant by reason
of any payments or acts of performance by Guarantor under this Guaranty; and (b)
subordinates any liability or indebtedness of the Tenant now or hereafter held
by Guarantor to the obligations of Tenant under, arising out of or related to
the Lease or Tenant's use or occupancy of the Premises.

         6. The liability of Guarantor and all rights, powers and remedies of
Landlord hereunder and under any other agreement now or at any time hereafter in
force between Landlord and Guarantor relating to the Lease shall be cumulative
and not alternative and such rights, powers and remedies shall be in addition to
all rights, powers and remedies given to Landlord by law.

         7. This Guaranty applies to, inures to the benefit of and binds all
parties hereto, their heirs, devisees, legatees, executors, administrators,
representatives, successors and assigns (including any purchaser at a judicial
foreclosure or trustee's sale or a holder of a deed in lieu thereof). This
Guaranty may be assigned by Landlord voluntarily or by operation of law.

         8. Guarantor shall not, without the prior written consent of Landlord,
which shall not be unreasonably withheld, commence, or join with any other
person in commencing, any bankruptcy, reorganization or insolvency proceeding
against Tenant. The obligations of Guarantor under this Guaranty shall not be
altered, limited or affected by any proceeding, voluntary or involuntary,
involving the bankruptcy, insolvency, receivership, reorganization, liquidation
or arrangement of Tenant, or by and defense which Tenant may have by reason of
any order, decree or decision of any court or administrative body resulting from
any such proceeding. Guarantor shall file in any bankruptcy or other proceeding
in which the filing of claims is required or permitted by law all claims which
Guarantor may have against Tenant relating to any indebtedness of Tenant to
Guarantor and will assign to Landlord all rights of Guarantor thereunder to the
extent of Tenant's outstanding obligations to pay Base Rent and Escalation Rent
to Landlord under the Lease. Landlord shall have the sole right to accept or
reject any plan proposed in such proceeding and to take any other action which a
party filing a claim is entitled to do. In all such cases, whether in
administration, bankruptcy or otherwise, the person or persons authorized to pay
such claim shall pay to Landlord the amount payable on such claim and, to the
full extent necessary for that purpose, Guarantor hereby assigns to Landlord all
of Guarantor's rights to any such payments or distributions to which Guarantor
would otherwise be





                             EXHIBIT "E" -- PAGE 2
<PAGE>   41

entitled; provided, however, that Guarantor's obligations hereunder shall not be
satisfied except to the extent that Landlord receives cash by reason of any such
payment or distribution. If Landlord receives anything hereunder other than
cash, the same shall be held as collateral for amounts due under this Guaranty.
Landlord shall pay to Guarantor any sums which Landlord receives under this
paragraph 8 which exceeds the amount of Base Rent and Escalation Rent owing to
Landlord by Tenant under the Lease, less Landlord's reasonable collection costs.

         9. This Guaranty shall constitute the entire agreement between
Guarantor and the Landlord with respect to the subject matter hereof. No
provision of this Guaranty or right of Landlord hereunder may be waived nor may
any Guarantor be released from any obligation hereunder except by a writing duly
executed by an authorized officer or director of Landlord.

         10. If more than one person signs this Guaranty, each such person shall
be deemed a Guarantor and the obligation of all such Guarantors shall be joint
and several. When the context and construction so requires, all words used in
the singular herein shall be deemed to have been used in the plural. The word
"person" as used herein shall include an individual, company, firm, association,
partnership, corporation, trust or other legal entity of any kind whatsoever.

         11. Should any one or more provisions of this Guaranty be determined to
be illegal or unenforceable, all other provisions shall nevertheless be
effective.

         12. The waiver or failure to enforce any provision of this Guaranty
shall not operate as a waiver of any other breach of such provision or any other
provisions hereof.

         13. In the event of any dispute between Guarantor and Landlord arising
out of or in connection with this Guaranty, the prevailing party in any
litigation, arbitration or other proceeding shall be entitled to have and
recover from the other party its reasonable attorneys' fees, collection costs
and other costs and expenses incurred.

         14. Time is strictly of the essence under this Guaranty and any
amendment, modification or revision hereof.

         15. If Guarantor is a corporation, each individual executing this
Guaranty on behalf of said corporation represents and warrants that he is duly
authorized to execute and deliver this Guaranty on behalf of said corporation,
in accordance with a duly adopted resolution of the board of directors of said
corporation or in accordance with the bylaws of said corporation, and that this
Guaranty is binding upon said corporation in accordance with its terms. If
Guarantor is a corporation, Landlord, at its option, may require Guarantor to
concurrently, with the execution of this Guaranty, deliver to Landlord a
certified copy of a resolution of the board of directors of said corporation
authorizing or ratifying the execution of this Guaranty.

         16. The term "Landlord" whenever hereinabove used refers to and means
the Landlord in the foregoing Lease specifically named and also any assignee of
said Landlord, whether by outright assignment or by assignment for security, and
also any successor to the interest of said Landlord or of any assignee of such
Lease or any part thereof, whether by assignment or otherwise. The term "Tenant"
whenever hereinabove used refers to and means the Tenant in the foregoing Lease
specifically named and also any assignee or subtenant of said Lease and also any
successor to the interests of said Tenant, assignee or sublessee of such Lease
or any part thereof, whether by assignment, sublease or otherwise.

         17. All notices, consents, demands and other communications from one
party to the other that are given pursuant to the terms hereof shall be in
writing and shall be deemed to have been fully given two (2) full business days
following deposit in the United States mail, certified or registered, postage
prepaid, or one (1) business day following transmittal by reputable overnight
courier (such as Federal Express), or when hand delivered, to the respective
addresses for delivery of notices specified below, or to such other place as
either party may from time to time designate in a notice to the other party:

Landlord:                               Guarantor

c/o The Johnston Group                  Xylan Corporation
26635 W. Agoura Rd., Ste 105            26801 W. Agoura Road
Calabasas, CA 91302                     Calabasas, CA 91302
Attn:  Mr. Jeff Johnston                Attn: Mr. John Yi

With a copy to:                         With a copy to:

Kenneth S. Fields                       Xylan Corporation
Fields & Pearl                          26801 W. Agoura Road
1875 Century Park East                  Calabasas, CA 91302
Suite 1400                              Attn: General Counsel
Los Angeles, CA 90067

         Failure to deliver a copy of any notice as provided above shall not
invalidate any notice or extend the time for performance if the notice is given
to the primary recipient listed above.

         18. Landlord shall endeavor to promptly deliver to Guarantor notice





                             EXHIBIT "E" -- PAGE 3
<PAGE>   42

(written or telephonic) of Tenant's failure to pay any installment of Base Rent
and/or Escalation Rent when due. In any event, Landlord's failure to deliver
written notice to Guarantor of Tenant's failure to pay Base Rent or Escalation
Rent within thirty (30) days following the date due under the Lease shall
relieve Guarantor of the obligation to pay Base Rent and/or Escalation Rent for
the period (without giving effect to acceleration rights under the Lease)
accruing from and after Tenant's failure to pay until the date on which Landlord
delivers written notice of Tenant's default to Guarantor. Landlord shall have no
obligation to deliver notices of default to Guarantor which do not pertain to
the failure to pay Base Rent or Escalation Rent.

         19. Landlord shall only proceed against Guarantor hereunder five (5)
business days following the occurrence of (i) Landlord's service (or good faith
attempted service) on Tenant of such written notice as is necessary to commence
unlawful detainer proceedings against Tenant (including, without limitation,
service of a Three Day Notice to Pay Rent or Quit) and (ii) Landlord's written
demand on Guarantor hereunder, which may only be given after the notice
described in clause (i) is given. Notwithstanding the foregoing, if Landlord is
precluded from commencing unlawful detainer or other proceedings against Tenant
(eg due to vacation of the Premises or the filing by or against Tenant of
bankruptcy or insolvency proceedings), then Landlord need not give the notice
described in clause (i) above. The notice provided for in this Section 19
pertains only to when Landlord may proceed against Guarantor hereunder, as
opposed to when Guarantor's obligations hereunder shall commence to accrue,
which shall be governed under Section 18 above.

         20. As a further material part of the consideration to Landlord to
enter into the Lease with Tenant, Guarantor further agrees:

         (a) the law of the state in which the Premises is located shall govern
all questions with respect to this Guaranty;

         (b) that any suit, action or proceeding arising directly or indirectly
from this Guaranty, the Lease or the subject matter thereof shall be litigated
only within courts located within the county and state in which the Premises is
located;

         (c) Guarantor hereby irrevocably consents to the jurisdiction of any
local, state or federal court located within the county and state in which the
Premises is located;

         (d) Each party hereby waives personal service of any and all process
upon it and consents to all such service in the manner and at the address set
forth in Paragraph 17 above; and

         (e) Without limiting the generality of the foregoing, Guarantor hereby
waives and agrees not to assert by way of motion, defense or otherwise in any
suit, action or proceeding, any claim that Guarantor is not personally subject
to the jurisdiction of the above-named courts, that such suits, actions or
proceeding is brought in an inconvenient forum or that the venue of such action,
suit or proceeding is improper.

         Executed as of April 15, 1999.



"GUARANTOR"                              "LANDLORD"

XYLAN CORPORATION, a California          MALIBU CANYON OFFICE PARTNERS, LLC.,
corporation                              a California limited liability company


By: _______________________________      By:  MB REAL ESTATE, INC., a
                                              California corporation,
Name Printed: _____________________           Manager

Title: ____________________________           By: ____________________________
                                                  Calvin H. Johnston
By: _______________________________

Name Printed: _____________________

Title: ____________________________














                             EXHIBIT "E" -- PAGE 4