<PAGE>
 
                                                                    Exhibit 10.1




                               INDUSTRIAL LEASE
                               ----------------
                             (Single Tenant; Net)




                                   BETWEEN 

                              THE IRVINE COMPANY 

                                     AND 

                    INFORMATION MANAGEMENT ASSOCIATES, INC.
<PAGE>
 
                               INDUSTRIAL LEASE
                               ----------------
                             (Single Tenant; Net)


     THIS LEASE is made as of the _____ day of November, 1998, by and between
THE IRVINE COMPANY, a Delaware corporation, hereafter called "Landlord," and
INFORMATION MANAGEMENT ASSOCIATES, INC., a Connecticut corporation, hereinafter
called "Tenant."


                      ARTICLE I.  BASIC LEASE PROVISIONS

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


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

     Address of Building:  7505 Irvine Center Drive, Irvine, CA 92618

2.   Project Description (if applicable):  Irvine Business Center

3.   Use of Premises:  Administrative office for software company, sales and
     training and any other use which does not violate applicable laws, rules
     and regulations or covenants, conditions and restrictions; provided
     however, that in no event may the Premises be used for retail sales.

4.   Estimated Commencement Date:  May 1, 1999


5.   Lease Term:  Eighty-Four (84) months, plus such additional days as may be
     required to cause this Lease to terminate on the final day of the calendar
     month.

6.   Basic Rent:  Sixty-One Thousand Eight Hundred Seventy-Two Dollars
     ($61,872.00) per month, based on $1.40 per rentable square foot.

     Basic Rent is subject to adjustment as follows:

     Commencing twelve (12) months following the Commencement Date, the Basic
     Rent shall be Sixty-Four Thousand Five Hundred Twenty-Three Dollars
     ($64,523.00) per month, based on $1.46 per rentable square feet.

     Commencing twenty-four (24) months following the Commencement Date, the
     Basic Rent shall be Sixty-Six Thousand Seven Hundred Thirty-Three Dollars
     ($66,733.00) per month, based on $1.51 per rentable square foot.

     Commencing thirty-six (36) months following the Commencement Date, the
     Basic Rent shall be Sixty-Nine Thousand Three Hundred Eighty-Five Dollars
     ($69,385.00) per month, based on $1.57 per rentable square foot.

     Commencing forty-eight (48) months following the Commencement Date, the
     Basic Rent shall be Seventy-Two Thousand Four Hundred Seventy-Eight Dollars
     ($72,478.00) per month, based on $1.64 per rentable square foot.

     Commencing sixty (60) months following the Commencement Date, the Basic
     Rent shall be Seventy-Five Thousand One Hundred Thirty Dollars ($75,130.00)
     per month, based on $1.70 per rentable square foot.

     Commencing seventy-two (72) months following the Commencement Date, the
     Basic Rent shall be Seventy-Eight Thousand Two Hundred Twenty-Three Dollars
     ($78,223.00) per month, based on $1.77 per rentable square foot.


7.   Guarantor(s):  N/A


8.   Floor Area of Premises:  approximately 44,194 rentable square feet

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<PAGE>
 
9.   Security Deposit: $86,045.00


10.  Broker(s):  Lee & Associates

11.  Additional Insureds: Insignia\ESG of California, Inc.


12.  Address for Payments and Notices:

          LANDLORD                         TENANT

     INSIGNIA\ESG OF CALIFORNIA, INC.    INFORMATION MANAGEMENT ASSOCIATES, INC.
     One Technology Drive, Suite F-207   7505 Irvine Center Drive
     Irvine, CA 92618                    Irvine, CA 92618

     with a copy of notices to:
     IRVINE INDUSTRIAL COMPANY
     P.O. Box 6370
     Newport Beach, CA  92658-6370
     Attn:  Vice President, Industrial Operations


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


14.  Vehicle Parking Spaces:  One Hundred Fifty  (150)


15.  Plan Approval Date:  December 1, 1998

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                             ARTICLE II.  PREMISES


     SECTION 2.1.  LEASED PREMISES.  Landlord leases to Tenant and Tenant leases
from Landlord the premises shown in Exhibit A (the "Premises"), including the
                                    ---------                                
building identified in Item 1 of the Basic Lease Provisions (which together with
the underlying real property, is called the "Building"), and containing
approximately the floor area set forth in Item 8 of the Basic Lease Provisions.
The Premises is a portion of the project shown in Exhibit Y (the "Project").
                                                  ---------                 

     SECTION 2.2.  ACCEPTANCE OF PREMISES.  Tenant acknowledges that except as
specifically set forth in this Lease neither Landlord nor any representative of
Landlord has made any representation or warranty with respect to the Premises or
the Building or the suitability or fitness of either for any purpose, including
without limitation any representations or warranties regarding zoning or other
land use matters, and that neither Landlord nor any representative of Landlord
has made any representations or warranties regarding (i) what other tenants or
uses may be permitted or intended in the Building and the Project, or (ii) any
exclusivity of use by Tenant with respect to its permitted use of the Premises
as set forth in Item 3 of the Basic Lease Provisions.  Tenant further
acknowledges that neither Landlord nor any representative of Landlord has agreed
to undertake any alterations or additions or construct any improvements to the
Premises except as expressly provided in this Lease.  The taking of possession
or use of the Premises by Tenant for any purpose other than construction shall
conclusively establish that the Premises and the Building were in satisfactory
condition and in conformity with the provisions of this Lease in all respects,
except for those matters which Tenant shall have brought to Landlord's attention
on a written punch list.  The list shall be delivered to Landlord within sixty
(60) days after the term ("Term") of this Lease commences as provided in Article
III below.  Nothing contained in this Section shall affect the commencement of
the Term or the obligation of Tenant to pay rent.  Landlord shall diligently
complete all punch list items of which it is notified as provided above.

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

     SECTION 2.4  LANDLORD'S RESPONSIBILITIES.

     (a) Landlord shall correct, repair or replace, at Landlord's sole cost and
expense and not as a Project Cost, any non-compliance of the Building exterior
and the Common Areas with all applicable building permits and codes in effect as
of the Commencement Date, including without limitation, the provisions of Title
III of the Americans With Disabilities Act ("ADA") in effect as of the
Commencement Date.  Said costs of compliance shall be Landlord's sole cost and
shall not be part of Project Costs.   All other ADA compliance issues which
pertain to the Premises, including without limitation, in connection with
Tenant's construction of any alterations or other improvements in the Premises
(and any resulting ADA compliance requirements in the Common Areas), the Tenant
Improvements and the operation of Tenant's business and employment practices in
the Premises, shall be the responsibility of Tenant at its sole cost and
expense.  The repairs, corrections or replacements required of Landlord or of
Tenant under the foregoing provisions of this Section 2.4 shall be made promptly
following notice of non-compliance from any applicable governmental agency.
Tenant shall promptly forward any such notice that Tenant receives to Landlord.
Further, Landlord shall, during the initial Lease Term, correct, repair or
replace, at Landlord's sole cost and expense and not as a Project Cost, any
failure of the structural components of the foundations, footings and load-
bearing walls of the Building.  The corrections, repairs or replacements
required of Landlord in the preceding sentence of this Section 2.4 shall be made
promptly following notice from Tenant.

     (b) Landlord warrants to Tenant that all Building systems including but not
limited to mechanical, electrical, plumbing, heating, ventilating and air
conditioning and life-fire safety shall be new and in good working order as of
the Commencement Date and shall be free from defects in workmanship or materials
for a period of twelve (12) months from the Commencement Date. Landlord shall
promptly rectify any non-compliance at its sole cost and expense and not as a
Project Cost after receipt of written notice from Tenant within such time
setting forth the nature and extent of any such non-compliance.

     (c) In connection with the completion of the Tenant Improvements
pursuant to the Work Letter, Landlord shall obtain customary warranties and
guaranties from the contractor(s) performing such work and/or the manufacturers
of equipment installed but shall be under no obligation to incur additional
expense in order to obtain or extend such warranties.  If after expiration of
the initial twelve (12) months of the Lease Term, Tenant is required to make
repairs to any component of the Premises or any of its systems for which
Landlord may have obtained a warranty, Landlord shall, upon request by Tenant,
use its good faith efforts to pursue its rights under any such warranties for
the benefit of Tenant.  Landlord shall be under no obligation to incur any
expense in connection with asserting rights under such warranties or guaranties
against either the contractor or the manufacturer, but shall use reasonable good
faith efforts to enforce such warranties and guaranties for Tenant's benefit.

                                       3
<PAGE>
 
                                 ARTICLE III.  TERM


     SECTION 3.1.  GENERAL.  The Term shall be for the period shown in Item 5 of
the Basic Lease Provisions.  Subject to the provisions of Section 3.2 below, the
Term shall commence ("Commencement Date") on the earlier of (a) the date upon
which all relevant governmental authorities have approved the Tenant
Improvements in accordance with applicable building codes, as evidenced by
written approval thereof in accordance with the building permits issued for the
Tenant Improvements or issuance of a temporary or final certificate of occupancy
for the Premises, or (b) the date Tenant commences its business activities in
the Premises.  Within ten (10) days after possession of the Premises is tendered
to Tenant, the parties shall memorialize on a form provided by Landlord the
actual Commencement Date and the expiration date ("Expiration Date") of this
Lease.  Tenant's failure to execute that form shall not affect the validity of
Landlord's determination of those dates.

     SECTION 3.2.  DELAY IN POSSESSION.  If Landlord, for any reason whatsoever,
cannot deliver possession of the Premises to Tenant on or before the Estimated
Commencement Date, this Lease shall not be void or voidable nor shall Landlord
be liable to Tenant for any resulting loss or damage.  However, Tenant shall not
be liable for any rent and the Commencement Date shall not occur until Landlord
delivers possession of the Premises and the Premises are in fact available for
Tenant's occupancy with any Tenant Improvements that have been approved as per
Section 3.1(a) above, except that if Landlord's failure to so deliver possession
on the Estimated Commencement Date is attributable to any action or inaction by
Tenant (including without limitation any Tenant Delay described in the Work
Letter, if any, attached to this Lease), then the Commencement Date shall not be
advanced to the date on which possession of the Premises is tendered to Tenant,
and Landlord shall be entitled to full performance by Tenant (including the
payment of rent) from the date Landlord would have been able to deliver the
Premises to Tenant but for Tenant's delay(s).  Notwithstanding anything to the
contrary contained in this Section 3.2, however, if for any reason other than
"Tenant Delays" (as defined in the Work Letter) the Commencement Date has not
occurred by the date that is two hundred seventy (270) days following the
Estimated Commencement Date, then Tenant may, by written notice to Landlord
given at any time thereafter but prior to the actual occurrence of the
Commencement Date, elect to terminate this Lease.

     SECTION 3.3.    RIGHT TO EXTEND THIS LEASE.  Provided that Tenant is not in
default under any provision of this Lease after notice and expiration of
applicable cure periods, either at the time of exercise of the extension rights
granted herein or at the time of the commencement of such extension, and
provided further that Tenant is then occupying not less than seventy-five
percent (75%) of the rentable area of the Premises, both at the time of exercise
and at the time of commencement of such extension, Tenant may extend the Term of
this Lease for one (1) period of sixty (60) months.  Tenant shall exercise its
right to extend the Term by and only by (i) delivering to Landlord, not less
than nine (9) months or more than twelve (12) months prior to the expiration
date of the Term, Tenant's written notice of its commitment to extend (the
"Commitment Notice"); and (ii) returning to Landlord, within fifteen (15) days
after receipt, an executed amendment to this Lease (to be prepared by Landlord
upon receipt of the Commitment Notice) setting forth the Basic Rent and other
charges payable during the extension term.  The Basic Rent payable under the
Lease during the extension of the Term shall be at the prevailing market rental
rate (including periodic adjustments) for comparable and similarly improved
space within the Project as of the commencement of the extension period.  In no
event shall the monthly Basic Rent payable for the extension period be less than
the Basic Rent payable during the month immediately preceding the commencement
of such extension period.   Within thirty (30) days after receipt of Tenant's
Commitment Notice, Landlord shall provide Tenant with its written opinion of the
prevailing market rental rate together with an estimate of additional rent for
the first year of the extension term.  If Tenant objects to Landlord's opinion,
the parties shall attempt to agree upon the prevailing market rental rate.   In
the event that the parties are not able to agree on the prevailing market rental
as described above within one hundred twenty (120) days prior to then-current
expiration date of the Term, then either party may elect, by written notice to
the other party, to cause said rental, including subsequent adjustments, to be
determined by appraisal as follows:

          Within ten (10) days following receipt of such appraisal election, the
parties shall attempt to agree on a single appraiser to determine the prevailing
market rental.  If the parties are unable to agree in that time, then each party
shall designate an appraiser within ten (10) days thereafter.  Should either
party fail to so designate an appraiser within that time, then the appraiser
designated by the other party shall determine the prevailing rental value.
Should each of the parties timely designate an appraiser, then the two
appraisers so designated shall appoint a third appraiser who shall acting alone,
determine the fair rental value of the Premises.  Any appraiser designated
hereunder shall have an M.A.I. certification with not less than five (5) years
experience in the valuation of industrial buildings in Orange County,
California.

          Within thirty (30) days following the selection of the appraiser, such
appraiser shall determine the prevailing market rental value, including
subsequent adjustments of the Premises.  In determining such value, the
appraiser shall consider rental comparables for comparable and similarly
improved space in buildings within the triangular geographic area bounded by the
I-5, I-405 and State Route 133 freeways.  The fees of the appraiser(s) shall be
shared equally by both parties.

          Within twenty (20) days after the determination of the prevailing
market rental, Landlord shall prepare a reasonably appropriate amendment to this
Lease for the applicable extension period and Tenant shall execute and return
same to Landlord within ten (10) days.  Should the prevailing market rental not
be established by the commencement of the then-current extension period, then
Tenant shall continue paying rent at the rate in effect during 

                                       4
<PAGE>
 
the month immediately preceding the commencement of such extension period, and a
lump sum adjustment shall be made promptly upon the determination of such new
rental.

     If Tenant fails to timely comply with any of the provisions of this
Section, Tenant's right to extend the Term shall be extinguished and the Lease
shall automatically terminate as of the expiration date of the Term, without any
extension and without any liability to Landlord.  Except with respect to an
assignment for which Landlord's consent is not required pursuant to Section 9.4
hereof, any attempt to assign or transfer any right or interest created by this
Section shall be void from its inception.  Tenant shall have no other right to
extend the Term beyond the single sixty (60) month extension created by this
Section.  Unless agreed to in a writing signed by Landlord and Tenant, any
extension of the Term, whether created by an amendment to this Lease or by a
holdover of the Premises by Tenant, or otherwise, shall be deemed a part of, and
not in addition to, any duly exercised extension period permitted by this
Section.


                   ARTICLE IV.  RENT AND OPERATING EXPENSES


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

     SECTION 4.2.  OPERATING EXPENSES.

          (a) Tenant shall pay to Landlord, as additional rent, "Building Costs"
and "Property Taxes," as those terms are defined below, incurred by Landlord in
the operation of the Building and Project.  For convenience of reference,
Property Taxes and Building Costs shall be referred to collectively as
"Operating Expenses".

          (b) Commencing prior to the start of the first full "Expense Recovery
Period" (as defined below) of the Lease, and prior to the start of each full or
partial Expense Recovery Period thereafter, Landlord shall give Tenant a written
estimate of the amount of Operating Expenses for the Expense Recovery Period.
Tenant shall pay the estimated amounts to Landlord in equal monthly
installments, in advance, with Basic Rent.  If Landlord has not furnished its
written estimate for any Expense Recovery Period by the time set forth above,
Tenant shall continue to pay cost reimbursements at the rates established for
the prior Expense Recovery Period, if any; provided that when the new estimate
is delivered to Tenant, Tenant shall, at the next monthly payment date, pay any
accrued cost reimbursements based upon the new estimate.  For purposes hereof,
"Expense Recovery Period" shall mean every twelve month period during the Term
(or portion thereof for the first and last lease years) commencing July 1 and
ending June 30.

          (c) Within one hundred twenty (120) days after the end of each Expense
Recovery Period, Landlord shall furnish to Tenant a statement showing in
reasonable detail the actual or prorated Operating Expenses incurred by Landlord
during the period, and the parties shall within thirty (30) days thereafter make
any payment or allowance necessary to adjust Tenant's estimated payments, if
any, to Tenant's actual owed amounts as shown by the annual statement.  Any
delay or failure by Landlord in delivering any statement hereunder shall not
constitute a waiver of Landlord's right to require Tenant to pay Operating
Expenses pursuant hereto.  Any amount due Tenant shall be credited against
installments next coming due under this Section 4.2, and any deficiency shall be
paid by Tenant together with the next installment.  If Tenant has not made
estimated payments during the Expense Recovery Period, any amount owing by
Tenant pursuant to subsection (a) above shall be paid to Landlord in accordance
with Article XVI.  Should Tenant fail to object in writing to Landlord's
determination of actual Operating Expenses within one hundred eighty (180) days
following delivery of Landlord's expense statement, Landlord's determination of
actual Operating Expenses for the applicable Expense Recovery Period shall be
conclusive and binding on the parties and any future claims to the contrary
shall be barred.

     Provided Tenant is not then in default of this Lease beyond any applicable
cure period herein provided, then Tenant shall have the right to have Tenant's
financial officer or other agent or consultant who is a certified public
accountant audit Landlord's Operating Expenses, subject to the terms and
conditions hereof.  In no event, however, shall such auditor be compensated by
Tenant on a "contingency" basis, or on any other basis tied to the results of
said audit.  Tenant shall give notice to Landlord of Tenant's intent to audit
within one hundred eighty (180) days following delivery of Landlord's expense
statement for each of the Expense Recovery Periods.  Following at least ten (10)
business days notice to Landlord, such audit shall be conducted at a mutually
agreeable time during normal business hours at the office of Landlord or its
management agent where the records are maintained in Orange County, California.
Landlord agrees to make such personnel available to Tenant as is reasonably
necessary for Tenant's employees and agents to conduct such audit.  Landlord
shall make such records available to Tenant's employees and agents, for
inspection during normal business hours.  Tenant's employees and agents shall be
entitled to make photostatic copies of such records, provided Tenant bears the
expense of such copying, and further provided that Tenant keeps such copies in a
confidential manner and does not discuss, display or distribute such copies to
any other third party.  If Tenant's audit determines that actual Operating
Expenses have been overstated by more than five percent (5%), then subject to
Landlord's right to review 

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and/or contest the audit results, Landlord shall reimburse Tenant for the
reasonable out-of-pocket costs of such audit. Tenant's Basic Rent shall be
appropriately adjusted to reflect any overstatement in Operating Expenses. In
the event of a dispute between Landlord and Tenant regarding the results of such
audit, such dispute shall be submitted to and resolved by JAMS as provided in
Section 22.7 of this Lease.

          All of the information obtained by Tenant and/or its auditor in
connection with such audit, as well as any compromise, settlement, or adjustment
reached between Landlord and Tenant as a result thereof, shall be held in strict
confidence and, except as may be required by law or pursuant to litigation,
shall not be disclosed to any third party, directly or indirectly, by Tenant or
its auditor or any of their officers, agents or employees.  Landlord may require
Tenant's auditor to execute a separate confidentiality agreement affirming the
foregoing as a condition precedent to any audit.

          (d) Even though the Lease has terminated and the Tenant has vacated
the Premises, when the final determination is made of Operating Expenses for the
Expense Recovery Period in which the Lease terminates, Tenant shall upon notice
pay the entire increase due over the estimated expenses paid.  Conversely, any
overpayment made in the event expenses decrease shall be rebated promptly by
Landlord to Tenant.

          (e) If, at any time during any Expense Recovery Period, any one or
more of the Operating Expenses are increased to a rate(s) or amount(s) in excess
of the rate(s) or amount(s) used in calculating the estimated expenses for the
year, then the estimate of Operating Expenses shall be increased for the month
in which such rate(s) or amount(s) becomes effective and for all succeeding
months by an amount equal to the increase.  Landlord shall give Tenant written
notice of the amount or estimated amount of the increase, the month in which the
increase will become effective, and the month for which the payments are due.
Tenant shall pay the increase to Landlord as a part of Tenant's monthly payments
of estimated expenses as provided in paragraph (b) above, commencing with the
month in which effective.

          (f) The term "Building Costs" shall include all expenses of operation
and maintenance of the Building and of the Building's proportionate share of the
Project, if applicable (determined as the rentable square footage of the
Building divided by the rentable square footage of all space in the Project), to
the extent such expenses are not billed to and paid directly by Tenant, and
shall include the following charges by way of illustration but not limitation:
water and sewer charges; insurance premiums or reasonable premium equivalents
should Landlord elect to self-insure any risk that Landlord is authorized to
insure hereunder; license, permit, and inspection fees; heat; light; power; air
conditioning; supplies; materials; equipment; tools; the cost of any
environmental, insurance, tax or other consultant utilized by Landlord in
connection with the Building and/or Project; establishment of reasonable
reserves for replacements and/or repair of Common Area improvements (if
applicable), equipment and supplies; costs incurred in connection with
compliance of any laws or changes in laws applicable to the Building or the
Common Areas of the Project; the cost of any capital investments (other than
tenant improvements for specific tenants) to the extent of the amortized amount
thereof over the useful life of such capital investments calculated at a market
cost of funds, all as reasonably determined by Landlord, for each such year of
useful life during the Term; labor; reasonably allocated wages and salaries,
fringe benefits, and payroll taxes for administrative and other personnel
directly applicable to the Building and/or Project, including both Landlord's
personnel and outside personnel; any expense incurred pursuant to Sections 6.1,
6.2, 6.4, 7.2, and 10.2; and a reasonable overhead/management fee for the
professional operation of the Building and Project.  Notwithstanding anything to
the contrary contained herein, the amount of such overhead/management fee to be
charged to Tenant shall be determined by multiplying the actual fee charged
(which from time to time may be with respect to the entire Project, a portion of
the Project only, the Building only, or the Project together with other
properties owned by Landlord and/or its affiliates and leased to third parties)
by a fraction, the numerator of which is the floor area of the Premises (as set
forth in Item No. 8 of the Basic Lease Provisions) and the denominator of which
is the total square footage of space charged with such fee.   It is understood
that Building Costs shall include competitive charges for direct services
provided by any subsidiary or division of Landlord. Notwithstanding the
provisions of this Section 4.2 to the contrary, Operating Expenses shall not
include any cost or expense identified as the responsibility of Landlord and not
an Operating Expense or a Project Cost by the express terms of this Lease, and
shall not include any of the following:

                (1) Leasing commissions, space planning costs, attorneys' fees,
costs, disbursements and other expenses incurred by Landlord or its agents in
connection with negotiations for leases with tenants, other occupants or
prospective tenants or other occupants of the Project, and similar costs
incurred in connection with disputes with and/or enforcement of any lease with
tenants, other occupants, or prospective tenants or other occupants of the
Project;

                (2) "Tenant allowances", "tenant concessions", work letter
payments, and other costs or expenses (including permit, license and inspection
fees) incurred in completing, fixturing, furnishing, renovating or otherwise
improving, decorating or redecorating space for tenants or other occupants of
the Project, or vacant, leasable space in the Project, including space
planning/interior design fees for same;

                (3) Depreciation and other "non-cash" expense items;

                (4) Services, items and benefits for which Tenant or any other
tenant or occupant of the Project specifically reimburses Landlord or for which
Tenant or any other tenant or occupant of the Project pays third persons or
services, items or benefits which are not generally made available to Tenant as
an occupant of the Building or the Project;

                                       6
<PAGE>
 
                (5) Costs or expenses (including fines, penalties and legal
fees) incurred due to the violation by Landlord of any terms and conditions
(other than by Tenant) of this Lease or of the leases of other tenants in the
Project, that would not have incurred but for such violation by Landlord;

                (6) Penalties for late payment of any Operating Expenses by
Landlord, including, without limitation, with respect to taxes, equipment
leases, etc.;

                (7) Payments in respect of overhead and/or profit to any
subsidiary or Affiliate (hereinafter defined) of Landlord, as a result of a non-
competitive selection process for services (other than the management fee) on or
to the Project, or for goods, supplies or other materials, to the extent that
the costs of such services, goods, supplies or materials exceed the costs that
would have been paid if the services, goods, supplies or materials had been
provided by parties unaffiliated with Landlord, of similar skill, competence and
experience, on a competitive basis;

                (8) Payments of principal, finance or refinance charges or
interest on debt or amortization on any deed of trust or other debt encumbering
the Project, and rental payments (or increases in same) under any ground or
underlying lease or leases encumbering the Project (except to the extent the
same may be made to pay or reimburse, or may be measured by Property Taxes);

                (9) Except for a management fee which is reasonable and
commercially competitive for similar projects in the Irvine Spectrum area, costs
of Landlord's general overhead and general administrative expenses (individual,
partnership or corporate, as the case may be) and wages, salaries and other
compensation and benefits (as well as adjustments thereto) for all employees and
personnel of Landlord above the level of manager for the Project, which costs
would not be chargeable to Operating Expenses in accordance with generally
accepted accounting principles, consistently applied;

                (10) Rentals and other related expenses, if any, incurred in
leasing air conditioning systems or other equipment ordinarily considered to be
of a capital nature, except equipment which is used in providing janitorial
services and which is not affixed to the Project and equipment which is leased
on a temporary basis in emergency situations;

                (11) Advertising and promotional expenses;

                (12) Costs or expenses for the acquisition of sculpture,
paintings or other works of art, but not the reasonable expenses of maintaining,
repairing and insuring same;

                (13) Costs for which Landlord is compensated through or
reimbursed by insurance including premium refunds;

                (14) Contributions to operating expense reserves (including tax
reserves), except for reasonable reserves for the roof of the Building;

                (15) Contributions to political or charitable organizations;

                (16) Costs incurred in removing the property of former
tenants and/or other occupants of the Project.

                (17) Any bad debt loss, rent loss, or reserves for bad debt
or rent loss;

                (18) Any expenses associated with Common Areas that are
totally within other Buildings in the Project.

          (g) The term "Property Taxes" as used herein shall include the
following:  (i) all real estate taxes or personal property taxes, as such
property taxes may be reassessed from time to time; and (ii) other taxes,
charges and assessments which are levied with respect to this Lease or to the
Building and/or the Project, and any improvements, fixtures and equipment and
other property of Landlord located in the Building and/or the Project, except
that general net income and franchise taxes imposed against Landlord shall be
excluded; and (iii) all assessments and fees for public improvements, services,
and facilities and impacts thereon, including without limitation arising out of
any Community Facilities Districts, "Mello Roos" districts, similar assessment
districts, and any traffic impact mitigation assessments or fees; (iv) any tax,
surcharge or assessment which shall be levied in addition to or in lieu of real
estate or personal property taxes, other than taxes covered by Article VIII; and
(v) costs and expenses incurred in contesting the amount or validity of any
Property Tax by appropriate proceedings.

     SECTION 4.3.  SECURITY DEPOSIT.  Concurrently with Tenant's delivery of
this Lease, Tenant shall deposit with Landlord the sum, if any, stated in Item 9
of the Basic Lease Provisions, to be held by Landlord as security for the full
and faithful performance of Tenant's obligations under this Lease (the "Security
Deposit").  Subject to the last sentence of this Section, the Security Deposit
shall be understood and agreed to be the property of Landlord upon Landlord's
receipt thereof, and may be utilized by Landlord in its discretion towards the
payment of all prepaid expenses by Landlord for which Tenant would be required
to reimburse Landlord under this Lease, including without limitation 

                                       7
<PAGE>
 
brokerage commissions and Tenant Improvement costs. Upon any default by Tenant,
including specifically Tenant's failure to pay rent or to abide by its
obligations under Sections 7.1 and 15.3 below, whether or not Landlord is
informed of or has knowledge of the default, the Security Deposit shall be
deemed to be automatically and immediately applied, without waiver of any rights
Landlord may have under this Lease or at law or in equity as a result of the
default, as a setoff for full or partial compensation for that default. If any
portion of the Security Deposit is applied after a default by Tenant, Tenant
shall within five (5) days after written demand by Landlord deposit cash with
Landlord in an amount sufficient to restore the Security Deposit to its original
amount. Landlord shall not be required to keep this Security Deposit separate
from its general funds, and Tenant shall not be entitled to interest on the
Security Deposit. If Tenant fully performs its obligations under this Lease, the
Security Deposit or any balance thereof shall be returned to Tenant (or, at
Landlord's option, to the last assignee of Tenant's interest in this Lease)
after the expiration of the Term, provided that Landlord may retain the Security
Deposit to the extent and until such time as all amounts due from Tenant in
accordance with this Lease have been determined and paid in full.



                                 ARTICLE V.  USES


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

     SECTION 5.2  SIGNS.  Provided Tenant continues to occupy the entire
Premises, Tenant shall have the exclusive right to install two (2) building-top
signs on the exterior of the Building, subject to Landlord's prior approval that
such exterior signage is in compliance with the Signage Criteria (defined
below).  Except as provided in the foregoing, or as otherwise approved in
writing by Landlord, in its sole discretion, Tenant shall have no right to
maintain identification signs in any location in, on or about the Premises, the
Building or the Project and shall not place or erect any signs, displays or
other advertising materials that are visible from the exterior of the Building.
The size, design, graphics, material, style, color and other physical aspects of
any permitted sign shall be subject to any covenants, conditions or restrictions
encumbering the Premises, Landlord's signage program for the Project, as in
effect from time to time and approved by the City of Irvine ("Signage
Criteria"), and any applicable municipal or other governmental permits and
approvals.  Tenant acknowledges having received and reviewed a copy of the
current Signage Criteria for the Project.  Tenant shall be responsible for the
cost of any permitted sign, including the fabrication, installation, maintenance
and removal thereof.  If Tenant fails to maintain its sign, or if Tenant fails
to remove same upon termination of this Lease and repair any damage caused by
such removal, Landlord may do so at Tenant's expense.

     SECTION 5.3  HAZARDOUS MATERIALS.

          (a) For purposes of this Lease, the term "Hazardous Materials"
includes (i) any "hazardous materials" as defined in Section 25501(n) of the
California Health and Safety Code, (ii) any other substance or matter which
results in liability to any person or entity from exposure to such substance or
matter under any statutory or common law theory, and (iii) any substance or
matter which is in excess of permitted levels set forth in any federal,
California or local law or regulation pertaining to any hazardous or toxic
substance, material or waste.

          (b) Tenant shall not cause or permit any Hazardous Materials to be
brought upon, stored, used, generated, released or disposed of on, under, from
or about the Premises (including without limitation the soil and groundwater
thereunder) without the prior written consent of Landlord.  Notwithstanding the
foregoing, Tenant shall have the right, without obtaining prior written consent
of Landlord, to utilize within the Premises standard office products that may
contain Hazardous Materials (such as photocopy toner, "White Out", and the
like), provided however, that (i) Tenant shall maintain such products in their
       -------- -------                                                       
original retail packaging, shall follow all instructions on such packaging with
respect to the storage, use and disposal of such products, and shall otherwise
comply with all applicable 

                                       8
<PAGE>
 
laws with respect to such products, and (ii) all of the other terms and
provisions of this Section 5.3 shall apply with respect to Tenant's storage, use
and disposal of all such products. Landlord may, in its sole discretion, place
such reasonable conditions as Landlord deems appropriate with respect to any
such Hazardous Materials, and may further require that Tenant demonstrate that
any such Hazardous Materials are necessary or useful to Tenant's business and
will be generated, stored, used and disposed of in a manner that complies with
all applicable laws and regulations pertaining thereto and with good business
practices. Tenant understands that Landlord may utilize an environmental
consultant to assist in determining conditions of approval in connection with
the storage, generation, release, disposal or use of Hazardous Materials by
Tenant on or about the Premises, and/or to conduct periodic inspections of the
storage, generation, use, release and/or disposal of such Hazardous Materials by
Tenant on and from the Premises, and Tenant agrees that any reasonable costs
incurred by Landlord in connection therewith shall be reimbursed by Tenant to
Landlord as additional rent hereunder upon demand.

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

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

          (e) If the presence of any Hazardous Materials on, under, from or
about the Premises or the Project caused or permitted by Tenant or its agents,
employees, contractors, licensees or invitees results in (i) injury to any
person, (ii) injury to or any contamination of the Premises or the Project, or
(iii) injury to or contamination of any real or personal property wherever
situated, Tenant, at its expense, shall promptly take all actions necessary to
return the Premises and the Project and any other affected real or personal
property owned by Landlord to the condition existing prior to the introduction
of such Hazardous Materials and to remedy or repair any such injury or
contamination, including without limitation, any cleanup, remediation, removal,
disposal, neutralization or other treatment of any such Hazardous Materials.
Notwithstanding the foregoing, Tenant shall not, without Landlord's prior
written consent, take any remedial action in response to the presence of any
Hazardous Materials on, under or about the Premises or the Project or any other
affected real or personal property owned by Landlord or enter into any similar
agreement, consent, decree or other compromise with any governmental agency with
respect to any Hazardous Materials claims; provided however, Landlord's prior
written consent shall not be necessary in the event that the presence of
Hazardous Materials on, under or about the Premises or the Project or any other
affected real or personal property owned by Landlord (i) imposes an immediate
threat to the health, safety or welfare of any individual or (ii) is of such a
nature that an immediate remedial response is necessary and it is not possible
to obtain Landlord's consent before taking such action. To the fullest extent
permitted by law, Tenant shall indemnify, hold harmless, protect and defend
(with attorneys acceptable to Landlord) Landlord and any successors to all or
any portion of Landlord's interest in the Premises and the Project and any other
real or personal property owned by Landlord from and against any and all
liabilities, losses, damages, diminution in value, judgments, fines, demands,
claims, recoveries, deficiencies, costs and expenses (including without
limitation attorneys' fees, court costs and other professional expenses),
whether foreseeable or unforeseeable, arising directly or indirectly out of the
use, generation, storage, treatment, release, on- or off-site disposal or
transportation of Hazardous Materials on, into, from, under or about the
Premises, the Building and the Project and any other real or personal property
owned by Landlord caused or permitted by Tenant, its agents, employees,
contractors, licensees or invitees, specifically including without limitation
the cost of any required or necessary repair, restoration, 

                                       9
<PAGE>
 
cleanup or detoxification of the Premises, the Building and the Project and any
other real or personal property owned by Landlord, and the preparation of any
closure or other required plans, whether or not such action is required or
necessary during the Term or after the expiration of this Lease. If Landlord at
any time discovers that Tenant or its agents, employees, contractors, licensees
or invitees may have caused or permitted the release of a Hazardous Material on,
under, from or about the Premises or the Project or any other real or personal
property owned by Landlord, Tenant shall, at Landlord's request, immediately
prepare and submit to Landlord a comprehensive plan, subject to Landlord's
approval, specifying the actions to be taken by Tenant to return the Premises or
the Project or any other real or personal property owned by Landlord to the
condition existing prior to the introduction of such Hazardous Materials. Upon
Landlord's approval of such cleanup plan, Tenant shall, at its expense, and
without limitation of any rights and remedies of Landlord under this Lease or at
law or in equity, immediately implement such plan and proceed to cleanup such
Hazardous Materials in accordance with all applicable laws and as required by
such plan and this Lease. The provisions of this subsection (e) shall expressly
survive the expiration or sooner termination of this Lease.

          (f) If the release of any Hazardous Materials on, under, from or about
the Premises or the Project caused by Landlord, its authorized agents or
employees, and not introduced by Tenant, its agents, employees, contractors,
licensees, or invitees results in (i) injury to any person, or (ii) injury to or
any contamination of the Premises or the Project at levels which require clean-
up or remediation under applicable laws, Landlord, at its expense (which shall
not be included in Operating Expenses), shall promptly take all actions
necessary to return the Premises and the Project to the condition existing prior
to the introduction of such Hazardous Materials, or to such condition as is
satisfactory to all governmental agencies asserting jurisdiction, and to remedy
or repair any such injury or contamination, including, without limitation, any
clean-up, remediation, removal, disposal, neutralization or other treatment of
any such Hazardous Materials.


          (g) Landlord hereby discloses to Tenant, and Tenant hereby
acknowledges, certain facts relating to Hazardous Materials at the Project known
by Landlord to exist as of the date of this Lease, as more particularly
described in EXHIBIT C attached hereto. Tenant shall have no liability or
             ---------
responsibility with respect to the Hazardous Materials facts described in
EXHIBIT C, nor with respect to any Hazardous Materials which were not caused or
---------                                                                      
knowingly permitted by Tenant, its agents, employees, contractors, licensees or
invitees. Landlord shall take responsibility, at its sole cost and expense, for
any governmentally-ordered clean-up, remediation, removal, disposal,
neutralization or other treatment of Hazardous Materials conditions described in
this Section 5.3(g). The foregoing obligation on the part of Landlord shall
include the reasonable costs (including, without limitation, reasonable
attorney's fees) of defending Tenant (with attorneys reasonably acceptable to
Tenant) from and against any legal action or proceeding instituted by any
governmental agency in connection with such clean-up, remediation, removal,
disposal, neutralization or other treatment of such conditions, provided that
Tenant promptly tenders such defense to Landlord. Tenant agrees to notify its
agents, employees, contractors, licensees, and invitees of any exposure or
potential exposure to Hazardous Materials at the Premises that Landlord brings
to Tenant's attention.

          (h) The obligations on the part of Landlord contained in Sections
5.3(f) and 5.3(g) above are personal to Landlord and shall not be binding on,
nor inure against any successor in interest to Landlord as of the owner of the
Premises, including without limitation, any lender acquiring the Premises by
foreclosure of its mortgage or deed of trust or deed in lieu of foreclosure.



                     ARTICLE VI.  COMMON AREAS; SERVICES


     SECTION 6.1.  UTILITIES AND SERVICES. Tenant shall be responsible for and
shall pay promptly, directly to the appropriate supplier, all charges for water,
gas, electricity, sewer, heat, light, power, telephone, refuse pickup,
janitorial service, interior landscape maintenance and all other utilities,
materials and services furnished directly to Tenant or the Premises or used by
Tenant in, on or about the Premises during the Term, together with any taxes
thereon. Landlord shall not be liable for damages or otherwise for any failure
or interruption of any utility or other service furnished to the Premises, and
no such failure or interruption shall be deemed an eviction or entitle Tenant to
terminate this Lease or withhold or abate any rent due hereunder. Landlord shall
at all reasonable times have free access to all electrical and mechanical
installations of Landlord. Notwithstanding the foregoing, if as a result of the
actions of Landlord, its agents, contractors or employees or the inactions of
Landlord if Landlord is required to act under this Lease, for more than three
(3) consecutive business days following written notice to Landlord there is no
HVAC service or electricity service to all or a portion of the Premises, or such
an interruption of other essential utilities and building services, such as fire
protection or water, so that all or a portion of the Premises cannot be used by
Tenant, then Tenant's obligation to pay Basic Rent and Operating Expenses (or an
equitable portion of such Basic Rent and Operating Expenses to the extent that
less than all of the Premises are affected) shall thereafter be abated until the
Premises are again useable by Tenant; provided, however, that if Landlord is
diligently pursuing the repair of such utilities or services and Landlord
provides substitute services reasonably suitable for Tenant's purposes, as for
example, bringing in portable air-conditioning equipment, then there shall not
be an abatement of Basic Rent or Operating Expenses. Any disputes concerning the
foregoing shall be resolved by JAMS arbitration pursuant to Section 22.7 of this
Lease. The foregoing provisions shall not apply in case of damage to, or
destruction of, the Premises, which shall be governed by the provisions of
Article XI of the Lease. Landlord shall at all reasonable times have free access
to all electrical and mechanical installations of Landlord.

                                       10
<PAGE>
 
     SECTION 6.2.  OPERATION AND MAINTENANCE OF COMMON AREAS. During the Term,
Landlord shall operate all Common Areas within the Project. The term "Common
Areas" shall mean all areas which are not held for exclusive use by persons
entitled to occupy space, and all other appurtenant areas and improvements
provided by Landlord for the common use of Landlord and tenants and their
respective employees and invitees, including without limitation parking areas
and structures, driveways, sidewalks, landscaped and planted areas, hallways and
interior stairwells not located within the premises of any tenant, common
electrical rooms and roof access entries, common entrances and lobbies,
elevators, and restrooms not located within the premises of any tenant.

     SECTION 6.3.  USE OF COMMON AREAS. The occupancy by Tenant of the Premises
shall include the use of the Common Areas in common with Landlord and with all
others for whose convenience and use the Common Areas may be provided by
Landlord, subject, however, to compliance with all rules and regulations as are
prescribed from time to time by Landlord. Landlord shall operate and maintain
the Common Areas in the manner Landlord may determine to be appropriate. All
costs incurred by Landlord for the maintenance and operation of the Common Areas
shall be included in Building Costs unless any particular cost incurred can be
charged to a specific tenant of the Project. Landlord shall at all times during
the Term have exclusive control of the Common Areas, and may restrain any use or
occupancy, except as authorized by Landlord's rules and regulations. Tenant
shall keep the Common Areas clear of any obstruction or unauthorized use related
to Tenant's operations. Landlord may temporarily close any portion of the Common
Areas for repairs, remodeling and/or alterations, to prevent a public dedication
or the accrual of prescriptive rights, or for any other reason deemed sufficient
by Landlord, without liability to Landlord.

     SECTION 6.4.  PARKING.  Tenant shall be entitled to the number of vehicle
parking spaces set forth in Item 14 of the Basic Lease Provisions, which spaces
shall be unreserved and unassigned, on those portions of the Common Areas
designated by Landlord for parking. Tenant shall not use more parking spaces
than such number. Notwithstanding the foregoing, Landlord shall designate a
minimum of ten (10) stalls as "visitor" in a location reasonably determined by
Landlord to conveniently serve visitors to the Premises and such stalls shall be
included in the determination of the number of stalls used by Tenant; provided,
however, that Landlord shall not be obligated to monitor the use of such stalls.
Landlord may, in its reasonable discretion, increase the number of stalls
designated for visitors and shall upon Tenant's written request re-evaluate the
number and/or location of such stalls but shall not be obligated to change the
number or location of such stalls except in its reasonable discretion. All
parking spaces shall be used only for parking by vehicles no larger than full
size passenger automobiles or pickup trucks. Tenant shall not permit or allow
any vehicles that belong to or are controlled by Tenant or Tenant's employees,
suppliers, shippers, customers or invitees to be loaded, unloaded or parked in
areas other than those designated by Landlord for such activities. If Tenant
permits or allows any of the prohibited activities described above, then
Landlord shall have the right, without notice, in addition to such other rights
and remedies that Landlord may have, to remove or tow away the vehicle involved
and charge the costs to Tenant. Parking within the Common Areas shall be limited
to striped parking stalls, and no parking shall be permitted in any driveways,
access ways or in any area which would prohibit or impede the free flow of
traffic within the Common Areas. There shall be no overnight parking of any
vehicles of any kind unless otherwise authorized by Landlord, and vehicles which
have been abandoned or parked in violation of the terms hereof may be towed away
at the owner's expense. Nothing contained in this Lease shall be deemed to
create liability upon Landlord for any damage to motor vehicles of visitors or
employees, for any loss of property from within those motor vehicles, or for any
injury to Tenant, its visitors or employees, unless ultimately determined to be
caused by the active negligence or willful misconduct of Landlord, its agents,
servants and employees. Landlord shall have the right to establish, and from
time to time amend, and to enforce against all users all reasonable rules and
regulations that Landlord may deem necessary and advisable for the proper and
efficient operation and maintenance of parking within the Common Areas. Landlord
shall have the right to construct, maintain and operate lighting facilities
within the parking areas; to change the area, level, location and arrangement of
the parking areas and improvements therein; to restrict parking by tenants,
their officers, agents and employees to employee parking areas; to enforce
parking charges (by operation of meters or otherwise); and to do and perform
such other acts in and to the parking areas and improvements therein as, in the
use of good business judgment, Landlord shall determine to be advisable. Any
person using the parking area shall observe all directional signs and arrows and
any posted speed limits. In no event shall Tenant interfere with the use and
enjoyment of the parking area by other tenants of the Project or their employees
or invitees. Parking areas shall be used only for parking vehicles. Washing,
waxing, cleaning or servicing of vehicles, or the storage of vehicles for 24-
hour periods, is prohibited unless otherwise authorized by Landlord. Tenant
shall be liable for any damage to the parking areas caused by Tenant or Tenant's
employees, suppliers, shippers, customers or invitees, including without
limitation damage from excess oil leakage. Tenant shall have no right to install
any fixtures, equipment or personal property in the parking areas.

     SECTION 6.5.  CHANGES AND ADDITIONS BY LANDLORD. Landlord reserves the
right to make alterations or additions to the Project, or to the attendant
fixtures, equipment and Common Areas. Landlord may at any time relocate or
remove any of the various buildings (other than the Building), parking areas,
and other Common Areas, and may add buildings and areas to the Project from time
to time. No change shall entitle Tenant to any abatement of rent or other claim
against Landlord, provided that the change does not deprive Tenant or materially
and adversely affect Tenant's reasonable access to or use of the Premises or
decrease the number of parking spaces available for Tenant's use.



                    ARTICLE VII.  MAINTAINING THE PREMISES

                                       11
<PAGE>
 
     SECTION 7.1.  TENANT'S MAINTENANCE AND REPAIR. Tenant at its sole expense
shall comply with all applicable laws and governmental regulations governing the
Premises and make all repairs necessary to keep the Premises in the condition as
existed on the Commencement Date (or on any later date that the improvements may
have been installed), excepting ordinary wear and tear, including without
limitation the electrical and mechanical systems, any air conditioning,
ventilating or heating equipment which serves the Premises, all walls, glass,
windows, doors, door closures, hardware, fixtures, electrical, plumbing, fire
extinguisher equipment and other equipment. Any damage or deterioration of the
Premises shall not be deemed ordinary wear and tear if the same could have been
prevented by good maintenance practices by Tenant. As part of its maintenance
obligations hereunder, Tenant shall, at Landlord's request, provide Landlord
with copies of all maintenance schedules, reports and notices prepared by, for
or on behalf of Tenant. Tenant shall obtain preventive maintenance contracts
from a licensed heating and air conditioning contractor to provide for regular
inspection and maintenance of the heating, ventilating and air conditioning
systems servicing the Premises, all subject to Landlord's approval. All repairs
shall be at least equal in quality to the original work, shall be made only by a
licensed contractor reasonably approved in writing in advance by Landlord and
shall be made only at the time or times reasonably approved by Landlord. Any
contractor utilized by Tenant shall be subject to Landlord's standard
requirements for contractors, as modified from time to time. Landlord shall have
the right at all times to inspect Tenant's maintenance of all equipment
(including without limitation air conditioning, ventilating and heating
equipment), and may impose reasonable restrictions and requirements with respect
to repairs, as provided in Section 7.3, and the provisions of Section 7.4 shall
apply to all repairs. Alternatively, Landlord may elect to make any repair or
maintenance of the electrical and mechanical systems and any air conditioning,
ventilating or heating equipment serving the Premises and include the reasonable
cost thereof as part of "Building Costs", and if the Tenant fails to properly
maintain and/or repair the Premises as herein provided following Landlord's
notice and the expiration of the applicable cure period, then Landlord may elect
to make any other repair or maintenance required hereunder on behalf of Tenant
and at Tenant's expense, and Tenant shall promptly reimburse Landlord for all
costs incurred upon submission of an invoice.

     SECTION 7.2.  LANDLORD'S MAINTENANCE AND REPAIR. Subject to Section 7.1
and Article XI, Landlord shall provide service, maintenance and repair with
respect to the roof, foundations, and footings of the Building, all landscaping,
walkways, parking areas, Common Areas, exterior lighting, and the exterior
surfaces of the exterior walls of the Building, except that Tenant at its
expense shall make all repairs which Landlord deems reasonably necessary as a
result of the act or negligence of Tenant, its agents, employees, invitees,
subtenants or contractors. Landlord shall have the right to employ or designate
any reputable person or firm, including any employee or agent of Landlord or any
of Landlord's affiliates or divisions, to perform any service, repair or
maintenance function. Landlord need not make any other improvements or repairs
except as specifically required under this Lease, and nothing contained in this
Section shall limit Landlord's right to reimbursement from Tenant for
maintenance, repair costs and replacement costs as provided elsewhere in this
Lease. Tenant understands that it shall not make repairs at Landlord's expense
or by rental offset. Tenant further understands that Landlord shall not be
required to make any repairs to the roof, foundations or footings unless and
until Tenant has notified Landlord in writing of the need for such repair and
Landlord shall have a reasonable period of time thereafter to commence and
complete said repair, if warranted. Subject to the limitations of Section 4.2
hereof, all costs of any maintenance and repairs on the part of Landlord
provided hereunder shall be considered part of Building Costs.

     SECTION 7.3.  ALTERATIONS. Tenant shall make no alterations, additions or
improvements to the Premises without the prior written consent of Landlord,
which consent may be given or withheld in Landlord's sole discretion.
Notwithstanding the foregoing, Landlord shall not unreasonably withhold its
consent to any alterations, additions or improvements to the Premises which cost
less than One Hundred Thousand Dollars ($100,000.00) in the aggregate over the
initial Term and do not (i) affect the exterior of the Building or outside areas
(or be visible from adjoining sites), or (ii) affect or penetrate any of the
structural portions of the Building, including but not limited to the roof, or
(iii) require any substantial change to the basic floor plan of the Premises,
any change to any structural or mechanical systems of the Premises, or any
governmental permit as a prerequisite to the construction thereof, or (iv)
interfere in any manner with the proper functioning of or Landlord's access to
any mechanical, electrical, plumbing or HVAC systems, facilities or equipment
located in or serving the Building, or (v) diminish the value of the Premises in
Landlord's reasonable discretion. Landlord may impose, as a condition to its
consent, any requirements that Landlord in its discretion may deem reasonable or
desirable, including but not limited to a requirement that all work be covered
by a lien and completion bond satisfactory to Landlord and requirements as to
the manner, time, and contractor for performance of the work. Tenant shall
obtain all required permits for the work and shall perform the work in
compliance with all applicable laws, regulations and ordinances, all covenants,
conditions and restrictions affecting the Project, and the Rules and Regulations
(hereafter defined). Tenant understands and agrees that Landlord shall be
entitled to a supervision fee in the amount of three percent (3%) of the cost of
the work. If any governmental entity requires, as a condition to any proposed
alterations, additions or improvements to the Premises by Tenant, that
improvements be made to the Common Areas, and if Landlord consents to such
improvements to the Common Areas, then Tenant shall, at Tenant's sole expense,
make such required improvements to the Common Areas in such manner, utilizing
such materials, and with such contractors (including, if required by Landlord,
Landlord's contractors) as Landlord may require in its sole discretion. Under no
circumstances shall Tenant make any improvement which incorporates any Hazardous
Materials, including without limitation asbestos-containing construction
materials into the Premises. Any request for Landlord's consent shall be made in
writing and shall contain architectural plans describing the work in detail
reasonably satisfactory to Landlord. Unless Landlord otherwise agrees in
writing, all alterations, additions or improvements affixed to the Premises
(excluding moveable trade fixtures and furniture) shall become the property of
Landlord and shall be surrendered with the Premises at the end of the Term,
except that Landlord may, by notice to Tenant, require Tenant to remove by the
Expiration Date, or sooner termination date of this Lease, all or any
alterations, decorations, fixtures, additions, improvements and the like
installed either by Tenant or by Landlord at Tenant's request and to repair any
damage to the Premises arising from that removal. Except as otherwise provided
in this Lease or in any Exhibit to this 

                                       12
<PAGE>
 
Lease, should Landlord make any alteration or improvement to the Premises at the
request of Tenant, Landlord shall be entitled to prompt reimbursement from
Tenant for all costs incurred. Notwithstanding the foregoing, Landlord shall
have the right to require Tenant to remove (i) any Non-Standard Improvements
included in the initial Tenant Improvements to the Premises but only if Landlord
notifies Tenant that such removal will be required at the time of Landlord's
approval of the Preliminary Plan, and (ii) any subsequent alterations, additions
or improvements whether or not Landlord's consent was required unless Landlord's
written consent was obtained and unless at the time of providing its consent
Landlord notified Tenant in writing that Tenant would not have to remove such
items upon the expiration of the Lease Term.

     SECTION 7.4.  MECHANIC'S LIENS. Tenant shall keep the Premises free from
any liens arising out of any work performed, materials furnished, or obligations
incurred by or for Tenant. Upon request by Landlord, Tenant shall promptly cause
any such lien to be released by posting a bond in accordance with California
Civil Code Section 3143 or any successor statute. In the event that Tenant shall
not, within sixty (60) days following the imposition of any lien, cause the lien
to be released of record by payment or posting of a proper bond, Landlord shall
have, in addition to all other available remedies, the right to cause the lien
to be released by any means it deems proper, including payment of or defense
against the claim giving rise to the lien. All expenses so incurred by Landlord,
including Landlord's attorneys' fees, and any consequential or other damages
incurred by Landlord arising out of such lien, shall be reimbursed by Tenant
promptly following Landlord's demand, together with interest from the date of
payment by Landlord at the maximum rate permitted by law until paid. Tenant
shall give Landlord no less than twenty (20) days' prior notice in writing
before commencing construction of any kind on the Premises so that Landlord may
post and maintain notices of nonresponsibility on the Premises.

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


           ARTICLE VIII.  TAXES AND ASSESSMENTS ON TENANT'S PROPERTY


     Tenant shall be liable for and shall pay, at least ten (10) days before
delinquency, all taxes and assessments levied against all personal property of
Tenant located in the Premises, against all improvements to the Premises made by
Landlord or Tenant which are above Landlord's Project standard in quality and/or
quantity for comparable space within the Project ("Above Standard
Improvements"), and against any alterations, additions or like improvements made
to the Premises by or on behalf of Tenant. When possible Tenant shall cause its
personal property, Above Standard Improvements and alterations to be assessed
and billed separately from the real property of which the Premises form a part.
If any taxes on Tenant's personal property, Above Standard Improvements and/or
alterations are levied against Landlord or Landlord's property and if Landlord
pays the same, or if the assessed value of Landlord's property is increased by
the inclusion of a value placed upon the personal property, Above Standard
Improvements and/or alterations of Tenant and if Landlord pays the taxes based
upon the increased assessment, Tenant shall pay to Landlord the taxes so levied
against Landlord or the proportion of the taxes resulting from the increase in
the assessment. In calculating what portion of any tax bill which is assessed
against Landlord separately, or Landlord and Tenant jointly, is attributable to
Tenant's Above Standard Improvements, alterations and personal property,
Landlord's reasonable determination shall be conclusive.


                    ARTICLE IX.  ASSIGNMENT AND SUBLETTING

     SECTION 9.1.  RIGHTS OF PARTIES.

          (a) Except as specifically set forth herein, Tenant will not, either
voluntarily or by operation of law, assign, sublet, encumber, or otherwise
transfer all or any part of Tenant's interest in this lease, or permit the
Premises to be occupied by anyone other than Tenant, without Landlord's prior
written consent, which consent shall not unreasonably be withheld in accordance
with the provisions of Section 9.1.(b). No assignment (whether voluntary,
involuntary or by operation of law) and no subletting shall be valid or
effective without Landlord's prior written consent and, at Landlord's election,
any such assignment or subletting or attempted assignment or subletting shall
constitute a material default of this Lease. Landlord shall not be deemed to
have given its consent to any assignment or subletting by any other course of
action, including its acceptance of any name for listing in the Building
directory. To the extent not prohibited by provisions of the Bankruptcy Code, 11
U.S.C. Section 101 et seq. (the "Bankruptcy Code"), including Section 365(f)(1),
Tenant on behalf of itself and its creditors, administrators and assigns waives
the applicability of Section 365(e) of the Bankruptcy Code unless the proposed
assignee of the Trustee for the estate of the bankrupt meets Landlord's standard
for consent as set forth in Section 9.1(b) of this Lease. If this Lease is
assigned to any person or entity pursuant to the provisions of the Bankruptcy
Code, any and all monies or other considerations to be delivered in

                                       13
<PAGE>
 
connection with the assignment shall be delivered to Landlord, shall be and
remain the exclusive property of Landlord and shall not constitute property of
Tenant or of the estate of Tenant within the meaning of the Bankruptcy Code. Any
person or entity to which this Lease is assigned pursuant to the provisions of
the Bankruptcy Code shall be deemed to have assumed all of the obligations
arising under this Lease on and after the date of the assignment, and shall upon
demand execute and deliver to Landlord an instrument confirming that assumption.



          (b)     If Tenant desires to transfer an interest in this Lease in any
transaction for which Landlord's consent is required, it shall first notify
Landlord of its desire and shall submit in writing to Landlord:  (i) the name
and address of the proposed transferee; (ii) the nature of any proposed
subtenant's or assignee's business to be carried on in the Premises; (iii) the
terms and provisions of any proposed sublease or assignment, including a copy of
the proposed assignment or sublease form; (iv) evidence of insurance of the
proposed assignee or subtenant complying with the requirements of Exhibit D
                                                                  ---------
hereto; (v) a completed Environmental Questionnaire from the proposed assignee
or subtenant; and (vi) any other information requested by Landlord and
reasonably related to the transfer.  Except as provided in Subsection (e) of
this Section, Landlord shall not unreasonably withhold its consent, provided:
(1) the use of the Premises will be consistent with the provisions of this Lease
and with Landlord's commitment to other tenants of the Project; (2) the proposed
assignee or subtenant has not been required by any prior landlord, lender or
governmental authority to take remedial action in connection with Hazardous
Materials contaminating a property arising out of the proposed assignee's or
subtenant's actions or use of the property in question and is not subject to any
enforcement order issued by any governmental authority in connection with the
use, disposal or storage of a Hazardous Material (unless such action has been
taken and/or order complied with so as to remediate such contamination); (3) at
Landlord's election, insurance requirements shall be brought into conformity
with Landlord's then current leasing practice; (4) any proposed subtenant or
assignee demonstrates that it is financially responsible by submission to
Landlord of all reasonable information as Landlord may request concerning the
proposed subtenant or assignee, including, but not limited to, a balance sheet
of the proposed subtenant or assignee as of a date within ninety (90) days of
the request for Landlord's consent and statements of income or profit and loss
of the proposed subtenant or assignee for the two-year period preceding the
request for Landlord's consent, and/or a certification signed by the proposed
subtenant or assignee that it has not been evicted or been in arrears in rent at
any other leased premises for the 3-year period preceding the request for
Landlord's consent;(5) the proposed assignee or subtenant is not an existing
tenant of the Project or a prospect with whom Landlord is negotiating to become
a tenant at the Project; and (6) the proposed transfer will not impose
additional burdens or adverse tax effects on Landlord.  If Tenant has any
exterior sign rights under this Lease, such rights are personal to Tenant and
may not be assigned or transferred except to an assignee approved by Landlord in
accordance with this Article but only if the name proposed for such exterior
sign will not materially devalue the Project in Landlord's sole discretion.

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

          (c)     Notwithstanding the provisions of Subsection (b) above, in
lieu of consenting to a proposed assignment or subletting, Landlord may elect to
(i) sublease the Premises (or the portion proposed to be subleased), or take an
assignment of Tenant's interest in this Lease, upon the same terms as offered to
the proposed subtenant or assignee (excluding terms relating to the purchase of
personal property, the use of Tenant's name or the continuation of Tenant's
business), or (ii) terminate this Lease as to the portion of the Premises
proposed to be subleased or assigned with a proportionate abatement in the rent
payable under this Lease, effective on the date that the proposed sublease or
assignment would have become effective. Landlord may thereafter, at its option,
assign or re-let any space so recaptured to any third party, including without
limitation the proposed transferee of Tenant.

          (d)     Tenant agrees that fifty percent (50%) of any amounts paid by
the assignee or subtenant, however described, in excess of (i) the Basic Rent
payable by Tenant hereunder, or in the case of a sublease of a portion of the
Premises, in excess of the Basic Rent reasonably allocable to such portion, plus
(ii) Tenant's direct out-of-pocket costs which Tenant certifies to Landlord have
been paid to provide occupancy related services to such assignee or subtenant of
a nature commonly provided by landlords of similar space including without
limitation reasonable legal fees, brokerage commissions, tenant improvement
costs and advertising and marketing expenses, shall be the property of Landlord
and such amounts shall be payable directly to Landlord by the assignee or
subtenant or, at Landlord's option, by Tenant. At Landlord's request, a written
agreement shall be entered into by and among Tenant, Landlord and the proposed
assignee or subtenant confirming the requirements of this subsection.

          (e)     Tenant shall pay to Landlord a fee of Five Hundred Dollars
($500.00) if and when any transfer hereunder is requested by Tenant.  Such fee
is hereby acknowledged as a reasonable amount to reimburse Landlord for its
costs of review and evaluation of a proposed assignee/sublessee, and Landlord
shall not be obligated to commence such review and evaluation unless and until
such fee is paid.

     SECTION 9.2. EFFECT OF TRANSFER.  No subletting or assignment, even with
the consent of Landlord, shall relieve Tenant of its obligation to pay rent and
to perform all its other obligations under this Lease.  Moreover, Tenant shall
indemnify and hold Landlord harmless, as provided in Section 10.3, for any act
or omission by an assignee or subtenant. Each assignee, other than Landlord,
shall be deemed to assume all obligations of Tenant under this Lease and shall
be liable jointly and severally with Tenant for the payment of all rent, and for
the due performance of all of Tenant's obligations, under this Lease.  No
transfer shall be binding on Landlord unless any document memorializing the
transfer is delivered to Landlord and both the assignee/subtenant and Tenant
deliver to Landlord an 

                                       14
<PAGE>
 
executed consent to transfer instrument prepared by Landlord and consistent with
the requirements of this Article. The acceptance by Landlord of any payment due
under this Lease from any other person shall not be deemed to be a waiver by
Landlord of any provision of this Lease or to be a consent to any transfer.
Consent by Landlord to one or more transfers shall not operate as a waiver or
estoppel to the future enforcement by Landlord of its rights under this Lease.

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

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

          (b)      Tenant hereby irrevocably assigns to Landlord all of Tenant's
interest in all rentals and income arising from any sublease of the Premises,
and Landlord may collect such rent and income and apply same toward Tenant's
obligations under this Lease; provided, however, that until a default occurs in
the performance of Tenant's obligations under this Lease, Tenant shall have the
right to receive and collect the sublease rentals.  Landlord shall not, by
reason of this assignment or the collection of sublease rentals, be deemed
liable to the subtenant for the performance of any of Tenant's obligations under
the sublease.  Tenant hereby irrevocably authorizes and directs any subtenant,
upon receipt of a written notice from Landlord stating that an uncured default
exists in the performance of Tenant's obligations under this Lease, to pay to
Landlord all sums then and thereafter due under the sublease.  Tenant agrees
that the subtenant may rely on that notice without any duty of further inquiry
and notwithstanding any notice or claim by Tenant to the contrary.  Tenant shall
have no right or claim against the subtenant or Landlord for any rentals so paid
to Landlord except to the extent of Tenant's portion thereof, if any, as
contemplated by Section 9.1 (d) hereof.

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

     SECTION 9.4.  CERTAIN TRANSFERS. The sale of all or substantially all of
Tenant's assets (other than bulk sales in the ordinary course of business) or,
if Tenant is a corporation, an unincorporated association, or a partnership, the
transfer, assignment or hypothecation of any stock or interest in such
corporation, association, or partnership in the aggregate of twenty-five percent
(25%) (except for publicly traded shares of stock) shall be deemed an assignment
within the meaning and provisions of this Article.  Notwithstanding the
foregoing, Landlord's consent shall not be required for the assignment of this
Lease as a result of a merger by Tenant with or into another entity, so long as
(i) the net worth of the successor entity after such merger is at least equal to
the greater of the net worth of Tenant as of the execution of this Lease by
Landlord or the net worth of Tenant immediately prior to the date of such
merger, evidence of which, satisfactory to Landlord, shall be presented to
Landlord prior to such merger, (ii) Tenant shall provide to Landlord, written
notice of such merger as soon as any such transaction is made public and such
assignment documentation and other information as Landlord may request in
connection therewith, and (iii) all of the other terms and requirements of this
Article shall apply with respect to such assignment.


                      ARTICLE X.  INSURANCE AND INDEMNITY


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

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


          SECTION 10.3.  JOINT INDEMNITY.

          (a)      To the fullest extent permitted by law, but subject to the
express limitations on liability contained in Section 10.5 of this Lease, Tenant
shall defend, indemnify, protect, save and hold harmless Landlord, its agents,
and any and all affiliates of Landlord, including, without limitation, any
corporations or other entities controlling,

                                       15
<PAGE>
 
controlled by or under common control with Landlord, from and against any and
all claims, liabilities, costs or expenses arising either before or after the
Commencement Date from Tenant's use or occupancy of the Premises, the Building
or the Common Areas or from any default in the performance of any obligation on
Tenant's part to be performed under this Lease or from the conduct of its
business, or from any activity, work, or thing done, permitted or suffered by
Tenant or its agents, employees, invitees or licensees in or about the Premises,
or from any negligence or willful misconduct of Tenant or its agents, employees,
visitors, patrons, guests, invitees or licensees. In cases of alleged negligence
asserted by third parties against Landlord which arise out of, are occasioned
by, or in any way attributable to Tenant's, its agents, employees, contractors,
licensees or invitees use and occupancy of the Premises, or from the conduct of
its business or from any activity, work or thing done, permitted or suffered by
Tenant or its agents, employees, invitees or licensees on Tenant's part to be
performed under this Lease, or from any negligence or willful misconduct of
Tenant, its agents, employees, licensees or invitees, Tenant shall accept any
tender of defense for Landlord and shall, notwithstanding any allegation of
negligence or willful misconduct on the part of the Landlord, defend Landlord
and protect and hold Landlord harmless and pay all costs, expenses and
attorneys' fees incurred in connection with such litigation, provided that
Tenant shall not be liable for any such injury or damage, and Landlord shall
reimburse Tenant for the reasonable attorney's fees and costs for the attorney
representing both parties, all to the extent and in the proportion that such
injury or damage is ultimately determined by a court of competent jurisdiction
(or in connection with any negotiated settlement agreed to by Landlord) to be
attributable to the negligence or willful misconduct of Landlord. Upon
Landlord's request, Tenant shall at Tenant's sole cost and expense, retain a
separate attorney reasonably selected by Landlord to represent Landlord in any
such suit if Landlord reasonably determines that the representation of both
Tenant and Landlord by the same attorney would cause a conflict of interest;
provided, however, that to the extent and in the proportion that the injury or
damage which is the subject of the suit is ultimately determined by a court of
competent jurisdiction (or in connection with any negotiated settlement agreed
to by Landlord) to be attributable to the negligence or willful misconduct of
Landlord, Landlord shall reimburse Tenant for the reasonable legal fees and
costs of the separate attorney retained by Tenant. The provisions of this
Subsection 10.3(a) shall expressly survive the expiration or sooner termination
of this Lease.

          (b)      To the fullest extent permitted by law, but subject to the
express limitations on liability contained in this Lease (including, without
limitation, the provisions of Sections 10.4, 10.5 and 14.8 of this Lease),
Landlord shall defend, indemnify, protect, save and hold harmless Tenant, its
agents and any and all affiliates of Tenant, including, without limitation, any
corporations, or other entities controlling, controlled by or under common
control with Tenant, from and against any and all claims, liabilities, costs or
expenses arising either before or after the Commencement Date from the
operation, maintenance or repair of the Common Areas, the Project and/or the
Building by Landlord or its employees or authorized agents. In cases of alleged
negligence asserted by third parties against Tenant which arise out of, are
occasioned by, or in any way attributable to the maintenance or repair of the
Common Areas, the Project or the Building by Landlord or its authorized agents
or employees, Landlord shall accept any tender of defense for Tenant and shall,
notwithstanding any allegation of negligence or willful misconduct on the part
of Tenant, defend Tenant and protect and hold Tenant harmless and pay all cost,
expense and attorneys' fees incurred in connection with such litigation,
provided that Landlord shall not be liable for any such injury or damage, and
Tenant shall reimburse Landlord for the reasonable attorney's fees and costs for
the attorney representing both parties, all to the extent and in the proportion
that such injury or damage is ultimately determined by a court of competent
jurisdiction (or in connection with any negotiated settlement agreed to by
Tenant) to be attributable to the negligence or willful misconduct of Tenant.
Upon Tenant's request, Landlord shall at Landlord's sole cost and expense,
retain a separate attorney reasonably selected by Tenant to represent Tenant in
any such suit if Tenant reasonably determines that the representation of both
Tenant and Landlord by the same attorney would cause conflict of interest;
provided, however, that to the extent and the proportion that the injury or
damage which is the subject of the suit is ultimately determined by a court of
competent jurisdiction (or in connection with any negotiated settlement agreed
to by Tenant) to be attributable to the negligence or willful misconduct or
Tenant, Tenant shall reimburse Landlord for the reasonable legal fees and costs
of the separate attorney retained by Landlord. The provisions of this Subsection
10.3(b) shall expressly survive the expiration or sooner termination of this
Lease .

     SECTION 10.4. LANDLORD'S  NONLIABILITY.  Subject to the express indemnity
obligations contained in Section 10.3(b) of this Lease, Landlord shall not be
liable to Tenant, its employees, agents and invitees, and Tenant hereby waives
all claims against Landlord for loss of or damage to any property or personal
injury, or any other loss, cost, damage, injury or liability whatsoever
resulting from fire, explosion, falling plaster, steam, gas, electricity, water
or rain which may leak or flow from or into any part of the Premises or from the
breakage, leakage, obstruction or other defects of the pipes, sprinklers, wires,
appliances, plumbing, air conditioning, electrical works or other fixtures in
the Building, whether the damage or injury results from conditions arising in
the Premises or in other portions of the Building.  Notwithstanding any
provision of this Lease to the contrary, including, without limitation, the
provisions of Section 10.3(b) of this Lease, Landlord shall in no event be
liable to Tenant, its employees, agents, and invitees, and Tenant hereby waives
all claims against Landlord, for loss or interruption of Tenant's business or
income (including, without limitation, any consequential damages and lost profit
or opportunity costs), or any other loss, cost, damage, injury or liability
resulting from, but not limited to, Acts of God (except with respect to
restoration obligations pursuant to Article XI below), acts of civil
disobedience or insurrection, acts or omissions (criminal or otherwise) of any
third parties (other than Landlord's employees or authorized agents), including
without limitation, any other tenants within the Project or their agents,
employees, contractors, guests or invitees.  It is understood that any such
condition may require the temporary evacuation or closure of all or a portion of
the Building.  Except as provided in Sections 6.1, 11.1 and 12.1 below, there
shall be no abatement of rent and no liability of Landlord by reason of any
injury to or interference with Tenant's business (including without limitation
consequential damages and lost profit or opportunity costs) arising from the
making of any repairs, alterations or improvements to any portion of the
Building, including repairs to the Premises, nor shall any related activity by
Landlord constitute an actual or constructive eviction; provided, however, that
in making repairs, alterations or improvements, Landlord shall interfere as
little as reasonably practicable 

                                       16
<PAGE>
 
with the conduct of Tenant's business in the Premises. Neither Landlord nor its
agents shall be liable for interference with light or other similar intangible
interests. Tenant shall immediately notify Landlord in case of fire or accident
in the Premises, the Building or the Project and of defects in any improvements
or equipment.


     SECTION 10.5. WAIVER OF SUBROGATION.  Landlord and Tenant each hereby
waives all rights of recovery against the other and the other's agents on
account of loss and damage occasioned to the property of such waiving party to
the extent only that such loss or damage is required to be insured against under
any "all risk" property insurance policies required by this Article X; provided
however, that (i) the foregoing waiver shall not apply to the extent of Tenant's
obligations to pay deductibles under any such policies and this Lease, and (ii)
if any loss is due to the act, omission or negligence or willful misconduct of
Tenant or its agents, employees, contractors, guests or invitees, Tenant's
liability insurance shall be primary and shall cover all losses and damages
prior to any other insurance hereunder.  By this waiver it is the intent of the
parties that neither Landlord nor Tenant shall be liable to any insurance
company (by way of subrogation or otherwise) insuring the other party for any
loss or damage insured against under any "all-risk" property insurance policies
required by this Article, even though such loss or damage might be occasioned by
the negligence of such party, its agents, employees, contractors, guests or
invitees.  The provisions of this Section shall not limit the indemnification
provisions elsewhere contained in this Lease.


                      ARTICLE XI.  DAMAGE OR DESTRUCTION


     SECTION 11.1. RESTORATION.

          (a)      If the Building is damaged, Landlord shall repair that damage
as soon as reasonably possible, at its expense, unless: (i) Landlord reasonably
determines that the cost of repair is not covered by Landlord's fire and
extended coverage insurance plus such additional amounts Tenant elects, at its
option, to contribute, excluding however the deductible (for which Tenant shall
be responsible for Tenant's proportionate share); (ii) Landlord reasonably
determines that the Premises cannot, with reasonable diligence, be fully
repaired by Landlord (or cannot be safely repaired because of the presence of
hazardous factors, including without limitation Hazardous Materials, earthquake
faults, and other similar dangers) within two hundred seventy (270) days after
the date of the damage; (iii) an event of default by Tenant has occurred and is
continuing at the time of such damage; or (iv) the damage occurs during the
final twelve (12) months of the Term unless Tenant has given a timely Commitment
Notice under Section 3.3. of this Lease. Should Landlord elect not to repair the
damage for one of the preceding reasons, Landlord shall so notify Tenant in
writing within sixty (60) days after the damage occurs and this Lease shall
terminate as of the date of that notice.

          (b)      Unless Landlord elects to terminate this Lease in accordance
with subsection (a) above, this Lease shall continue in effect for the remainder
of the Term; provided that so long as Tenant is not in default under this Lease,
if the damage is so extensive that Landlord reasonably determines that the
Premises cannot, with reasonable diligence, be repaired by Landlord (or cannot
be safely repaired because of the presence of hazardous factors, earthquake
faults, and other similar dangers) so as to allow Tenant's substantial use and
enjoyment of the Premises within two hundred seventy (270) days after the date
of damage, then Tenant may elect to terminate this Lease by written notice to
Landlord within the sixty (60) day period stated in subsection (a).

          (c)      Commencing on the date of any damage to the Building, and
ending on the sooner of the date the damage is repaired or the date this Lease
is terminated, the rental to be paid under this Lease shall be abated in the
same proportion that the floor area of the Building that is rendered unusable by
the damage from time to time bears to the total floor area of the Building, but
only to the extent that any business interruption insurance proceeds are
received by Landlord therefor from Tenant's insurance described in Exhibit D.
                                                                   ----------  
Notwithstanding the foregoing, Tenant shall not be required to remain in any
portion of the Premises in which it cannot reasonably conduct its business
during any such repair.

          (d)      Notwithstanding the provisions of subsections (a), (b) and
(c) of this Section, and subject to the provisions of Section 10.5 above, the
cost of any repairs shall be borne by Tenant, and Tenant shall not be entitled
to rental abatement or termination rights, if the damage is due to the fault or
neglect of Tenant or its employees, subtenants, invitees or representatives. In
addition, the provisions of this Section shall not be deemed to require Landlord
to repair any improvements or fixtures that Tenant is obligated to repair or
insure pursuant to any other provision of this Lease.

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

                                       17
<PAGE>
 
     SECTION 11.2. LEASE GOVERNS. Tenant agrees that the provisions of this
Lease, including without limitation Section 11.1, shall govern any damage or
destruction and shall accordingly supersede any contrary statute or rule of law.


                         ARTICLE XII.  EMINENT DOMAIN


     SECTION 12.1. TOTAL OR PARTIAL TAKING.  If all or a material portion of
the Premises is taken by any lawful authority by exercise of the right of
eminent domain, or sold to prevent a taking, either Tenant or Landlord may
terminate this Lease effective as of the date possession is required to be
surrendered to the authority.  In the event title to a portion of the Premises
is taken or sold in lieu of taking, and if Landlord elects to restore the
Premises in such a way as to alter the Premises materially, either party may
terminate this Lease, by written notice to the other party, effective on the
date of vesting of title.  In the event neither party has elected to terminate
this Lease as provided above, then Landlord shall promptly, after receipt of a
sufficient condemnation award, proceed to restore the Premises to substantially
their condition prior to the taking, and a proportionate allowance shall be made
to Tenant for the rent corresponding to the time during which, and to the part
of the Premises of which, Tenant is deprived on account of the taking and
restoration.  Notwithstanding the foregoing, Tenant shall not be required to
remain in any portion of the Premises in which it cannot reasonably conduct its
business during such taking and/or restoration.  In the event of a taking,
Landlord shall be entitled to the entire amount of the condemnation award
without deduction for any estate or interest of Tenant; provided that nothing in
this Section shall be deemed to give Landlord any interest in, or prevent Tenant
from seeking any award against the taking authority for, the taking of personal
property and fixtures belonging to Tenant or for relocation or business
interruption expenses recoverable from the taking authority.

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

     SECTION 12.3. TAKING OF PARKING AREA. In the event there shall be a
taking of the parking area such that Landlord can no longer provide sufficient
parking to comply with this Lease, Landlord may substitute reasonably equivalent
parking in a location reasonably close to the Building; provided that if
Landlord fails to make that substitution within sixty (60) days following the
taking and if the taking materially impairs Tenant's use and enjoyment of the
Premises, Tenant may, at its option, terminate this Lease by written notice to
Landlord.  If this Lease is not so terminated by Tenant, there shall be no
abatement of rent and this Lease shall continue in effect.


         ARTICLE XIII.  SUBORDINATION; ESTOPPELCERTIFICATE; FINANCIALS


     SECTION 13.1. SUBORDINATION. At the option of Landlord, this Lease shall
be either superior or subordinate to all ground or underlying leases, mortgages
and deeds of trust, if any, which may hereafter affect the Premises, and to all
renewals, modifications, consolidations, replacements and extensions thereof;
provided, that so long as Tenant is not in default under this Lease, this Lease
shall not be terminated or Tenant's quiet enjoyment of the Premises disturbed in
the event of termination of any such ground or underlying lease, or the
foreclosure of any such mortgage or deed of trust, to which Tenant has
subordinated this Lease pursuant to this Section.  In the event of a termination
or foreclosure, Tenant shall become a tenant of and attorn to the successor-in-
interest to Landlord upon the same terms and conditions as are contained in this
Lease, and shall execute any instrument reasonably required by Landlord's
successor for that purpose.  Tenant shall also, upon written request of
Landlord, execute and deliver all instruments as may be required from time to
time to subordinate the rights of Tenant under this Lease to any ground or
underlying lease or to the lien of any mortgage or deed of trust (provided that
such instruments include the nondisturbance and attornment provisions set forth
above), or, if requested by Landlord, to subordinate, in whole or in part, any
ground or underlying lease or the lien of any mortgage or deed of trust to this
Lease.

     SECTION 13.2. ESTOPPEL CERTIFICATE.

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

          (b)      Notwithstanding any other rights and remedies of Landlord,
Tenant's failure to deliver any estoppel statement within the provided time
shall be conclusive upon Tenant that (i) this Lease is in full force and effect,
without modification except as may be represented by Landlord, (ii) there are no
uncured defaults in Landlord's performance, and (iii) not more than one month's
rental has been paid in advance.

                                       18
<PAGE>
 
     SECTION 13.3  FINANCIALS.

          (a) Tenant shall deliver to Landlord, prior to the execution of this
Lease and thereafter at any time upon Landlord's request but not more often than
once in any calendar year, Tenant's current annual audited financial statements,
certified true, accurate and complete by the chief financial officer of Tenant,
including a balance sheet and profit and loss statement for the most recent
prior year (collectively, the "Statements"), which Statements shall accurately
and completely reflect the financial condition of Tenant.  Landlord agrees that
it will keep the Statements confidential, except that Landlord shall have the
right to deliver the same to any proposed purchaser or encumbrancer of the
Premises.

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


                      ARTICLE XIV.  DEFAULTS AND REMEDIES


     SECTION 14.1.  TENANT'S DEFAULTS.  In addition to any other event of
default set forth in this Lease, the occurrence of any one or more of the
following events shall constitute a default by Tenant:

          (a) The failure by Tenant to make any payment of rent or additional
rent required to be made by Tenant, as and when due, where the failure continues
for a period of five (5) days after written notice from Landlord to Tenant;
provided, however, that any such notice shall be in lieu of, and not in addition
to, any notice required under California Code of Civil Procedure Section 1161
and 1161(a) as amended.  For purposes of these default and remedies provisions,
the term "additional rent" shall be deemed to include all amounts of any type
whatsoever other than Basic Rent to be paid by Tenant pursuant to the terms of
this Lease.

          (b) Except as specifically set forth in Section 9.4, any assignment,
sublease, encumbrance or other transfer of the Lease by Tenant, either
voluntarily or by operation of law, whether by judgment, execution, transfer by
intestacy or testacy, or other means, without the prior written consent of
Landlord.

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

          (d) The failure of Tenant to timely and fully provide any
subordination agreement, estoppel certificate or financial statements in
accordance with the requirements of Article XIII.

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

          (f) (i) The making by Tenant of any general assignment for the benefit
of creditors; (ii) the filing by or against Tenant of a petition to have Tenant
adjudged a Chapter 7 debtor under the Bankruptcy Code or to have debts
discharged or a petition for reorganization or arrangement under any law
relating to bankruptcy (unless, in the case of a petition filed against Tenant,
the same is dismissed within sixty (60) days); (iii) the appointment of a
trustee or receiver to take possession of substantially all of Tenant's assets
located at the Premises or of Tenant's interest in this Lease, if possession is
not restored to Tenant within sixty (60) days; (iv) the attachment, execution or
other judicial seizure of substantially all of Tenant's assets located at the
Premises or of Tenant's interest in this Lease, where the seizure is not
discharged within sixty (60) days; or (v) Tenant's convening of a meeting of its
creditors for the purpose of effecting a moratorium upon or composition of its
debts.  Landlord shall not be deemed to have knowledge of any event described in
this subsection unless notification in writing is received by Landlord, nor
shall there be any presumption attributable to Landlord of Tenant's insolvency.
In the event that any provision of this subsection is contrary to applicable
law, the provision shall be of no force or effect.

     SECTION 14.2.  LANDLORD'S REMEDIES.

          (a) In the event of any default by Tenant, or in the event of the
abandonment of the Premises by Tenant, then in addition to any other remedies
available to Landlord, Landlord may exercise the following remedies:

              (i) Landlord may terminate Tenant's right to possession of the
Premises by any lawful means, in which case this Lease shall terminate and
Tenant shall immediately surrender possession of the Premises to 


                                      19
<PAGE>
 
Landlord. Such termination shall not affect any accrued obligations of Tenant
under this Lease. Upon termination, Landlord shall have the right to reenter the
Premises and remove all persons and property. Landlord shall also be entitled to
recover from Tenant:

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

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

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

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

                    (5) At Landlord's election, all other amounts in addition to
or in lieu of the foregoing as may be permitted by law. The term "rent" as used
in this Lease shall be deemed to mean the Basic Rent and all other sums required
to be paid by Tenant to Landlord pursuant to the terms of this Lease. Any sum,
other than Basic Rent, shall be computed on the basis of the average monthly
amount accruing during the twenty-four (24) month period immediately prior to
default, except that if it becomes necessary to compute such rental before the
twenty-four (24) month period has occurred, then the computation shall be on the
basis of the average monthly amount during the shorter period. As used in
subparagraphs (1) and (2) above, the "worth at the time of award" shall be
computed by allowing interest at the rate of ten percent (10%) per annum. As
used in subparagraph (3) above, the "worth at the time of award" shall be
computed by discounting the amount at the discount rate of the Federal Reserve
Bank of San Francisco at the time of award plus one percent (1%).

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

          (b) The various rights and remedies reserved to Landlord in this Lease
or otherwise shall be cumulative and, except as otherwise provided by California
law, Landlord may pursue any or all of its rights and remedies at the same time.

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

     SECTION 14.3.  LATE PAYMENTS.

          (a) Any rent due under this Lease that is not received by Landlord
within five (5) days of the date when due shall bear interest at the lesser of
twelve percent (12%) per annum or the maximum rate permitted by law until fully
paid.  The payment of interest shall not cure any default by Tenant under this
Lease.  In addition, Tenant acknowledges that the late payment by Tenant to
Landlord of rent will cause Landlord to incur costs not contemplated 

                                      20
<PAGE>
 
by this Lease, the exact amount of which will be extremely difficult and
impracticable to ascertain. Those costs may include, but are not limited to,
administrative, processing and accounting charges, and late charges which may be
imposed on Landlord by the terms of any ground lease, mortgage or trust deed
covering the Premises. Accordingly, if any rent due from Tenant shall not be
received by Landlord or Landlord's designee within five (5) days after the date
due, then Tenant shall pay to Landlord, in addition to the interest provided
above, a late charge in a sum equal to the greater of five percent (5%) of the
amount overdue or Two Hundred Fifty Dollars ($250.00) for each delinquent
payment; provided, however, that such late charge shall be waived on the first
two (2) occasions only during the Term when rent is not paid within five (5)
days after the date due provided Tenant makes such payment within five (5) days
after written notice from Landlord. Acceptance of a late charge by Landlord
shall not constitute a waiver of Tenant's default with respect to the overdue
amount, nor shall it prevent Landlord from exercising any of its other rights
and remedies.

          (b) Following each second consecutive installment of rent that is not
paid within five (5) days following written notice of nonpayment from Landlord,
Landlord shall have the option to require that Tenant increase the amount, if
any, of the Security Deposit by one hundred percent (100%).  Should Tenant
deliver to Landlord, at any time during the Term, two (2) or more insufficient
checks, the Landlord may require that all monies then and thereafter due from
Tenant be paid to Landlord by cashier's check.

     SECTION 14.4.  RIGHT OF LANDLORD TO PERFORM.  All covenants and agreements
to be performed by Tenant under this Lease shall be performed at Tenant's sole
cost and expense and without any abatement of rent or right of set-off.  If
Tenant fails to pay any sum of money, other than rent, or fails to perform any
other act on its part to be performed under this Lease, and the failure
continues beyond any applicable grace period set forth in Section 14.1, then in
addition to any other available remedies, Landlord may, at its election make the
payment or perform the other act on Tenant's part.  Landlord's election to make
the payment or perform the act on Tenant's part shall not give rise to any
responsibility of Landlord to continue making the same or similar payments or
performing the same or similar acts.  Tenant shall, promptly upon demand by
Landlord, reimburse Landlord for all sums paid by Landlord and all necessary
incidental costs, together with interest at the lesser of twelve percent (12%)
or the maximum rate permitted by law from the date of the payment by Landlord.
Landlord shall have the same rights and remedies if Tenant fails to pay those
amounts as Landlord would have in the event of a default by Tenant in the
payment of rent.

     SECTION 14.5.  DEFAULT BY LANDLORD.  Landlord shall not be deemed to be in
default in the performance of any obligation under this Lease unless and until
it has failed to perform the obligation within thirty (30) days after written
notice by Tenant to Landlord specifying in reasonable detail the nature and
extent of the failure; provided, however, that if the nature of Landlord's
obligation is such that more than thirty (30) days are required for its
performance, then Landlord shall not be deemed to be in default if it commences
performance within the thirty (30) day period and thereafter diligently pursues
the cure to completion.

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

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

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


                           ARTICLE XV.  END OF TERM

                                      21
<PAGE>
 
     SECTION 15.1.  HOLDING OVER.  This Lease shall terminate without further
notice upon the expiration of the Term, and any holding over by Tenant after the
expiration shall not constitute a renewal or extension of this Lease, or give
Tenant any rights under this Lease, except when in writing signed by both
parties.  If Tenant holds over for any period after the expiration (or earlier
termination) of the Term without the prior written consent of Landlord, such
possession shall constitute a tenancy at sufferance only; such holding over with
the prior written consent of Landlord shall constitute a month-to-month tenancy
commencing on the first (1st) day following the termination of this Lease.    In
either of such events, possession shall be subject to all of the terms of this
Lease, except that the monthly Basic Rent shall be one hundred seventy-five
percent (175%) of the Basic Rent for the month immediately preceding the date of
termination for the initial two (2) months of holdover by Tenant and for the
third (3rd) month and each month Tenant holds over thereafter, two hundred
percent (200%) of the Basic Rent for the month immediately preceding the date of
termination.   If Tenant fails to surrender the Premises upon the expiration of
this Lease despite demand to do so by Landlord, Tenant shall indemnify and hold
Landlord harmless from all loss or liability, including without limitation, any
claims made by any succeeding tenant relating to such failure to surrender.
Acceptance by Landlord of rent after the termination shall not constitute a
consent to a holdover or result in a renewal of this Lease.  The foregoing
provisions of this Section are in addition to and do not affect Landlord's right
of re-entry or any other rights of Landlord under this Lease or at law.

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

     SECTION 15.3.  SURRENDER OF PREMISES; REMOVAL OF PROPERTY.  Upon the
Expiration Date or upon any earlier termination of this Lease, Tenant shall quit
and surrender possession of the Premises to Landlord in as good order, condition
and repair as when received or as hereafter may be improved by Landlord or
Tenant, reasonable wear and tear and repairs which are Landlord's obligation
excepted, and shall, without expense to Landlord, remove or cause to be removed
from the Premises all personal property and debris, except for any items that
Landlord may by written authorization allow to remain.  Tenant shall repair all
damage to the Premises resulting from the removal, which repair shall include
the patching and filling of holes and repair of structural damage, provided that
Landlord may instead elect to repair any structural damage at Tenant's expense.
If Tenant shall fail to comply with the provisions of this Section, Landlord may
effect the removal and/or make any repairs, and the cost to Landlord shall be
additional rent payable by Tenant upon demand.  If Tenant fails to remove
Tenant's personal property from the Premises upon the expiration of the Term,
Landlord may remove, store, dispose of and/or retain such personal property, at
Landlord's option, in accordance with then applicable laws, all at the expense
of Tenant.  If requested by Landlord, Tenant shall execute, acknowledge and
deliver to Landlord an instrument in writing releasing and quitclaiming to
Landlord all right, title and interest of Tenant in the Premises.


                      ARTICLE XVI.  PAYMENTS AND NOTICES

     All sums payable by Tenant to Landlord shall be paid, without deduction or
offset, in lawful money of the United States to Landlord at its address set
forth in Item 12 of the Basic Lease Provisions, or at any other place as
Landlord may designate in writing.  Unless this Lease expressly provides
otherwise, as for example in the payment of rent pursuant to Section 4.1, all
payments shall be due and payable within five (5) days after demand.  All
payments requiring proration shall be prorated on the basis of a thirty (30) day
month and a three hundred sixty (360) day year.  Any notice, election, demand,
consent, approval or other communication to be given or other document to be
delivered by either party to the other may be delivered in person or by courier
or overnight delivery service to the other party, or may be deposited in the
United States mail, duly registered or certified, postage prepaid, return
receipt requested, and addressed to the other party at the address set forth in
Item 12 of the Basic Lease Provisions, or if to Tenant, at that address or, from
and after the Commencement Date, at the Premises, or may be delivered by
telegram, telex or telecopy, provided that receipt thereof is telephonically
confirmed.  Either party may, by written notice to the other, served in the
manner provided in this Article, designate a different address.  If any notice
or other document is sent by mail, it shall be deemed served or delivered
seventy-two (72)  hours after mailing.  If more than one person or entity is
named as Tenant under this Lease, service of any notice upon any one of them
shall be deemed as service upon all of them.

                     ARTICLE XVII.  RULES AND REGULATIONS

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

                                      22
<PAGE>
 
                      ARTICLE XVIII.  BROKER'S COMMISSION

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


                 ARTICLE XIX.  TRANSFER OF LANDLORD'S INTEREST


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


                          ARTICLE XX.  INTERPRETATION


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

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

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

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

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

     SECTION 20.6.  CONTROLLING LAW.  This Lease shall be governed by and
interpreted in accordance with the laws of the State of California.

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

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

                                      23
<PAGE>
 
and remedies of Landlord under this Lease shall be cumulative and in addition to
any and all other rights and remedies which Landlord may have.

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

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

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

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


                     ARTICLE XXI.  EXECUTION AND RECORDING


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

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

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

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

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

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

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

                                      24
<PAGE>
 
                         ARTICLE XXII.  MISCELLANEOUS


     SECTION 22.1.  NONDISCLOSURE OF LEASE TERMS.  Tenant acknowledges and
agrees that the terms of this Lease are confidential and constitute proprietary
information of Landlord.  Disclosure of the terms could adversely affect the
ability of Landlord to negotiate other leases and impair Landlord's relationship
with other tenants.  Accordingly, Tenant agrees that it, and its partners,
officers, directors, employees and attorneys, shall not intentionally and
voluntarily disclose the terms and conditions of this Lease to any other tenant
or apparent prospective tenant of the Project, either directly or indirectly,
without the prior written consent of Landlord, provided, however, that Tenant
may disclose the terms to prospective subtenants or assignees under this Lease.
The provisions of this Section  are not intended to prevent Tenant from
disclosing the existence or terms of this Lease as may be required of a public
company in its filings with regulatory agencies.

     SECTION 22.2.  GUARANTY.  As a condition to the execution of this Lease by
Landlord, the obligations, covenants and performance of the Tenant as herein
provided shall be guaranteed in writing by the Guarantor(s) listed in Item 7 of
the Basic Lease Provisions, if any, on a form of guaranty provided by Landlord.

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

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

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

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

     SECTION 22.7.  JAMS.

          (a) All claims or disputes between Landlord and Tenant arising out of,
or relating to, the Lease which either party is expressly authorized by a
provision hereof to submit to arbitration, shall be decided by the
JAMS/ENDISPUTE, or its successor, in Orange County, California ("JAMS"), unless
the parties mutually agree otherwise.  Within ten (10) business days following
submission to JAMS, JAMS shall designate three arbitrators and each party may,
within five (5) business days thereafter, veto one of the three persons so
designated.  If two different designated arbitrators have been vetoed, the third
arbitrator shall hear and decide the matter.  Any arbitration pursuant to this
SECTION 22.7 shall be decided within thirty (30) days of submission to JAMS.
The decision of the arbitrator shall be final and binding on the parties.  All
costs associated with arbitration shall be awarded to the prevailing party as
determined by the arbitrator.

          (b) Notice of the demand for arbitration by either party to the Lease
shall be filed in writing with the other party to the Lease and with JAMS and
shall be made within a reasonable time after the dispute has arisen.  The award
rendered by the arbitrators shall be final, and judgment may be entered upon it
in accordance with applicable law in any court having jurisdiction thereof.  If
either party in good faith decides to join one or more third parties in an
arbitration being conducted pursuant to this Section because such party's
presence is necessary if complete relief is to be accorded in the arbitration
and such persons or entities do not agree to be joined and bound thereby, there
shall be no obligation for Landlord and Tenant to submit the dispute to
arbitration as contemplated by this Section.

                                      25
<PAGE>
 
     (c) The agreement herein among the parties to the Lease and any other
written agreement to arbitrate referred to herein shall be specifically
enforceable under prevailing law.


LANDLORD:                           TENANT:

THE IRVINE COMPANY,                 INFORMATION MANAGEMENT
a Delaware corporation              ASSOCIATES, INC.,
                                    a Connecticut corporation


By: /s/ Richard G. Sim              By: /s/ Gary R. Mortino
    --------------------------          --------------------------
    Richard G. Sim,                 Name: Gary R. Mortino
    Executive Vice President        Title: Chief Financial Officer
                                    
By: /s/ Clarence W. Barker          By:
    --------------------------          --------------------------  
    Clarence W. Barker,             Name:
    President, Irvine Industrial    Title:
    Company, a division of The 
    Irvine Company

                                      26
<PAGE>
 
                           INDEX TO INDUSTRIAL LEASE
                             (Single Tenant; Net)
 
ARTICLE I.     BASIC LEASE PROVISIONS

ARTICLE II.    PREMISES
Section 2.1    Leased Premises
Section 2.2    Acceptance of Premises
Section 2.3    Building Name and Address
Section 2.4    Landlord's Responsibilities

ARTICLE III.   TERM
Section 3.1    General
Section 3.2    Delay in Possession

ARTICLE IV.    RENT AND OPERATING EXPENSES
Section 4.1    Basic Rent
Section 4.2    Operating Expenses
Section 4.3    Security Deposit

ARTICLE V.     USES
Section 5.1    Use
Section 5.2    Signs
Section 5.3    Hazardous Materials

ARTICLE VI.    COMMON AREAS; SERVICES
Section 6.1    Utilities and Services
Section 6.2    Operation and Maintenance of Common Areas
Section 6.3    Use of Common Areas
Section 6.4    Parking
Section 6.5    Changes and Additions by Landlord

ARTICLE VII.   MAINTAINING THE PREMISES
Section 7.1    Tenant's Maintenance and Repair
Section 7.2    Landlord's Maintenance and Repair
Section 7.3    Alterations
Section 7.4    Mechanic's Liens
Section 7.5    Entry and Inspection

ARTICLE VIII.  TAXES AND ASSESSMENTS ON TENANT'S PROPERTY

ARTICLE IX.    ASSIGNMENT AND SUBLETTING
Section 9.1    Rights of Parties
Section 9.2    Effect of Transfer
Section 9.3    Sublease Requirements
Section 9.4    Certain Transfers

ARTICLE X.     INSURANCE AND INDEMNITY
Section 10.1   Tenant's Insurance
Section 10.2   Landlord's Insurance
Section 10.3   Joint Indemnity
Section 10.4   Landlord's Nonliability
Section 10.5   Waiver of Subrogation 

ARTICLE XI.    DAMAGE OR DESTRUCTION
Section 11.1   Restoration
Section 11.2   Lease Governs

ARTICLE XII.   EMINENT DOMAIN
Section 12.1   Total or Partial Taking
Section 12.2   Temporary Taking
Section 12.3   Taking of Parking Area

ARTICLE XIII.  SUBORDINATION; ESTOPPEL CERTIFICATE; FINANCIAL
Section 13.1   Subordination
Section 13.2   Estoppel Certificate
Section 13.3   Financials


                              (i)
<PAGE>
 
ARTICLE XIV.   DEFAULTS AND REMEDIES
Section 14.1   Tenant's Defaults
Section 14.2   Landlord's Remedies
Section 14.3   Late Payments
Section 14.4   Right of Landlord to Perform
Section 14.5   Default by Landlord
Section 14.6   Expenses and Legal Fees
Section 14.7   Waiver of Jury Trial
Section 14.8   Satisfaction of Judgment
Section 14.9   Limitation of Actions Against Landlord

ARTICLE XV.    END OF TERM
Section 15.1   Holding Over
Section 15.2   Merger on Termination
Section 15.3   Surrender of Premises; Removal of Property

ARTICLE XVI.   PAYMENTS AND NOTICES

ARTICLE XVII.  RULES AND REGULATIONS

ARTICLE XVIII. BROKER'S COMMISSION

ARTICLE XIX.   TRANSFER OF LANDLORD'S INTEREST

ARTICLE XX.    INTERPRETATION
Section 20.1   Gender and Number
Section 20.2   Headings
Section 20.3   Joint and Several Liability
Section 20.4   Successors
Section 20.5   Time of Essence
Section 20.6   Controlling Law
Section 20.7   Severability
Section 20.8   Waiver and Cumulative Remedies
Section 20.9   Inability to Perform
Section 20.10  Entire Agreement
Section 20.11  Quiet Enjoyment
Section 20.12  Survival

ARTICLE XXI.   EXECUTION AND RECORDING
Section 21.1   Counterparts
Section 21.2   Corporate and Partnership Authority
Section 21.3   Execution of Lease; No Option or Offer
Section 21.4   Recording
Section 21.5   Amendments
Section 21.6   Executed Copy
Section 21.7   Attachments

ARTICLE XXII.  MISCELLANEOUS
Section 22.1   Nondisclosure of Lease Terms
Section 22.2   Guaranty
Section 22.3   Changes Requested by Lender
Section 22.4   Mortgagee Protection
Section 22.5   Covenants and Conditions
Section 22.6   Security Measures

EXHIBITS
Exhibit A      Description of the Premises
Exhibit B      Environmental Questionnaire
Exhibit C      Landlord's Disclosures
Exhibit D      Insurance Requirements
Exhibit E      Rules and Regulations
Exhibit X      Work Letter
Exhibit Y      Project Site Plan


                                     (ii)