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                                                                   EXHIBIT 10.16

              POINT RICHMOND R&D ASSOCIATES INDUSTRIAL GROSS LEASE



This Lease is made and entered into as of April 1, 1996, between Point Richmond
R&D Associates, a California General Partnership ("Landlord") and PIXAR, a
California Corporation ("Tenant").

         1. DEFINITIONS. Words not defined in this paragraph or elsewhere in
this Lease have their customary meanings. 1) The "Initial Term" is three years;
2) "Commencement Date" is May 1, 1996, the first day of the Initial Term; 3)
"Base Monthly Rent" means, subject to adjustment, $40,081.45 per month ($1.55
per square foot, Industrial Gross), payable in advance, without deduction,
offset, prior notice or demand, on the first day of each Month of the Term; 4)
"Premises" means the part of the Building leased to Tenant for exclusive use,
consisting of approximately 25,859 square feet, commonly known as 1001 West
Cutting Boulevard, Richmond, California 94801, as delineated on Exhibit A); 5)
"Building" means the structure in which the Premises are located; 6) "Property"
includes the Building and land on which it stands; 7) "Agents" includes
employees, agents, guests, invitees and, when applied to Tenant, subtenants and
assignees; 8) "Day" and "Month" mean calendar day/month; 9) "Lease Year" means
consecutive 12-month periods starting on the Commencement Date; 10) "Common
Area" means parts of the Building not for exclusive use by tenants including
halls, lobby, elevators, rest rooms, roof, exterior walls and structural
components; 11) "Tax" means any form of assessment, license, fee, rent, tax,
levy, penalty or tax imposed by any authority having direct or indirect taxing
powers (including Improvement Districts) against Landlord's interest in the
Property or personal property used in the operation of the Property and/or
Landlord's business of renting the Property; 12) "Alteration" includes
additions, deletions, modifications and changes including utility installations
such as ducting, power panels, fluorescent fixtures, base heaters, conduit and
wiring; 13) "Operating Expenses" are all expenses for maintenance, servicing,
management and repair of the Property and the Premises inclusive of Taxes and
insurance premiums; 14) "Base Year" is the calendar year in which Tenant
executes this Lease; 15) Tenant's "Pro Rata Share" is the total cost of an item
multiplied by 35.61% [Landlord may, however, adjust Tenant's Pro Rata Share of
specific Operating Expenses if Landlord reasonably determines that Tenant's
usage warrants such adjustment]; 16) The "floor area of the Premises" is
measured from the exterior surface of exterior walls and from the center of
walls separating the Premises from adjacent premises or common areas; 17) The
"floor area of the Building" is measured from the exterior surface of exterior
walls including common and core areas; 18) "consent" and "approval" require
reasonable conduct by the consenting/approving party; 19) "Regulation" includes
all laws, statutes, regulations and requirements adopted by duly constituted
public authorities now in force or hereafter adopted; 20) "Condemnation"
includes taking by exercise of governmental power or the sale or transfer to any
condemnor under threat of or during the pendency of proceedings for
condemnation.

         2. PREMISES. Landlord hereby leases to Tenant and Tenant shall have
exclusive use of the Premises for the Initial Term.

         3. DELAY IN POSSESSION. If Landlord cannot deliver possession of the
Premises to Tenant on the Commencement Date, such failure shall not affect the
validity of this Lease, extend its Term, or render Landlord liable for any
resulting damage, but Tenant shall not be obligated to pay rent until Landlord
tenders possession. If Landlord cannot deliver possession within 150 Days of the
Commencement Date, Tenant may terminate this Lease on written notice to
Landlord. In such event, Tenant shall have no further recourse against Landlord
respecting the Lease.

                  3.1. OPTION TO EXTEND TERM. Tenant will have (1) option to
renew lease, with expiration of extension to be co-terminus with base lease.
Tenant shall notify Landlord 180 days prior to end of lease with intention to
pursue option.

         4. RENT. Tenant shall pay all rent due Landlord in United States
dollars at the address set forth below or such other place as Landlord
designates in writing. If Alterations increase the floor area of the Premises,
Base Monthly Rent will increase proportionately. If the obligation to pay rent
commences other than on the first day of a Month, the first payment shall
also include rent from the date the obligation commences to the first day of
the following month calculated per diem.

                  4.1. BASE MONTHLY RENT ADJUSTMENT. The Base Monthly Rent shall
be fixed at $40,081.45 for the entire Initial Term.
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                  4.2. ADDITIONAL RENT. Tenant shall pay to Landlord with Base
Monthly Rent as additional rent Tenant's Pro Rata Share of Operating Expenses.
Such payments shall be made in the amounts set forth in this Lease as reasonably
adjusted by Landlord from time to time. Tenant shall also pay Landlord, as
additional rent, forthwith on demand, Tenant's Pro Rata Share of the amount by
which Taxes and insurance premiums paid by Landlord with respect to the Property
for any calendar year during the Term exceed the amounts paid for such items
during the Base Year.

                  4.3. SECURITY DEPOSIT/CLEANING CHARGE. Concurrent with its
execution of this Lease, Tenant shall give Landlord as a security deposit the
sum of $40,081.45 (the "Deposit") and a cleaning charge in the amount of $ N/A
("Cleaning Charge"). Landlord shall hold the Deposit as security for Tenant's
faithful performance of all its obligations under this Lease and may, at its
option, apply the Deposit to remedy defaults in the payment of any charge
hereunder, to repair damages to the Property caused by Tenant, or to clean the
Premises at the end of this Lease. If any portion of the Deposit is so applied,
Tenant shall, within 10 Days after written demand therefor, deliver to Landlord
funds sufficient to restore the Deposit to its original amount. Landlord shall
not be required to keep the Deposit separate from its general funds. Tenant
shall earn no interest on the Deposit. If Tenant fully performs under this
Lease, Landlord shall return any unused portion of the Deposit to the last
holder of Tenant's interest in this Lease upon Tenant's surrender of the
Premises. On any transfer of Landlord's interest in the Lease, the Deposit will
be transferred to Landlord's successor, and Landlord released from liability for
the Deposit. The Cleaning Charge is not refundable and Landlord has no
obligation to account for it.

                  4.4. LATE CHARGES. Late payment of any sums due hereunder will
cause Landlord to incur costs not contemplated by this Lease, including, without
limit, accounting charges and late charges which may be imposed on Landlord by
the terms of loans secured by the Property. If Tenant fails to deliver to
Landlord any monies due hereunder within 10 Days of the due date, Tenant shall
pay to Landlord a late charge of 10% of the overdue amount which is agreed to be
a reasonable estimate of the costs Landlord will incur by reason of the late
payment, the exact amount of which will be difficult to determine. Acceptance of
a late charge shall not constitute a waiver of the default or preclude
Landlord's exercise of other rights and remedies.

         5. TAXES. Landlord shall pay all Taxes assessed against Landlord's
interest in the Property and personal property used in its operation. Tenant
shall pay all Taxes assessed on Tenant's fixtures, improvements, furnishings,
merchandise, equipment and personal property in and on the Premises. If Tenant
fails to timely pay Taxes, Landlord may (but is not obligated to) pay the same
at any time thereafter. On demand, Tenant shall repay Landlord amounts so paid
with interest at the highest rate allowable by law.

         6. INSURANCE.

                  6.1. LANDLORD'S INSURANCE. Landlord shall insure the Property
for up to 100% of its replacement value against loss or damage by those risks
normally included by the insurance industry in the term "All Risk"; any recovery
from such insurance shall belong to Landlord. Landlord shall maintain
comprehensive general liability insurance insuring Landlord (and others named by
Landlord, but not Tenant) against liability for bodily injury, death and
property damage on or about the Property, with combined single limit coverage of
at least $2 million.

                  6.2. TENANT'S INSURANCE. Tenant, at its sole expense, shall
maintain: a) All Risk coverage insurance on all fixtures, improvements,
furnishings, merchandise, equipment and personal property in the Premises; and
b) for the benefit of Tenant, commercial general liability and property damage
insurance against claims for bodily injury, death or property damage occurring
in or about, and/or arising from Tenant's use of, the Premises, with combined
single limit coverage of at least $2,000,000 (such insurance shall include,
without limit, products liability, coverage for liability arising from
consumption of any food or beverages sold from the premises (including coverage
for liability from consumption or sale of alcoholic beverages). Such insurance
coverage shall not limit Tenant's liability. Tenant shall furnish to Landlord
prior to the Commencement Date, and at least 30 Days prior to the expiration
date of any policy, certificates indicating that the insurance required of
Tenant is in full force and effect, that Landlord has been named as an
additional insured on the liability policy, and that no such policy will be
canceled unless 30 Days' prior written notice has been given to Landlord. Each
liability policy shall include a broad form liability endorsement and provide
that Landlord as an additional insured may recover for any loss it suffers by
reason of acts/omissions of Tenant and its Agents. Except as Landlord may


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approve in writing before issuance of such policy, all policies which Tenant
shall obtain hereunder shall be issued by companies with "AAA" rating by either
Moody's Rating Service or Standard & Poor's Rating Service and general policy
rating of at least A in Best Insurance Guide's then most current issue. Policies
obtained by Tenant pursuant to this Lease shall be subject to Landlord's
approval.

                  6.3. WAIVER OF SUBROGATION. Notwithstanding anything to the
contrary herein, the parties hereby release each other and their respective
officers, agents, employees and servants, from all claims for damages, loss,
expense or injury to the Premises, and/or to the furnishings and fixtures and
equipment or inventory or other property of either Landlord or Tenant in, about
or upon the Premises, which is caused by or results from perils, events or
happenings which are covered by insurance in force at the time of any such loss
or by insurance required to be carried hereunder; provided, however, that such
waiver shall be effective only to the extent permitted by the said insurance and
to the extent such insurance coverage is not prejudiced thereby. Each party
shall cause each insurance policy obtained by it to provide that the insurance
company waives all right of recovery by way of subrogation in connection with
any damage covered by such policy.

                  6.4. LANDLORD INDEMNIFICATION. Tenant will indemnify and save
Landlord harmless from and against any and all claims, actions, damages,
liability and expense relating to loss of life, personal injury and/or property
damage arising from or out of any occurrence in, upon or at the Premises, or the
occupancy or Tenant's use of the Property, occasioned wholly or in part by any
acts or omissions of Tenant and its Agents. If Landlord becomes a party to such
litigation commenced by or against Tenant, Tenant shall defend and hold Landlord
harmless from all claims, liabilities, costs and expenses, and shall pay all
costs, expenses and reasonable legal fees incurred by Landlord in connection
with such litigation. If Tenant is made a party to litigation commenced by or
against Landlord solely as a result of Landlord's acts or omissions, Landlord
shall defend Tenant and indemnify Tenant against the costs of such litigation.
As used herein, "litigation" includes arbitration. The provisions of this
paragraph shall be deemed to apply only to those circumstances where there is a
portion of a loss or claim not covered by existing insurance and then only to
the extent that such loss or claim is not covered by insurance. This paragraph
shall not preclude application of comparative negligence if the parties or their
agents are both at fault.

                  6.5. TENANT INDEMNIFICATION. Landlord will indemnify and save
Tenant harmless from and against any and all claims, actions, damages, liability
and expense relating to loss of life, personal injury and/or property damage
arising from or out of any occurrence in, upon or at the Premises, or the
occupancy or Landlord's use of the Property, occasioned wholly or in part by any
acts or omissions of Landlord and its Agents. If Tenant becomes a party to such
litigation commenced by or against Landlord, Landlord shall defend and hold
Tenant harmless from all claims, liabilities, costs and expenses, and shall pay
all costs, expenses and reasonable legal fees incurred by Tenant in connection
with such litigation. If Landlord is made a party to litigation commenced by or
against Tenant solely as a result of Tenant's acts or omissions, Tenant shall
defend Landlord and indemnify Landlord against the costs of such litigation. As
used herein, "litigation" includes arbitration. The provisions of this paragraph
shall be deemed to apply only to those circumstances where there is a portion of
a loss or claim not covered by existing insurance and then only to the extent
that such loss or claim is not covered by insurance. This paragraph shall not
preclude application of comparative negligence if the parties or their agents
are both at fault.

                  6.6. WORKER'S INSURANCE. Tenant shall keep in force for the
Term and pay for worker's compensation and other insurance to comply with all
applicable Regulations.

           7.     MAINTENANCE.

                  7.1. PREMISES. During the Term, Landlord shall maintain the
Premises (including all interior walls, doors, doorways, lighting fixtures,
plumbing fixtures, and all windows) in good order, condition and repair. Tenant
waives the provisions of any law permitting Tenant to make repairs at Landlord's
expense, including, without limitation, California Civil Code Sections 1941-
1946. Tenant will supply its own janitorial services to the Premises.

                  7.2. COMMON AREAS. Landlord shall maintain the Common Area in
reasonably good order and condition; however, damage caused by the
acts/omissions of Tenant and its Agents shall be repaired at Tenant's expense.
Landlord shall maintain all improvements and appurtenances upon the Property in
good order and repair. Tenant shall notify Landlord in writing of required
repairs to the Property; Landlord shall make necessary


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repairs in a reasonable time. Maintenance and repairs shall be completed in a
good and workmanlike manner using such methods as Landlord deems appropriate in
its sole discretion. Landlord shall make commercially reasonable efforts to
perform maintenance and repairs with minimum interference with Tenant's business
operations.

                  7.3. ALTERATIONS. Tenant shall make no Alteration to the
Property without Landlord's prior written consent. Landlord may impose such
conditions upon approval of an Alteration as Landlord may deem appropriate.
Every Alteration shall be done under supervision of a licensed contractor and in
accordance with plans and specifications furnished to and approved by Landlord
prior to commencement of work. If an Alteration increases the floor area of the
Premises, the Base Monthly Rent and Tenant's Pro Rata Share shall be increased
in proportion to the resulting increase in the floor area of the Premises.
Tenant shall give Landlord 7 Days' advance written notice prior to starting
construction of each Alteration. Each Alteration shall remain in place and
become the property of Landlord, unless, at the time of consent, Landlord
required removal of the Alteration on Termination, in which case, Tenant shall
remove such Alteration(s) and restore the Premises to their pre-Alteration
condition at Termination.

                  7.4. SYSTEMS. The heating/air-conditioning ("HVAC"), plumbing
and electrical systems (collectively "Systems") shall not be used for any
purpose other than that for which they were constructed. Tenant shall pay for
repairs resulting from the willful misconduct of Tenant and its Agents.

                  7.5. LIENS. Tenant shall keep the Property free from liens
arising out of work performed, materials furnished or obligations incurred by
Tenant. Tenant shall indemnify Landlord from all costs, liens and encumbrances
from work performed or materials furnished by or at Tenant's direction. If
Tenant fails to obtain removal of such lien within 20 Days following its
imposition, Landlord shall have the right, but not the obligation, to obtain
such release by such means as it may deem proper, including payment of the claim
giving rise to such lien. On demand, Tenant shall reimburse Landlord for all
such sums paid and expenses incurred by Landlord in connection therewith
(including attorneys' fees and costs) together with interest at the highest rate
allowable by law from the date Landlord makes such payment until the date of
reimbursement.

         8. MANAGEMENT. The Wareham Property Group, Inc., an affiliate of
Landlord, or another affiliated or unaffiliated third party, will manage the
Property for a fee.

         9. UTILITIES AND SERVICES.

                  9.1. PREMISES. Landlord will make available to the Premises
HVAC and utilities for heating and lighting use at all times. Tenant will pay
all utility costs directly. If utility services cannot be put directly into
Tenant's name, then Tenant shall pay to Landlord as additional rent the
estimated cost of supplying these utilities to the Premises, as reasonably
determined by Landlord.


                  9.2. COMMON AREAS. Landlord shall arrange for Common Area
utilities, landscaping, janitorial and, if Landlord deems it appropriate,
security services. Tenant will pay its pro rata share above Base Year costs.

                  9.3. LIMITATION OF LIABILITY. Landlord shall not be in default
under the provisions of this Lease or be liable for any damages directly or
indirectly resulting from the following conditions: (1) the interruption of use
of any equipment in connection with the furnishing of any of the services
described in paragraphs 9.1 and 9.2 of this lease; (2) failure to furnish or
delay in furnishing any services referred to in paragraphs 9.1 and 9.2 of this
lease where failure or delay is caused by accident or any condition or event
beyond Landlord's reasonable control; (3) the limitation, curtailment or
rationing of, or restrictions on, use of water, electricity, gas or any other
form of energy serving the premises. Landlord shall not be liable under any
circumstances for a loss of or injury to property or business, however
occurring, through or in connection with or incidental to failure to furnish any
such services. Notwithstanding the foregoing provisions of this paragraph, in
the event that utility service to the premises is unavailable for a period
exceeding 15 consecutive days, then from and after the 16th consecutive day
without utility service and until utility service is restarted, Tenant shall be
entitled to an abatement of rent unless the disruption of the utility service
results in whole, or in part, from the acts and/or omissions of Tenant
(inclusive of Tenant's agents, servants, employees, guests, invitees, operatives
and/or contractors) in which case there shall be no abatement of rent.


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         10. USE OF PREMISES. This Lease is subject to all Regulations governing
use of the Property. Tenant has not entered into this Lease relying on any
representation by Landlord or its Agents as to suitability of the Premises for
the conduct of Tenant's business. Tenant has made its own analysis of
suitability of the Premises for its intended use. Tenant shall: 1) use the
Premises for only general office and animation studios purposes and legal,
related uses; 2) pay Landlord the full amount of any increased insurance premium
resulting from Tenant's use of the Premises; 3) at its sole expense, promptly
comply with all Regulations and the requirements of any board of fire
underwriters or other similar body now or hereafter constituted relating to or
affecting Tenant's particular use of the Premises. Tenant shall not: 1) sell or
permit to be kept, used or sold in or about the Premises any articles
prohibited by a standard form policy of fire insurance; 2) do or permit anything
to be done in or about the Property which will obstruct or interfere with rights
of other occupants of the Property or injure or annoy them; 3) maintain or
permit any nuisance in or about the Property; 4) commit or suffer to be
committed any waste in or upon the Property; 5) conduct or allow any auction or
similar sale upon the Property; 6) do or permit anything to be done in or about
the Property which will violate any Regulation [the judgment of any court of
competent jurisdiction or Tenant's admission in any action (whether or not
Landlord is a party) that Tenant has violated a Regulation shall be conclusive
of that fact between Landlord and Tenant]; 7) place a sign upon the Property; 8)
do or permit anything to be done which will increase existing insurance premiums
for the Property or cause cancellation of any policy covering any of the
Property.

         11. DEFAULTS AND REMEDIES.

                  11.1. DEFAULT OF TENANT. The occurrence of any one or more of
the following events shall constitute a default and breach of this Lease by
Tenant: (a) Tenant's failure to pay any rent or charges required to be paid by
Tenant under this Lease within 5 days of Landlord's delivery of written notice
to Tenant that said amounts are past due; (b) Tenant's abandonment or vacation
of the demised premises; (c) Tenant's failure to promptly and fully perform any
other covenant, condition or agreement contained in this Lease where such
failure continues for 30 days after written notice from Landlord to Tenant of
such default; (d) the levy of a writ of attachment or execution on this Lease or
on any of the property of Tenant located in the premises; (e) the making by
Tenant of a general assignment for the benefit of its creditors or of an
arrangement, composition, extension or adjustment with its creditors; (f) the
filing by or against Tenant of a petition for relief or other proceeding under
federal bankruptcy laws or state or other insolvency laws, which petition in not
removed or which action is not dismissed within 90 days of its filing, or the
assumption by any court or administrative agency, or by a receiver, trustee or
custodian appointed by either, of jurisdiction, custody or control of the
premises or of Tenant or any substantial part of its assets or property; or (g)
if the interest of Tenant under this Lease is held by a partnership or by more
than one person or entity, the occurrence of any act or event described in parts
(e) or (f) above in respect of any partner of the partnership. Except as
otherwise specified by this paragraph, in the event a nonmonetary default occurs
which cannot reasonably be cured within the time period specified above and
Tenant commences corrective action within said time period, Tenant shall not be
subject to penalty under this Lease so long as Tenant prosecutes such corrective
action diligently and continuously to completion.

                  11.2. REMEDIES OF LANDLORD. In the event of Tenant's default
hereunder, then in addition to any other rights or remedies Landlord may have
under this Lease or under law, Landlord may elect either of the remedies set
forth in Paragraphs 11.2.1 and 11.2.2 Notwithstanding any other provision of
this Lease, the Lessor has the remedy described in California Civil Code Section
1951.4 (Lessor (Landlord) may continue lease in effect after Lessee's (Tenant's)
breach and abandonment and recover rent as it becomes due, if Lessee (Tenant)
has the right to sublet or assign, subject only to reasonable limitations).

         11.2.1. To immediately terminate this Lease and Tenant's right to
possession of the premises by giving written notice to Tenant and to recover
from Tenant an award of damages equal to the sum of (i) the worth at the time of
award of the unpaid rental which had been earned at the time of termination,
(ii) the worth at the time of award of the amount by which the unpaid rental
which would have been earned after termination until the time of award exceeds
the amount of such rental loss that Tenant affirmatively proves could have been
reasonably avoided, (iii) the worth at the time of award of the amount by which
the unpaid rental for the balance of the term after the time of award exceeds
the amount of

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such rental loss that Tenant affirmatively proves could be reasonable avoided,
(iv) any other amount necessary to compensate Landlord for all the detriment
either proximately caused by Tenant's failure to perform Tenant's obligations
under this Lease or which in the ordinary course of things would be likely to
result therefrom, and (v) all such other amounts in addition to or in lieu of
the foregoing as may be permitted from time to time under applicable law; or

         11.2.2. To have this Lease continue to effect for so long as Landlord
does not terminate this Lease and Tenant's right to possession of the premises,
in which event Landlord shall have the right to enforce all of the rights and
remedies provided by this Lease and by law, including the right to recover the
rental and other charges payable by Tenant under this Lease as they become due.

         For purposes of this paragraph 11, the worth at the time of award of
the amounts referred to in parts 11.2.1(i) and 11.2.2(ii) shall be computed by
allowing interest at the highest rate allowable by law, and the worth at time of
award of the amount referred to in part 11.2.2(iii) shall be computed by
discounting such amount at the rate specified in California Civil Code Section
1951.2(b) or any successor statute. In such computations, the rent due hereunder
shall include monthly rent plus the aggregate amount of all other rentals,
charges and other amounts payable by Tenant hereunder.

         11.3 DEFAULT BY LANDLORD. Landlord will be in default if Landlord
fails to perform any obligation required of Landlord (other than a delay in
delivery of possession as provided for in paragraph 3.2 above) with 30 days
after written notice by Tenant, specifying wherein Landlord has failed to
perform such obligation; provided that if the nature of Landlord's obligation is
such that more than 30 days are required for performance, then Landlord shall
not be in default if Landlord commences performance within 30 day period and
thereafter diligently prosecutes the same to completion. Except as expressly set
forth in this Lease, Tenant shall not have any right whatsoever to terminate
this Lease or to withhold, reduce or offset any amount against any payments of
rents or charges due and payable under this Lease.

         12. TERMINATION. Upon expiration of the Term or early termination of
this Lease (collectively "Termination"), Tenant shall deliver up and surrender
to Landlord possession of the Premises in as good order and condition as when
Tenant took possession excepting only ordinary wear and tear. Upon Termination,
Landlord may reenter the Premises and remove all persons and property therefrom.
If Tenant fails to remove anything that is required or entitled to remove from
the Premises on Termination, Landlord may remove the same and store or dispose
of such item(s) in accordance with CC 31980. Tenant shall pay to Landlord on
demand all expenses incurred in such removal and storage and in cleaning the
Premises. If the Premises are not surrendered at the end of the Term, Tenant
shall indemnify Landlord against all losses resulting from Tenant's delay in
surrendering the Premises. If Tenant remains in possession of the Premises after
expiration of the Term and if Landlord and Tenant have not executed an express
written agreement as to such holding over, then such occupancy shall be a
tenancy from month to month at a Base Monthly Rent fixed at 125% of the Base
Monthly Rent in effect immediately prior to such expiration, such payments to be
made as herein provided. In the event of such holding over, all terms of this
Lease including the obligation for payment of all charges owing hereunder shall
remain in force and effect on said month to month basis. The voluntary or other
surrender of this Lease by Tenant, if accepted by Landlord, or a mutual
cancellation thereof, shall not work a merger, but shall, at the Landlord's
option, terminate or operate as an assignment to Landlord of any or all
subleases or subtenancies.

         13. CONDEMNATION OF PREMISES.

                  13.1. TOTAL CONDEMNATION. If the entire Premises are taken by
Condemnation during the Term, this Lease shall terminate on the date of transfer
of possession and Tenant shall have no claim against Landlord for the value of
the unexpired Term.

                  13.2. PARTIAL CONDEMNATION. If any portion of the Premises is
taken by Condemnation during the Term, this Lease shall remain in full force and
effect; except that if a partial taking leaves the Premises unsuitable for
occupation, Tenant may terminate this Lease effective on the date transfer of
possession is required unless Landlord makes other comparable arrangements for
Tenant's space. Landlord and Tenant shall each have the right to terminate this
Lease effective on the date transfer of possession is required in the event of
Condemnation of more than 25% of the floor area of the Premises. The parties may
exercise their respective rights to terminate this Lease by serving written
notice to the


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other within 30 Days of their receipt of notice of condemnation, except that
Tenant's notice shall be ineffective if Landlord serves notice upon Tenant of
Landlord's election to provide alternate space equivalent to that condemned
within 10 Days of Tenant's delivery of notice to Landlord pursuant to this
paragraph. Tenant shall have the right of approval of replacement space. All
rent and other obligations of Tenant under this Lease shall be paid to the date
of Termination; Tenant shall have no claim against Landlord for any unexpired
portion of the Term. If this Lease is not canceled after a partial taking, Base
Monthly Rent and Tenant's Pro Rata Share shall be adjusted to reflect the net
change in the floor area of the Premises. TENANT WAIVES CALIFORNIA CODE OF CIVIL
PROCEDURE SECTION 1265.130.

                  13.3. AWARD TO TENANT. In the event of Condemnation, Tenant
may claim from the condemnor such compensation as Tenant may separately recover
for moving costs, loss of business, fixtures or equipment belonging to Tenant.
Tenant shall have no other right to recover from Landlord or the condemnor for
any additional claims arising out of such taking.

         14. LANDLORD'S ENTRY. Landlord and its Agents may enter the Premises at
all reasonable times to: inspect the Premises; make repairs or Alterations; post
"To Lease" signs during the last 120 Days of the Term; show the Premises during
the last 120 days of the Term; and/or to post notices of nonresponsibility.
Landlord shall have such right of entry without any rebate of rent to Tenant for
any loss of occupancy or quiet enjoyment of the Premises. Landlord shall provide
24 hours' notice of intended entry except under circumstances Landlord deems an
emergency.

         15. LIMITATION OF LIABILITY AND INDEMNITY: This paragraph 15, inclusive
of all subparagraphs, supersedes each and every other provision of this Lease.

                  15.1. LIMITATION OF LANDLORD'S LIABILITY. TENANT WILL NOT HOLD
LANDLORD LIABLE FOR AMOUNTS EXCEEDING INSURANCE COVERAGE MAINTAINED BY LANDLORD
UNDER THIS LEASE ("EXISTING COVERAGE") RESPECTING ANY INJURY OR DAMAGE,
PROXIMATE OR REMOTE, OCCURRING THROUGH OR CAUSED BY ANY REPAIRS OR ALTERATIONS
TO THE PROPERTY, UNLESS SUCH INJURY OR DAMAGE ARISES FROM LANDLORD'S NEGLIGENCE,
WILLFUL MISCONDUCT, OR BREACH OF THIS LEASE ("LANDLORD'S ACTS"). LANDLORD SHALL
NOT BE LIABLE IN EXCESS OF EXISTING COVERAGE FOR ANY INJURY OR DAMAGE OCCASIONED
BY DEFECTIVE ELECTRIC WIRING, OR THE BREAKING, BURSTING, STOPPAGE OR LEAKING OF
ANY PART OF THE PLUMBING, AIR-CONDITIONING, HEATING, FIRE CONTROL SPRINKLER
SYSTEMS OR GAS, SEWER OR STEAM PIPES, UNLESS SUCH LOSS ARISES FROM LANDLORD'S
ACTS.

                  15.2. LIMITATION ON ENFORCEMENT OF REMEDIES. NOTWITHSTANDING
ANY OTHER PROVISION OF THIS LEASE, TENANT AND ITS AGENTS SHALL, UNDER ALL
CIRCUMSTANCES, BE ABSOLUTELY LIMITED TO LANDLORD'S INTEREST IN THE PROPERTY FOR
SATISFACTION OF TENANT AND ITS AGENTS' REMEDIES, OR FOR THE COLLECTION OF A
JUDGMENT (OR OTHER JUDICIAL PROCESS OR ARBITRATION AWARD) REQUIRING LANDLORD TO
PAY MONEY, AS THE RESULT OF ANY AND ALL JUDGMENTS, AWARDS AND/OR ORDERS AGAINST
LANDLORD RELATING TO OR ARISING OUT OF TENANT AND ITS AGENTS' OCCUPANCY AND USE
OF THE PROPERTY AND/OR IN THE EVENT OF ANY DEFAULT BY LANDLORD HEREUNDER, AND NO
OTHER PROPERTY OF LANDLORD OR ITS PARTNERS OR PRINCIPALS, DISCLOSED OR
UNDISCLOSED, SHALL BE SUBJECT TO LEVY, EXECUTION OR OTHER ENFORCEMENT PROCEDURE
FOR THE SATISFACTION OF TENANT AND ITS AGENTS' REMEDIES WITH RESPECT TO THIS
LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT HEREUNDER, OR THE USE AND
OCCUPANCY OF THE PROPERTY AND THE PREMISES BY TENANT AND ITS AGENTS. TENANT, ON
BEHALF OF TENANT AND ITS AGENTS, WAIVES ALL RIGHT TO COLLECT OR ENFORCE ANY AND
ALL ORDERS, AWARDS AND/OR JUDGMENTS AGAINST LANDLORD IN EXCESS OF LIMITATIONS
IMPOSED BY THIS PARAGRAPH. TENANT SHALL REQUIRE THAT EACH SUBTENANT AND EACH
ASSIGNEE OF TENANT AGREE TO BE BOUND BY THE WAIVER SET FORTH IN THIS PARAGRAPH.
LANDLORD'S MAXIMUM EXPOSURE AS SET FORTH IN THIS PARAGRAPH IS CUMULATIVE AND IN
THE AGGREGATE (AS TO ALL JUDGMENTS, AWARDS AND ORDERS AGAINST LANDLORD ARISING
IN CONNECTION WITH THIS LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT, OR THE
USE AND OCCUPANCY OF THE PROPERTY BY TENANT AND ITS AGENTS). LIMITS IMPOSED BY
THIS PARAGRAPH INCLUDE LANDLORD'S DUTIES OF INDEMNITY (EXPRESS AND/OR IMPLIED).
"LANDLORD" INCLUDES ALL PERSONS AND ENTITIES WHO NOW OR HEREAFTER OWN AN
INTEREST IN LANDLORD.

         16. ASSIGNMENT AND SUBLETTING. Tenant shall not directly or indirectly
assign this Lease in whole or in part, or sublet any part or all of the
Premises, or license the use of all or any part of the Premises, or business
conducted thereon, or encumber or hypothecate this Lease, without first
obtaining Landlord's written consent. The transfer of shares of stock,
partnership interests or other ownership interests in Tenant resulting in a
change in the effective control of Tenant, or any merger, consolidation or other


                                        7
<PAGE>   8
reorganization of Tenant is an indirect assignment of Tenant's interest in this
Lease. Tenant's request for consent to any assignment, sublease or other
transfer shall be in writing and shall include the following: (a) the name and
legal composition of the proposed transferee; (b) the nature of the proposed
transferee's business to be carried on in the Premises; (c) the terms and
provisions of the proposed assignment or sublease; and (d) such financial and
other reasonable information as Landlord may request concerning the proposed
transferee or concerning the proposed assignment or sublease. Any assignment,
subletting, licensing, encumbering or hypothecating of this Lease without
Landlord's prior written consent shall constitute a default. Landlord's consent
to any assignment or sublease shall not constitute a waiver of the need for subh
consent to any subsequent assignment or sublease.

         Notwithstanding any assignment or subletting with Landlord's consent,
Tenant shall remain fully liable on this Lease. Without limiting other reasons
or circumstances, Landlord and Tenant agree that it is reasonable for Landlord
to withhold consent if, in Landlord's reasonable judgment: (i) the financial
strength of the proposed assignee is not commensurate with the obligations of
the Lease; (ii) the proposed use would be incompatible with the use of the rest
of the Property; or (iii) the proposed use would generate traffic and/or wear
and tear materially in excess of Tenant's use. If Landlord consents to a
sublease or assignment, Tenant shall pay Landlord's reasonable attorneys' fees
incurred in connection with such consent. Tenant shall pay to Landlord 75% of
all Excess Rent received by Tenant directly or indirectly in respect of an
assignment of this Lease or sublease of the Premises. "Excess Rent" means, in
the case of an assignment, all consideration and, in the case of a sublease, all
consideration in excess of the rents and charges reserved under this Lease.

         17. DAMAGE OR DESTRUCTION. Each party may terminate this Lease if the
Premises or the Building are damaged to an extent exceeding 50% of the then
replacement cost of the Premises (in the event of damage limited to the
Premises) or 33% of the Building (in the event of damage not limited to the
Premises). Landlord may also terminate this Lease if the Premises or the
Building are damaged by an uninsured peril to an extent exceeding 33% of the
then replacement cost of the Premises (in the event of damage limited to the
Premises) or 25% of the Building (in the event of damages not limited to the
Premises). If a party elects Termination under this section, the terminating
party shall deliver written notice to the non-terminating party within 30 Days
of the occurrence of the damage. Tenant shall have 30 Days to vacate the
Premises unless they are unsafe for occupancy, in which case, Tenant shall
immediately vacate. TENANT WAIVES SECTION 1932(2), AND SECTION 1933(4) OF THE
CALIFORNIA CIVIL CODE. If this Lease is not terminated pursuant to this
paragraph, Landlord shall, within 90 Days of the occurrence of the damage,
proceed to repair the Building, on the same plan as existed immediately before
the occurrence. Tenant shall be liable for repair and replacement of all
fixtures, leasehold improvements, furnishings, merchandise, equipment and
Tenant's personal property not covered by insurance. If Tenant is able to
continue to conduct its business during the making of repairs, the Base Monthly
Rent will be reduced in the proportion that the unusable part of the Premises
bears to the whole during the repair period. Notwithstanding any other provision
of this Lease, if the discounted present value of the Base Monthly Rent due for
the remaining Term, using as the discount rate the prime commercial lending rate
in effect at the Bank of America, NT&SA, as of the date of the damage is less
than the cost of repairing the damage to the Premises, Landlord may terminate
this Lease on 10 Days' written notice to Tenant.

         18. HAZARDOUS MATERIALS.

                  18.1. TENANT'S WARRANTIES. Tenant's obligations are:

                           18.1.1. RESTRICTIONS ON HAZARDOUS MATERIALS.
Hazardous Material (as defined below) shall not be brought upon, manufactured,
generated, disposed of, handled, used, kept or stored (collectively "Handled" or
"Handling") in, on, about or under the Property by Tenant and its Agents without
Landlord's prior written consent.

                           18.1.2. APPLICABLE REGULATIONS. If any Hazardous
Material is Handled, in, on, about or under the Property by Tenant and its
Agents, Tenant shall bear all responsibility for ensuring that such material
shall be handled in compliance with all Environmental, Health and Safety
Requirements regulating such Hazardous Material. Tenant shall procure, maintain
in effect and comply with all conditions and requirements of any and all
permits, licenses and other governmental and regulatory approvals or
authorizations required by Environmental, Health or Safety Requirements relating
to the

                                        8
<PAGE>   9
Handling of Hazardous Material by Tenant. Tenant shall give Landlord copies of
all such permits, licenses, or other regulatory approvals within 5 Days of
receipt.

                           18.1.3. RESTORATION. If, as a result of handling of
Hazardous Materials by Tenant and its Agents, Hazardous Material in, on, about
or under the Property or any adjoining property results in contamination of the
Property or other property, Tenant, at its sole expense, shall promptly take all
actions as are necessary to return the Property and/or the other affected
property to the condition existing prior to such contamination ("Restoration").
Tenant shall not, however, undertake Restoration without first providing
Landlord with written notice thereof and obtaining Landlord's approval. Tenant
shall effect Restoration in compliance with all Environmental, Health and Safety
Requirements. Tenant shall not enter into any settlement agreement, consent
decree or compromise respecting any claims relating to Hazardous Material
connected with the Property without first notifying Landlord of its intention to
do so and affording Landlord ample opportunity to appear, intervene or
appropriately assert and protect Landlord's interests.

                           18.1.4. REMOVAL. On Termination, Tenant shall remove
from the Property all Hazardous Materials in, on, about or under the Property
Handled by Tenant and its Agents and all receptacles and containers therefor,
and shall cause such Hazardous Materials, receptacles and containers to be
Handled, transported and disposed of pursuant to all applicable Environmental,
Health and Safety Requirements. Hazardous Materials, receptacles and containers
shall be removed by duly licensed haulers, transported to and disposed of at
duly licensed facilities for the disposal of such Hazardous Materials,
receptacles or containers. Tenant shall deliver to Landlord copies of all
documentation relating to Handling of Hazardous Materials, receptacles or
containers therefor, reflecting legal and proper Handling. Tenant shall, at its
sole expense, repair all damage to the Property resulting from its removal of
Hazardous Materials, receptacles and containers. Tenant shall continue to pay
rent until completion of such removal and repairs.

                           18.1.5. TENANT'S WRITTEN CONFIRMATION. Tenant shall
execute such documents as Landlord may request as to Tenant's knowledge of the
presence of Hazardous Materials in, on, about or under the Property. On each
anniversary of the Commencement Date, Tenant shall, upon request, give Landlord
a letter stating the during the preceding year Tenant complied with this Section
18 or, if Tenant has not so complied, stating the details of noncompliance.

                           18.1.6. TENANT'S DUTY TO NOTIFY LANDLORD. Tenant
shall notify Landlord in writing immediately upon receiving written notice of:
(1) enforcement, cleanup, remediation or other action threatened, instituted or
completed by any governmental or regulatory agency or private person with
respect to the Property or any adjoining property relating to Hazardous
Materials; (2) any claim threatened or made by any person against Tenant,
Landlord, the Property or any adjoining landowner, tenant or property for
personal injury, compensation or any other matter relating to Hazardous
Materials; and (3) any reports made by or to any governmental or regulatory
agency with respect to the Property or any adjoining property relating to
Hazardous Materials, including without limitation, any complaints, notices or
asserted violations in connection therewith. Tenant shall supply to Landlord as
promptly as possible, and in any event within 5 Days after Tenant first receives
or sends the same, copies of all claims, reports, complaints, notices, warnings,
asserted violations or other documents relating in any way to the foregoing.

                  18.2. LANDLORD'S RIGHTS. Landlord and its Agents shall have
the right to communicate, verbally or in writing, with any regulatory agency or
any environmental consultant on any matter respecting the Property relating to
Hazardous Materials. Landlord shall be entitled to copies of all notices,
reports or other documents issued by or to any such regulatory agency or
consultant respecting the Property relating to Hazardous Materials.

                  18.3. TENANT'S DUTY TO INDEMNIFY. If the Handling by Tenant 
and its Agents of Hazardous Materials results in contamination of the Property,
or if any lender or governmental agency requires an investigation to determine
whether there is contamination of the Property or any adjoining property as a 
result of the Handling of Hazardous Materials by Tenant and its Agents, and it
is determined that such handling resulted in contamination of the property, 
then Tenant shall indemnify, defend and hold Landlord and its Agents and all of
Landlord's partners or other affiliates, together with all their directors, 
officers, shareholders, employees, agents, contractors and attorneys, harmless
from and defend them against any and all claims, damages, penalties, fines, 
costs, liabilities and losses (including, without limitation, sums paid in 
settlement of claims, attorneys' fees, consultants' fees and experts' fees) 
which arise during or after the Term as a result of such

                                        9
<PAGE>   10
contamination. This indemnification includes, without limitation, costs incurred
in connection with removal or restoration work required by any regulatory agency
and/or private persons because of the presence of Hazardous Materials in the
soil or groundwater in, on, about or under the Property or any adjoining
property as a result of the handling of Hazardous Materials, resulting in
contamination of the property, by Tenant and its Agents and legal fees and
expenses incurred by Landlord relating to such claims, demands, investigations
and responses.

          18.4. RIGHT OF ENTRY. If contamination of the Property by Hazardous
Materials occurs or if any lender or regulatory agency requires an
investigation to determine if there is contamination of the Property or any
adjoining property, then Landlord and its Agents shall have the right, at any
reasonable time and from time to time, to enter the Premises to perform
monitoring, testing or other analyses, and to review applicable documents,
notices, or other materials. If such contamination resulted from the handling of
Hazardous Materials by Tenant and its Agents, Tenant shall pay, on delivery of
Landlord's invoice, all costs and expenses reasonably incurred by Landlord in
connection with such investigation, monitoring, and testing.

          18.5. DEFINITIONS. The following terms shall have the following
meanings:

                  18.5.1. "HAZARDOUS MATERIAL": shall mean, without limitation,
(1) petroleum or petroleum products; (2) hydrocarbon substances of any kind; (3)
asbestos in any form; (4) formaldehyde; (5) radioactive substances; (6)
industrial solvents; (7) flammables; (8) explosives; (9) leakage from
underground storage tanks; (10) substances defined as "hazardous substances,"
"hazardous materials," or "toxic substances" in (A) the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986 or as otherwise
amended, 42 U.S.C. Sections 9601, et seq., (B) the Hazardous Materials
Transportation Act, 49 U.S.C. Sections 1801 et seq. and any amendments
thereto, or (C) the Resource Conservation and Recovery Act, 42 U.S.C. Sections
6901, et seq. and any amendments thereto; (11) those substances defined as
"hazardous wastes," "extremely hazardous wastes" or "restricted hazardous
wastes" in Sections 25115, 25117, and 25122.7 or listed pursuant to Section
25140 of the California Health & Safety Code and any amendments thereto; (12)
those substances defined as "hazardous substances" in Section 25316 of the
California Health & Safety Code and any amendments thereto; (13) those
substances defined as "hazardous materials," "hazardous wastes" or "hazardous
substances" in Sections 25501 and 25501.1 of the California Health & Safety
Code and any amendments thereto; (14) those substances defined as "hazardous
substances" under Section 25281 of the California Health & Safety Code and any
amendments thereto; (15) those substances causing "pollution" or "contamination"
or constituting "hazardous substances" within the meaning of (A) the Clean Water
Act, 33 U.S.C. Section 1251 et seq. and any amendments thereto, (B) the
Porter-Cologne Water Quality Control Act, Section 13050 of the California Water
Code and any amendments thereto, and (C) the Safe Drinking Water Act, 42 U.S.C.
Section 300f et seq.; (16) such chemicals as are identified on the list
published from time to time as provided in Chapter 6.6 of the California Health
and Safety Code, as amended, as causing cancer or reproductive toxicity; (17)
polychlorinated biphenyls (PCBs) set forth in the Federal Toxic Substance
Control Act, as amended, 15 U.S.C. Section 2601 et seq.; (18) "toxic air
contaminant" as defined in California health and Safety Code Section 39655; and
(19) the wastes, substances, materials, contaminants and pollutants identified
pursuant to or set forth in the regulations adopted or judicial or
administrative, decisions or decrees promulgated pursuant to any of the
foregoing laws. The foregoing list of definitions and statutes is illustrative,
not exhaustive; such list shall be deemed to include all definitions, rules,
regulations and laws applicable to the subject matter of this paragraph as they
may be amended or changed from time to time.

                  18.5.2. "ENVIRONMENTAL HEALTH AND SAFETY REQUIREMENTS" means
any law, statute, ordinance, rule, regulation, order, judgment or decree
promulgated by any governmental agency, court, judicial or quasi-judicial body
or legislative or quasi-legislative body which relates to matters of the
environment, health, industrial hygiene or safety.

         18.6. ALLOCATION OF RESPONSIBILITIES. ALL LIABILITY ARISING FROM THE
TRANSPORTATION OR HANDLING OF HAZARDOUS MATERIALS IN, ON, UNDER, AND/OR ABOUT
THE PROPERTY OR ADJOINING PROPERTY BY TENANT AND ITS AGENTS SHALL, AT ALL TIMES,
REMAIN TENANT'S SOLE RESPONSIBILITY, EVEN IF THE HAZARDOUS MATERIALS ORIGINATE
FROM THE PROPERTY. NO ACT BY LANDLORD OR ITS AGENTS SHALL CONSTITUTE LANDLORD'S
ASSUMPTION OF ANY OBLIGATIONS, DUTIES, LIABILITIES OR RESPONSIBILITIES
PERTAINING TO


                                       10
<PAGE>   11
TENANT'S COMPLIANCE WITH ANY ENVIRONMENTAL, HEALTH OR SAFETY REQUIREMENTS.
NOTWITHSTANDING TERMINATION OF THIS LEASE, TENANT SHALL RETAIN ALL LIABILITY AND
RESPONSIBILITY FOR COMPLIANCE WITH REGULATIONS AND ENVIRONMENTAL, HEALTH OR
SAFETY REQUIREMENTS CONCERNING TENANT AND ITS AGENTS' HANDLING OF HAZARDOUS
MATERIALS. TENANT SHALL INDEMNIFY AND HOLD LANDLORD AND ITS AGENTS HARMLESS FROM
ALL COSTS AND EXPENSES ASSOCIATED WITH SUCH COMPLIANCE.

         18.7. INSPECTIONS. Tenant will cooperate with the completion of
inspections of the Property as required by applicable law and regulation. Tenant
shall provide to Landlord a copy of the reports for each such inspection within
15 days of Tenant's receipt of such reports.

         18.8. COOPERATION. Tenant will not interfere with Landlord's acts
pursuant to the above-referenced Regulations. Tenant will comply with reasonable
procedures promulgated by Landlord pursuant to such laws and regulations.
Landlord shall have no duty to establish any procedures or to supervise in any
way Tenant's activities on the Property.

         18.9. SURVIVAL. The covenants, agreements and indemnities set forth in
this Section 18 shall survive Termination and shall not be affected by any
investigation, or information obtained as a result of any investigation, by or
on behalf of Landlord or any prospective Tenant.


         18.10. STORAGE TANKS. Tenant shall not install any storage tanks on the
Property without Landlord's prior written consent.

         18.11. LANDLORD'S OBLIGATIONS. Landlord's obligations are:

                           18.11.1. COMPLIANCE WITH REGULATIONS. If Landlord and
its Agents Handle Hazardous Material in, on, about or under the Property, such
material shall be Handled in compliance with all Environmental, Health and
Safety Requirements.

                           18.11.2. RESTORATION. If, as a result of Landlord's
bringing Hazardous Material upon the Property, or otherwise any contamination of
the Property or the surrounding environment occurs, Landlord shall promptly take
all necessary actions to return the Property and/or the surrounding environment
to the condition existing prior to such contamination.


                           18.11.3. DUTY TO NOTIFY TENANT. Landlord shall notify
Tenant in writing upon learning of: (1) enforcement, cleanup, remediation or 
other action threatened, instituted or completed by any regulatory agency or 
private person with respect to the Property relating to Hazardous Materials; 
(2) any claim threatened or made against Landlord respecting the Tenant or the
Property for personal injury, compensation or any other matter relating to 
Hazardous Materials; and (3) reports made by or to any regulatory agency 
respecting the Property, complaints, notices or asserted violations in 
connection therewith. Landlord shall supply to Tenant copies of claims, 
notices, warnings, or other documents relating to the foregoing.

                           18.11.4. INDEMNITY OF TENANT. If Hazardous Materials
on the Property, resulting from Landlord's acts, contaminate the Property, or if
the Property is contaminated on the Commencement Date, Landlord shall indemnify
and hold Tenant and its Agents harmless from any and all claims, damages,
penalties, fines, costs, liabilities and losses, damages, attorneys' fees,
consultants' fees and experts' fees resulting from such contamination.

         19.      MISCELLANEOUS PROVISIONS.

                  19.1. WAIVER. No waiver of any breach of this Lease shall be
construed as a waiver of any other breach. Landlord's acceptance of rent after
Tenant's breach shall not be a waiver of any preceding breach of this Lease by
Tenant, even if known by Landlord at the time.

                  19.2. NOTICES. Notices, requests, demands and other
communications shall be in writing personally delivered or sent by certified
mail, return receipt requested, postage prepaid, properly addressed to the other
party at the address set forth by its signature below, or at such other address
as may be designated in writing by one party to the other. Notice shall be
effective on personal delivery or on the date indicated on the post office's
certified mail receipt of delivery.

                  19.3. CONSTRUCTION. This Lease shall be construed pursuant to
California law. The invalidity of any provision of this Lease shall not affect
the remainder. All terms of this Lease shall be construed to mean either the
singular or the plural, masculine, feminine or neuter, as the situation may
demand. Headings are descriptive only and not

                                       11
<PAGE>   12
determinative of meaning. Time is of the essence in performance of all
obligations. This Lease constitutes the entire agreement between the parties
respecting the subject matters it addresses. This Lease supersedes all prior
oral and written agreements respecting the hiring of the Premises. Provisions of
this Lease may be waived, amended or repealed only by all parties' written
consent. This Lease binds and inures to the benefit of the parties' heirs,
personal representatives, successors and assigns.

                  19.4. MEMORANDUM. If Landlord requests a memorandum of Lease,
the parties shall execute, acknowledge and record a document identifying: the
parties, Premises, Term and Commencement Date. No other memorandum of this Lease
shall be recorded.

                  19.5. AUTHORITY. Each individual executing this Lease for a
corporation warrants that he is duly authorized to execute and deliver the Lease
for the corporation and that the Lease binds the corporation in accordance with
its terms. Each individual executing this Lease on behalf of a partnership
warrants that he is duly authorized to execute and deliver this Lease for the
partnership and that this Lease binds the partnership in accordance with its
terms.

                  19.6. LITIGATION. All actions and arbitrations arising out of
or in connection with this Lease shall be venued in Alameda County, California.
If an action or arbitration proceeding is commenced by reason of the breach of
this Lease or arising out of this Lease, the prevailing party shall recover
costs of suit and attorneys' fees, whether or not the matter proceeds to
judgment.

                  19.7. SUBORDINATION OF LEASEHOLD. Tenant agrees that this
Lease is and shall be, at all times, subject and subordinate to the lien of any
mortgage or other encumbrances which Landlord may create against the premises,
including all renewals, replacements and extensions thereof. Tenant agrees to
execute any and all instruments in writing which may be required by Landlord to
subordinate Tenant's rights to the lien of such mortgage. Tenant's obligation
to subordinate its leasehold to a lender shall, at all times, be conditioned
upon the lender giving to Tenant a nondisturbance agreement providing that the
lender will not terminate Tenant's occupancy in the event of a foreclosure as
long as Tenant is not in default under the provisions of this Lease.

                  19.8. ESTOPPEL. Within 15 Days of Landlord's request, Tenant
shall complete, execute and deliver to Landlord a certification: (a) that this
Lease is unmodified and in full force and effect (or if modified, stating the
nature of such modification and certifying that this Lease as so modified is in
full force and effect); (b) of the date to which the rent and other charges are
paid; (c) that Tenant knows of no uncured defaults on the part of Landlord
hereunder, or specifying such defaults, if any are claimed; and (d) of the date
of commencement and expiration of the Term. Tenant's failure to timely deliver
the document constitutes a certification that Landlord is not in default under
the Lease and the terms of the Lease are in force without modification.
Prospective purchasers, lenders or lender's assignees may rely upon such
certification.

                  19.9. ATTORNMENT. In the event of a sale of the Property or
the completion of foreclosure against the Property, Tenant shall attorn to the
Landlord's successor in interest.

                  19.10. LENDER'S REQUESTS. Tenant shall consent to Lease
amendments requested by any lender against the Property, provided that such
amendments do not materially affect Tenant's obligations. Tenant shall timely
supply financial information requested by such lender.

                  19.11. RESERVED.

                  19.12. RELOCATION. Landlord may relocate Tenant to another
part of the Building so long as Landlord pays reasonable relocation costs.
Landlord shall have no other liability respecting relocation. Tenant shall have
the right of approval of the new space.

                  19.13. SUBMISSION. Submission of this document to Tenant does
not create a reservation for a lease or any rights respecting the Premises prior
to Landlord's execution.

                  19.14. RESERVED.

                  19.15. ARBITRATION OF DISPUTES. ANY CONTROVERSY OR CLAIM
BETWEEN THE PARTIES ARISING OUT OF THIS LEASE SHALL BE SUBMITTED TO BINDING
ARBITRATION UNDER THE RULES OF THE AMERICAN ARBITRATION ASSOCIATION.
CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 1283.05 SHALL APPLY TO THE 
ARBITRATION. ANY COURT OF COMPETENT JURISDICTION MAY ENTER JUDGMENT UPON THE 
ARBITRATION AWARD.

                                       12
<PAGE>   13
NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY DISPUTE
ARISING OUT OF THE MATTERS INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISIONS
DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW AND YOU ARE GIVING
UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR JURY
TRIAL. BY INITIALING IN THE SPACE BELOW YOU ARE GIVING UP YOUR JUDICIAL RIGHTS
TO DISCOVERY AND APPEAL UNLESS THOSE RIGHTS ARE SPECIFICALLY INCLUDED IN THE
"ARBITRATION OF DISPUTES" PROVISION. IF YOU REFUSE TO SUBMIT TO ARBITRATION
AFTER AGREEING TO THIS PROVISION YOU MAY BE COMPELLED TO ARBITRATE UNDER THE
AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR AGREEMENT TO THIS
ARBITRATION PROVISION IS VOLUNTARY.

WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING
OUT OF THE MATTERS INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION TO
NEUTRAL ARBITRATION.

                  -------                                -------
                  Initial                                Initial

                  19.16. BROKERAGE. Tenant is solely responsible for any
brokerage costs associated with this transaction. Landlord represents and
warrants that it has had no broker representation.

                  19.17. COOPERATION. Tenant will not interfere with Landlord's
actions pursuant to any Regulation affecting the Property. Tenant will comply
with all reasonable procedures promulgated by Landlord relating to the matters
covered by such Regulations. Landlord has no duty to establish procedures or
regulations or to supervise Tenant's activities for any purpose including,
without limitation, the Handling of Hazardous Materials.

                  19.18. PARKING. Tenant shall have the use of 77 off-street
parking places.

                  19.19. TENANT IMPROVEMENTS. Tenant agrees to take the Premises
as-is. Landlord has no responsibility to provide any Tenant Improvements.

                  LANDLORD:                                   TENANT:


By            illegible                       By /s/ Lawrence B. Levy
   ------------------------------           ----------------------------
        Authorized Signature                    Authorized Signature


                                              /s/ Lawrence B. Levy
                                            ----------------------------
                                                 Please print name

Address for Notices:                        Address for Notices:
1120 Nye Street, Suite 400                  1001 West Cutting Boulevard
San Rafael, CA 94901                        Richmond, CA 94801


Date         4-26-96                        Date         4-24-96
     -----------------------                     ------------------------
                                       13
<PAGE>   14
                       [MAP OF PT. RICHMOND TECH. CENTER, RICHMOND, CA.]
<PAGE>   15
                             FIRST ADDENDUM TO LEASE



        THIS FIRST ADDENDUM TO LEASE (this "Addendum") is made by and between
Point Richmond R&D Associates, a California general partnership ("Landlord"),
and PIXAR, a California corporation ("Tenant"), to be part of that certain Point
Richmond R&D Associates Industrial Gross Lease of even date herewith between
Landlord and Tenant (the "Lease") concerning approximately 25,859 square feet of
space (the "Premises"), located at 1001 West Cutting Boulevard, Richmond,
California. Landlord and Tenant agree that, notwithstanding anything to the
contrary in the Lease, the Lease is hereby modified and supplemented as set
forth below.

         1 . Definitions. The Lease shall commence on, and the Commencement Date
shall be, sixty (60) days after the later to occur of the following: (i) the
date that Landlord has delivered exclusive possession of the Premises to Tenant,
free of all other tenancies, with all approvals and permits from the appropriate
governmental authorities required for the legal occupancy of the Premises for
Tenant's intended use, and (ii) the date on which landlord has completed all
work, if any, to be performed by Landlord pursuant to Section 3 of this
Addendum.

         2. Premises. Tenant shall also have the right to use the Common Area in
common with the other tenants on the Property. On the Commencement Date, the
Premises shall be broom clean and in good condition.

         3. Alterations. Landlord hereby consents to the construction by the
Tenant of the improvements described in Exhibit A attached hereto. Tenant shall
have no responsibility for and Landlord shall pay all costs to bring the
Premises into compliance with applicable Regulations, including, without
limitation, the Americans with Disabilities Act and environmental laws.

         4. Use of the Premises. Tenant shall not be required to comply with or
cause the Premises to comply with any Regulations requiring the construction of
improvements in the Premises unless the compliance with any of the foregoing is
necessitated solely due to Tenant's particular use of the Premises.

         5. Termination. Tenant's obligations with respect to the surrender of
the Premises shall be fulfilled if Tenant surrenders possession of the
Premises in the condition existing at the Commencement Date (including the
improvements described on Exhibit A attached to this Addendum), ordinary wear
and tear, casualties, condemnation, Hazardous Materials (other than those
released or emitted by Tenant in or about the Premises), and alterations or
other interior improvements which Landlord states in writing may be surrendered
at the termination of the Lease, excepted.

         6. Assignment and Subletting. Tenant may, without Landlord's prior
written consent and without being subject to the provisions of Section 16 of
the Lease, sublet the Premises or assign the Lease to (i) a subsidiary,
affiliate, division or corporation controlling, controlled by or under common
control with Tenant; (ii) a successor corporation related to Tenant by merger,
consolidation, nonbankruptcy reorganization, or government action; or (iii) a
purchaser of substantially all of Tenant's assets located in the Premises. A
sale or transfer of Tenant's capital stock shall not be deemed an assignment,
subletting or any other transfer of the Lease or the Premises. Tenant shall not
be required to pay Landlord any Excess Rent until Tenant has deducted therefrom
the costs to Tenant to effectuate the assignment or sublease, including
attorneys' fees, leasing commissions and remodeling costs. Item (i) of Section
16 of the Lease is hereby deleted; however, Landlord may withhold its consent
to a full assignment and transfer if the financial strength of the proposed
assignee is not, in Landlord's reasonable judgment, commensurate with the
obligations of the Lease.

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<PAGE>   16
         7. Hazardous Materials. To the best knowledge of Landlord, (i) no
Hazardous Material is present on the Property or the soil, surface water or
groundwater thereof, (ii) no underground storage tanks are present on the
Property, and (iii) no action, proceeding or claim is pending or threatened
regarding the Property concerning any hazardous Material or pursuant to any
environmental law. Under no circumstances shall Tenant be liable for, and
Landlord shall indemnify, defend and hold harmless Tenant and its Agents from
and against, all losses, costs, claims, liabilities and damages (including
attorneys' and consultants' fees) of every type and nature, directly or
indirectly arising out of or in connection with any Hazardous Materials present
at any time on or about the Property, or the soil, air, improvements,
groundwater or surface water thereof, or the violation of any laws, orders or
regulations, relating to any such Hazardous Material, except to the extent that
any of the foregoing actually results from the release or emission of Hazardous
Material on or about the Premises during the term of the Lease by Tenant or its
Agents in violation of applicable environmental laws.

         8. Subordination of Leasehold. If required by Tenant, Landlord will
make best efforts to obtain from any lender or ground lessors of the Property a
written agreement in form reasonably satisfactory t Tenant providing for
recognition of Tenant's interest under the Lease in the event of a foreclosure
of the lender's security interest or termination of the ground lease.

         9. Use of Premises. In addition to the provisions of Section 10 of the
Lease, Tenant may use the Premises for all legal uses.

         10. Reasonable Expenditures. Any expenditure by a party permitted or
required under the Lease, for which such party is entitled to demand and does
demand reimbursement from the other party, shall be limited to the fair market
value of the goods and services involved, shall be reasonably incurred, and
shall be substantiated by documentary evidence available for inspection and
review by the other party or its representative during normal business hours.

         11. Security Deposit. Section 4.3 of the Lease is deleted in its
entirety; there shall be no security deposit payable by Tenant under the Lease.

         12. Tax Increase on Sale. Notwithstanding any other provision of the
Lease to the contrary, Tenant shall not be obligated to pay any Tax increase due
solely to the sale or other transfer of an interest in the Property, or a sale
or other transfer of all of the Property.

         13. Contest. If Tenant desires to contest the validity or amount of
any Tax applicable to the Premises, Tenant shall be entitled to do so and to
defer payment of such Tax until final determination of such contest upon giving
Landlord written notice thereof prior to commencing such contest and protecting
Landlord on demand by obtaining a surety bond in the amount of 150% of the
total amount of Taxes in dispute. The surety bond shall hold Landlord harmless
from any damages or costs incurred in connection with the contest. Landlord
shall, at Tenant's request, cooperate in all reasonable ways requested by Tenant
in connection with the contest of Taxes, provided that Tenant pays all
reasonable costs incurred by Landlord resulting from such cooperation.

         14. Additional Rent. The term "Operating Expenses" shall not include
Taxes and insurance premiums. Tenant's obligation to pay additional rent
pursuant to Section 4.2 of the Lease shall be capped as follows: Tenant shall
have no obligation to pay Operating Expenses, Taxes or insurance premium
increases in any calendar year to the extent that such amounts have increased by
more than five percent (5%) from the immediately preceding calendar year.


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<PAGE>   17
         15. Effect of Addendum. All terms with initial capital letters used
herein as defined terms shall have the meanings ascribed to them in the Lease
unless specifically defined herein. In the event of any inconsistency between
this Addendum and the Lease, the terms of this Addendum shall prevail.


LANDLORD:                            TENANT:

POINT RICHMOND R&D ASSOCIATES,       PIXAR, a California corporation
a California general partnership


By: /s/ Richard K. Robbins             By:  /s/ Lawrence B. Levy
   ---------------------------         ----------------------------

Name: Richard K. Robbins               Name: Lawrence B. Levy
   ---------------------------         ----------------------------

Its:  Managing General Partner         Its:  EVP & CFO
   ---------------------------         ----------------------------


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<PAGE>   18
                                    EXHIBIT A

                               TENANT IMPROVEMENTS


Landlord hereby consents to Tenant's installation and construction of the
following improvements. Such work shall be performed in accordance with
applicable local/State/Federal building codes and specifications prepared by
Tenant.

1.       Install new carpet/base/vinyl tile throughout the Premises.

2.       Construct several new hardwall office and conference room spaces in
         locations designated by Tenant.

3.       Modify/redesign the existing Electrical/Mechanical systems to support
         the additional people and technology planned for the space.

4.       Create several openings to connect the Premises with the Tenant's
         existing space.

5.       Remove existing Electrical/Mechanical Systems (including junction
         boxes/electrical panels, etc.) in the "Warehouse" space that are not
         required for the Tenant Improvements.

6.       Tenant will not be responsible for any improvements required to the
         base building electrical/mechanical system/restroom facilities/parking
         facilities to bring the facility up to current code compliance. This
         would include any "ADA" issues relating to existing conditions.

7.       Tenant is not responsible to return the space to its original condition
         to the Landlord at completion of lease.


                              LANDLORD IMPROVEMENTS

1.       Landlord will provide painting of Premises including "Warehouse" space
         and its ceiling (including joists and insulation).