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                                                                    EXHIBIT 10.1

 
                             INDUSTRIAL/COMMERCIAL
                       MULTI-TENANT LEASE--MODIFIED NET

                                BY AND BETWEEN

                         ALLIEDSIGNAL INC., AS LESSOR

                                      AND

                      CREATIVE COMPUTERS, INC., AS LESSEE


                              DATED JUNE 3, 1997


                           FOR PREMISES LOCATED AT:

                            2525 WEST 190TH STREET
                             TORRANCE, CALIFORNIA
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                               TABLE OF CONTENTS
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1.  Basic Provisions ("Basic Provisions").................................................................  1
    1.1        Parties....................................................................................  1
    1.2(a)     Premises...................................................................................  1
    1.2(b)     Parking....................................................................................  1
    1.3        Term.......................................................................................  1
    1.4        Early Possession...........................................................................  1
    1.5        Base Rent..................................................................................  1
    1.6(a)     Base Rent Paid Upon Execution..............................................................  1
    1.6(b)     Lessee's Share of Building and Common Area Operating Expenses..............................  2
    1.7        Security Deposit...........................................................................  2
    1.8        Permitted Use..............................................................................  2
    1.9        Insuring Party.............................................................................  2
    1.10(a)    Real Estate Brokers........................................................................  2
    1.10(b)    Payment to Brokers.........................................................................  2
    1.11       Guarantor..................................................................................  2
    1.12       Addenda and Exhibits.......................................................................  2

2.  Premises, Parking and Common Areas....................................................................  2
    2.1        Letting....................................................................................  2
    2.2        Condition..................................................................................  2
    2.3        Compliance with Covenants, Restrictions and Building Code..................................  2
    2.4        Acceptance of Premises.....................................................................  3
    2.5        This Paragraph intentionally blank.........................................................  3
    2.6        Vehicle Parking............................................................................  3
    2.7        Common Areas - Definition..................................................................  4
    2.8        Common Areas - Lessee's Rights.............................................................  4
    2.9        Common Areas - Rules and Regulations.......................................................  4
    2.10       Common Areas - Changes.....................................................................  4

3.  Term..................................................................................................  5
    3.1        Term.......................................................................................  5
    3.2        Early Possession...........................................................................  5
    3.3        Delay In Possession........................................................................  5

4.  Rent..................................................................................................  5
    4.1        Base Rent..................................................................................  5
    4.2        Building and Common Area Operating Expenses................................................  6

5.  This Paragraph Intentionally Left Blank...............................................................  8

6.  Use...................................................................................................  8
    6.1        Permitted Use..............................................................................  8
    6.2        Hazardous Substances.......................................................................  8
               (a) Reportable Uses Require Consent........................................................  8
               (b) Duty to Inform Lessor..................................................................  9
               (c) Indemnification........................................................................  9
    6.3        Lessee's Compliance with Requirements......................................................  9
    6.4        Inspection; Compliance with Law............................................................ 10
    6.5        Environmental Review; Cancellation of Lease................................................ 10
    6.6        Lessor's Representation; Indemnity......................................................... 10

7.  Maintenance, Repairs Utility Installations, Trade Fixtures and Alternations........................... 11
    7.1        Lessee's Obligations....................................................................... 11
    7.2        Lessor's Obligations....................................................................... 11
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    7.3        Utility Installations, Trade Fixtures, Alterations......................................... 12
               (a)  Definitions; Consent Required......................................................... 12
               (b)  Consent............................................................................... 12
               (c)  Lien Protection....................................................................... 12
    7.4        Ownership, Removal, Surrender, and Restoration............................................. 12
               (a)  Ownership............................................................................. 12
               (b)  Surrender/Restoration................................................................. 13

8.  Insurance; Indemnity.................................................................................. 13
    8.1       Payment of Premiums......................................................................... 13
    8.2       Liability Insurance......................................................................... 13
              (a) Carried by Lessee....................................................................... 13
              (b) Carried by Lessor....................................................................... 13
    8.3       Property Insurance-Building, Improvements and Rental Value.................................. 13
              (a) Building and Improvements............................................................... 13
              (b) Premises................................................................................ 14
              (c) Lessee's Improvements................................................................... 14
    8.4       Lessee's Property Insurance................................................................. 14
    8.5       Insurance Policies.......................................................................... 14
    8.6       Waiver of Subrogation....................................................................... 14
    8.7       Indemnity................................................................................... 14
    8.8       Exemption of Lessor from Liability.......................................................... 15

9.  Damage or Destruction................................................................................. 15
    9.1       Definitions................................................................................. 15
              (a) "Premises Partial Damage"............................................................... 15
              (b) "Premises Total Destruction"............................................................ 15
              (c) "Insured Loss".......................................................................... 16
              (d) "Replacement Cost"...................................................................... 16
              (e) "Hazardous Substance Condition"......................................................... 16
    9.2       Premises Partial Damage - Insured Loss...................................................... 16
    9.3       Partial Damage - Uninsured Loss............................................................. 16
    9.4       Total Destruction........................................................................... 17
    9.5       Damage Near End of Term..................................................................... 17
    9.6       Abatement of Rent; Lessee's Remedies........................................................ 17
    9.7       Hazardous Substance Conditions.............................................................. 17
    9.8       Termination - Advance Payments.............................................................. 18
    9.9       Waiver of Statutes.......................................................................... 18

10. Real Property Taxes................................................................................... 18
    10.1       Payment of Taxes........................................................................... 18
    10.2       Real Property Tax Definition............................................................... 18
    10.3       Additional Improvements.................................................................... 18
    10.4       Joint Assessment........................................................................... 18
    10.5       Lessee's Property Taxes.................................................................... 19

11. Utilities............................................................................................. 19

12. Assignment and Subletting............................................................................. 19
    12.1       Lessor's Consent Required.................................................................. 19
    12.2       Terms and Conditions Applicable to Assignment and Subletting............................... 20
    12.3       Additional Terms end Conditions Applicable to Subletting................................... 20

13. Default; Breach; Remedies............................................................................. 21
    13.1       Default; Breach............................................................................ 21
    13.2       Remedies................................................................................... 22
    13.3       Inducement Recapture In Event of Breach.................................................... 23
    13.4       Late Charges............................................................................... 23
    13.5       Breach by Lessor........................................................................... 24
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14. Condemnation.......................................................................................... 24

15. Brokers' Fees......................................................................................... 24
    15.1       Procuring Cause............................................................................ 24
    15.2       Additional Terms........................................................................... 24
    15.3       Assumption of Obligations.................................................................. 24
    15.4       Representations and Warranties............................................................. 25

16. Tenancy and Financial Statements...................................................................... 25
    16.1       Tenancy Statement.......................................................................... 25
    16.2       Financial Statement........................................................................ 25

17. Lessor's Liability.................................................................................... 25

18. Severability.......................................................................................... 25

19. Interest on Past-Due Obligations...................................................................... 25

20. Time of Essence....................................................................................... 25

21. Rent Defined.......................................................................................... 25

22. No Prior or other Agreements.......................................................................... 25

23. Notices............................................................................................... 26
    23.1       Notice Requirements........................................................................ 26
    23.2       Date of Notice............................................................................. 26

24. Waivers............................................................................................... 26

25. Recording............................................................................................. 26

26. No Right To Holdover.................................................................................. 26

27. Cumulative Remedies................................................................................... 26

28. Covenants and Conditions.............................................................................. 26

29. Binding Effect; Choice of Law......................................................................... 26

30. Subordination; Attornment; Non-Disturbance............................................................ 27
    30.1       Subordination.............................................................................. 27
    30.2       Attornment................................................................................. 27
    30.3       Non-Disturbance............................................................................ 27
    30.4       Self-Executing............................................................................. 27
    30.5       Existing Encumbrances...................................................................... 27

31. Attorneys' Fees....................................................................................... 27

32. Lessor's Access; Showing Premises; Repairs............................................................ 27

33. Auctions.............................................................................................. 28

34. Signs................................................................................................. 28

35. Termination; Merger................................................................................... 28

36. Consents.............................................................................................. 28
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37. This Paragraph Intentionally Left Blank..............................................................  28

38. Quiet Possession.....................................................................................  28

39. Options..............................................................................................  29
    39.1       Definition................................................................................  29
    39.2       Options Personal to Original Lessee.......................................................  29
    39.3       Multiple Options..........................................................................  29
    39.4       Effect of Default on Options..............................................................  29

40. Rules and Regulations................................................................................  29

41. Security Measures....................................................................................  29

42. Reservations.........................................................................................  29

43. Performance Under Protest............................................................................  30

44. Authority............................................................................................. 30

45. Conflict.............................................................................................. 30

46. Offer................................................................................................. 30

47. Amendments............................................................................................ 30

48. Multiple Parties...................................................................................... 30

ADDENDUM.................................................................................................. 32

49. Options To Extend..................................................................................... 32
    49.1       Certain Options............................................................................ 32
    49.2       First Option Period Market Rental Value Adjustment(s) (MRV)................................ 32
    49.3       Second Option Period Cost Of Living Adjustments (COL)...................................... 33

50. Expansion Rights and Obligations...................................................................... 33
    50.1       Expansion Space............................................................................ 33
    50.2       Basement Expansion Space................................................................... 33
    50.3       First Floor Expansion Space................................................................ 33
    50.4       Commencement of Rent on Expansion Space.................................................... 34
    50.5       Early Possession; Causing Expansion Space to be Delivered.................................. 34
    50.6       Delay in Possession of Expansion Space..................................................... 34
    50.7       Delivery of Expansion Space and Basement Expansion Space and First Floor Expansion Space... 34
    50.8       Terms and Conditions Applicable To Expansion Space or Basement Expansion Space............. 34

51. Installation of Certain Mainframe Computers........................................................... 35

52. Base Rent Increase In Sixth Year Of Original Term..................................................... 35

53. Certain Obligations Of Lessor......................................................................... 35

54. Signs................................................................................................. 35

55. Cancellation Option................................................................................... 35

56. Installation Of Certain Equipment..................................................................... 36

57. Cafeteria Access...................................................................................... 36
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58. Possible Boundary Changes in Industrial Park.......................................................... 36
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             INDUSTRIAL/COMMERCIAL MULTL-TENANT LEASE--MODIFIED NET
                   ALLIEDSIGNAL INC./CREATIVE COMPUTERS, INC.

1.         BASIC PROVISIONS ("BASIC PROVISIONS").

    1.1         PARTIES: This Lease ("LEASE"), dated for reference purposes
only, June 3, 1997, is made by and between AlliedSignal Inc. ("Lessor) and
Creative Computers, Inc. ("Lessee"), (collectively the "PARTIES", or
individually a "PARTY").

    1.2  (a)    PREMISES: That certain portion of the Building, including all
improvements therein or to be provided by Lessor under the terms of this Lease,
commonly known by the street address of 2525 West 190th Street, located in the
                                        ----------------------                
City of Torrance, County of Los Angeles, State of California, with zip code
        --------            -----------           ----------                
90504 as outlined on Exhibit A-1 attached hereto ("PREMISES").  The "BUILDING"
-----                -----------                                              
is that certain building containing the Premises and generally described as a
steel frame and concrete three (3) story building known as "Building 38," as
more particularly described in Exhibits A-2 through A-4 hereto.  Initially,
                               ------------------------                    
Lessee shall occupy approximately 53,600 rentable square feet consisting of all
of the 2nd floor, plus 5,000 rentable square feet of the basement, plus
approximately 1,400 rentable square feet consisting of the front lobby of the
Building.  The Building contains approximately 161,600 rentable square feet.  In
addition to Lessee's rights to use and occupy the Premises as hereinafter
specified, Lessee shall have non-exclusive rights to the Common Areas (as
defined in Paragraph 2.7 below) as hereinafter specified, but shall not have any
rights to the roof or exterior walls of the Building or to any other buildings
or property owned by Lessor unless required for access or the operation of the
Building as shown on Exhibit A-1 hereto or as otherwise provided in Sections 56
or 57 hereof.  The Premises, the Building, the Common Areas and the land upon
which they are located, are herein collectively referred to as the "PROPERTY."
The Property is presently part of an approximately eighty-eight (88) acre campus
facility owned by Lessor and herein referred to as the "Industrial Center."
(Also see Paragraph 2.)  (See Addendum)

    1.2(b)  PARKING:  500 unreserved vehicle parking spaces plus (i) 7.5
additional parking spaces for each 1,000 rentable square feet of office space
leased by Lessee on the Basement or First Floor levels of the Building pursuant
to Section 50 hereof, or otherwise, and (ii) 100 additional unreserved parking
spaces from November 1, 1997 through the Basement Expansion Date and from
November 1 through January 31 of each year thereafter (collectively, the
"Parking Spaces"); which Parking Spaces shall be located on parcels 25 and 26
and the parking lot to the south of the Building (a portion of parcel 27) as
shown in Exhibit A-1 hereto (the "Parking Area").  Notwithstanding the
foregoing, in the event that the Parking Area is ever restriped or reconfigured
from its present parking layout, Lessee shall be entitled to the greater of (x)
that number of parking spaces provided above, or (y) a prorata share of all
parking spaces the Parking Area, which prorata share shall be determined by
dividing the number of rentable square feet in the Building then leased by
Lessee by the total number of rentable square feet within the Building and then
multiplying such quotient by the total number of parking spaces in the Parking
Area.  Furthermore, even if Lessor fails to occupy any portion of the Building,
Lessor shall be entitled to retain the exclusive use of the ten (10) parking
spaces located on Lot 27 that are closet to the building located immediately to
the east of the Building as visitor parking for such building.  (Also see
Paragraph 2.6.).

    1.3         TERM:  Ten (10) years and 0 months ("ORIGINAL TERM") commencing
October 1, 1997, subject to adjustment as provided in Paragraph 3 ("COMMENCEMENT
DATE") and ending ten (10) years thereafter ("EXPIRATION DATE").  (Also see
Paragraph 3.)  (See Addendum)

    1.4         EARLY POSSESSION:  From date of the Lease to the Commencement
Date for cabling purposes and as available (as reasonably determined by Lessor)
up until October 1, 1997 for the installation of furnishings, fixtures and
tenant improvement work ("EARLY POSSESSION DATE").  (Also see Paragraphs 3.2 and
3.3.)

    1.5         BASE RENT:  $39,000.00 per month ("BASE RENT"), payable on the
                                                                              
1st day of each month commencing on the Commencement Date (Also see Paragraph
---                                                                          
4.)  This Lease provides for the Base Rent to be adjusted per Addendum attached
hereto.

    1.6  (a)  BASE RENT PAID UPON EXECUTION:  $39,000.00 as Base Rent for the
period October 1, 1997 through October 30, 1997.

    1.6(b)  LESSEE'S SHARE OF BUILDING AND COMMON AREA OPERATING EXPENSES:
thirty-seven and 13/100ths percent (37.13%)  ("LESSEE'S SHARE") as determined by
a prorata square footage of the Premises as compared to the total square footage
of the Building.

    1.7         SECURITY DEPOSIT:  $ None.  ("SECURITY DEPOSIT"). (Also see
Paragraph 5.)
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    1.8         PERMITTED USE:  General office uses only  ("PERMITTED USE")
(Also see Paragraph 6.)

    1.9         INSURING PARTY.   Lessor is the "INSURING PARTY."  (Also see
Paragraph 8.)

    1.10 (a)    REAL ESTATE BROKERS.  The following real estate broker(s)
(collectively, the "BROKERS") and brokerage relationships exist in this
transaction and are consented to by the Parties (check applicable boxes):
[x] The Seeley Company represents Lessor exclusively ("LESSOR'S BROKER"); and
[x] Lee & Associates represents Lessee exclusively ("LESSEE'S BROKER") (Also see
Paragraph 15.)

    1.10 (b)    PAYMENT TO BROKERS.  Upon the execution of this Lease by both
Parties, Lessor shall pay to said Broker(s) jointly, or in such separate shares
as they may mutual designate in writing, a fee as set forth in a separate
written agreement between Lessor and said Broker(s) (or in the event there is no
separate written agreement between Lessor and said Broker(s), the sum of $N/A)
for brokerage services rendered by said Broker(s) in connection with this
transaction.

    1.11        GUARANTOR.  The obligations of the Lessee under this Lease are
to be guaranteed by  N/A  ("GUARANTOR"). (Also see Paragraph 37.)
                    -----                                        

    1.12        ADDENDA AND EXHIBITS.  Attached hereto is an Addendum consisting
of Paragraphs 49 through 58, and Exhibits A-1 through A-4, all of which
constitute a part of this Lease.

2.         PREMISES, PARKING AND COMMON AREAS.

    2.1         LETTING.  Lessor hereby leases to Lessee, and Lessee hereby
leases from Lessor, the Premises, together with a non-exclusive right to use the
Common Areas (defined below) for the term, at the rental, and upon all of the
terms, covenants and conditions set forth in this Lease.  Unless otherwise
provided herein, any statement of square footage set forth in this Lease, or
that may have been used in calculating rental and/or Building and Common Area
Operating Expenses, is an approximation which Lessor and Lessee agree is
reasonable and the rental and Lessee's Share (as defined in Paragraph 1.6(b))
based thereon is not subject to revision whether or not the actual square
footage is more or less.

    2.2         CONDITION.  Lessor shall deliver the Premises to Lessee AS IS
clean and free of debris on the Commencement Date and warrants to Lessee for a
period of one (1) year from the Commencement Date that the existing plumbing,
electrical systems, fire sprinkler system, lighting, air conditioning and
heating systems and loading doors, if any, in the Premises, other than those
constructed by Lessee, shall be in good operating condition on the Commencement
Date and for a period of one (1) year thereafter.  If a non-compliance with said
warranty exists as of the Commencement Date or within one (1) year thereafter,
Lessor shall, except as otherwise provided in this Lease, promptly after receipt
of written notice from Lessee setting forth with specificity the nature and
extent of such non-compliance, rectify same at Lessor's expense.  If Lessee does
not give Lessor written notice of a non-compliance with this warranty within
thirty (30) days after the Commencement Date or within one (1) year thereafter,
correction of that non-compliance shall be the obligation of Lessee at Lessee's
sole cost and expense on or before one (1) year from the Commencement Date.

    2.3         COMPLIANCE WITH COVENANTS, RESTRICTIONS AND BUILDING CODE.
Lessor warrants that any improvements (other than those constructed by Lessee or
at Lessee's direction) on or in the Premises and the Common Area were
constructed or installed by Lessor or with Lessor's consent or at Lessor's
direction in 1984 when the Building was first constructed shall comply with all
applicable covenants or restrictions of record and applicable building codes,
regulations and ordinances in effect on the date the Building was constructed.
Lessor further warrants to Lessee that Lessor has no knowledge of any claim
having been made by any governmental agency that a violation or violations of
applicable building codes, regulations, or ordinances exist with regard to the
Premises in effect on the date the Building was constructed in 1984.  Said
warranties shall not apply to any Alterations or Utility Installations (defined
in Paragraph 7.3(a)) made or to be made by Lessee.  If the Premises do not
comply with said warranties, Lessor shall, except as otherwise provided in this
Lease, promptly after receipt of written notice from Lessee given within six (6)
months following the Commencement Date and setting forth with specificity the
nature and extent of such non-compliance, take such action, at Lessor's expense,
as may be reasonable or appropriate to rectify the non-compliance .  Lessor
makes no warranty that the Permitted Use in Paragraph 1.8 is permitted for the
Premises under Applicable Laws (as defined in Paragraph 2.4).

    2.4         ACCEPTANCE OF PREMISES.   Lessee hereby acknowledges: (a) that
it has been advised by the Broker(s) to satisfy itself with respect to the
condition of the Premises (including but not limited to the electrical and fire
<PAGE>
 
sprinkler systems, security, environmental aspects, seismic and earthquake
requirements, and compliance with the Americans with Disabilities Act and
applicable zoning, municipal, county, state and federal laws, ordinances and
regulations and any covenants or restrictions of record, collectively,
"APPLICABLE LAWS") and the present and future suitability of the Premises for
Lessee's intended use: (b) that Lessee has made such investigation as it deems
necessary with reference to such matters, is satisfied with reference thereto,
and assumes all responsibility therefor as the same relate to Lessee's occupancy
of the Premises and/or the terms of this Lease and (c) that neither Lessor, nor
any of Lessor's agents, has made any oral or written representations or
warranties with respect to said matters other than as set forth in this Lease.

    2.5         THIS PARAGRAPH INTENTIONALLY BLANK.

    2.6         VEHICLE PARKING.  Lessee shall be entitled to use the number of
unreserved Parking Spaces in the Parking Area as specified in Paragraph 1.2(b).
The use of the Parking Area shall be in common only with the other occupants of
the Building.  With respect to the portion of the Parking Area located on Lots
25 and 26, Lessee, its employees and guests shall occupy the southernmost
Parking Spaces and Lessor, its employees and guests shall occupy the
northernmost Parking Spaces.  Lessor shall calculate the number of Parking
Spaces Lessee is to receive with each such change in the number of Lessee's
Parking Spaces hereunder and shall, at Lessor's expense, identify by signage or
other means which Parking Spaces on Lots 25 and 25, together with Parking Spaces
on a portion of Lot 27 (as described below) are for the respective use of Lessor
and Lessee and their respective employees and guests.  With respect to the
portion of the Parking Area immediately to the south of the Building on Parcel
27 (the "Parcel 27 Parking Lot"), Lessee shall be entitled to (a) the westerly
one-third of the Parking Spaces in the Parcel 27 Parking Lot from and after the
Commencement Date, (b) the westerly two-thirds of the Parking Spaces in the
Parcel 27 Parking Lot, from and after the Basement Expansion Date, and (c) all
of the Parking spaces in the Parcel 27 Parking Lot, except the ten parking
spaces in the Parcel 27 Parking Lot as shown on Exhibit A-1 closest to the
building located immediately to the east of the Building from and after the
First Floor Expansion Date.  The row ten parking spaces on Parcel 27 Parking Lot
located closest to the building located immediately to the east of the Building
shall be reserved by Lessor for guest parking for such adjacent building as long
as Lessor pays its fractional share of maintaining such portion of the Parcel 27
Parking Lot.  Lessee and Lessor may designate each portion of its Parking Spaces
in the area south of the Building as "Reserved" by signage or other reasonable
means.  Lessee shall not use more parking spaces than said number.  Said parking
spaces shall be used for parking by vehicles no larger than full-size passenger
automobiles or pick-up trucks, herein called "Permitted Size Vehicles."
Vehicles other than Permitted Size Vehicles shall be parked and loaded or
unloaded as directed by Lessor In the Rules and Regulations (as defined in
Paragraph 40) issued by Lessor.  (Also see Paragraph 2.9.)

          (a) Lessee shall not permit or allow any vehicles that belong to or
are controlled by Lessee or Lessee's employees, suppliers, shippers, customers,
contractors or invitees to be loaded, unloaded, or parked in areas other than
those designated by Lessor for such activities.  Lessee shall be provided
reasonable access and use of the loading dock for the Building.

          (b) If Lessee permits or allows any of the prohibited activities
described in this Paragraph 2.6, then Lessor shall have the right, without
notice, in addition to such other rights and remedies that it may have, to
remove or tow away the vehicle involved and charge the cost to Lessee, which
cost shall be immediately payable upon demand by Lessor.

          (c) Lessor shall at the Commencement Date of this Lease and
thereafter, provide the parking facilities required by this Lease.

    2.7         COMMON AREAS - DEFINITION.  The term "COMMON AREAS" is defined
as the following:  (a) the Parking Area, plus (b) the sidewalk and landscaping
immediately adjacent and within 30 feet of the Building and those portions of
the Building and adjacent area that are used in common by Lessee and other
occupants of the Building, including, without limitation, elevator lobbies,
loading and unloading areas, trash areas, roadways, sidewalks, walkways,
parkways, driveways, landscaped areas, lighting facilities, fences, gates,
striping, bumpers and interior utility raceways within the Building that are
provided and designated by the Lessor from time to time for the general non-
exclusive use of Lessor, Lessee and any other lessees of the Building and their
respective employees, suppliers, shippers, customers, contractors and invitees,
including parking areas, loading and unloading areas, and trash areas.

    2.8         COMMON AREAS - LESSEE'S RIGHTS.  Lessor hereby grants to Lessee,
for the benefit of Lessee and its employees, suppliers, shippers, contractors,
customers and invitees, during the term of this Lease, the non-exclusive right
to use, in common with others entitled to such use, the Common Areas as they
exist from time to time, subject to any rights, powers, and privileges reserved
by Lessor or granted to Lessee under the terms hereof or under the 
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terms of any rules and regulations or restrictions governing the use of the
Industrial Center. Under no circumstances shall the right herein granted to use
the Common Areas be deemed to include the right to store any property,
temporarily or permanently, in the Common Areas. Any such storage shall be
permitted only by the prior written consent of Lessor or Lessor's designated
agent, which consent may be revoked at any time. In the event that any
unauthorized storage shall occur then Lessor shall have the right, without
notice, in addition to such other rights and remedies that it may have, to
remove the property and charge the cost to Lessee, which cost shall be
immediately payable upon demand by Lessor.

    2.9         COMMON AREAS - RULES AND REGULATIONS.  Lessor or such other
person(s) as Lessor may appoint shall have the exclusive control and management
of the Common Areas and shall have the right, from time to time, to establish.
modify amend and enforce reasonable Rules and Regulations with respect thereto
in accordance with Paragraph 40; provided, however, that no such rules or
regulations shall unreasonably interfere with Lessee's ingress or egress to its
parking lots or it Premises or to the cafeteria, otherwise materially interfere
with Lessee's other use of the Common Area, or result in an increase in costs to
Lessee.  Lessee agrees to abide by and conform to all such Rules and
Regulations, and to cause its employees, suppliers, shippers, customers,
contractors and invitees to so abide and conform. Lessor shall not be
responsible to Lessee for the non-compliance with said rules and regulations by
other lessees of the Industrial Center.

    2.10        COMMON AREAS - CHANGES.  Lessor shall have the right, in
Lessor's sole discretion, from time to time:

          (a) To make changes to the Common Areas, including, without
limitation, changes in the location, size, shape and number of driveways,
entrances, loading and unloading areas, ingress, egress, direction of traffic,
landscaped areas, walkways and utility raceways, as long as no changes are made
to the number or size of Parking Spaces allocated to the Lessee hereunder;

          (b) To close temporarily any of the Common Areas for maintenance
purposes so long as reasonable access to the Premises and Parking Area remains
available;

          (c) To add additional improvements to the Common Areas;

          (d) To use the Common Areas while engaged in making additional
improvements, repairs or alterations to the Industrial Center, or any portion
thereof; and

          (e) To do and perform such other acts and make such other changes in,
to or with respect to the Common Areas as Lessor may, in the exercise of sound
business judgment, deem to be appropriate.

Notwithstanding the foregoing, Lessor shall not be permitted to take any such
actions if it would reduce Parking Spaces or unreasonably interfere with
Lessee's access to or use of the Premises or Lessee's use and enjoyment of the
Common Areas or if such action would result in an increase in costs to Lessee
(unless Lessee receives a benefit in exchange for such increase in costs).

3.         TERM.

    3.1         TERM.  Notwithstanding Paragraph 1.3, the Commencement Date
shall be the date Lessee actually commences the use of any portion of the
Premises for the operation of its business; provided that such date shall be no
later than thirty-one (31) days after "Premises Delivery" (defined below).  The
target Commencement Date, the Expiration Date and the Original Term of this
Lease are as specified in Paragraph 1.3.  Lessee and Lessor shall confirm the
actual Commencement Date in writing when it occurs.

    3.2         EARLY POSSESSION.  If an Early Possession Date is specified in
Paragraph 1.4 and if Lessee totally or partially occupies the Premises after the
Early Possession Date but prior to the Commencement Date, the obligation to pay
Base Rent shall be abated for the period of such early occupancy.  All other
terms of this Lease, however, (excluding, however the obligations to pay
Lessee's Share of Building and Common Area Operating Expenses) shall be in
effect during such period.  Any such early possession shall not affect nor
advance the Expiration Date of the Original Term.  From and after the Early
Possession Date, Lessee shall have access to the Premises for purposes of
placing cable and other wiring within the Premises.  Between the Early
Possession Date and October 1, 1997, Lessor shall permit Lessee to enter the
Premises and install its furnishings, fixtures, equipment and other tenant
improvements to the extent that Lessor has vacated portions of the Premises and
can, in Lessor's reasonable opinion, make such portions of the Premises
available to Lessee for such purposes.  Lessor shall vacate the entire Premises
and make the same available to Lessee for 
<PAGE>
 
the installation of its furnishings, fixtures, equipment and other tenant
improvements (the "Premises Delivery") no later than October 1, 1997. The
Commencement Date shall be the first to occur of (a) thirty-one (31) days after
the Premises Delivery, or (b) when Lessee commences to use any portion of the
Premises for the operation of its business.

    3.3         DELAY IN POSSESSION.  If for any reason Lessor cannot cause
Premises Delivery to occur (a) by October 1, 1997, then Lessee shall receive, in
lieu of its actual damages, two (2) days of free rent for each day that the
Premises Delivery is late after October 1, 1997 through October 31, 1997, and
(b) by November 1, 1997, then Lessee shall receive, as additional damages in
lieu of its actual damages, three (3) days of free rent for each day that the
Premises Delivery is late after November 1, 1997 through November 30, 1997, and
(c) by December 1, 1997, then Lessee shall receive, as additional damages in
lieu of its actual damages, four (4) days of free rent for each day that the
Premises Delivery is late after December 1, 1997 through December 31, 1997, and
(d) by January 1, 1998, then Lessee shall receive the greater of an amount equal
to four (4) days of free rent for each day that the Delivery is late after
January 1, 1998 or Lessee's actual damages (including special and consequential
damages, but excluding any punitive damages) for Lessor's failure to timely
achieve Premises Delivery as required hereby.  Such free rent shall commence
upon the Commencement Date and shall continue until used in full.  The foregoing
damages set forth in items (a), (b) and (c) above, shall be Lessee's exclusive
damages during the first ninety (90) days following Lessor's failure to cause
Premises Delivery to occur on or before October 1, 1997 and Lessor shall not be
subject to any further liability for such time period, nor shall such failure
affect the validity of this Lease, or the obligations of Lessee hereunder, or
extend the term hereof, but in such case, Lessee shall not, except as otherwise
provided herein, be obligated to pay rent or perform any other obligation of
Lessee under the terms of this Lease until the Commencement Date occurs.

4.         RENT.

    4.1         BASE RENT.  Lessee shall pay Base Rent and other rent or
charges, as the same may be adjusted from time to time, to Lessor in lawful
money of the United States, without offset or deduction, on or before the day on
which it is due under the terms of this Lease.  Base Rent and all other rent and
charges for any period during the term hereof which is for less than one full
month shall be prorated based upon the actual number of days of the month
involved.  Payment of Base Rent and other charges shall be made to Lessor at its
address stated herein or to such other persons or at such other addresses as
Lessor may from time to time designate in writing to Lessee.

    4.2         BUILDING AND COMMON AREA OPERATING EXPENSES.  Lessee shall pay
to Lessor during the term hereof, in addition to the Base Rent, Lessee's Share
(as specified in Paragraph 1.6(b)) of all Building and Common Area Operating
Expenses, as hereinafter defined, during each calendar year of the term of this
Lease, in accordance with the following provisions:

          (a) "BUILDING AND COMMON AREA OPERATING EXPENSES" are defined, for
purposes of this Lease, as all costs incurred by Lessor relating to the
ownership and operation of the Property, including, but not limited to, the
following:

              (i)   The operation, repair and maintenance, in neat, clean, good
order and condition, of the following:

                   (a) The Common Areas including the Parking Area, loading and
unloading areas, trash areas, roadways, sidewalks, walkways, parkways,
driveways, landscaped areas, fences and gates, striping, bumpers, irrigation
systems, Common Area lighting facilities and elevators.

                   (b) Fire detection and sprinkler systems.

              (ii)  The cost of water, gas, electricity and telephone to service
the Common Areas.

              (iii) Trash disposal, property management and security services
(subject to approval by Lessee) and the costs of any environmental inspections.

              (iv)  Reserves set aside for maintenance and repair of Common
            Areas.

              (v)    Real Property Taxes (as defined in Paragraph 10.2) to be
paid by Lessor for the Building and the Common Areas under Paragraph 10 hereof.
<PAGE>
 
              (vi)   The cost of the premiums for the insurance policies, other
than earthquake insurance premiums in excess of $0.01 per rentable square foot
per month for space then being leased, maintained by Lessor under Paragraph 8
hereof.

              (vii)  Any deductible portion of an insured loss, other than a
loss to which earthquake insurance would pertain, concerning the Building or the
Common Areas.

              (viii) Subject to 4.2(g) below, a management fee not to
exceed three percent (3%) of the Base Rent while Lessor is managing the Building
and Common Areas.

              (ix)   Any other services to be provided by Lessor that are stated
elsewhere in this Lease to be a Building and Common Area Operating Expense. 
(See Addendum)

    Notwithstanding the foregoing, Common Area Operating Expenses should not
include (a) capital expenditures; (b) costs to comply with laws and regulations
enacted prior to the date the Building was constructed in 1984 and that the
Building and/or the Premises failed to meet on the date of its construction in
1984; (c) depreciation and other non-cash expenses; (d) property management fees
(including the cost of any wages, salaries or other compensation paid to any of
Lessor's employees or as Lessor's overhead) in excess of 3% of the Base Rent;
(e) costs and expenses incurred primarily for the benefit of a particular lessee
or for which the Lessor is reimbursed by other lessees; (f) the cost of
remediating or removing hazardous materials unless caused by Lessee; (g) the
cost of remedying latent defects unless caused by Lessee; (h) costs, penalties,
fines and other expenses incurred as the result of a violation of laws,
regulations, ordinances or orders unless caused by Lessee; (i) premiums for
earthquake insurance coverage in excess of $0.01 per rentable square foot per
month for space then being leased by Lessee; (j) the cost of legal, accounting
and consulting fees incurred in connection with (A) a particular lessee, (B)
compliance with laws and regulations enacted prior to the date the Building was
constructed and that the Building failed to meet on the date of its original
construction, and (C) a violation of laws, regulations, ordinances or orders
unless caused by Lessee; (k) the cost of financing capital improvements or
replacements (or any imputed interest thereon); (l) the cost of the cafeteria
and related expenses, (m) any wages, salaries or other compensation paid to any
of Lessor's employees or as Lessor's overhead except as part of and included in
Lessor's management fee as provided in subparagraph (d) above, (n) the cost of
maintaining and/or replacing the roof of the Building, (o) any costs due to
changes in the Common Area or building systems made by Lessor unless such
changes provide a mutual benefit to all occupants of the Building; and (p) any
other expense that under generally accepted accounting principles would not be
considered to be a maintenance or operating expense.

          (b) Any Building and Common Area Operating Expenses and Real Property
Taxes that are specifically attributable to the Building or to any other
building in the Industrial Center or to the operation, repair and maintenance
thereof, shall be allocated entirely to the Building or to such other building.
However, any Common Area Operating Expenses and Real Property Taxes that are not
specifically attributable to the Building or to any other Building or to the
operation, repair and maintenance thereof, shall be equitably allocated by
Lessor to all buildings in the Industrial Center owned by Lessor.

          (c) The inclusion of the improvements, facilities and services set
forth in Subparagraph 4.2(a) shall not be deemed to impose an obligation upon
Lessor to either have said improvements or facilities or to provide those
services unless the Industrial Center owned by Lessor already has the same,
Lessor already provided the services, or Lessor has agreed elsewhere this Lease
to provide the same or some of them.

          (d) Lessee's Share of Building and Common Area Operating Expenses
shall be payable by Lessee within ten (10) days after a reasonably detailed
statement of actual expenses is presented to Lessee by Lessor.  At Lessor's
option, however, an amount may be estimated by Lessor from time to time of
Lessee's Share of annual Building and Common Area Operating Expenses and the
same shall be payable monthly or quarterly, as Lessor shall designate during
each 12 month period of the Lease term, on the same day as the Base Rent is due
hereunder.  Lessor shall deliver to Lessee within sixty (60) days after the
expiration of each calendar year a reasonably detailed statement showing
Lessee's Share of the actual Building and Common Area Operating Expenses
incurred during the preceding year.  If Lessee's payments under this Paragraph
4.2(d) during said preceding year exceed Lessee's Share as indicated on said
statement, Lessee shall be credited the amount of such overpayment against
Lessee's Share of Building and Common Area Operating Expenses next becoming due.
If Lessee's payments under this Paragraph 4.2(d) during said preceding year were
less than Lessee's Share as Indicated on said statement, Lessee shall pay to
Lessor the amount of the deficiency within ten (10) days after delivery by
Lessor to Lessee of said statement.
<PAGE>
 
          (e) Lessor shall keep proper books of account, receipts and other
appropriate records with respect to Common Area.  Until the end of the third
anniversary of each calendar year, (a) the books, receipts and records relating
to such calendar year shall, within five (5) business days following Lessee's
request, be made available to Lessee and its authorized representatives for
review during regular business hours at the office of Lessor as designated by
Lessor, and (b) Lessee shall be entitled to have an independent certified public
accountant or other real estate professional hired by Lessee audit such books,
records and receipts for such calendar year.  If Lessor does not agree with the
results of such audit, Lessor can have its own audit conducted.  If the results
of Lessor's audit do not agree with the results of Lessee's audit, the party
conducting Lessor's audit and the party conducting Lessee's audit shall jointly
agree upon a neutral third party meeting the above qualifications to conduct an
audit that shall be final and binding upon the parties.  The cost of such third
audit shall be shared equally by Lessor and Lessee.  In the event any such audit
reveals an undercharge or overcharge of Lessee's Share of Building and Common
Area Operating Expenses, the applicable party shall pay the other, upon demand,
the amount necessary to effect all appropriate adjustments, together with
interest at a Prime Rate set forth in the Money Rates section of the Wall Street
Journal from the date that any such overpayment was made or any underpayment
should have been made.  Lessor shall reimburse Lessee upon demand for all costs
incurred by Lessee in connection with any such audit in the event that such
audit determines that the Lessee's Share of Building and Common Area Operating
Expenses stated to be payable to Lessor in the statement delivered by Lessor or,
if no such statement was delivered, the estimate statement delivered by Lessor,
for such calendar year was more than one hundred and three percent (103%) of the
Lessee's Share of Building and Common Area Operating Expenses actually payable
for such calendar year.

          (f) In the event that an annual statement is not delivered to Lessee
pursuant to subsection (d) above within one hundred eighty (180) days after the
end of the calendar year, Lessor shall not be entitled to collect any amount for
the calendar year in question other than the amount, if any, billed by Lessor
during such calendar year pursuant to Lessor's estimate statement for such
calendar year.  Furthermore, once a statement for a calendar year is delivered
by Lessor to Lessee, Lessor may not, following one hundred eighty (180) days
after the end of the calendar year in question, revise the statement to
recalculate the Building and Common Area Operating Expenses in a manner which
would result in an increase of the Building and Common Area Operating Expenses
for the calendar year in question.  In the event the Lessor fails to timely
deliver a statement to Lessee, Lessee may, nonetheless, elect to have the
Building and Common Area Operating Expenses paid by Lessee during such year
audited pursuant to subparagraph (e) above.

          (g) Notwithstanding the foregoing, from and after the date that the
First Floor Expansion Space (defined in the Addendum) is delivered to Lessee,
Lessee may, at its option, take over the management and maintenance of the
Common Areas, including the obligation to insure the same in place of Lessor's
insurance set forth in Paragraph 8.3 below, in which event all other provisions
of this paragraph 4.2 shall be inapplicable.  If Lessee elects to exercise the
right provided to it under this paragraph 4.2(g) it shall so notify Lessor in
writing at least 30 days in advance of the date it wishes to take over such
management and maintenance of the Common Area and Lessor shall cooperate with
and assist Lessee with the transition of the same.  Lessor shall have the right
to periodically inspect the Common Area to assure itself that Lessee is
adequately maintaining the Common Area and, if Lessee is failing to adequately
maintain the Common Area, and fails to take all necessary steps to do so within
thirty (30) days after notice from Lessor, Lessor may reassume the
responsibilities of managing and maintaining the Common Areas and this
subparagraph 4.2(g) shall be of no further force or effect.  In the event Lessee
exercises its option under this Paragraph 4.2(g), Lessee shall thereafter bill
Lessor for its share of Building and Common Area Operating Expenses for the
prorata portion of the Building not leased by Lessee and Lessor shall have all
inspection and audit rights provided Lessee in subparagraphs 4.2(e) and 4.2(f)
above.  The calculation of such Building and Common Area Operating Expenses and
Lessor's share shall be done on the same basis as this paragraph 4.2.

5.         THIS PARAGRAPH INTENTIONALLY LEFT BLANK.

6.         USE.

    6.1         PERMITTED USE.

          (a) Lessee shall use and occupy the Premises only for the Permitted
Use set forth in Paragraph 1.8, or any other legal use which is reasonably
comparable thereto, and for no other purpose.  Lessee shall not use or permit
the use of the Premises in a manner that is unlawful, creates waste or a
nuisance, or that disturbs owners and/or occupants of, or causes damage to the
premises or neighboring premises or properties.
<PAGE>
 
          (b) Lessor hereby agrees to not unreasonably withhold or delay its
consent to any written request by Lessee, Lessee's assignees or subtenants, and
by prospective assignees and subtenants of Lessee, its assignees and subtenants,
for a modification of said Permitted Use, so long as the same will not impair
the structural integrity of the improvements on the Premises or in the Building
or the mechanical or electrical systems therein, does not conflict with uses by
other lessees, is not significantly more burdensome to the Premises or the
Building and the improvements thereon, and is otherwise permissible pursuant to
this Paragraph 6.  If Lessor elects to withhold such consent, Lessor shall
within five (5) business days after such request give a written notification of
same, which notice shall include an explanation of Lessor's reasonable
objections to the change in use.

    6.2         HAZARDOUS SUBSTANCES.

          (a) REPORTABLE USES REQUIRE CONSENT.  The term "HAZARDOUS SUBSTANCES"
as used in this Lease shall mean any product, substance, chemical, material or
waste whose presence, nature, quantity and/or intensity of existence, use,
manufacture, disposal, transportation, spill, release or effect, either by
itself or in combination with other materials expected to be on the Premises, is
ether: (i) potentially injurious to the public health, safety or welfare, the
environment, or the Premises; (ii) regulated or monitored by any governmental
authority or (iii) a basis for potential liability of Lessor to any governmental
agency or third party under any applicable statute or common law theory.
Hazardous Substance shall include, but not be limited to, hydrocarbons,
petroleum, gasoline, crude oil or any products or by-products thereof.  Lessee
shall not engage in any activity in or about the Premises which constitutes a
Reportable Use (as hereinafter defined) of Hazardous Substances without the
express prior written consent of Lessor and compliance in a timely manner (at
Lessee's sole cost and expense) with all Applicable Requirements (as defined in
Paragraph 6.3).  "REPORTABLE USE" shall mean (i) the installation or use of any
above or below ground storage tank; (ii) the generation, possession, storage,
use, transportation, or disposal of a Hazardous Substance that requires a permit
from, or with respect to which a report, notice, registration or business plan
is required to be filed with, any governmental authority, and (iii) the presence
in, on or about the Premises of a Hazardous Substance with respect to which any
Applicable Laws require that a notice be given to persons entering or occupying
the Premises or neighboring properties.  Notwithstanding the foregoing, Lessee
may, without Lessor's prior consent, but upon notice to Lessor and in compliance
with all Applicable Requirements, use any ordinary and customary materials
reasonably required to be used by Lessee in the normal course of the Permitted
Use, so long as such use is not a Reportable Use and does not expose the
Premises or neighboring properties to any meaningful risk of contamination or
damage or expose Lessor to any liability therefor.  In addition, Lessor may (but
without any obligation to do so) condition its consent to any Reportable Use of
any Hazardous Substance by Lessee upon Lessee's giving Lessor such additional
assurances as Lessor, in its reasonable discretion, deems necessary to protect
itself, the public, the Premises and the environment against damage,
contamination or injury and/or liability therefor, including but not limited to
the installation (and, at Lessor's option, removal on or before Lease expiration
or earlier termination) of reasonably necessary protective modifications to the
Premises (such as concrete encasements) and/or the deposit of a security
deposit.

          (b) DUTY TO INFORM LESSOR.  If Lessee knows, or has reasonable cause
to believe, that a Hazardous Substance has come to be located in, on, under or
about the Premises or the Building, other than as previously consented to by
Lessor, Lessee shall immediately give Lessor written notice thereof, together
with a copy of any statement, report, notice, registration, application, permit,
business plan, license, claim, action, or proceeding given to, or received from,
any governmental authority or private party concerning the presence, spill,
release, discharge of, or exposure to, such Hazardous Substance including but
not limited to all such documents as may be involved in any Reportable Use
involving the Premises.  Lessee shall not cause or permit any Hazardous
Substance to be spilled or released in, on, under or about the Premises
(including, without limitation, through the plumbing or sanitary sewer system).

          (c) INDEMNIFICATION.  Lessee shall indemnity, protect, defend and hold
Lessor, its agents, employees, lenders and ground lessor, if any, and the
Premises, harmless from and against any and all damages, liabilities, judgments,
costs, claims, liens, expenses, penalties, loss of permits and attorneys' and
consultants' fees arising out of or involving any Hazardous Substance brought
onto the Premises by or for Lessee or by anyone under Lessee's control.
Lessee's obligations under this Paragraph 6.2(c) shall include, but not be
limited to, the effects of any contamination or injury to person, property or
the environment created or suffered by Lessee, and the cost of investigation
(including consultants' and attorneys' fees and testing), removal, remediation,
restoration and/or abatement thereof, or of any contamination therein involved,
and shall survive the expiration or earlier termination of this Lease.  No
termination, cancellation or release agreement entered into by Lessor and Lessee
shall release Lessee from its obligations under this Lease with respect to
Hazardous Substances, unless specifically so agreed by Lessor in writing at the
time of such agreement.
<PAGE>
 
    6.3         LESSEE'S COMPLIANCE WITH REQUIREMENTS.  Lessee shall, at
Lessee's sole cost and expense, fully, diligently and in a timely manner, comply
with all "APPLICABLE REQUIREMENTS," which term is used in this Lease to mean all
laws, rules, regulations, ordinances, directives, covenants, easements and
restrictions of record, permits, the requirements of any applicable fire
insurance underwriter or rating bureau, and the recommendations of Lessor's
engineers and/or consultants, relating in any manner to the Premises and caused
by Lessee (including bun not limited to matters pertaining to (i) industrial
hygiene, (ii) environmental conditions on, in, under or about the Premises,
inducing soil and groundwater conditions, and (iii) the use, generation,
manufacture, production, installation, maintenance, removal, transportation,
storage, spill, or release of any Hazardous Substance), now in effect or which
may hereafter come into effect.  Lessee shall, within five (5) days after
receipt of Lessor's written request, provide Lessor with copies of all documents
and information, including but not limited to permits, registrations, manifests,
applications, reports and certificates, evidencing Lessee's compliance with any
Applicable Requirements specified by Lessor, and shall immediately upon receipt,
notify Lessor in writing (with copies of any documents involved) of any
threatened or actual claim, notice, citation, warning, complaint or report
pertaining to or involving failure by Lessee or the Premises to comply with any
Applicable Requirements and caused by Lessee.

    6.4         INSPECTION; COMPLIANCE WITH LAW.  Lessor, Lessor's agents,
employees, contractors and designated representatives, and the holders of any
mortgages, deeds of trust or ground leases on the Premises ("LENDERS") shall
have the right to enter the Premises at any time in the case of an emergency,
and otherwise at reasonable times upon at least three (3) full business days'
notice, for the purpose of inspecting the condition of the Premises and for
verifying compliance by Lessee with this Lease and all Applicable Requirements
(as defined in Paragraph 6.3), and Lessor shall be entitled to employ experts
and/or consultants in connection therewith to advise Lessor with respect to
Lessee's activities, including but not limited to Lessee's installation,
operation, use, monitoring, maintenance, or removal of any Hazardous Substance
on or from the Premises.  The costs and expenses of any such inspections shall
be paid by the party requesting same, unless a Default or Breach of this Lease
by Lessee or a violation of Applicable Requirements or a contamination, caused
or materially contributed to by Lessee, is found to exist or to be imminent, or
unless the inspection is requested or ordered by a governmental authority as the
result of any such existing or imminent violation or contamination.  In such
case, Lessee shall upon request reimburse Lessor or Lessor's Lender, as the case
may be, for the costs and expenses of such inspections.

    6.5         ENVIRONMENTAL REVIEW; CANCELLATION OF LEASE.   Within twenty-
five (25) days after the effective date of this Lease, Lessee may conduct
whatever environmental inspections, tests and reviews Lessee deems appropriate
with respect to the Building and the Common Area.  Lessor shall cooperate with
Lessee to permit such environmental inspections, tests and reviews to be
completed as promptly as possible.  Lessor may accompany Lessee when tests are
performed and obtain duplicate samples if desired.  Lessor shall provide to
Lessee and Lessee's environmental consultants all tests, studies and reports
that, to the best knowledge of Lessor, are in Lessor's possession pertaining to
the environmental condition of the Building and the Common Area.  The "best
knowledge of Lessor" shall mean to the Lessor's knowledge following due inquiry
of the departments within Lessor having some or all responsibility for the real
estate, legal, environmental, health and/or safety or human resources functions.
In the event that any of such tests, studies or reports disclose a condition
that would require remediation or would be considered unsafe for employees or
any other persons coming onto the property by any federal or state law,
regulation, rule, ordinance or court of administrative ruling, interpretation or
decision, then Lessee shall have the right to cancel the Lease upon fifteen (15)
days written notice to Lessor.  Upon any such cancellation neither party shall
have any further rights or obligations hereunder except that Lessor shall return
to Lessee all rent and any other amounts paid by Lessee to Lessor.

    6.6         LESSOR'S REPRESENTATION; INDEMNITY.  Lessor represents and
warrants to Lessee that the Premises, the Building and the Common Area are
presently free from Hazardous Substances (except as permitted by Paragraph
6.2(a) above) and shall remain free from Hazardous Substances (except as
permitted by Paragraph 6.2(a) above) during the term of the Lease (subject to
the actions of Lessee).  In the event any Hazardous Substance is spilled,
deposited or otherwise comes to be located on the Premises, the Building or the
Common Area (except as permitted by Paragraph 6.2(a) above), Lessor shall
immediately notify Lessee and, subject to the other provisions of this Article
6, Lessor shall promptly take whatever action is required to safely remove such
Hazardous Substances.  Furthermore, Lessor shall indemnify, protect, defend and
hold Lessee, its agents and employees harmless from and against any and all
damages, liabilities, judgments, costs, claims, liens, expenses, penalties, and
attorneys' and consultants' fees arising out of or involving any Hazardous
Substance now or hereafter located on the Premises, Building or Common Area
(except as permitted by Paragraph 6.2(a) above) by any cause other than the acts
of Lessee or anyone under Lessee's control.  Lessor's obligations under this
Paragraph shall include, but not be limited to, the effects of any
contamination, or injury to person, property or the environment, and the cost of
investigation (including consultants' and attorneys' fees and testing), removal,
remediation, restoration and/or abatement thereof, or any contamination therein
involved, and shall survive the expiration or earlier
<PAGE>
 
release agreement entered into by Lessor and Lessee shall release Lessor from
its obligations under this Lease with respect to Hazardous Substances, unless
specifically so agreed by Lessee is writing at the time of such agreement.
AlliedSignal Inc., the original Lessor under this Lease, hereby guarantees
Lessee that the provisions of this Paragraph 6.6 shall be fully performed
regardless of any subsequent transfer of all or any part of the Property by
AlliedSignal Inc. and agrees that the terms and provisions of Paragraph 6.6
shall continue to be binding upon and enforceable against AlliedSignal Inc.
notwithstanding Paragraphs 8.8 and 17 hereof.

7.   MAINTENANCE, REPAIRS UTILITY INSTALLATIONS, TRADE FIXTURES AND
     ALTERNATIONS.

7.1  LESSEE'S OBLIGATIONS.

(a)  Subject to the provisions of Paragraphs 2.2 (Condition), 2.3 (Compliance
     with Covenants, Restrictions and Building Code), 7.2 (Lessor's
     Obligations), 9 (Damage or Destruction), and 14 (Condemnation), Lessee
     shall, at Lessee's sole cost and expense and at all times, keep the
     Premises and every part thereof in good order, condition and repair
     (whether or not such portion of the Premises requiring repair, or the means
     of repairing the same, are reasonably or readily accessible to Lessee, and
     whether or not the need for such repairs occurs as a result of Lessees use,
     any prior use, the elements or the age of such portion of the Premises),
     including, without limiting the generality of the foregoing, all equipment
     or facilities specifically serving the Premises, such as plumbing, heating,
     air conditioning, ventilating, electrical, lighting facilities, boilers,
     fired or unfired pressure vessels, fire hose connections if within the
     Premises, fixtures, interior walls, interior surfaces of exterior walls,
     ceilings, floors, windows, doors, plate glass, and skylights, but excluding
     any items which are the responsibility of Lessor pursuant to Paragraph 7.2
     below.  Lessee, in keeping the Premises in good order, condition and
     repair, shall exercise and perform good maintenance practices.  Lessee's
     obligations shall include restorations, replacements or renewals when
     necessary to keep the Premises and all improvements thereon or a part
     thereof in good order, condition and state of repair.  Lessor, subject to
     the one-year warranty provided by Lessor pursuant Paragraph 2.2 above,
     shall keep in good condition and repair the roof, fire sprinkler system or
     other automatic fire extinguishing system, including fire alarm and/or
     smoke detection systems and equipment within the Building.  Notwithstanding
     the foregoing or any other provisions of this Lease, if any repairs,
     modifications or improvements to the Premises or Building are required,
     Lessee shall only be required to pay that portion of the cost thereof equal
     to the total cost multiplied by a fraction, the numerator of which is the
     remaining term of the Lease and the denominator of which is the useful life
     of the repair, modification or improvement as determined by generally
     accepted accounting principles.  With respect to the immediately preceding
     sentence, if the calculation of Lessee's share of such costs is based upon
     the then unexpired term of the Lease and the Lease term is later extended
     pursuant to Lessee's exercise of one or more of its options to extend such
     term as provided in Paragraph 49 of the Addendum, Lessee Share of such
     costs shall be recalculated on the basis of such extended term on the date
     of exercise of such option to extend and any additional amounts due from
     Lessee shall be due and payable on the first day of the option term.

(b)  Lessee shall, at Lessee's sole cost and expense, procure and maintain a
     contract, with copies to Lessor, in customary form and substance for and
     with a contractor specializing and experienced in the inspection,
     maintenance and service of the heating, air conditioning and ventilation
     system exclusively for the Premises.

(c)  If Lessee fails to perform Lessee's obligations under this Paragraph 7.1,
     Lessor may enter upon the Premises after ten (10) days' prior written
     notice to Lessee (except in the case of an emergency, in which case no
     notice shall be required), perform such obligations on Lessee's behalf, and
     put the Premises in good order, condition and repair; in accordance with
     Paragraph 13.2 below.

7.2    LESSOR'S OBLIGATIONS.  Subject to the provisions of Paragraphs 2.2
(Condition), 2.3 (Compliance with Covenants, Restrictions and Building Code),
4.2 (Common Area Operating Expenses), 6 (Use), 7.1 (Lessee's Obligations), 9
(Damage or Destruction) and 14 (Condemnation), Lessor, subject to reimbursement
pursuant to Paragraph 4.2 where applicable, shall keep in good order, condition
and repair the foundations, exterior walls, structural condition of interior
bearing walls, exterior roof, fire sprinkler and/or standpipe and hose (if
located in the Common Areas) or other automatic fire extinguishing system
including fire alarm and/or smoke detection systems and equipment, fire
hydrants, parking lots, walkways, parkways, driveways, landscaping, fences,
signs and utility systems serving the Common Areas and all parts thereof, as
well as providing the services for which there is a Building and Common Area
Operating Expense pursuant to Paragraph 4.2. Lessor shall not be obligated to
paint the exterior or interior surfaces of exterior walls nor shall Lessor be
obligated to maintain, repair or replace windows, doors or plate glass of the
Premises. Lessee expressly waives the benefit of any statute now or hereafter in
effect which would otherwise afford Lessee the right to make repairs at Lessor's
expense or to terminate this Lease because of Lessor's failure to keep the
Building or Common Areas in good order, condition and repair.
<PAGE>
 
7.3    UTILITY INSTALLATIONS, TRADE FIXTURES, ALTERATIONS.

(a)  DEFINITIONS; CONSENT REQUIRED.  The term "UTILITY INSTALLATIONS" is used in
     this Lease to refer to all air lines, power panels, electrical
     distribution, security, fire protection systems, communications systems,
     lighting fixtures, heating, ventilating and air conditioning equipment,
     plumbing, and fencing in, on or about the Premises.  The term "TRADE
     FIXTURES" shall mean Lessee's machinery and equipment which can be removed
     without doing material damage to the Premises.  The term "ALTERATIONS"
     shall mean any modification of the improvements on the Premises which are
     provided by Lessor under the terms of this Lease, other than Utility
     Installations or Trade Fixtures.  "LESSEE-OWNED ALTERATIONS AND/OR UTILITY
     INSTALLATIONS" are defined as Alterations and/or Utility Installations made
     by Lessee that are not yet owned by Lessor pursuant to Paragraph 7.4(a).
     After the initial improvements by Lessee, Lessee shall not make nor cause
     to be made any Alterations or Utility Installations in, on, under or about
     the Premises without Lessor's prior written consent.  Lessee may, however,
     make non-structural Utility Installations to the interior of the Premises
     (excluding the roof) without Lessor's consent but upon notice to Lessor, so
     long as they are not visible from the outside of the Premises, do not
     involve puncturing, relocating or removing the roof or any structural or
     bearing walls, or changing or interfering with the fire sprinkler or fire
     detection systems and the cost thereof does not exceed $50,000.00.

(b)  CONSENT.  Any Alterations or Utility Installations that Lessee shall desire
     to make and which require the consent of the Lessor shall be presented to
     Lessor in written form with detailed plans. An consents given by Lessor,
     whether by virtue of Paragraph 7.3(a) or by subsequent specific consent,
     shall be deemed conditioned upon: (i) Lessee's acquiring all applicable
     permits required by governmental authorities; (ii) the furnishing of copies
     of such permits together with a copy of the plans and specifications for
     the Alteration or Unity Installation to Lessor prior to commencement of the
     work thereon; and (iii) the compliance by Lessee with all conditions of
     said permits in a prompt and expeditious manner.  Any Alterations or
     Utility Installations by Lessee during the term of this Lease shall be done
     in a good and workmanlike manner, with good and sufficient materials, and
     be in compliance with all Applicable Requirements.  Lessee shall promptly
     upon completion thereof furnish Lessor with as-built plans and
     specifications therefor.  Lessor may, (but without obligation to do so)
     condition its consent to any requested Alteration or Utility Installation
     that costs $50,000.00 or more upon Lessee's providing Lessor with a lien
     and completion bond in an amount equal to one and one-half times the
     estimated cost of such Alteration or Utility installation.

(c)  LIEN PROTECTION.  Lessee shall pay when due all claims for labor or
     materials furnished or alleged to have been furnished to or for Lessee at
     or for use on the Premises, which claims are or may be secured by any
     mechanic's or materialmen's lien against the Premises or any interest
     therein.  Lessee shall give Lessor not less than ten (10) days' notice
     prior to the commencement of any work in, on, or about the Premises, and
     Lessor shall have the right to post notices of non-responsibility in or on
     the Premises as provided by law.  If Lessee shall, in good faith, contest
     the validity of any such lien, claim or demand, then Lessee shall at its
     sole expense, defend and protect itself, Lessor and the Premises against
     the same and shall pay and satisfy any such adverse judgment that may be
     rendered thereon before the enforcement thereof against the Lessor or the
     Premises.  If Lessor shall require, Lessee shall furnish to Lessor a surety
     bond satisfactory to Lessor in an amount equal to one and one-half times
     the amount of such contested lien claim or demand, indemnifying Lessor
     against liability for the same, as required by law for the holding of the
     Premises free from the effect of such lien or claim. In addition, Lessor
     may require Lessee to pay Lessor's attorneys' fees and costs in
     participating in such action if Lessor shall decide it is to its best
     interest to do so.

7.4  OWNERSHIP, REMOVAL, SURRENDER, AND RESTORATION.

(a)  OWNERSHIP.  Subject to Lessor's right to require their removal and to cause
     Lessee to become the owner thereof as hereinafter provided in this
     Paragraph 7.4, all Alterations and Utility Installations made to the
     Premises by Lessee shall be the property of and owned by Lessee, but
     considered a part of the Premises.  Lessor may, at any time and at its
     option, elect in writing to Lessee to be the owner of all or any specified
     part of the Lessee-Owned Alterations and Utility Installations. Unless
     otherwise instructed per Subparagraph 7.4(b) hereof, all Lessee-Owned
     Alterations and Utility Installations shall, at the expiration or earlier
     termination of this Lease, become the property of Lessor and remain upon
     the Premises and be surrendered with the Premises by Lessee.

(b)  SURRENDER/RESTORATION.  Lessee shall surrender the Premises by the end of
     the last day of the Lease term or any earlier termination date, clean and
     free of debris and in good operating order, condition and state of repair,
     ordinary wear and tear excepted, patched and ready for paint.  Ordinary
     wear and tear shall not include any damage or deterioration that would have
     been prevented by good maintenance practice or by Lessee performing all of
     its obligations under this Lease.  Except as otherwise agreed or specified
     herein, the Premises, as surrendered, shall include the Alterations and
     Utility Installations.  The obligation of Lessee shall include the repair
     of any damage occasioned by the installation, maintenance or removal of
     Lessee's Trade Fixtures, furnishings, equipment, and Lessee-Owned
<PAGE>
 
     Alterations and Utility Installations, as well as the removal of any
     storage tank installed by or for Lessee, and the removal, replacement or
     remediation of any soil, material or ground water contaminated by Lessee,
     all as may then be required by Applicable Requirements and/or good
     practice. Lessee's Trade Fixtures shall remain the property of Lessee and
     shall be removed by Lessee subject to its obligation to repair and restore
     the Premises per this Lease.

8.   INSURANCE; INDEMNITY

8.1  PAYMENT OF PREMIUMS.  Subject to Section 4.2(g), the cost of the premiums
for the insurance policies maintained by Lessor under this Paragraph 8 shall be
a Building and Common Area Operating Expense pursuant to Paragraph 4.2 hereof.
Premiums for policy periods commencing prior to, or extending beyond, the term
of this Lease shall be prorated to coincide with the corresponding Commencement
Date or Expiration Date.

8.2  LIABILITY INSURANCE.

(a)  CARRIED BY LESSEE.  Lessee shall obtain and keep in force during the term
     of this Lease a Commercial General Liability policy of insurance protecting
     Lessee, Lessor and any Lender(s) whose names have been provided to Lessee
     in writing (as additional insureds) against claims for bodily injury,
     personal injury and property damage based upon, involving or arising out of
     the ownership, use, occupancy or maintenance of the Premises and all areas
     appurtenant thereto.  Such insurance shall be on an occurrence basis
     providing single time coverage in an amount not less than $3,000,000 per
     occurrence with an "Additional Insured-Managers or Lessors of Premises"
     endorsement and contain the "Amendment of the Pollution Exclusion"
     endorsement for damage caused by heat, smoke or fumes from a hostile fire.
     The policy shall not contain any intra-insured exclusions as between
     insured persons or organizations, but shall include coverage for liability
     assumed under this Lease as an "INSURED CONTRACT" for the performance of
     Lessee's indemnity obligations under this Lease. The limits of said
     insurance required by this Lease or as carried by Lessee shall not,
     however, limit the liability of Lessee nor relieve Lessee of any obligation
     hereunder. All insurance to be carried by Lessee shall be primary to and
     not contributory with any similar insurance carried by Lessor, whose
     insurance shall be considered excess insurance only.

(b)  CARRIED BY LESSOR.  Lessor shall also maintain liability insurance
     described in Paragraph 8.2(a) above, in addition to and not in lieu of, the
     insurance required to be maintained by Lessee. Lessee shall not be named as
     an additional insured therein.

8.3    PROPERTY INSURANCE-BUILDING, IMPROVEMENTS AND RENTAL VALUE.

(a)  BUILDING AND IMPROVEMENTS.  Unless Lessee exercises its rights under
     Section 4.2(g), Lessor shall obtain and keep in force during the term of
     this Lease a policy or policies in the name of Lessor, with loss payable to
     Lessor and to any Lender(s), insuring against loss or damage to the
     Premises.  Such insurance shall be for full replacement cost with
     commercially reasonable deductibles, as the same shall exist from time to
     time, or the amount required by any Lender(s), but in no event more than
     the commercially reasonable and available insurable value thereof if, by
     reason of the unique nature or age of the improvements involved such latter
     amount is less than full replacement cost.  Lessee-Owned Alterations and
     Utility Installations, Trade Fixtures and Lessee's personal property shall
     be insured by Lessee pursuant to Paragraph 8.4.  If the coverage is
     available and commercially appropriate, Lessor's policy or policies shall
     insure against all risks of direct physical loss or damage (except the
     perils of flood and/or earthquake unless required by a Lender and, in such
     event, Lessee shall be named as an additional insured), including coverage
     for any additional costs resulting from debris removal and reasonable
     amounts of coverage for the enforcement of any ordinance or law regulating
     the reconstruction or replacement of any undamaged sections of the Building
     required to be demolished or removed by reason of the enforcement of any
     building, zoning, safety or land use laws as the result of a covered loss,
     but not including plate glass insurance.  Said policy or policies shall
     also contain an agreed valuation provision in lieu of any co-insurance
     clause, waiver of subrogation, and inflation guard protection causing an
     increase in the annual property insurance coverage amount by a factor of
     not less than the adjusted U.S. Department of Labor Consumer Price Index
     for All Urban Consumers for the city nearest to where the Premises are
     located.

(b)  PREMISES.  Lessee shall pay for any increase in the premiums for the
     property insurance of the Building and for the Common Areas or other
     buildings in the Industrial Center if said increase is caused by Lessee's
     acts, omissions, use or occupancy of the Premises.

(c)  LESSEE'S IMPROVEMENTS.  Since Lessor is the Insuring Party, Lessor shall
     not be required to insure Lessee-Owned Alterations and Utility
     Installations unless the item in question has become the property of Lessor
     under the terms of this Lease.
<PAGE>
 
8.4  LESSEE'S PROPERTY INSURANCE.  Subject to the requirements of Paragraph
8.5, Lessee at its cost shall either by separate policy or, at Lessor's option,
by endorsement to a policy already carried, maintain insurance coverage on all
of Lessee's personal property, Trade Fixtures and Lessee-Owned Alterations and
Utility Installations in, on, or about the Premises similar in coverage to that
carried by Lessor as the Insuring Party under Paragraph 8.3(a).  Such insurance
shall be full replacement cost coverage with a deductible not to exceed $100,000
per occurrence.  The proceeds from any such insurance shall be used by Lessee
for the replacement of personal property and the restoration of Trade Fixtures
and Lessee-Owned Alterations and Utility Installations if Lessee reoccupies the
Premises following a damage or destruction.  Upon request from Lessor, Lessee
shall provide Lessor with written evidence that such insurance is in force.

8.5    INSURANCE POLICIES.  Insurance required hereunder shall be in companies
duly licensed to transact business in the state where the Premises are located,
and maintaining during the policy term a "General Policyholders Rating" of at
least B+, V, or such other rating as may be required by a Lender, as set forth
in the most current issue of "Best's Insurance Guide."  Lessee shall not do or
permit to be done anything which shall invalidate the insurance policies
referred to in this Paragraph 8.  Lessee shall cause to be delivered to Lessor,
within seven (7) days after the earlier of the Early Possession Date or the
Commencement Date, certified copies of, or certificates evidencing the existence
and amounts of the insurance required under Paragraph 8.2(a) and 8.4. No such
policy shall be cancelable or subject to modification except after thirty (30)
days' prior written notice to Lessor. Lessee shall at least thirty (30) days
prior to the expiration of such policies or any other policies of insurance
Lessee is required to maintain hereunder under Section 4.2(g) or otherwise,
furnish Lessor with evidence of renewals or "insurance binders" evidencing
renewal thereof, or Lessor may order such insurance and charge the cost thereof
to Lessee, which amount shall be payable by Lessee to Lessor upon demand.

8.6    WAIVER OF SUBROGATION.  Without affecting any other rights or remedies,
Lessee and Lessor each hereby release and relieve the other, and waive their
entire right to recover damages (whether in contract or in tort) against the
other, for loss or damage to their property arising out of or incident to the
perils required to be insured against under Paragraph 8.  The effect of such
releases and waivers of the right to recover damages shall not be limited by the
amount of insurance carried or required, or by any deductibles applicable
thereto. Lessor and Lessee agree to have their respective insurance companies
issuing property damage insurance waive any right to subrogation that such
companies may have against Lessor or Lessee, as the case may be, so long as the
insurance is not invalidated thereby.

8.7  INDEMNITY.

(a)  Except for Lessor's negligence and/or breach of express warranties,
     Lessor's maintenance obligations hereunder or any latent defects in the
     portions of the Building or the Common Area not installed by Lessee, Lessee
     shall indemnify, protect, defend and hold harmless the Premises, Lessor and
     its agents, Lessor's master or ground lessor, partners and Lenders, from
     and against any and all claims, loss of rents and/or damages, costs, liens,
     judgments, penalties, loss of permits, attorneys' and consultants' fees,
     expenses and/or liabilities arising out of, involving, or in connection
     with, the occupancy of the Premises by Lessee, the conduct of Lessee's
     business, any act, omission or neglect of Lessee, its agents, contractors,
     employees or invitees, and out of any Default or Breach by Lessee in the
     performance in a timely manner of any obligation on Lessee's part to be
     performed under this Lease. The foregoing shall include, but not be limited
     to, the defense or pursuit of any claim or any action or proceeding
     involved therein, and whether or not (in the case of claims made against
     Lessor) litigated and/or reduced to judgment.  In case any action or
     proceeding be brought against Lessor by reason of any of the foregoing
     matters, Lessee upon notice from Lessor shall defend the same at Lessee's
     expense by counsel reasonably satisfactory to Lessor and Lessor shall
     cooperate with Lessee in such defense. Lessor need not have first paid any
     such claim in order to be so indemnified.

(b)  Except for Lessee's negligence and/or breach of express warranties, herein
     or hereunder Lessor shall indemnify, protect, defend and hold harmless
     Lessee and its agents, and employees from and against any and all claims,
     damages, costs, liens, judgments, penalties, loss of permits, attorneys'
     and consultants' fees, expenses and/or liabilities arising out of,
     involving, or in connection with, any intentional act, omission or gross
     negligence of Lessor, its agents, contractors, employees or invitees and/or
     any latent defects in the Premises, the Building or the Common Area not
     constructed or installed by Lessee, and out of any Default or Breach by
     Lessor in the performance in a timely manner of any obligation on Lessor's
     part to be performed under this Lease.  The foregoing shall include, but
     not be limited to, the defense or pursuit of any claim or any action or
     proceeding involved therein and whether or not (in the case of claims made
     against Lessee) litigated and/or reduced to judgment in case any action or
     proceeding be brought against Lessee by reason of any of the foregoing
     matters.  In such defense Lessee need not have first paid any such claim in
     order to be so indemnified.
<PAGE>
 
8.8  EXEMPTION OF LESSOR FROM LIABILITY.  Lessor shall not be liable for
injury or damage to the person or goods, wares merchandise or other property of
Lessee, Lessee's employees, contractors, invitees, customers, or any other
person in or about the Premises, whether such damage or injury is caused by or
results from fire, steam, electricity, gas, water or rain, or from the breakage,
leakage, obstruction or other defects of pipes, fire sprinklers, wires,
appliances, plumbing, air conditioning or lighting fixtures, or from any other
cause, whether said injury or damage results from conditions arising upon the
Premises or upon other portions of the Building of which the Premises are a
part, from other sources or places, and regardless of whether the cause of such
damage or injury or the means of repairing the same is accessible or not, unless
caused by Lessor's or its agents' or employees' gross negligence or intentional
misconduct, Lessor's maintenance obligations hereunder, a latent defect in the
Premises, Building or Common Area not constructed or installed by Lessee or any
default or breach by Lessor under this Lease.  Lessor shall not be liable for
any damages arising from any act or neglect of any other lessee of Lessor nor
from the failure by Lessor to enforce the provisions of any other lease in the
Building.  Notwithstanding Lessor's negligence or breach of this Lease, Lessor
shall under no circumstances be liable for injury to Lessee's business or for
any loss of income or profit therefrom.  This Paragraph 8.8 shall be
inapplicable respecting the damages for delay in delivery of the original
Premises or the Expansion Space as specified in Sections 3.3 and 50.6 hereof.

9.   DAMAGE OR DESTRUCTION.

9.1  DEFINITIONS.

(a)  "PREMISES PARTIAL DAMAGE" shall mean damage or destruction to the Premises,
     other than Lessee-Owned Alterations and Utility Installations, the repair
     cost of which damage or destruction is less than fifty percent (50%) of the
     then Replacement Cost (as defined in Paragraph 9.1 (d)) of the Premises
     (excluding Lessee-Owned Alterations and Utility Installations and Trade
     Fixtures) immediately prior to such damage or destruction.

(b)  "PREMISES TOTAL DESTRUCTION" shall mean damage or destruction to the
     Premises, other than Lessee-Owned Alterations and Utility Installations,
     the repair cost of which damage or destruction is fifty percent (50%) or
     more of the then Replacement Cost of the Premises (excluding Lessee-Owned
     Alterations and Utility Installations and Trade Fixtures) immediately prior
     to such damage or destruction.  In addition, damage or destruction to the
     Building, other than Lessee-Owned Alterations and Utility Installations and
     Trade Fixtures of any lessees of the Building, the cost of which damage or
     destruction is fifty percent (50%) or more of the then Replacement Cost
     (excluding Lessee-Owned Alterations and Utility Installations and Trade
     Fixtures of any lessees of the Building) of the Building shall, at the
     option of Lessor, be deemed to be Premises Total Destruction.

(c)  "INSURED LOSS" shall mean damage or destruction to the Premises, other than
     Lessee-Owned Alterations and Utility Installations and Trade Fixtures,
     which was caused by an event required to be covered by the insurance
     described in Paragraph 8.3(a) irrespective of any deductible amounts or
     coverage limits involved.

(d)  "REPLACEMENT COST" shall mean the cost to repair or rebuild the
     improvements owned by Lessor at the time of the occurrence to their
     condition existing immediately prior thereto, including demolition, debris
     removal and upgrading required by the operation of applicable building
     codes, ordinances or laws, and without deduction for depreciation.

(e)  "HAZARDOUS SUBSTANCE CONDITION" shall mean the occurrence or discovery of a
     condition involving the presence of, or a contamination by, a Hazardous
     Substance as defined in Paragraph 6.2(a), in, on, or under the Premises.

9.2  PREMISES PARTIAL DAMAGE - INSURED LOSS.  If Premises Partial Damage that
is an Insured Loss occurs, then Lessor shall, at Lessor's expense, repair such
damage (but not Lessee's Trade Fixtures or Lessee-Owned Alterations and Utility
Installations) as soon as reasonably possible and this Lease shall continue in
full force and effect.  In the event however that there is a shortage of
insurance proceeds and such shortage is due to the fact that by reason of the
unique nature of the improvements in the Premises, full replacement cost
insurance coverage was not commercially reasonable and available, Lessor shall
have no obligation to pay for the shortage in insurance proceeds or to fully
restore the unique aspects of the Premises unless Lessee provides Lessor with
the funds to cover same, or adequate assurance thereof, within ten (10) days
following receipt of written notice of such shortage and request therefor.  If
Lessor receives said funds or adequate assurance thereof within said ten (10)
day period, Lessor shall complete them as soon as reasonably possible and this
Lease shall remain in full force and effect.  If Lessor does not receive such
funds or assurance within said period, Lessor may nevertheless elect by written
notice to Lessee within ten (10) days thereafter to make such restoration and
repair as is commercially reasonable with Lessor paying any shortage in
proceeds, in which 
<PAGE>
 
case this Lease shall remain in full force and effect. If Lessor does not
receive such funds or assurance within such ten (10) day period, and if Lessor
does not so elect to restore and repair, then this Lease shall terminate sixty
(60) days following the occurrence of the damage or destruction. Unless
otherwise agreed Lessee shall in no event have any right to reimbursement from
Lessor for any funds contributed by Lessee to repair any such damage or
destruction. Premises Partial Damage due to flood or earthquake shall be subject
to Paragraph 9.3 rather than Paragraph 9.2, notwithstanding that there may be
some insurance coverage, but the net proceeds of any such insurance shall be
made available for the repairs if made by either Party.

9.3    PARTIAL DAMAGE - UNINSURED LOSS.  If Premises Partial Damage that is not
an Insured Loss occurs, unless caused by a negligent or willful act of Lessee
(in which event Lessee shall make the repairs at Lessee's expense and this Lease
shall continue in full force and effect), Lessor may at Lessor's option, either
(i) repair such damage as soon as reasonably possible at Lessor's expense in
which event this Lease shall continue in full force and effect, or (ii) give
written notice to Lessee within thirty (30) days alter receipt by Lessor of
knowledge of the occurrence of such damage of Lessor's desire to terminate this
Lease as of the date sixty (60) days following the date of such notice.  In the
event Lessor elects to give such notice of Lessor's intention to terminate this
Lease, Lessee shall have the right within ten (10) days after the receipt of
such notice to give written notice to Lessor of Lessee's commitment to pay for
the repair of such damage totally at Lessee's expense and without reimbursement
from Lessor.  Lessee shall provide Lessor with the required funds or
satisfactory assurance thereof within thirty (30) days following such commitment
from Lessee.  In such event this Lease shall continue in full force and effect,
and Lessor shall proceed to make such repairs as soon as reasonably possible
after the required funds are available.  If Lessee does not give such notice and
provide the funds or assurance thereof within the times specified above, this
Lease shall terminate as of the date specified in Lessor's notice of
termination.

9.4    TOTAL DESTRUCTION.  Notwithstanding any other provision hereof, if
Premises Total Destruction occurs (including any destruction required by any
authorized public authority), this Lease shall terminate sixty (60) days
following the date of such Premises Total Destruction whether or not the damage
or destruction is an Insured Loss or was caused by a negligent or willful act of
Lessee.  In the event, however, that the damage or destruction was caused by
Lessee, Lessor shall have the right to recover Lessor's damages from Lessee
except as released and waived in Paragraph 9.7.

9.5    DAMAGE NEAR END OF TERM.  If at any time during the last six (6) months
of the term of this Lease there is damage for which the cost to repair exceeds
one month's Base Rent, whether or not an Insured Loss, Lessor may, at Lessor's
option, terminate this Lease effective sixty (60) days following the date of
occurrence of such damage by giving written notice to Lessee of Lessor's
election to do so within thirty (30) days after the date of occurrence of such
damage.  Provided, however, if Lessee at that time has an exercisable option to
extend this Lease or to purchase the Premises, then Lessee may preserve this
Lease by (a) exercising such option, and (b) providing Lessor with any shortage
in insurance proceeds (or adequate assurance thereof) needed to make the repairs
on or before the earlier of (i) the date which is ten (10) days after Lessee's
receipt of Lessor's written notice purporting to terminate this Lease, or (ii)
the day prior to the date upon which such option expires.  If Lessee duly
exercises such option during such period and provides Lessor with funds (or
adequate assurance thereof) to cover any shortage in insurance proceeds, Lessor
shall, at Lessor's expense repair such damage as soon as reasonably possible and
this Lease shall continue in full force and effect.  If Lessee fails to exercise
such option and provide such funds or assurance during such period, then this
Lease shall terminate as of the date set forth in the first sentence of this
Paragraph 9.5.

9.6  ABATEMENT OF RENT; LESSEE'S REMEDIES.

(a)  In the event of (i) Premises Partial Damage or (ii) Hazardous Substance
     Condition for which Lessee is not legally responsible, the Base Rent,
     Common Area Operating Expenses and other charges, if any, payable by Lessee
     hereunder for the period during which such damage or condition, its repair,
     remediation or restoration continues, shall be abated in proportion to the
     degree to which Lessee's use of the Premises is impaired.   Except for
     abatement of Base Rent, Common Area Operating Expenses and other charges,
     if any, as aforesaid, all other obligations of Lessee hereunder shall be
     performed by Lessee, and Lessee shall have no claim against Lessor for any
     damage suffered by reason of any such damage, destruction, repair,
     remediation or restoration.

(b)  If Lessor shall be obligated to repair or restore the Premises under the
     provisions of this Paragraph 9 and shall not commence, in a substantial and
     meaningful way, the repair or restoration of the Premises within ninety
     (90) days after such obligation shall accrue, Lessee may, at any time prior
     to the commencement of such repair or restoration, give written notice to
     Lessor and to any Lenders of which Lessee has actual notice of Lessee's
     election to terminate this Lease on a date not less than sixty (60) days
     following the giving of such notice.  If Lessee gives such 
<PAGE>
 
     notice to Lessor and such Lenders and such repair or restoration is not
     commenced within thirty (30) days after receipt of such notice, this Lease
     shall terminate as of the date specified in said notice. If Lessor or a
     Lender commences the repair or restoration to the Premises within thirty
     (30) days after the receipt of such notice, this Lease shall continue in
     full force and effect. "COMMENCE" as used in this Paragraph 9.6 shall mean
     either the unconditional authorization of the preparation of the required
     plans, or the beginning the actual work on the Premises, whichever occurs
     first.

9.7    HAZARDOUS SUBSTANCE CONDITIONS.  If a Hazardous Substance Condition
occurs, unless Lessee is legally responsible therefor (in which case Lessee
shall make the investigation and remediation thereof required by Applicable
Requirements and this Lease shall continue in full force and effect, but subject
to Lessor's rights under Paragraphs 6.2(a), 6.2(c) and Paragraph 13), Lessor
shall, within thirty (30) days, either (i) investigate and remediate such
Hazardous Substance Condition, if required, as soon as reasonably possible at
Lessor's expense, in which event this Lease shall continue in full force and
effect, or (ii) if the estimated cost to investigate and remediate such
condition exceeds twelve (12) times the then monthly Base Rent or $100,000,
whichever us greater, give written notice to Lessee within thirty (30) days
after receipt by Lessor of knowledge of the occurrence of such Hazardous
Substance Condition of Lessor's desire to terminate this Lease as of the date
sixty (60) days following the date of such notice.   In the event Lessor elects
to give such notice of Lessor's intention to terminate this Lease, Lessee shall
have the right within ten (10) days after the receipt of such notice to give
written notice to Lessor of Lessee's commitment to pay for the excess costs of
(a) investigation and remediation of such Hazardous Substance Condition to the
extent required by Applicable Requirements, or (b) an amount equal to twelve
(12) times the then monthly Base Rent or $100,000, whichever is greater.  Lessee
shall provide Lessor with the funds required of Lessee or satisfactory assurance
thereof within thirty (30) days following said commitment by Lessee.  In such
event this Lease shall continue in full force and effect, and Lessor shall
proceed to make such investigation and remediation as soon as reasonably
possible after the required funds are available.  If Lessee does not give such
notice and provide the required funds or assurance thereof within the time
period specified above, this Lease shall terminate as of the date specified in
Lessor's notice of termination.

9.8    TERMINATION - ADVANCE PAYMENTS.  Upon termination of this Lease pursuant
to this Paragraph 9, Lessor shall return to Lessee any advance payment made by
Lessee to Lessor.

9.9    WAIVER OF STATUTES.  Lessor and Lessee agree that the terms of this Lease
shall govern the effect of any damage to or destruction of the Premises and the
Building with respect to the termination of this Lease and hereby waive the
provisions of any present or future statute to the extent it is inconsistent
herewith.

10.     REAL PROPERTY TAXES.

10.1    PAYMENT OF TAXES.  Lessor shall pay the Real Property Taxes, as defined
in Paragraph 10.2, applicable to the Building and Common Areas, and except as
otherwise provided in Paragraph 10.3 any such amounts shall be included in the
calculation of Building and Common Area Operating Expenses in accordance with
the provisions of Paragraph 4.2.

10.2    REAL PROPERTY TAX DEFINITION.  As used herein, the term "REAL PROPERTY
TAXES" shall include any form of real estate tax or assessment, general,
special, ordinary or extraordinary, and any license fee, commercial rental tax,
improvement bond or bonds, levy or tax (other than inheritance, personal income
or estate taxes) imposed upon the Building and Common Area by any authority
having the direct or indirect power to tax, including any city, state or federal
government, or any school, agricultural, sanitary, fire, street, drainage, or
other improvement district thereof, levied against any legal or equitable
interest of Lessor in the Building and Common Area or any portion thereof,
Lessor's right to rent or other income therefrom, and/or Lessor's business of
leasing the Premises.  The term "REAL PROPERTY TAXES" shall also include any
tax, fee, levy, assessment or charge, or any increase therein, imposed by reason
of events occurring, or changes in Applicable Law taking effect, during the term
of this Lease.  In calculating Real Property Taxes for any calendar year, the
Real Property Taxes for any real estate tax year shall be included in the
calculation of Real Property Taxes for such calendar year based upon the number
of days which such calendar year and tax year have in common.  The term "Real
Property Taxes" shall not include any increase in property taxes resulting from
a reassessment of the Building or the Common Area due to a "change in ownership"
as defined in the California Revenue and Taxation Code pursuant to California's
Proposition 13 during the Original Term of this Lease except for the first
transfer of the Building by the original Lessor hereunder.  Any such increase in
property taxes shall be the sole responsibility of Lessor.  During any extension
of the Term hereof, Lessor may make any necessary adjustments for actual
increases in Real Property Taxes due to changes in ownership of the Property.

10.3    ADDITIONAL IMPROVEMENTS.  Building and Common Area Operating Expenses
shall not include Real Property Taxes specified in the tax assessor's records
and work sheets as being caused by additional improvements 
<PAGE>
 
placed upon the Building or Common Area by other lessees or by Lessor for the
exclusive enjoyment of such other lessees. Notwithstanding Paragraph 10.1
hereof, Lessee shall, however, pay to Lessor at the time Common Area Operating
Expenses are payable under Paragraph 4.2, the entirety of any increase in Real
Property Taxes if assessed solely by reason of Alterations, Trade Fixtures or
Utility Installations placed upon the Premises by Lessee or at Lessee's request.

10.4    JOINT ASSESSMENT.  If the Building is not separately assessed, Real
Property taxes allocated to the Building shall be an equitable proportion of the
Real Property Taxes for all of the land and improvements included within the tax
parcel assessed, such proportion to be determined by Lessor from the respective
valuations assigned in the assessor's work sheets or such other information as
may be reasonably available.  Lessor's current determination thereof, in good
faith, shall be conclusive.  Lessor represents and warrants that the Real
Property Taxes for the Building and Common Area is currently $0.055 per square
foot per month.

10.5    LESSEE'S PROPERTY TAXES.  Lessee shall pay prior to delinquency all
taxes assessed against and levied upon Lessee-Owned Alterations and Utility
Installations, Trade Fixtures, furnishings, equipment and all personal property
of Lessee contained in the Premises or stored within the Industrial Center.
When possible, Lessee shall cause its Lessee-Owned Alterations and Utility
Installations, Trade Fixtures, furnishings, equipment and all other personal
property to be assessed and billed separately from the real property of Lessor.
If any of Lessee's said property shall be assessed with Lessor's real property,
Lessee shall pay Lessor the taxes attributable to Lessee's property within ten
(10) days after receipt of a written statement setting forth the taxes
applicable to Lessee's property.

11.    UTILITIES.  Lessee shall pay directly for all utilities and services
supplied to the Premises, including but not limited to electricity, telephone,
security, gas and cleaning (unless mutually agreed with Lessor to share any of
these costs) of the Premises, together with any taxes thereon.  If any such
utilities or services are not separately metered to the Premises or separately
billed to the Premises, Lessee shall pay to Lessor a reasonable proportion to be
determined by Lessor of all such charges jointly metered or billed with other
premises in the Building, in the manner and within the time periods set forth in
Paragraph 4.2(d).  Lessor shall pay all charges of causing the Building or the
Premises to be separately metered.

12.     ASSIGNMENT AND SUBLETTING.

12.1    LESSOR'S CONSENT REQUIRED.

(a)  Lessee shall not voluntarily or by operation of law assign, transfer,
     mortgage or otherwise transfer or encumber (collectively, "assign") or
     sublet all or any part of Lessee's interest in this Lease or in the
     Premises without Lessor's prior written consent given under and subject to
     the terms of Paragraph 36.

(b)  A change in the stock ownership, ownership of the assets or the control of
     Lessee shall not be deemed an assignment hereunder.  Lessor acknowledges
     that Lessee's stock is publicly traded.

(c)  This Paragraph Intentionally Left Blank.

(d)  An assignment or subletting of Lessee's interest in this Lease without
     Lessor's specific prior written consent shall, at Lessor's option, be a
     Default curable after notice per Paragraph 13.1, or a non-curable Breach
     without the necessity of any notice and grace period.  If Lessor elects to
     treat such unconsented to assignment or subletting as a non-curable Breach,
     Lessor shall have the right to ether: (i) terminate this Lease, or (ii)
     upon thirty (30) days written notice ("LESSOR'S S NOTICE"), increase the
     monthly Base Rent for the Premises to the greater of the then fair market
     rental value of the Premises, as reasonably determined by Lessor, or one
     hundred ten percent (110%) of the Base Rent then in effect. Pending
     determination of the new fair market rental value, if disputed by Lessee,
     Lessee shall pay the amount set forth in Lessor's Notice, with any
     overpayment credited against the next installment(s) of Base Rent coming
     due, and any underpayment for the period retroactively to the effective
     date of the adjustment being due and payable immediately upon the
     determination thereof.  Further, in the event of such Breach and rental
     adjustment, (i) the purchase price of any option to purchase the Premises
     held by Lessee shall be subject to similar adjustment to the then fair
     market value as reasonably determined by Lessor (without the Lease being
     considered an encumbrance or any deduction for depreciation or
     obsolescence, and considering the Premises at its highest and best use and
     in good condition) or one hundred ten percent (110%) of the price
     previously in effect, (ii) any index-oriented rental or price adjustment
     formulas contained in this Lease shall be adjusted to require that the base
     index be determined with reference to the index applicable to the time of
     such adjustment, and (iii) any fixed rental adjustments scheduled during
     the remainder of the 
<PAGE>
 
     Lease term shall be increased in the same ratio as the new rental bears to
     the Base Rent in effect immediately prior to the adjustment specified in
     Lessor's Notice.

(e)  Lessee's remedy for any breach of this Paragraph 12.1 by Lessor shall be
     limited to compensatory damages and/or injunctive relief.

(f)  Lessor shall be entitled to assign or sublet all or any part of the
     Premises to an affiliated corporation or other entity without the consent
     of Lessor or the payment of any charge or fee.  An "affiliated corporation
     or other entity" shall be defined as an entity which is at least a 25%
     owner of, 25% owned by, or in 25% common ownership with Lessee.

12.2    TERMS AND CONDITIONS APPLICABLE TO ASSIGNMENT AND SUBLETTING.

(a)  Regardless of Lessor's consent, any assignment or subletting shall not (i)
     be effective without the express written assumption by such assignee or
     sublessee of the obligations of Lessee under this Lease, (ii) release
     Lessee of any obligations hereunder, nor (iii) alter the primary liability
     to Lessee for the payment of Base Rent and other sums due Lessor hereunder
     or for the performance of any other obligations to be performed by Lessee
     under this Lease.

(b)  Lessor may accept any rent or performance of Lessee's obligations from any
     person other than Lessee pending approval or disapproval of an assignment.
     Neither a delay in the approval or disapproval of such assignment nor the
     acceptance of any rent for performance shall constitute a waver or estoppel
     of Lessor's right to exercise its remedies for the Default or Breach by
     Lessee of any of the terms, covenants or conditions of this Lease.

(c)  The Consent of Lessor to any assignment or subletting shall not constitute
     a consent to any subsequent assignment or subletting by Lessee or to any
     subsequent or successive assignment or subletting by the assignee or
     sublessee.

(d)  In the event of any Default or Breach of Lessee's obligation under this
     Lease, Lessor may proceed directly against Lessee, any Guarantors or anyone
     else responsible for the performance of the Lessee's obligations under this
     Lease, including any sublessee, without first exhausting Lessor's remedies
     against any other person or entity responsible therefor to Lessor, or any
     security held by Lessor.

(e)  Each request for consent to an assignment or subletting shall be in
     writing, accompanied by information relevant to Lessor's determination as
     to the financial and operational responsibility and appropriateness of the
     proposed assignee or sublessee, including but not limited to the intended
     use and/or required modification of the Premises, if any, together with a
     deposit of $1,000 to be applied to Lessor's reasonable legal fees incurred
     in considering and processing the request for consent.  Lessee agrees to
     provide Lessor with such other or additional information and/or
     documentation as may be reasonably requested by Lessor.

(f)  Any assignee of, or sublessee under, this Lease shall, by reason of
     accepting such assignment or entering into such sublease, be deemed, for
     the benefit of Lessor, to have assumed and agreed to conform and comply
     with each and every term, covenant, condition and obligation herein to be
     observed or performed by Lessee during the term of said assignment or
     sublease, other than such obligations as are contrary to or inconsistent
     with provisions of an assignment or sublease to which Lessor has
     specifically consented in writing,

12.3    ADDITIONAL TERMS END CONDITIONS APPLICABLE TO SUBLETTING.  The following
terms and conditions shall apply to any subletting by Lessee of all or any part
of the Premises and shall be deemed included in all subleases under this Lease
whether or not expressly incorporated therein:

(a)  Lessee hereby assigns and transfers to Lessor all of Lessee's interest in
     all rentals and income arising from any sublease of all or a portion of the
     Premises heretofore or hereafter made by Lessee, and Lessor may collect
     such rent and income and apply same toward Lessee's obligations under this
     Lease; provided, however, that until a Breach (as defined in Paragraph
     13.1) shall occur in the performance of Lessee's obligations under this
     Lease.  Lessee may, except as otherwise provided in this Lease, receive,
     collect and enjoy the rents accruing under such sublease.  Lessor shall
     not, by reason of the foregoing provision or any other assignment of such
     sublease to Lessor, nor by reason of the collection of the rents from a
     sublessee, be deemed liable to the sublessee for any failure of Lessee to
     perform and comply with any of Lessee's obligations to such sublessee under
     such Sublease.  Lessee hereby irrevocably authorizes and directs any such
     sublessee, upon receipt of a written notice from Lessor stating that a
     Breach exists in the performance of 
<PAGE>
 
     Lessee's obligations under this Lease, to pay to Lessor the rents and other
     charges due and to become due under the sublease. Sublessee shall rely upon
     any such statement and request from Lessor and shall pay such rents and
     other charges to Lessor without any obligation or right to inquire as to
     whether such Breach exists and notwithstanding any notice from or claim
     from Lessee to the contrary. Lessee shall have no right or claim against
     such sublessee, or until the Breach has been cured, against Lessor, for any
     such rents and other charges so paid by said sublessee to Lessor.

(b)  In the event of a Breach by Lessee in the performance of its obligations
     under this Lease, Lessor, at its option and without any obligation to do
     so, may require any sublessee to attorn to Lessor, in which event Lessor
     shall undertake the obligations of the sublessor under such sublease from
     the time of the exercise of said option to the expiration of such sublease;
     provided, however, Lessor shall not be liable for any prepaid rents or
     security deposit paid by such sublessee to such sublessor or for any other
     prior defaults or breaches of such sublessor under such sublease.

(c)  Any matter or thing requiring the consent of the sublessor under a sublease
     shall also require the consent of Lessor herein.

(d)  No sublessee under a sublease approved by Lessor shall further assign or
     sublet all or any part of the Premises without Lessor's prior written
     consent.

(e)  Lessor shall deliver a copy of any notice of Default or Breach by Lessee to
     the sublessee, who shall have the right to cure the Default of Lessee
     within the grace period, if any, specified in such notice.  The sublessee
     shall have a right of reimbursement and offset from and against Lessee for
     any such Defaults cured by the sublessee.

13.    DEFAULT; BREACH; REMEDIES.

13.1    DEFAULT; BREACH.  Lessor and Lessee agree that it an attorney is
consulted by Lessor in connection with a Lessee Default or Breach (as
hereinafter defined), $500.00 is a reasonable minimum sum per such occurrence
for legal services and costs in the preparation and service of a notice of
Default, and that Lessor may include the cost of such services and costs in said
notice as rent due and payable to cure said default.  A "DEFAULT" by Lessee is
defined as a failure by Lessee to observe, comply with or perform any of the
terms, covenants, conditions or rules applicable to Lessee under this Lease.  A
"BREACH" by Lessee is defined as the occurrence of any one or more of the
following Defaults, and, where a grace period for cure after notice is specified
herein, the failure by Lessee to cure such Default prior to the expiration of
the applicable grace period, and shall entitle Lessor to pursue the remedies set
forth in Paragraphs 13.2 and/or 13.3:

(a)  The vacating of the Premises without the intention to promptly reoccupy
     same, or the abandonment of the Premises; unless Lessee continues to pay
     the then Base Rent and provides casualty insurance for the Premises for the
     replacement value thereof (with current building code endorsement) without
     a deductible or with the deductible amount secured by Lessee in a manner
     reasonably acceptable to Lessor, and contemplating Lessee's vacation or
     abandonment of the Premises.

(b)  Except as expressly otherwise provided in this Lease, the failure by Lessee
     to make any payment of Base Rent, Lessee's Share of Building and Common
     Area Operating Expenses, or any other monetary payment required to be made
     by Lessee hereunder as and when due, the failure by Lessee to provide
     Lessor with reasonable evidence of insurance or surety bond required under
     this Lease, or the failure of Lessee to fulfill any obligation under this
     Lease which endangers or threatens life or property, provided, that with
     respect to the first two failures of Lessee to pay any amounts hereunder as
     and when due, it shall not constitute a Default hereunder unless Lessee
     fails to cure such failure within three (3) days following telephonic or
     written notice from Lessor.

(c)  Except as expressly otherwise provided in this Lease, the failure by Lessee
     to provide Lessor with reasonable written evidence (in duly executed
     original form, if applicable) of (i) compliance with Applicable
     Requirements per Paragraph 6.3, (ii) the inspection, maintenance and
     service contracts required under Paragraph 7.1(b), (iii) the rescission of
     an unauthorized assignment or subletting per Paragraph 12.1, (iv) a Tenancy
     Statement per Paragraphs 16 or 37, (v) the subordination or non-
     subordination of this Lease per Paragraph 30, (vi) the guaranty of the
     performance of Lessee's obligations under this Lease if required under
     Paragraphs 1.11 and 37, (vii) the execution of any document requested under
     Paragraph 42 (easements), or (viii) any other documentation or information
     which Lessor may reasonably require of Lessee under the terms of this
     lease, where any such failure continues for a period of ten (10) days
     following written notice by or on behalf of Lessor to Lessee.
<PAGE>
 
(d)  A Default by Lessee as to the terms, covenants, conditions or provisions of
     this Lease, or of the rules adopted under Paragraph 40 hereof that are to
     be observed, complied with or performed by Lessee, other than those
     described in Subparagraphs 13.1 (a), (b) or (c), above, where such Default
     continues for a period of thirty (30) days after written notice thereof by
     or on behalf of Lessor to Lessee; provided, however, that if the nature of
     Lessee's Default is such that more than thirty (30) days are reasonably
     required for its cure, then it shall not be deemed to be a Breach of this
     Lease by Lessee if Lessee commences such cure within said thirty (30) day
     period and thereafter diligently prosecutes such cure to completion.

(e)  The occurrence of any of the following events: (i) the making by Lessee of
     any general arrangement or assignment for the benefit of creditors; (ii)
     Lessee's becoming a "debtor" as defined in 11 U.S. Code Section 101 or any
     successor statute thereto (unless in the case of a petition filed against
     Lessee, the same is dismissed within sixty (60) days); (iii) the
     appointment of a trustee or receiver to take possession of substantially
     all of Lessee's assets located at the Premises or of Lessee's interest in
     this Lease, where possession is not restored to Lessee within thirty (30)
     days; or (iv) the attachment, execution or other judicial seizure of
     substantially all of Lessee's assets located at the Premises or of Lessee's
     interest in this Lease, where such seizure is not discharged within thirty
     (30) days; provided, however, in the event that any provision of this
     Subparagraph 13.1(e) is contrary to any applicable law, such provision
     shall be of no force or effect, and shall not affect the validity of the
     remaining provisions.

13.2    REMEDIES.  If Lessee fails to perform any affirmative duty or obligation
of Lessee under this Lease, within ten (10) days after written notice to Lessee
(or in case of an emergency, without notice), Lessor may at its option (but
without obligation to do so), perform such duty or obligation on Lessee's
behalf, including but not limited to the obtaining of reasonably required bonds,
insurance policies, or governmental licenses, permits or approvals. The costs
and expenses of any such performance by Lessor shall be due and payable by
Lessee to Lessor upon invoice therefor.  If any two or more checks given to
Lessor by Lessee shall not be honored by the bank upon which it is drawn,
Lessor, at its own option, may require all future payments to be made under this
Lease by Lessee to be made only by cashier's check.   In the event of a Breach
of this Lease by Lessee (as defined in Paragraph 13.1), with or without further
notice or demand, and without liming Lessor in the exercise of any right or
remedy which Lessor may have by reason of such Breach, Lessor may:

(a)  Terminate Lessee's right to possession of the Premises by any lawful means,
     in which case this Lease and the term hereof shall terminate and Lessee
     shall immediately surrender possession of the Premises to Lessor.  In such
     event Lessor shall be entitled to recover from Lessee: (i) the worth at the
     time of the award of the unpaid rent which had been earned at the time of
     termination; (ii) the worth at the time of award of the amount by which the
     unpaid rent which would have been earned after termination until the time
     of award exceeds the amount of such rental loss that the Lessee proves
     could have been reasonably avoided; (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 the Lessee proves
     could be reasonably avoided; and (iv) any other amount necessary to
     compensate Lessor for all the detriment proximately caused by the Lessee's
     failure to perform its obligations under this Lease or which in the
     ordinary course of things would be likely to result therefrom, including
     but not limited to the cost of recovering possession of the Premises,
     expenses of reletting, including necessary renovation and alteration of the
     Premises, reasonable attorneys' fees, and that portion of any leasing
     commission paid by Lessor in connection with this Lease applicable to the
     unexpired team of this Lease.  The worth at the time of award of the amount
     referred to in provision (iii) of the immediately preceding sentence shall
     be computed by discounting such amount at the discount rate of the Federal
     Reserve Bank of San Francisco or the Federal Reserve Bank District in which
     the Premises are located at the time of award plus one percent ( 1%).
     Efforts by Lessor to mitigate damages caused by Lessee's Default or Breach
     of this Lease shall not waive Lessor's right to recover damages under this
     Paragraph 13.2.  If termination of this Lease is obtained through the
     provisional remedy of unlawful detainer, Lessor shall have the right to
     recover in such proceeding the unpaid rent and damages as are recoverable
     therein, or Lessor may reserve the right to recover all or any part thereof
     in a separate suit for such rent and/or damages.  If a notice and grace
     period required under Subparagraph 13.1(b), (c) or (d) was not previously
     given, a notice to pay rent or quit, or to perform or quit, as the case may
     be, given to Lessee under any statute authorizing the forfeiture of leases
     for unlawful detainer shall also constitute the applicable notice for grace
     period purposes required by Subparagraph 13.1(b), (c) or (d).  In such
     case, the applicable grace period under the unlawful detainer statue shall
     run concurrently after the one such statutory notice, and the failure of
     Lessee to cure the Default within the greater of the two (2) such grace
     periods shall constitute both an unlawful detainer and a Breach of this
     Lease entitling Lessor to the remedies provided for in this Lease and/or by
     said statute.

(b)  Continue the Lease and Lessee's right to possession in effect (in
     California under California Civil Code Section 1951.4) the terms of which
     are incorporated herein by this reference after Lessee's Breach 
<PAGE>
 
     and recover the rent as it becomes due, provided Lessee has the right to
     sublet or assign, subject only to reasonable limitations. Lessor and Lessee
     agree that the limitations on assignment and subletting in this Lease are
     reasonable. Acts of maintenance or preservation, efforts to relet the
     Premises, or the appointment of a receiver to protect the Lessor's interest
     under this Lease, shall not constitute a termination of the Lessee's right
     to possession.

(c)  Pursue any other remedy now or hereafter available to Lessor under the laws
     or judicial decisions of the state wherein the Premises are located.

(d)  The expiration or termination of this Lease and/or the termination of
     Lessee's right to possession shall not relieve Lessee from liability under
     any indemnity provisions of this Lease as to matters occurring or accruing
     during the term hereof or by reason of Lessee's occupancy of the Premises.

(e)  As long as Lessee is not in default in Lessee's payment of a Base Rent and
     Lessee's Share of estimated Building and Common Area Operating Expenses, in
     the event Lessor asserts that any other Default or Breach has occurred
     under this Lease, and obtains a judgment, writ of possession or other
     remedy, Lessee shall have a period of ten (10) days following such judgment
     to perform the act or cure the Default or Breach on which such judgment was
     based, whereupon the Lease shall be reinstated, Lessor shall release the
     judgment and the Lease shall continue in full force and effect.

13.3    INDUCEMENT RECAPTURE IN EVENT OF BREACH.  Any agreement by Lessor for
free or abated rent or other charges applicable to the Premises, or for the
giving or paying by Lessor to or for Lessee of any cash or other bonus,
inducement or consideration for Lessee's entering into this Lease, all of which
concessions are hereinafter referred to as "INDUCEMENT PROVISIONS" shall be
deemed conditioned upon Lessee's full and faithful performance of all of the
terms, covenants and conditions of this Lease to be performed or observed by
Lessee during the term hereof as the same may be extended.  Upon the occurrence
of a Breach (as Defined in Paragraph 13.1) of this Lease by Lessee, any such
Inducement Provision shall automatically be deemed deleted from this Lease and
of no further force or effect, and any rent, other charge, bonus, inducement or
consideration theretofore abated, given or paid by Lessor under such an
Inducement Provision shall be immediately due and payable by Lessee to Lesser,
and recoverable by Lessor, as additional rent due under this Lease,
notwithstanding any subsequent cure of said Breach by Lessee. The acceptance by
Lessor of rent or the cure of the Breach which initiated the operation of this
Paragraph 13.3 shall not be deemed a waiver by Lessor of the provisions of this
Paragraph 13.3 unless specifically so stated in writing by Lessor at the time of
such acceptance.

13.4    LATE CHARGES.  Lessee hereby acknowledges that late payment by Lessee to
Lessor of rent and other sums due hereunder will cause Lessor to incur costs not
contemplated by this Lease, the exact amount of which will be extremely
difficult to ascertain.  Such costs include, but are not limited to, processing
and accounting charges, and late charges which may be imposed upon Lessor by the
terms of any ground lease, mortgage or deed of trust covering the Premises.
Accordingly, if any installment of rent or other sum due from Lessee shall not
be received by Lessor or Lessor's designee within ten (10) days after such
amount shall be due, then, without any requirement for notice to Lessee except
as explicitly provided in Paragraph 13.1(b), Lessee shall pay to Lessor a late
charge equal to six percent (6%) of such overdue amount.  The parties hereby
agree that such late charge represents a fair and reasonable estimate of the
costs Lessor will incur by reason of late payment by Lessee.  Acceptance of such
late charge by Lessor shall in no event constitute a waiver of Lessee's Default
or Breach with respect to such overdue amount, nor prevent Lessor from
exercising any of the other rights and remedies granted hereunder.  In the event
that a late charge is payable hereunder, whether or not collected, for three (3)
consecutive installments of Base Rent, then notwithstanding Paragraph 4.1 or any
other provision of this Lease to the contrary, Base Rent shall, at Lessor's
option, become due and payable quarterly in advance.

13.5    BREACH BY LESSOR.  Except as provided in Paragraph 3.3, Lessor shall not
be deemed in breach of this Lease unless Lessor fails within a reasonable time
to perform an obligation required to be performed by Lessor. For purposes of
this Paragraph 13.5, a reasonable time shall in no event be less than thirty
(30) days after receipt by Lessor, and by any Lender(s) whose name and address
shall have been furnished to Lessee in writing for such purpose, of written
notice specifying wherein such obligation of Lessor has not been performed;
provided, however, that it the nature of Lessor's obligation is such that more
than thirty (30) days after such notice are reasonably required for its
performance, then Lessor shall not be in breach of this Lease if performance is
commenced within such thirty (30) day period and thereafter diligently pursued
to completion.

14.    CONDEMNATION.  If the Premises or any portion thereof are taken under the
power of eminent domain or sold under the threat of the exercise of said power
(all of which are herein called "condemnation"), this Lease shall terminate as
to the part so taken as of the date the condemning authority takes title or
possession, whichever first occurs.  
<PAGE>
 
If more than ten percent (10%) of the floor area of the Premises, or more than
twenty-five percent (25%) of the portion of the Common Areas designated for
Lessee's parking, is taken by condemnation, Lessee may, at Lessee's option, to
be exercised in writing within ten (10) days after Lessor shall have given
Lessee written notice of such taking (or in the absence of such notice, within
ten (10) days after the condemning authority shall have taken possession)
terminate this Lease as of the date the condemning authority takes such
possession. If Lessee does not terminate this Lease in accordance with the
foregoing, this Lease shall remain in full force and effect as to the portion of
the Premises remaining, except that the Base Rent shall be reduced in the same
proportion as the rentable floor area of the Premises taken bears to the total
rentable floor area of the Premises. No reduction of Base Rent shall occur if
the condemnation does not apply to any portion of the Premises. Any award for
the taking of all or any part of the Premises under the power of eminent domain
or any payment made under threat of the exercise of such power shall be the
property of Lessor, whether such award shall be made as compensation for
diminution of value of the leasehold or for the taking of the fee, or as
severance damages; provided, however, that Lessee shall be entitled to any
compensation, separately awarded to Lessee for Lessee's relocation expenses
and/or loss of Lessee's Trade Fixtures. In the event that this Lease is not
terminated by reason of such condemnation, Lessor shall to the extent of its net
severance damages received, over and above Lessee's Share of the legal and other
expenses incurred by Lessor in the condemnation matter, repair any damage to the
Premises caused by such condemnation authority. Lessee shall be responsible for
the payment of any amount in excess of such net severance damages required to
complete such repair.

15.    BROKERS' FEES.

15.1    PROCURING CAUSE.  The Broker(s) named in Paragraph 1.10 is/are the
procuring cause of this Lease.

15.2    ADDITIONAL TERMS.  Unless Lessor and Broker(s) have otherwise agreed in
writing, Lessor agrees that: (a) if Lessee exercises any Option (as defined in
Paragraph 39.1) granted under this Lease or any Option subsequently granted, or
(b) if Lessee acquires any rights to the Premises or other premises in which
Lessor has an interest, or (c) if Lessee remains in possession of the Premises
with the consent of Lessor after the expiration of the term of this Lease after
having failed to exercise an Option, or (d) if said Brokers are the procuring
cause of any other lease or sale entered into between the Parties pertaining to
the Premises and/or any adjacent property in which Lessor has an interest, or
(e) if Base Rent is increased, whether by agreement or operation of an
escalation clause herein, then as to any of said transactions, Lessor shall pay
said Broker(s) a fee in accordance with the schedule of said Broker(s) in effect
at the time of the execution of this Lease.

15.3    ASSUMPTION OF OBLIGATIONS.  Any buyer or transferee of Lessor's interest
in this Lease, whether such transfer is by agreement or by operation of law,
shall be deemed to have assumed Lessor's obligation under this Paragraph 15.
Each Broker shall be an intended third party beneficiary of the provisions of
Paragraph 1.10 and of this Paragraph 15 to the extent of its interest in any
commission arising from this Lease and may enforce that right directly against
Lessor and its successors.

15.4    REPRESENTATIONS AND WARRANTIES.  Lessee and Lessor each represent and
warrant to the other that it has had no dealings with any person, firm, broker
or finder other than as named in Paragraph 1.10(a) in connection with the
negotiation of this Lease and/or the consummation of the transaction
contemplated hereby, and that no broker or other person, firm or entity other
than said named Broker(s) is entitled to any commission or finder's fee in
connection with said transaction.  Lessee and Lessor do each hereby agree to
indemnify, protect, defend and hold the other harmless from and against
liability for compensation or charges which may be claimed by any such unnamed
broker, finder or other similar party by reason of any dealings or actions of
the indemnifying Party, including any costs, expenses, and/or attorneys' fees
reasonably incurred with respect thereto.

16.    TENANCY AND FINANCIAL STATEMENTS.

16.1    TENANCY STATEMENT.  Lessee (as "RESPONDING PARTY") shall within ten (10)
days after written notice from the other Lessor (the "REQUESTING PARTY")
execute, acknowledge and deliver to the Requesting Party a statement in writing
in a form similar to the then most current "TENANCY STATEMENT" form published by
the American Industrial Real Estate Association, plus such additional
information, confirmation and/or statements as may be reasonably requested by
the Requesting Party.

16.2    FINANCIAL STATEMENT.  If Lessor desires to finance, refinance, or sell
the Premises or the Building, or any pan thereof, Lessee shall deliver to any
potential lender or purchaser designated by Lessor such financial statements of
Lessee as may be reasonably required by such lender or purchaser, including but
not limited to Lessee's 
<PAGE>
 
financial statements for the past three (3) years. All such financial statements
shall be received by Lessor and such lender or purchaser in confidence and shall
be used only for the purposes herein set forth.

17.    LESSOR'S LIABILITY.  The term "Lessor" as used herein shall mean the
owner or owners at the time in question of the fee title to the Premises.
Except as provided in Paragraph 15.3, upon such transfer or assignment and
delivery of the Security Deposit, as aforesaid, the prior Lessor shall be
relieved of all liability with respect to the obligations and/or covenants under
this Lease thereafter to be performed by the Lessor; provided that the indemnity
obligations of Lessor set forth in Paragraphs 6.6 and 8.7(b) above shall survive
the transfer and continue to be binding upon such transferor.  Subject to the
foregoing, the obligations and/or covenants in this Lease to be performed by the
Lessor shall be binding only upon the Lessor as hereinabove defined.

18.    SEVERABILITY.  The invalidity of any provision of this Lease, as
determined by a court of competent jurisdiction, shall in no way affect the
validity of any other provision hereof.

19.    INTEREST ON PAST-DUE OBLIGATIONS.  Any monetary payment due Lessor
hereunder, other than late charges, not received by Lessor within ten (10) days
following the date on which it was due, shall bear interest from the date due at
the prime rate charged by the largest state chartered bank in the state in which
the Premises are located plus four percent (4%) per annum, but not exceeding the
maximum rate allowed by law, in addition to the potential late charge provided
for in Paragraph 13.4.

20.    TIME OF ESSENCE.  Time is of the essence with respect to the performance
of all obligations to be performed or observed by the Parties under this Lease.

21.    RENT DEFINED.  All monetary obligations of Lessee to Lessor under the
terms of this Lease are deemed to be rent.

22.    NO PRIOR OR OTHER AGREEMENTS.  This Lease contains all agreements between
the Parties with respect to any matter mentioned herein, and no other prior or
contemporaneous agreement or understanding shall be effective.

23.    NOTICES.

23.1    NOTICE REQUIREMENTS.  All notices required or permitted by this Lease
shall be in writing and may be delivered in person (by hand or by messenger or
courier service) or may be sent by regular, certified or registered mail or U.S.
Postal Service Express Mail, with postage prepaid, or by facsimile transmission
during normal business hours, and shall be deemed sufficiently given if served
in a manner specified in this Paragraph 23.  The addresses noted adjacent to a
Party's signature on this Lease shall be that Party's address for delivery or
mailing of notice purposes.  Either Party may by written notice to the other
specify a different address for notice purposes, except that upon Lessee's
taking possession of the Premises, the Premises shall constitute Lessee's
address for the purpose of mailing or delivering notices to Lessee.  A copy of
all notices required or permitted to be given to Lessor hereunder shall be
concurrently transmitted to such party or parties at such addresses as Lessor
may from time to time hereafter designate by written notice to Lessee.

23.2    DATE OF NOTICE.  Any notice sent by registered or certified mail, return
receipt requested, shall be deemed given on the date of delivery shown on the
receipt card, or if no delivery date is shown, the postmark thereon.  If sent by
regular mail, the notice shall be deemed given forty-eight (48) hours after the
same is addressed as required herein and mailed with postage prepaid. Notices
delivered by United States Express Mail or overnight courier that guarantees
next day delivery shall be deemed given twenty-four (24) hours after delivery of
the same to the United States Postal Service or courier.  If any notice is
transmitted by facsimile transmission or similar means, the same shall be deemed
served or delivered upon telephone or facsimile confirmation of receipt of the
transmission thereof, provided a copy is also delivered via overnight delivery
or mail.  If notice is received on a Saturday or a Sunday or a legal holiday, it
shall be deemed received on the next business day.

24.    WAIVERS.  No waiver by Lessor of the Default or Breach of any term,
covenant or condition hereof  by Lessee, shall be deemed a waiver of any other
term, covenant or condition hereof, or of any subsequent Default or Breach by
Lessee of the same or any other term, covenant or condition hereof. Lessor's
consent to, or approval of, any such act shall not be deemed to render
unnecessary the obtaining of Lessor's consent to, or approval of, any subsequent
or similar act by Lessee, or be construed as the basis of an estoppel to enforce
the provision or provisions of this Lease requiring such consent.  Regardless of
Lessor's knowledge of a Default or Breach at the time of accepting rent, the
acceptance of rent by Lessor shall not be a waiver of any Default or Breach by
Lessee of any provision hereof.  Any payment given Lessor by Lessee may be
accepted by Lessor on account of moneys or damages due Lessor, notwithstanding
any qualifying statements or conditions made by Lessee in connection therewith,
which such statements and/or conditions 
<PAGE>
 
shall be of no force or effect whatsoever unless specifically agreed to in
writing by Lessor at or before the time of deposit of such payment.

25.    RECORDING.  Either Lessor or Lessee shall, upon request of the other,
execute, acknowledge and deliver to the other a short form memorandum of this
Lease for recording purposes.  The Party requesting recordation shall be
responsible for payment of any fees or taxes applicable thereto.

26.    NO RIGHT TO HOLDOVER.  Lessee has no right to retain possession of the
Premises or any part thereof beyond the expiration or earlier termination of
this Lease. In the event that Lessee holds over in violation of this Paragraph
26 then the Base Rent payable from and after the time of the expiration or
earlier termination of this Lease shall be increased to one hundred fifty
percent (150%) of the Base Rent applicable during the month immediately
preceding such expiration or earlier termination. Nothing contained herein shall
be construed as a consent by Lessor to any holding over by Lessee.

27.    CUMULATIVE REMEDIES.  No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies at
law or in equity.

28.    COVENANTS AND CONDITIONS.  All provisions of this Lease to be observed or
performed by Lessee are both covenants and conditions.

29.     BINDING EFFECT; CHOICE OF LAW.  This Lease shall be binding upon the
Parties, their personal representatives, successors and assigns and be governed
by the laws of the State in which the Premises are located.  Any litigation
between the Parties hereto concerning this Lease shall be initiated in the
county in which the Premises are located.

30.    SUBORDINATION; ATTORNMENT; NON-DISTURBANCE.

30.1    SUBORDINATION.  This Lease and any Option granted hereby shall be
subject and subordinate to any ground lease, mortgage, deed of trust, or other
hypothecation or security device (collectively, "SECURITY DEVICE"), now or
hereafter placed by Lessor upon the real property of which the Premises are a
part, to any and all advances made on the security thereof, and to all renewals,
modifications, consolidations, replacements and extensions thereof. Lessee
agrees that the Lenders holding any such Security Device shall have no duty,
liability or obligation to perform any of the obligations of Lessor under this
Lease, but that in the event of Lessor's default with respect to any such
obligation, Lessee will give any Lender whose name and address have been
furnished Lessee in writing for such purpose notice of Lessor's default pursuant
to Paragraph 13.5.  If any Lender shall elect to have this Lease and/or any
Option granted hereby superior to the lien of its Security Device and shall give
written notice thereof to Lessee, this Lease and such Options shall be deemed
prior to such Security Device, notwithstanding the relative dates of the
documentation or recordation thereof.

30.2    ATTORNMENT.  Subject to the non-disturbance provisions of Paragraph
30.3, Lessee agrees to attorn to a Lender or any other party who acquires
ownership of the Premises by reason of a foreclosure of a Security Device, and
that in the event of such foreclosure, such new owner shall not: (i) be liable
for any act or omission of any prior lessor or with respect to events occurring
prior to acquisition of ownership, (ii) be subject to any offsets or defenses
which Lessee might have against any prior lessor, or (iii) be bound by
prepayment of more than one month's rent.

30.3    NON-DISTURBANCE.  With respect to Security Devices entered into by
Lessor after the execution of this lease, Lessee's subordination of this Lease
shall be subject to receiving assurance (a "non-disturbance agreement") from the
Lender that Lessee's possession and this Lease, including any options to extend
the term hereof, will not be disturbed so long as Lessee is not in Breach hereof
and attorns to the record owner of the Premises.

30.4    SELF-EXECUTING.  The agreements contained in this Paragraph 30 shall be
effective without the execution of any further documents; provided, however,
that upon written request from Lessor or a Lender in connection with a sale,
financing or refinancing of Premises, Lessee and Lessor shall execute such
further writings as may be reasonably required to separately document any such
subordination or non-subordination, attornment and/or non-disturbance agreement
as is provided for herein.

30.5    EXISTING ENCUMBRANCES.  Lessor represents and warrants that the Building
and the Common Area are presently unencumbered by the lien of any mortgage or
deed of trust or any other instrument, the exercise or foreclosure of which
could terminate or permit the termination of this Lease.
<PAGE>
 
31.    ATTORNEYS' FEES.   If any Party brings an action or proceeding to enforce
the terms hereof or declare rights hereunder, the Prevailing Party (as hereafter
defined) in any such proceeding, action, or appeal thereon, shall be entitled to
reasonable attorneys' fees. Such fees may be awarded in the same suit or
recovered in a separate suit, whether or not such action or proceeding is
pursued to decision or judgment.  The term  "PREVAILING PARTY" shall include,
without limitation, a Party who substantially obtains or defeats the relief
sought, as the case may be, whether by compromise, settlement, judgment, or the
abandonment by the other Party of its claim or defense. The attorneys' fee award
shall not be computed in accordance with any court fee schedule, but shall be
such as to fully reimburse all attorneys' fees reasonably incurred.  Lessor
shall be entitled to attorneys' fees, costs and expenses incurred in preparation
and service of notices of Default and consultations in connection therewith,
whether or not a legal action is subsequently commenced in connection with such
Default or resulting Breach.

32.    LESSOR'S ACCESS; SHOWING PREMISES; REPAIRS.  Lessor and Lessor's agents
shall have the right to enter the Premises at any time upon at least one (1)
business days' notice, in the case of an emergency, and otherwise at reasonable
times for the purpose of showing the same to prospective purchasers, lenders, or
lessees, and making such alterations, repairs improvements or additions to the
Premises or to the Building, as Lessor may reasonably deem necessary. Lessor may
at any time place on or about the Premises or Building any ordinary  "For Sale"
signs and Lessor may at any time during the last one hundred eighty (180) days
of the term hereof place on or about the Premises any ordinary "For Lease"
signs. All such activities of Lessor shall be without abatement of rent or
liability to Lessee.

33.    AUCTIONS.  Lessee shall not conduct, nor permit to be conducted, either
voluntarily or involuntarily, any auction upon the Premises without first having
obtained Lessor's prior written consent except for internet-based or similar
electronic auctions, notwithstanding anything to the contrary in this Lease,
Lessor shall not be obligated to exercise any standard of reasonableness in
determining whether to grant such consent.

34.    SIGNS.  Lessee shall not place any sign upon the exterior of the Premises
or the Building, except that Lessee may, with Lessor's prior written consent,
install (but not on the roof) such signs as are reasonably required to advertise
Lessee's own business so long as such signs are in a location designated by
Lessor and comply with Applicable Requirements and the signage criteria
established for the Industrial Center by Lessor.  The installation of any sign
on the Premises by or for Lessee shall be subject to the provisions of Paragraph
7 (Maintenance, Repairs, Unity Installations, Trade Fixtures and Alterations).
Unless otherwise expressly agreed herein, Lessor reserves all rights to the use
of the roof of the Building, and the right to install advertising signs on the
Building, including the roof, which do not unreasonably interfere with the
conduct of Lessee's business; Lessor shall be entitled to all revenues from such
advertising signs. ( See Addendum)

35.    TERMINATION; MERGER.  Unless specifically stated otherwise in writing by
Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual
termination or cancellation hereof, or a termination hereof by Lessor for Breach
by Lessee, shall automatically terminate any sublease or lesser estate in the
Premises; provided, however, Lessor shall, in the event of any such surrender,
termination or cancellation, have the option to continue any one or all of any
existing subtenancies.  Lessor's failure within ten (10) days following any such
event to make a written election to the contrary by written notice to the holder
of any such lesser interest, shall constitute Lessor's election to have such
event constitute the termination of such interest.

36.  CONSENTS.

(a)  Except for Paragraph 33 hereof (Auctions) or as otherwise provided herein,
     wherever in this Lease the consent of a Party is required to an act by or
     for the other Party, such consent shall not be unreasonably withheld or
     delayed, Lessor's actual reasonable costs and expenses (including but not
     limited to architects', attorneys', engineers' and other consultants fees)
     incurred in the consideration of, or response to, a request by Lessee for
     any Lessor consent pertaining to this Lease or the Premises, including but
     not limited to consents to an assignment, a subletting or the presence or
     use of a Hazardous Substance, shall be paid by Lessee to Lessor upon
     receipt of an invoice and supporting documentation therefor. In addition to
     the deposit described in Paragraph 12.2(e), Lessor may, as a condition to
     considering any such request by Lessee, require that Lessee deposit with
     Lessor an amount of money reasonably calculated by Lessor to represent the
     cost Lessor will incur in considering and responding to Lessee's request.
     Any unused portion of said deposit shall be refunded to Lessee without
     interest.  Lessor's consent to any act, assignment of this Lease or
     subletting of the Premises by Lessee shall not constitute an acknowledgment
     that no Default or Breach by Lessee of this Lease exists, nor shall such
     consent be deemed a waiver of any then existing Default or Breach, except
     as may be otherwise specifically stated in writing by Lessor at the time of
     such consent.
<PAGE>
 
(b)  All conditions to Lessor's consent authorized by this Lease are
     acknowledged by Lessee as being reasonable.  The failure to specify herein
     any particular condition to Lessor's consent shall not preclude the
     impositions by Lessor at the time of consent of such further or other
     conditions as are then reasonable with reference to the particular matter
     for which consent is being given.

37.    THIS PARAGRAPH INTENTIONALLY LEFT BLANK.

38.    QUIET POSSESSION.  Upon payment by Lessee of the rent for the Premises
and the performance of all of the covenants, conditions and provisions on
Lessee's part to be observed and performed under this Lease, Lessee shall have
quiet possession of the Premises for the entire term hereof subject to all of
the provisions of this Lease.

39.    OPTIONS.

39.1    DEFINITION.  As used in this Lease, the word "OPTION" has the following
meaning: (a) the right to extend the term of this Lease or to renew this Lease
or to extend or renew any lease that Lessee has on other property of Lessor; (b)
the right of first refusal to lease the Premises or the right of first offer to
lease the Premises or the right of first refusal to lease other property of
Lessor or the right of first offer to lease other property of Lessor; (c) the
right to purchase the Premises, or the right of first refusal to purchase the
Premises, or the right of first offer to purchase the Premises, or the right to
purchase other property of Lessor, or the right of first refusal to purchase
other property of Lessor, or the right of first offer to purchase other property
of Lessor.

39.2    OPTIONS PERSONAL TO ORIGINAL LESSEE.  Each Option granted to Lessee in
this Lease is personal to the original Lessee named in Paragraph 1.1 hereof, and
cannot be voluntary or involuntarily assigned or exercised by any person or
entity other than said original Lessee while the original Lessee is in full and
actual possession of the Premises and without the intention of thereafter
assigning or subletting.  The Options, if any, herein granted to Lessee are not
assignable, either as a 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.

39.3    MULTIPLE OPTIONS.  In the event that Lessee has any multiple Options to
extend or renew this Lease, a later option cannot be exercised unless the prior
Options to extend or renew this Lease have been validly exercised.

39.4    EFFECT OF DEFAULT ON OPTIONS.

(a)  Lessee shall have no right to exercise an Option, notwithstanding any
     provision in the grant of Option to the contrary: (i) during the period
     commencing with the giving of any notice of Default under Paragraph 13.1
     and continuing until the noticed Default is cured, or (ii) during the
     period of time any monetary obligation due Lessor from Lessee is unpaid
     (without regard to whether notice thereof is given Lessee), or (iii) during
     the time Lessee is in Breach of this Lease, or (iv) in the event that
     Lessor has given to Lessee three (3) or more notices of separate Defaults
     under Paragraph 13.1 during the twelve (12) month period immediately
     preceding the exercise of the Option, whether or not the Defaults are
     cured.

(b)  The period of time within which an Option may be exercised shall not be
     extended or enlarged by reason of Lessee's inability to exercise an Option
     because of the provisions of Paragraph 39.4(a)

(c)  All rights of Lessee under the provisions of an Option shall terminate and
     be of no further force or effect, notwithstanding Lessee's due and timely
     exercise of the Option, if, after such exercise and during the term of this
     Lease, (i) Lessee fails to pay to Lessor a monetary obligation of Lessee
     for a period of thirty (30) days after such obligation becomes due (without
     any necessity of Lessor to give notice thereof to Lessee), or (ii) Lessor
     gives to Lessee three (3) or more notices of separate Defaults under
     Paragraph 13.1 during any twelve (12) month period, whether or not the
     Defaults are cured.

40.    RULES AND REGULATIONS.  Lessee agrees that it will abide by, and keep and
observe all reasonable rules and regulations ("Rules and Regulations") which
Lessor may make from time to time for the management, safety, care, and
cleanliness of the grounds, the parking and unloading of vehicles and the
preservation of good order, as well as for the convenience of other occupants or
tenants of the Building and the Industrial Center and their invitees.

41.    SECURITY MEASURES.  Lessee hereby acknowledges that the rental payable to
Lessor hereunder does not include the cost of guard service or other security
measures, and that Lessor shall have no obligation whatsoever to 
<PAGE>
 
provide same. Lessee assumes all responsibility for the protection of the
Premises, Lessee, its agents and invitees and their property from the acts of
third parties.

42.    RESERVATIONS.   Lessor reserves the right, from time to time, to grant,
without the consent or joinder of Lessee, such easements, rights of way, utility
raceways, and dedications that Lessor deems necessary, and to cause the
recordation of parcel maps and restrictions, so long as such easements, rights
of way, utility raceways, dedications, maps and restrictions do not reasonably
interfere with the use of the Premises by Lessee.  Lessee agrees to sign any
documents reasonably requested by Lessor to effectuate any such easement rights,
dedication, map or restrictions.

43.    PERFORMANCE UNDER PROTEST.  If at any time a dispute shall arise as to
any amount or sum of money to be paid by one Party to the other under the
provisions hereof, the Party against whom the obligation to pay the money is
asserted shall have the right to make payment "under protest" and such payment
shall not be regarded as a voluntary payment and there shall survive the right
on the part of said Party to institute suit for recovery of such sum.  If it
shall be adjudged that there was no legal obligation on the part of said Party
to pay such sum or any part thereof, said Party shall be entitled to recover
such sum or so much thereof as it was not legally required to pay under the
provisions of this Lease.

44.    AUTHORITY.  If either Party hereto is a corporation, trust, or general or
limited partnership, each individual executing this Lease on behalf of such
entity represents and warrants that he or she is duly authorized to execute and
deliver this Lease on its behalf.  If Lessee is a corporation, trust or
partnership, Lessee shall, within thirty (30) days after request by Lessor,
deliver to Lessor evidence satisfactory to Lessor of such authority.

45.    CONFLICT.  Any conflict between the printed provisions of this Lease and
the typewritten or handwritten provisions shall be controlled by the typewritten
or handwritten provisions.

46.    OFFER.  Preparation of this Lease by either Lessor or Lessee or Lessor's
agent or Lessee's agent and submission of same to Lessee or Lessor shall not be
deemed an offer to lease. This Lease is not intended to be binding until
executed and delivered by all Parties hereto.

47.    AMENDMENTS.  This Lease may be modified only in writing, signed by the
parties in interest at the time of the modification.  The Parties shall amend
this Lease from time to time to reflect any adjustments that are made to the
Base Rent or other rent payable under this Lease. As long as they do not
materially change Lessee's obligations hereunder, Lessee agrees to make such
reasonable non-monetary modifications to this Lease as may be reasonably
required by an institutional insurance company or pension plan Lender in
connection with the obtaining of normal financing or refinancing of the property
of which the Premises are a part.

48.    MULTIPLE PARTIES.   Except as otherwise expressly provided herein, if
more than one person or entity is named herein as either Lessor or Lessee, the
obligations of such multiple parties shall be the joint and several
responsibility of all persons or entities named herein as such Lessor or Lessee.

                       SEE ADDENDUM ATTACHED HERETO AND
                    INCORPORATED HEREIN BY THIS REFERENCE.
<PAGE>
 
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR
INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE
TIME THIS LEASE IS EXECUTED, THE TERMS OF THE LEASE ARE COMMERCIALLY REASONABLE
AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.

     IF THIS LEASE HAS BEEN FILLED IN, IT HAS BEEN PREPARED FOR YOUR ATTORNEY'S
REVIEW AND APPROVAL. FURTHER, EXPERTS SHOULD BE CONSULTED TO EVALUATE THE
CONDITION OF THE PROPERTY FOR THE POSSIBLE PRESENCE OF ASBESTOS, UNDERGROUND
STORAGE TANKS OR HAZARDOUS SUBSTANCES. NO REPRESENTATION OR RECOMMENDATION IS
MADE BY THE AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION OR BY THE REAL ESTATE
BROKERS OR THEIR CONTRACTORS, AGENTS OR EMPLOYEES AS TO THE LEGAL SUFFICIENCY.
LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT
RELATES; THE PARTIES SHALL RELY SOLELY UPON THE ADVICE OF THEIR OWN COUNSEL AS
TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE. IF THE SUBJECT PROPERTY IS IN A
STATE OTHER THAN CALIFORNIA, AN ATTORNEY FROM THE STATE WHERE THE PROPERTY IS
LOCATED SHOULD BE CONSULTED.

The parties hereto have executed this Lease at the place and on the dates
specified above their respective signatures.
 
Executed at:  Torrance, California      Executed at:  Torrance, California
              on:  June ____, 1997                    on:  June ____, 1997
 
LESSOR:                                 LESSEE:

ALLIEDSIGNAL INC.                       CREATIVE COMPUTERS, INC.
 
By:_______________________________      By:_______________________________
     J. Thomas Zusi                          Richard M. Finkbeiner
     Vice-President-Finance                  Chief Financial Officer
 
Address: 2525 West 190th Street         Address: 2645 Maricopa Street,
         Torrance, California 90504              Torrance, California 90503
 
Telephone: (310) 512-5731               Telephone: (310) 222-5806
Facsimile: (310) 512-5647               Facsimile: (310) 222-5807
<PAGE>
 
                  ADDENDUM TO STANDARD INDUSTRIAL/COMMERCIAL
                MULTI-TENANT LEASE ("LEASE") DATED June 3, 1997
                     BETWEEN ALLIEDSIGNAL INC., AS LESSOR,
                    AND CREATIVE COMPUTERS, INC, AS LESSEE.


49.  Options To Extend:
     -----------------

     49.1  Certain Options.  Lessor hereby grants to Lessee the option to extend
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the term of this Lease for two (2) additional sixty (60) month periods
commencing when the prior term expires, upon each and all of the following terms
and conditions:

     (a) Lessee gives to Lessor, and Lessor actually receives on a date which is
prior to the date that the option period would commence (if exercised) by at
least nine (9) and not more than twelve (12) months, a written notice of the
exercise of the options to extend this Lease for said additional terms, time
being of the essence.  If said notification of the exercise of said options are
not so given and received, the options shall automatically expire; said options
may only be exercised consecutively;

     (b) The provisions of Paragraph 39, including the provision relating to
default of Lessee set forth in Paragraph 39.4 of this Lease are conditions of
this Option;

     (c) All of the terms and conditions of this Lease except where specifically
modified by this option shall apply;

     (d) The monthly rent for each month of the option period shall be
calculated as follows, using the method(s) indicated below;

     49.2  First Option Period Market Rental Value Adjustment(s) (MRV).  On
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October 1, 2007, the monthly rent payable under Paragraph 1.5 ("Base Rent") of
the attached Lease shall be adjusted to ninety-five percent (95%) of the "Market
Rental Value" of the property as follows:

     (a) Four (4) months prior to the Market Rental Value (MRV) Adjustment Date
described above, Lessor and Lessee shall meet to establish an agreed upon new
MRV for the specified term.  If agreement cannot be reach, then:

     (i) Lessor and Lessee shall immediately appoint a mutually acceptable
appraiser or broker to establish the new MRV within the next thirty (30) days.
Any associated costs will be split equally between the parties, or

     (ii) Both Lessor and Lessee shall each immediately select and pay the
appraiser or broker of their choice to establish a MRV within the next thirty
(30) days.  If, for any reason, either one of the appraisals is not completed
within the next thirty (30) days, as stipulated, then the appraisal that is
completed at that time shall automatically become the new MRV.  If both
appraisals are completed and the two appraisers/brokers cannot agree on a
reasonable average MRV then they shall immediately select a third (3rd) mutually
acceptable appraiser/broker to establish a third MRV within the next thirty (30)
days.  The average of the two appraisals closest in value shall then become the
new MRV.  The costs of the third appraisal will be split equally between the
parties.

     (b) In any event, the new MRV shall not be less than the rent payable for
the month immediately preceding the date for rent adjustment.

     (c) Upon the establishment of each New Market Rental Value as described in
Paragraph 49.2:

     (i) the monthly rental sum so calculated for each term as specified in
Paragraph 49.2 will become the new "Base Rent" for the purpose of calculating
any further Cost of Living Adjustments as specified in Paragraph 49.2 below and

     (ii) the first month of each Market Rental Value term as specified in
Paragraph 49.2 shall become the new "Base Month" for the purposes of calculating
any further Cost of Living Adjustments, as specified in Paragraph 49.2 below.

     49.3.  Second Option Period Cost Of Living Adjustments (COL)
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<PAGE>
 
     (a) On October 1, 2012 the monthly rent payable under Paragraph 1.5 ("Base
Rent") as adjusted at July 1, 2007, of the attached Lease shall be adjusted by
the change, if any, from the Base Month specified above, in the Consumer Price
Index of the Bureau of Labor Statistics of the U.S. Department of Labor or CPI W
(Urban Wage Earners and Clerical Workers) for Los Angeles-Long Beach,
California, All Items (1982-1984 = 100), herein referred to as "C.P.I."

     (b) The monthly rent payable in accordance with Paragraph 49.3 of this
Addendum shall be calculated as follows:  the Base Rent set forth in Paragraph
1.5 of the attached Lease, as adjusted at October 1, 2007, shall be multiplied
by a fraction the numerator of which shall be the C.P.I. of the calendar month
two (2) months prior to the month specified in Paragraph 49.2 above during which
the adjustment is to take effect, and the denominator of which shall be the
C.P.I. of the calendar month which is two (2) months prior to October 2007.  The
sum so calculated shall constitute the new monthly rent hereunder, but in no
event shall any such new monthly rent be less than the rent payable for the
month immediately preceding the date for rent adjustment; provided, however,
notwithstanding the sum so calculated, the new Base Rent shall in no event be
less than one hundred fifteen percent (115%) of the October 1, 2007 Base Rent
nor more than one hundred twenty-five percent (125%) of the October 1, 2007 Base
Rent.

50.  Expansion Rights and Obligations.
     --------------------------------

     50.1   Expansion Space.  In addition to Lessee's rights to the Premises, as
            ---------------
provided in Paragraph 1.2 hereof, Lessor and  Lessee agree to the following
expansion provisions in order for Lessor and Lessee to expand the Premises to
include all of the Building except 15,000 rentable square feet in the Basement
level for Lessor's existing computer and related support area no later than
October 1, 1999 ("Expansion Provision") in accordance with and subject to the
provisions of this Paragraph 50.  The Expansion Provision shall apply to all
space within the Building other than the 15,000 rentable square feet in the
basement level for Lessor's existing computer and related support area (the
"Expansion Space") consisting of approximately 38,300 rentable square feet, and
defined below in two parts as the Basement Expansion Space and the First Floor
Expansion Space and outlined in Exhibits A-3 and A-4 attached hereto and
incorporated herein by this reference.

     50.2  Basement Expansion Space.  In addition to Lessee's rights to the
           ------------------------
Premises, as provided in Paragraph 1.2 hereof, Lessor shall lease to the Lessee
and Lessee agrees to lease from Lessor the Basement Expansion Space no later
than May 30, 1998 (the "Basement Expansion Date"), in accordance with and
subject to the provisions of this Paragraph 50.  The Basement Expansion Space
is that certain space in the Building consisting of approximately 38,300
rentable square feet, as also outlined in Exhibit A-4 attached hereto and
incorporated herein by this reference.

     50.3  First Floor Expansion Space.  In addition to Lessee's rights to the
           ---------------------------
Premises, as provided in Paragraph 1.2 hereof, Lessor shall lease to Lessee and
Lessee agrees to lease from Lessor the First Floor Expansion Space no earlier
than April 1, 1999 and no later than October 1, 1999 (the "First Floor Expansion
Date"), in accordance with and subject to the provisions of this Paragraph 50.
The "First Floor Expansion Space" is all of the first floor of the Building
consisting of approximately 53,500 rentable square feet.  In the event Lessor
desires that Lessee accept the First Floor Expansion Space on or after April 1,
1999 but prior to the First Floor Expansion Date, Lessor shall deliver written
notice to Lessee (the "Expansion Space Notice") specifying the date upon which
Lessor will Deliver the First Floor Expansion Space.  The Expansion Space Notice
shall only be effective if provided to Lessee at least six (6) months prior to
the date for Delivery specified in the Expansion Space Notice.  If an Expansion
Space Notice is not timely provided to Lessee by Lessor, Lessor shall Deliver
the First Floor Expansion Space to Lessee on the First Floor Expansion Date as
defined above.  Upon Lessor giving the Expansion Space Notice to Lessee, the
Lessor and Lessee shall execute an amendment to the Lease confirming or
modifying the First Floor Expansion Space Date to be the date set forth in the
Expansion Space Notice.

     50.4  Commencement of Rent on Expansion Space.  Rent shall commence with
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respect to each portion of the Expansion Space (at the same Base Rent then in
effect for as the balance of the Premises) as and when Lessee actually commences
to use such portion of the Expansion Space for the operation of its business;
provided that such date shall be no later than thirty-one (31) days after such
portion of the Expansion Space is "Delivered", as defined below, by Lessor to
Lessee.

     50.5  Early Possession; Causing Expansion Space to be Delivered.  At least
           ---------------------------------------------------------
ninety (90) days prior to each of the Basement Expansion Date, with respect to
the Basement Expansion Space, and the First Floor Expansion Date, with respect
to the First Floor Expansion Space (each, an "Expansion Early Possession Date"),
Lessor shall make the Basement Expansion Space and the First Floor Expansion
Space, as the case may be, available to the Lessee for purposes of placing cable
and other wiring within the Basement Expansion Space and First Floor Expansion
Space.  From each Expansion 
<PAGE>
 
Early Possession Date until the Basement Expansion Date and the First Floor
Expansion Date, as the case may be, Lessor shall permit Lessee to enter the
Basement Expansion Space and the First Floor Expansion Space, as applicable, and
install its furnishings, fixtures, equipment and other Tenant improvements to
the extent Lessor has vacated portions of the applicable Expansion Space and
can, in Lessor's reasonable opinion, make such portions of the applicable
Expansion Space available to Lessee for such purposes. Lessor shall Deliver (as
defined below) the Basement Expansion Space to Lessee no later than the Basement
Expansion Date and shall Deliver the First Floor Expansion Space to Lessee no
later than the First Floor Expansion Date. The term "Deliver" or "Delivered" or
"Delivery" shall mean Lessor's delivery of the entire Basement Expansion Space
or First Floor Expansion Space, as the case may be, completely vacated by Lessor
and available to Lessee for the installation of its furnishings, fixtures,
equipment and other tenant improvements. The terms and provisions of the first
three sentences of Paragraph 3.2 of this Lease shall be applicable to this
Paragraph 50.5

     50.6  Delay in Possession of Expansion Space.  In the event Lessor fails to
           --------------------------------------
Deliver the Basement Expansion Space on or before the Basement Delivery Date or
fails to Deliver the First Floor Expansion Space on or before the First Floor
Delivery Date, then Lessee shall receive, as its damages, the sum of the
following:  (a) two (2) days of free rent for each of the first thirty (30) days
that the Lessor's Delivery of the Basement Expansion Space or First Floor
Expansion Space is late, plus (b) three (3) days of free rent for each of the
next thirty (30) days that the Lessor's Delivery of the Basement Expansion Space
or First Floor Expansion Space is late, plus (c) four (4) days of free rent for
each of the next thirty (30) days that the Lessor's Delivery of the Basement
Expansion Space or First Floor Expansion Space is late.  In addition to the
foregoing, if the Lessor fails to Delivery the Basement Expansion Space within
ninety (90) days of the Basement Expansion Date or fails to deliver the First
Floor Expansion Space within ninety (90) days of the First Floor Expansion Date,
Lessor shall be liable to Lessee for the greater of (x) four (4) days of free
rent for each day thereafter that Lessor's Delivery of the Basement Expansion
space or First Floor Expansion Space is late after such or (y) Lessee's actual
damages (including special and consequential damages, but excluding punitive
damages) for each day thereafter for Lessor's failure to timely deliver the
Basement Expansion Space or First Floor Expansion Space.  Such free rent shall
commence upon the date for commencement for rent for such portion of the
Expansion Space and shall continue until used in full.  The foregoing damages
shall be Lessee's exclusive damages for Lessor's failure to Deliver the Basement
Expansion Space on or before the Basement Expansion Date or Deliver the First
Floor Expansion Space on or before the First Floor Expansion Date.

     50.7  Delivery of Expansion Space and Basement Expansion Space and First
           ------------------------------------------------------------------
Floor Expansion Space.  Lessor shall Deliver the Basement Expansion Space and
---------------------
the First Floor Expansion Space so that it is delivered to Lessee in a "broom
clean" condition.  Except as otherwise expressly herein provided, all Expansion
Space delivered to Lessee shall be "AS IS, WHERE IS".

     50.8  Terms and Conditions Applicable To Expansion Space or Basement
           --------------------------------------------------------------
Expansion Space.  Upon Delivery of the Basement Expansion Space or the First
---------------
Floor Expansion Space, as the case may be and continuing for the balance of the
Lease term, as extended, the Basement Expansion Space and/or the First Floor
Expansion Space, as the case may be, shall automatically be considered part of
the Premises, and all other provisions of the Lease, not expressly modified by
the provisions of this Paragraph 50 shall apply. Without limiting the foregoing,
Lessor and Lessee acknowledge that the Base Rent on each portion of the
Expansion Space shall be sixty-five cents (65 cents) per rentable square foot
per month from the date of Delivery of such portion of the Expansion Space
through and including September 30, 2002. From October 1, 2002 to September 30,
2007, the Base Rent on the Expansion Space shall be eighty-one and 25/100 cents
(81.25 cents) per rentable square foot per month.

     51.  Installation of Certain Mainframe Computers.  Included in the
          -------------------------------------------
Premises, as initially constituted, is a portion of the basement area of the
Building.  The portion of the basement in question will be used by Lessee for
the purpose of installing certain mainframe computers.  The Lessor intends to
retain the portion of the computer area in the basement shown on Exhibit "A" of
the Building consisting of approximately 15,000 rentable square feet during the
first five (5) years of the Base Term and then approximately 5,000 rentable
square feet during the balance of the Base Term and Extension Terms of the
Lessee for its own computers.  When Lessor's use of this area of the Basement is
reduced from 15,000 rentable square feet to 5,000 rentable square feet, the
difference in square footage shall become part of the Premises.

     52.  Base Rent Increase In Sixth Year Of Original Term. Notwithstanding the
          -------------------------------------------------
provisions of Paragraph 1.5 of the Lease, effective from October 1, 2002, until
September 30, 2007, the Base Rent on the Premises, as then constituted, shall be
increased from sixty-five cents (65 cents) per rental square foot to eighty-one
and 25/100 cents (81.25 cents) per rentable square foot.
<PAGE>
 
     53.  Certain Obligations Of Lessor.  Notwithstanding the provisions of
          -----------------------------
Paragraph 4.2 (a), Lessor will, at its sole cost and expense, divide the
Building to cause it to function as a multi-tenant building prior to
Commencement Date and upon each expansion into Expansion Space by Lessee,
including, without limitation, the following:  (a) cause the front entrance and
the front lobby of the Building to be made exclusively available to Lessee; (b)
add appropriate security doors on either side of the elevator bank on the ground
floor and each multi-tenant floor and provide other appropriate security
measures so that each party will be permitted to use the elevators and
stairwells while still having each party's individual space secure, (c) be
responsible for all applicable building codes, ADA and other legal requirements
in connection with the division of the Building into multi-tenant space, but the
obligation for compliance of each of these items within the Premises and the
Expansion Space shall be the sole responsibility of Lessee, subject to Section
2.3 above, (d) separate the HVAC, electrical systems and telecom systems
presently used by Lessor in the Building, such that the Lessee will be able to
operate, repair and pay for such systems that service it in the Premises,
independent of such systems used by the Lessor; (e) develop and construct a
layout allowing a secure environment to divide the basement computer room
between Lessor and Lessee; and (f) inspect the existing cabling jointly with
Lessee's systems engineers for the purpose of evaluating the viability of the
same and make all raceways available to both parties for their respective
cabling.  In the event Lessee determines, in its reasonable opinion, that any of
the raceways are too crowded for Lessee's efficient use, Lessor shall, at
Lessor's expense, upon Lessee's request, test, remove and dispose of any cable
located within the raceway then not in current use.  The systems engineers of
Lessor and Lessee agree that the existing cabling is unusable, Lessor shall
remove and dispose of it.

     54.  Signs.  Notwithstanding the provisions of Paragraph 34 of the Lease,
          -----
but subject to compliance with all applicable laws, Lessee shall have the right,
at its sole cost and expense, to install an exclusive identifying sign on the
Building, as well as to install a monument sign on 190th Street identifying the
location of Lessee.  Lessor shall have the right to retain its monument signage
on the Property directing visitors to the applicable site entrances and
applicable parking areas.

     55.  Cancellation Option.   Notwithstanding any other provision of this
          -------------------
Lease,  Lessee shall have a single opportunity to cancel this Lease, effective
June 30, 2002, upon (a) giving Lessor written notice its intention to so cancel
the Lease (the "Cancellation Notice") no earlier than October 1, 2001, and no
later than December 31, 2001, and (b) paying to Lessor, contemporaneously with
the giving of the Cancellation Notice, the sum of Two Hundred Fifty Thousand
Dollars ($250,000), as a cancellation fee.

     56.  Installation Of Certain Equipment.  Provided Lessee has obtained all
          ---------------------------------
required permits from appropriate authorities, and provided further that the
same do not interfere with the functioning of Lessor's equipment, Lessee shall
be permitted to install a satellite dish and a generator in or on the Building,
the specific location of which shall be agreed upon in advance by Lessor and
Lessee.

     57.  Cafeteria Access.  Lessee's employees and agents shall be given access
          ----------------
to, and the right to make purchases in, Lessor's cafeteria in the Building
during the term of the Lease, and during any option periods, for so long as
Lessee maintains a cafeteria in the Building.  Lessee may also use the grass
area to the east of the Building (as long as it exists as such) and the
cafeteria for employee meetings and recognition picnics and the like on an "ad
hoc" basis as determined by and with the reasonable approval of Lessor's
Security Department.  It is understood that Lessor assumes no obligation hereby
to maintain a cafeteria in the Building.

     58.  Possible Boundary Changes in Industrial Park.  Lessee acknowledges
          --------------------------------------------
that Lessor intends to create newly described legal lots within the existing
Industrial Park and may record reciprocal easement agreements among the various
parcels to provide access, parking and sharing of Common Area Operating Expenses
and may also dedicate roadways, grant easements and take other similar actions
in connection with such creation of newly described legal lots within the
Industrial Park.  Any such creation of newly described legal lots within the
Industrial Park and all documents and actions proposed in connection therewith,
including, without limitation, recording of reciprocal easement agreements and
the dedication of roadways and grants of easements and the like, shall be
subject to the review and approval of Lessee, which approval will not be
unreasonably withheld.

Lessor                                        Lessee
Initials:__________                           Initials:__________