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                                                                   EXHIBIT 10.17

               [AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION LOGO]

           STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE -- NET
               (DO NOT USE THIS FORM FOR MULTI-TENANT BUILDINGS)

1.    BASIC PROVISIONS ("BASIC PROVISIONS")

      1.1   PARTIES: This Lease ("LEASE"), dated for reference purposes only
December 1, 2000 is made by and between Communications & Power Industries
Holding Corporation ("LESSOR") and Communications & Power Industries, Inc.
("LESSEE"), (collectively the "PARTIES," or individually a "PARTY").

      1.2   PREMISES: That certain real property, including all improvements
therein or to be provided by Lessor under the terms of this Lease, and commonly
known as 301 Industrial Way, San Carlos, CA 94070 located in the County of San
Mateo, State of California and generally described as (describe briefly the
nature of the property and, if applicable, the "PROJECT" if the property is
located within a Project) approximately 18.09 acres of land on which are
situated four buildings containing approximately 320,000 square feet of
manufacturing and research and development office space, and a waste water
treatment facility ("PREMISES"). (See also Paragraph 2)

      1.3   TERM: Twenty years and -0- months ("ORIGINAL TERM") commencing
January 1, 2001 ("COMMENCEMENT DATE") and ending December 31, 2020 ("EXPIRATION
DATE"). (See also Paragraph 3)

      1.4   EARLY POSSESSION: on date deed to Premises from Lessee to Lessor
("EARLY POSSESSION DATE"). (See also Paragraphs 3.2 and 3.3)

      1.5   BASE RENT: $204,166.67 per month ("BASE RENT"), payable on the first
business day of each month commencing January 2, 2001. (See also Paragraph 4)

[ ]   If this box is checked, there are provisions in this Lease for the Base
Rent to be adjusted.

      1.6   BASE RENT PAID UPON EXECUTION: $N/A as Base Rent for the period.

      1.7   SECURITY DEPOSIT: $-0- ("SECURITY DEPOSIT"). (See also Paragraph 5)

      1.8   AGREED USE: Any lawful use. (See also Paragraph 6)

      1.9   INSURING PARTY: Lessee is the "INSURING PARTY" unless otherwise
stated herein. (See also Paragraph 8)

      1.10  REAL ESTATE BROKERS: (See also Paragraph 15)

            (a)   REPRESENTATION: The following real estate brokers
(collectively, the "BROKERS") and brokerage relationships exist in this
transaction (check applicable boxes):

[ ]   N/A represents Lessor exclusively ("LESSOR'S BROKER");

[ ]   N/A represents Lessee exclusively ("LESSEE'S BROKER"); or

[ ]   N/A represents both Lessor and Lessee ("DUAL AGENCY").

            (b)   PAYMENT TO BROKERS: Upon execution and delivery of this Lease
by both Parties, Lessor shall pay to the Broker the fee agreed to in their
separate written agreement (or if there is no such agreement, the sum of -0-% of
the total Base Rent for the brokerage services rendered by said Broker).

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

      1.12  ADDENDA AND EXHIBITS. Attached hereto is an Addendum or Addenda
consisting of Paragraphs N/A through N/A and Exhibits N/A, all of which
constitute a part of this Lease.

2.    PREMISES.

      2.1   LETTING. Lessor hereby leases to Lessee, and Lessee hereby leases
from Lessor, the Premises, for the term, at the rental, and upon all of the
terms, covenants and conditions set forth in this Lease. Unless otherwise
provided herein, any statement of size set forth in this Lease, or that may have
been used in calculating rental, is an approximation which the Parties agree is
reasonable and the rental based thereon is not subject to revision whether or
not the actual size is more or less.

      2.2   CONDITION. Lessor shall deliver the Premises to Lessee "as is" on
the Commencement Date or the Early Possession Date, whichever first occurs
("START DATE").

      2.3   COMPLIANCE. Lessee acknowledges that the improvements on the
Premises comply in all material respects with all applicable laws, covenants or
restrictions of record building codes, regulations and ordinances ("APPLICABLE
REQUIREMENTS") in effect on the Start Date. Lessee is responsible for
determining whether or not the zoning is appropriate for Lessee's intended use.
The Applicable Requirements are hereafter charged as opposed to being in
existence at the Start Date which is addressed in Paragraph 6.2 e below so as
??? Lease the construction of an addition to or an alteration of the Building,
the remediation of any Hazardous Substance or the enforcement of other physical
modification of the Building ("CAPITAL EXPENDITURE") Lessor and Lessee shall
allocate the ??? as follows

                  100% to Lessee


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          (a)  Whether or not such Capital Expenditures are required as a
result of the specific and unique use of the Premises by Lessee as compared
with uses by tenants in general. Lessee shall be fully responsible for the cost
thereof, provided, however, that if such Capital Expenditure is required during
the last two (2) years of this Lease and the cost thereof exceeds six (6)
months Base Rent Lessee may instead terminate this Lease unless Lessor notifies
Lessee, in writing, within ten (10) days after receipt of Lessee's termination
notice that Lessor has elected to pay the difference between the actual cost
thereof and the amount equal to six (6) months Base Rent. If Lessee elects
termination, Lessee shall immediately cease the use of the Premises which
requires such Capital Expenditure and deliver to Lessor written notice
specifying a termination date at least ninety (90) days thereafter. Such
termination date shall, however, in no event be earlier than the last day that
Lessee could legally utilize the Premises without commencing such capital
Expenditure.

          (b)  The provisions concerning Capital Expenditures are intended to
apply to non-voluntary unexpected and new Applicable Requirements. If the
Capital Expenditures are instead triggered by Lessee as a result of an actual
or proposed change in use, change in intensity of use, or modification to the
Premises then, and in that event, Lessee shall be fully responsible for the
cost thereof, and Lessee shall not have any right to terminate this Lease.

     2.4  ACKNOWLEDGEMENTS. Lessee acknowledges that: (a) it has been advised
by Lessor and/or Brokers to satisfy itself with respect to the condition of the
Premises (including but not limited to the electrical. HVAC and fire sprinkler
systems, security, environmental aspects, and compliance with Applicable
Requirements), and their suitability for Lessee's intended use. (b) Lessee has
made such investigation as it deems necessary with reference to such matters
and assumes all responsibility therefor as the same relate to its occupancy of
the Premises, and (c) neither Lessor, Lessor's agents, nor any Broker has made
any oral or written representations or warranties with respect to said matters
other than as set forth in this Lease. In addition, Lessor acknowledges that:
(a) Broker has made no representations, promises or warranties concerning
Lessee's ability to honor the Lease or suitability to occupy the Premises, and
(b) it is Lessor's sole responsibility to investigate the financial capability
and/or suitability of all proposed tenants.

     2.5  LESSEE AS PRIOR OWNER/OCCUPANT. The warranties made by Lessor in
Paragraph 2 shall be of no force or effect if immediately prior to the Start
Date Lessee was the owner or occupant of the Premises. In such event, Lessee
shall be responsible for any necessary corrective work. Lessee was
owner/occupant of the Premises prior to the Start Date.

3.   TERM.

     3.1  TERM. The Commencement Date, Expiration Date and Original Term of
this Lease are as specified in Paragraph 1.3.

     3.2  EARLY POSSESSION. If Lessee totally or partially occupies the
Premises prior to the Commencement Date, the obligation to pay Base Rent shall
be abated for the period of such early possession. All other terms of this
Lease (including but not limited to the obligations to pay Real Property Taxes
and insurance premiums and to maintain the Premises) shall, however, be in
effect during such period. Any such early possession shall not affect the
Expiration Date.

     3.3  DELAY IN POSSESSION. Lessor agrees to use its best commercially
reasonable efforts to deliver possession of the Premises to Lessee by the
Commencement Date. If, despite said efforts, Lessor is unable to deliver
possession as agreed, Lessor shall not be subject to any liability therefor,
nor shall such failure affect the validity of this Lease. Lessee shall not,
however, be obligated to pay Rent or perform its other obligations until it
receives possession of the Premises. If possession is not delivered within
sixty (60) days after the Commencement Date, Lessee may, at its option, by
notice in writing within ten (10) days after the end of such sixty (60) day
period, cancel this Lease, in which event the Parties shall be discharged from
all obligations hereunder. If such written notice is not received by Lessor
within said ten (10) day period, Lessee's right to cancel shall terminate.
Except as otherwise provided, if possession is not tendered to Lessee by the
Start Date and Lessee does not terminate this Lease, as aforesaid, any period
of rent abatement that Lessee would otherwise have enjoyed shall run from the
date of delivery of possession and continue for a period equal to what Lessee
would otherwise have enjoyed under the terms hereof, but minus any days of
delay caused by the acts or omissions of Lessee. If possession of the Premises
is not delivered within four (4) months after the Commencement Date, this Lease
shall terminate unless other agreements are reached between Lessor and Lessee,
in writing.

     3.4  LESSEE COMPLIANCE. Lessor shall not be required to tender possession
of the Premises to Lessee until Lessee complies with its obligation to provide
evidence of insurance (Paragraph 8.5). Pending delivery of such evidence, Lessee
shall be required to perform all of its obligations under this Lease from and
after the Start Date, including the payment of Rent, notwithstanding Lessor's
election to withhold possession pending receipt of such evidence of insurance.
Further, if Lessee is required to perform any other conditions prior to or
concurrent with the Start Date, the Start Date shall occur but Lessor may elect
to withhold possession until such conditions are satisfied.

4.   RENT.

     4.1  RENT DEFINED. All monetary obligations of Lessee to Lessor under the
terms of this Lease (except for the Security Deposit) are deemed to be rent
("RENT").

     4.2  PAYMENT. Lessee shall cause payment of Rent to be received by Lessor
in lawful money of the United States, without offset or deduction (except as
specifically permitted in this Lease), on or before the day on which it is due.
Rent for any period during the term hereof which is for less than one (1) full
calendar month shall be prorated based upon the actual number of days of said
month. Payment of Rent shall be made to Lessor at its address stated herein or
to such other persons or place as Lessor may from time to time designate in
writing. Acceptance of a payment which is less than the amount then due shall
not be a waiver of Lessor's rights to the balance of such Rent, regardless of
Lessor's endorsement of any check so stating.



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6.   USE.

     6.1  USE.  Lessee shall use and occupy the Premises only for the Agreed
Use, or any other legal use which is reasonably comparable thereto, and for no
other purpose. Lessee shall not use or permit the use of the Premises in a
manner that is unlawful, creates damage, waste or a nuisance, or that disturbs
owners and/or occupants of or causes damage to neighboring properties. Lessor
shall not unreasonably withhold or delay its consent to any written request for
a modification of the Agreed Use, so long as the same will not impair the
structural integrity of the improvements on the Premises or the mechanical or
electrical systems therein, is not significantly more burdensome to the
Premises. If Lessor effects to withhold consent, Lessor shall within five (5)
business days after such request give written notification of same, which
notice shall include an explanation of Lessor's objections to the change in use.

     6.2  HAZARDOUS SUBSTANCES.

     (a) REPORTABLE USES REQUIRE CONSENT. The term "Hazardous Substance" as used
in this Lease shall mean any product, substance or waste whose presence, use,
manufacture, disposal, transportation, or release either by itself or in
combination with other materials expected to be on the Premises, is either (i)
potentially injurious to the public health, safety or welfare, the environment
or the Premises (ii) regulated or monitored by any governmental authority, or
(iii) a basis for potential liability of Lessor to any governmental agency or
third party under any applicable statute or common law theory. Hazardous
Substances shall include, but not be limited to hydrocarbons, petroleum,
gasoline, and/or crude oil or any products, by-products or fractions thereof.
Lessee shall not engage in any activity in or on the Premises which constitutes
a Reportable Use of Hazardous Substances without timely compliance (at Lessee's
expense) with all Applicable Requirements. "Reportable Use" shall mean (i) the
installation or use of any above or below ground storage tank, (ii) the
generation, possession, storage, use, transportation, or disposal of a Hazardous
Substance that requires a permit from or with respect to which a report, notice,
registration or business plan is required to be filed with, any governmental
authority, and/or (iii) the presence at the Premises of a Hazardous Substance
with respect to which any Applicable Requirements requires that a notice be
given to persons entering or occupying the Premises or neighboring properties.
Notwithstanding the foregoing, Lessee may use any ordinary and customary
materials reasonably required to be used in the normal course of the Agreed Use,
so long as such use is in compliance with all Applicable Requirements and does
not expose the Premises or neighboring property to any meaningful risk of
contamination or damage or expose Lessor to any liability therefor.

     (b)  DUTY TO INFORM LESSOR. If Lessee knows, or has reasonable cause to
believe, that a Hazardous Substance has come to be located in, on, under or
about the Premises, other than as previously consented to by Lessor, Lessee
shall immediately give written notice of such fact to Lessor, and provide Lessor
with a copy of any report, notice, claim or other documentation which it has
concerning the presence of such Hazardous Substance.

     (c)  LESSEE REMEDIATION. Lessee shall not cause or permit any Hazardous
Substance to be spilled or released in, on, under, or about the Premises
(including through the plumbing or sanitary sewer system) and shall promptly, at
Lessee's expense, take all investigatory and/or remedial action reasonably
recommended, whether or not formally ordered or required, for the cleanup of any
contamination of, and for the maintenance, security and/or monitoring of the
Premises or neighboring properties, that was caused or materially contributed to
by Lessee, or pertaining to or involving any Hazardous Substance brought onto
the Premises during the term of this Lease, by or for Lessee, or any third
party.

     (d)  LESSEE INDEMNIFICATION.  Lessee shall indemnify, defend and hold
Lessor, its agents, employees, lenders and ground lessor, if any, harmless from
and against any and all loss of rents and/or damages, liabilities, judgments,
claims, expenses, penalties, and attorneys and consultants' fees arising out of
or involving any Hazardous Substance brought onto the Premises by or for Lessee,
or any third party (provided, however, that Lessee shall have no liability under
this Lease with respect to underground migration of any Hazardous Substance
under the Premises from adjacent properties). Lessee's obligations shall
include, but not be limited to, the effects of any contamination or injury to
person, property, or the environment created or suffered by Lessee, and the cost
of investigation, removal, remediation, restoration and/or abatement, and shall
survive the expiration or termination of this Lease. No termination,
cancellation or release agreement entered into by Lessor and Lessee shall
release Lessee from its obligations under this Lease with respect to Hazardous
Substances, unless specifically so agreed by Lessor in writing at the time of
such agreement.

     (e)  ADDITIONAL LESSEE INDEMNIFICATION.  Lessee and its successors and
assigns shall also indemnify, defend, reimburse and hold Lessor, its employees
and lenders, harmless from and against any and all environmental damages,
including the cost of remediation, which existed as a result of Hazardous
Substances on the Premises prior to the Start Date or which are caused by the
gross negligence or willful misconduct of Lessee, its agents or employees.
Lessee's obligations, as and when required by the Applicable Requirements, shall
include, but not be limited to the cost of investigation, removal, remediation,
restoration and/or abatement, and shall survive the expiration or termination of
this Lease.

     (f)  INVESTIGATIONS AND REMEDIATIONS.  Lessee shall have the responsibility
and pay for any investigations or remediation measures required by governmental
entities having jurisdiction with respect to the existence of Hazardous
Substances on the Premises prior to the Start Date.

     6.3  LESSEE'S COMPLIANCE WITH APPLICABLE REQUIREMENTS. Except as otherwise
provided in this Lease, Lessee shall at Lessee's sole expense, fully, diligently
and in a timely manner, materially comply with all Applicable Requirements and
the requirements of any applicable [illegible] insurance underwriter or rating
bureau without regard to whether said requirements are now in effect or become
effective after the Start Date. Lessee shall within ten (10) days after receipt
of Lessor's written request, provide Lessor with copies of all permits and other
documents, and other information evidencing Lessee's compliance with any
Applicable Requirements specified by Lessor, and shall immediately upon receipt,
notify Lessor in writing with copies of any documents involved) or any
threatened or actual claim, notice, citation, warning, complaint or report
pertaining to or involving the failure of Lessee or the Premises to comply with
any Applicable Requirements.

     6.4  INSPECTION COMPLIANCE.  Lessor and Lessors "Lender" (as defined in
Paragraph 30 below) and consultants shall have the right to enter the Premises
at any time in case of an emergency and otherwise at reasonable times for the
purpose of inspecting the condition of the Premises and for verifying compliance
by Lessee with this Lease. The cost of any such inspections shall be paid by
Lessor unless a [illegible] Acceptable Requirements or a contamination is found
to exist or be imminent or the inspection is requested or ordered by a
governmental agency in such case Lessee shall upon request reimburse Lessor for
the cost of such inspections so long as such inspection is reasonably
[illegible] to the [illegible] or contamination


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7.   MAINTENANCE; REPAIRS, UTILITY INSTALLATIONS; TRADE FIXTURES AND
     ALTERATIONS.

     7.1  LESSEE'S OBLIGATIONS.

          (a) IN GENERAL. Subject to the provisions of Paragraph 2.2
(Condition), 2.3 (Compliance), 6.3 (Lessee's Compliance with Applicable
Requirements), 7.2 (Lessor's Obligations), 9 (Damage or Destruction) and
14 (Condemnation) Lessee shall, at Lessee's sole expense, keep the Premises,
Utility Installations, and Alterations in good order, condition and repair
(whether or not the portion of the Premises requiring repairs or the means of
repairing the same, are reasonably or readily accessible to Lessee, and whether
or not the need for such repairs occurs as a result of Lessee's use any prior
use, the elements or the age of such portion of the Premises), including, but
not limited to all equipment or facilities such as plumbing, heating,
ventilating, air-conditioning, electrical, lighting facilities, boilers,
pressure vessels, fire protection system, fixtures, walls (interior and
exterior), foundations, ceilings, roofs, floors, windows, doors, plate glass,
skylights, landscaping, driveways, parking lots, fences, retaining walls, signs,
sidewalks and parkways located in, on or adjacent to the Premises. Lessee, in
keeping the Premises in good order, condition and repair, shall exercise and
perform good maintenance practices, specifically including the procurement and
maintenance of the service contracts required by Paragraph 7.1(b) below.
Lessee's obligations shall include restorations, replacements or renewals when
necessary to keep the Premises and all improvements thereon or a part thereof in
good order, condition and state of repair. Lessee shall during the term of this
Lease keep the exterior appearance of the Building in first-class condition
consistent with the exterior appearance of other similar facilities of
comparable age and size in the vicinity, including, when necessary, the exterior
repainting of the Building.

          (b) SERVICE CONTRACTS. Lessee shall, at Lessee's sole expense, procure
and maintain contracts, with copies to Lessor, in customary form and substance
for and with contractors specializing and experienced in the maintenance of the
following equipment and improvements ("Basic Elements"), if any, if and when
installed on the Premises. (i) HVAC equipment, (ii) boiler, and pressure
vessels, (iii) fire extinguishing systems including fire alarm and/or smoke
detection, (iv) landscaping and irrigation systems, (v) roof covering and
drains, (vi) driveways and parking lots, (vii) clarifiers, (viii) basic utility
feed to the perimeter of the Building, and (ix) any other equipment, if
reasonably required by Lessor.

          (c) REPLACEMENT. Replacement of Basic Elements shall be at Lessee's
expense.

     7.2  LESSOR'S OBLIGATIONS. Subject to the provisions of Paragraphs 9
(Damage or Destruction) and 14 (Condemnation), it is intended by the Parties
hereto that Lessor have no obligation, in any manner whatsoever, to repair and
maintain the Premises, or the equipment therein, all of which obligations are
intended to be that of the Lessee. It is the intention of the Parties that the
terms of this Lease govern the respective obligations of the Parties as to
maintenance and repair of the Premises, and they expressly waive the benefit of
any statute now or hereafter in effect to the extent it is inconsistent with the
terms of this Lease.

     7.3  UTILITY INSTALLATIONS; TRADE FIXTURES; ALTERATIONS.

          (a) DEFINITIONS; CONSENT REQUIRED. The term "UTILITY INSTALLATIONS"
refers to all floor and window coverings, air lines, power panels, electrical
distribution, security and fire protection systems, communication systems,
lighting fixtures, HVAC equipment, plumbing, and fencing in or on the Premises.
The term "TRADE FIXTURES" shall mean Lessee's machinery and equipment that can
be removed without doing material damage to the Premises. The term "ALTERATIONS"
shall mean any modification of the improvements, other than Utility
Installations or Trade Fixtures, whether by addition or deletion. "LESSEE OWNED
ALTERATIONS AND/OR UTILITY INSTALLATIONS"  are defined as Alterations and/or
Utility Installations made by Lessee that are not yet owned by Lessor pursuant
to Paragraph 7.4(a). Lessee shall not make any Alterations or Utility
Installations to the Premises without Lessor's prior written consent not to be
unreasonably withheld. Lessee may, however, make non-structural Utility
Installations to the interior of the Premises (excluding the roof) without such
consent but upon notice to Lessor, as long as they are not visible from the
outside, do not involve puncturing, relocating or removing the roof or any
existing walls, and the cumulative cost thereof during this Lease as extended
does not exceed $50,000 in the aggregate or $10,000 in any one year.

          (b) CONSENT. Any Alterations or Utility Installations that Lessee
shall desire to make and which require the consent of the Lessor shall be
presented to Lessor in written form with detailed plans. Consent shall be deemed
conditioned upon Lessee's: (i) acquiring all applicable governmental permits,
(ii) furnishing Lessor with copies of both the permits and the plans and
specifications prior to commencement of the work, and (iii) compliance with all
conditions of said permits and other Applicable Requirements in a prompt and
expeditious manner. Any Alterations or Utility Installations shall be performed
in a workmanlike manner with good and sufficient materials. Lessee shall
promptly upon completion furnish Lessor with as-built plans and specifications.

          (c) INDEMNIFICATION. Lessee shall pay, when due, all claims for labor
or materials furnished or alleged to have been furnished to or for Lessee at or
for use on the Premises, which claims are or may be secured by any mechanic's or
materialmen's lien against the Premises or any interest therein. Lessee shall
give Lessor not less than ten (10) days' notice prior to the commencement of any
work in, on or about the Premises, and Lessor shall have the right to post
notices of non-responsibility. If Lessee shall contest the validity of any such
lien, claim or demand, then Lessee shall, at its sole expense defend and protect
itself, Lessor and the Premises against the same and shall pay and satisfy any
such adverse judgment that may be rendered thereon before the enforcement
thereof. If Lessor shall require, Lessee shall furnish a surety bond in an
amount equal to one and one-half times the amount of such contested lien, claim
or demand, indemnifying Lessor against liability for the same. If Lessor elects
to participate in any such action, Lessee shall pay Lessor's attorney's fees and
costs.

     7.4  OWNERSHIP; REMOVAL; SURRENDER; AND RESTORATION.

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

          (b) REMOVAL. By delivery to Lessee of written notice from Lessor not
earlier than ninety (90) and not later than thirty (30) days prior to the end of
the term of this Lease, Lessor may require that any or all Lessee Owned
Alterations or Utility Installations be removed by the expiration or termination
of this Lease. Lessor may require the removal at any time of all or any part of
any Lessee Owned Alterations or Utility Installations made without the required
consent.

          (c) SURRENDER/RESTORATION. Lessee shall surrender the Premises by the
Expiration Date or any earlier termination date with all of the improvements
parts and surfaces thereof broom clean and free of debris and in good operating
order, condition and state of repair, ordinary wear and tear excepted. "Ordinary
wear and tear" shall not include any damage or deterioration that would have
been prevented by good maintenance practice. Lessee shall repair any damage
occasioned by the installation, maintenance or removal of Trade Fixtures, Lessee
Owned Alterations and/or Utility Installations, furnishings, and equipment as
well as the removal of any storage tank installed by or for Lessee and the
removal, replacement or remediation of any soil material or groundwater
contaminated by Lessee. Trade Fixtures shall remain the property of Lessee and
shall be removed by Lessee. The failure by Lessee to timely vacate the Premises
pursuant to this Paragraph 7.4(c) without the express written consent of Lessor
shall constitute a holdover under the provisions of Paragraph 26 below.

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8.   INSURANCE: INDEMNITY.

     8.1  PAYMENT FOR INSURANCE. Lessee shall make arrangements for and pay for
all insurance required under Paragraph 8.

     8.2  LIABILITY INSURANCE.

          (a)  CARRIED BY LESSEE. Lessee shall obtain and keep in force a
Commercial General Liability Policy of Insurance protecting Lessee and Lessor
against claims for bodily injury, personal injury and property damage based upon
or arising out of the ownership, use, occupancy or maintenance of the Premises
and all areas appurtenant thereto. Such insurance shall be on an occurrence
basis providing single limit coverage in an amount not less than $2,000,000 per
occurrence with an "ADDITIONAL INSURED-MANAGERS OR LESSORS OF PREMISES
ENDORSEMENT" and contain the "AMENDMENT OF THE POLLUTION EXCLUSION ENDORSEMENT"
for damage caused by heat, smoke or fumes from a hostile fire. The Policy shall
not contain any intra-insured exclusions as between insured persons or
organizations, but shall include coverage for liability assumed under this Lease
as an "insured contract" for the performance of Lessee's indemnity obligations
under this Lease. The limits of said insurance shall not, however, limit the
liability of Lessee nor relieve Lessee of any obligation hereunder. All
insurance carried by Lessee shall be primary to and not contributory with any
similar insurance carried by Lessor, whose insurance shall be considered excess
insurance only.

     8.3  PROPERTY INSURANCE - BUILDING IMPROVEMENTS.

          (a)  BUILDING AND IMPROVEMENTS. The Insuring Party shall obtain and
keep in force a policy or policies in the name of Lessor with loss payable to
Lessor, any groundlessor, and to any Lender(s) insuring loss or damage to the
Premises. The amount of such insurance shall be equal to the full replacement
cost of the Premises, as the same shall exist from time to time, or the amount
required by any Lenders, but in no event more than the commercially reasonable
and available insurance value thereof. If the coverage is available and
commercially appropriate, such policy or policies shall insure against all risks
of direct physical loss or damage (except the perils of flood and/or
earthquake), including coverage for debris removal and the enforcement of any
Applicable Requirements requiring the upgrading, demolition, reconstruction or
replacement of any portion of the Premises as the result of a covered loss. Said
policy or policies shall also contain an agreed valuation provision in lieu of
any coinsurance clause, waiver of subrogation, and inflation guard protection
causing an increase in the annual property insurance coverage amount by a factor
of not less than the adjusted U.S. Department of Labor Consumer Code Price Index
for All Urban Consumers for the city nearest to where the Premises are located.

          (b)  ADJACENT PREMISES. If the Premises are part of a larger
building, or of a group of buildings owned by Lessor which are adjacent to the
Premises, the Lessee shall pay for any increase in the premiums for the
property insurance of such building or buildings if said increase is caused by
Lessee's acts, omissions, or use or occupancy of the Premises.

     8.4  LESSEE'S PROPERTY/BUSINESS INTERRUPTION INSURANCE.

          (a)  PROPERTY DAMAGE. Lessee shall obtain and maintain insurance
coverage on all of Lessee's personal property, Trade Fixtures, and Lessee Owned
Alterations and Utility Installations. Such insurance shall be full replacement
cost coverage subject to deductible. The proceeds from any such insurance shall
be used by Lessee for the replacement of personal property, Trade Fixtures and
Lessee Owned Alterations and Utility Installations. Lessee shall provide Lessor
with written evidence that such insurance is in force.

          (b)  BUSINESS INTERRUPTION. Lessee shall obtain and maintain loss of
income and extra expense insurance in amounts as will reimburse Lessee for
direct or indirect loss of earnings attributable to all perils commonly insured
against by prudent lessees in the business of Lessee or attributable to
prevention of access to the Premises as a result of such perils.

          (c)  NO REPRESENTATION OF ADEQUATE COVERAGE. Lessor makes no
representation that the limits or forms of coverage of insurance specified
herein are adequate to cover Lessee's property, business operations or
obligations under this Lease.

     8.5  INSURANCE POLICIES. Insurance required herein shall be by companies
duly licensed or admitted to transact business in the state where the Premises
are located, and maintaining during the policy term a "General Policyholders
Rating" of at least B+.V. as set forth in the most current issue of "Best's
Insurance Guide", or such other rating as may be required by a Lender. Lessee
shall not do or permit to be done anything which invalidates the required
insurance policies. Lessee shall, prior to the Start Date, deliver to Lessor
certified copies of policies of such insurance or certificates evidencing the
existence and amounts of the required insurance. No such policy shall be
cancelable or subject to modification except after ten (10) days prior written
notice to Lessor. Lessee shall, at least ten (10) days prior to the expiration
of such policies, furnish Lessor with evidence of renewals or "insurance
binders" evidencing renewal thereof, or Lessor may order such insurance and
charge the cost thereof to Lessee, which amount shall be payable by Lessee to
Lessor upon demand. Such policies shall be for a term of at least one year, or
the length of the remaining term of this Lease, whichever is less. If either
Party shall fail to procure and maintain the insurance required to be carried
by it, the other Party may, but shall not be required to, procure and maintain
the same.

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

     8.7  INDEMNITY. Except for Lessor's gross negligence or willful misconduct,
Lessee shall indemnify, protect, defend and hold harmless the Premises, Lessor
and its agents, Lessor's master or ground lessor, partners and Lenders, from
and against any and all claims, loss of rents and/or damages, liens, judgments,
penalties, attorneys' and consultants fees, expenses and/or liabilities arising
out of, involving or in connection with the use and/or occupancy of the Premises
by Lessee. If any action or proceeding is brought against Lessor by reason of
any of the foregoing matters, Lessee shall upon notice defend the same at
Lessee's expense by counsel reasonably satisfactory to Lessor and Lessor shall
cooperate with Lessee in such defense. Lessor need not have first paid any such
claim in order to be defended or indemnified.

     8.8  EXEMPTION OF LESSOR FROM LIABILITY. Lessor shall not be liable for
injury or damage to the person or goods, wares, merchandise, or other property
of Lessee, Lessee's employees, contractors, invitees, customers, or any other
person in or about the Premises, whether such damage or injury is caused by or
results from fire, steam, electricity, gas, water or rain, or from the breakage,
leakage, obstruction or other defects of pipes, fire sprinklers, wires,
appliances, plumbing, HVAC or lighting fixtures, or from any other cause,
whether the said injury or damage results from conditions arising upon the
Premises or upon other portions of the Building of which the Premises are a part
or from other sources or places. Lessor shall not be liable for any damages
arising from any act or neglect of any other tenant of Lessor. Notwithstanding
Lessor's negligence or breach of this Lease, Lessor shall under no circumstances
be liable for injury to Lessee's business or for any loss of income or profit
therefrom.

9.   DAMAGE OR DESTRUCTION.

     9.1  DEFINITIONS.

          (a)  "PREMISES PARTIAL DAMAGE" shall mean damage or destruction to
the improvements on the Premises other than Lessee Owned Alterations and
Utility Installations which can reasonably be repaired in six (6) months or
less from the date of the damage or destruction


                                     PAGE 5
<PAGE>   6

Lessor shall notify Lessee in writing within thirty (30) days from the date of
the damage or destruction as to whether or not the damage is Partial or Total

          (b) "PREMISES TOTAL DESTRUCTION" shall mean damage or destruction to
the Premises, other than Lessee Owned Alterations and Utility Installations and
Trade Fixtures, which cannot reasonably be repaired in six (6) months or less
from the date of the damage or destruction. Lessor shall notify Lessee in
writing within thirty (30) days from the date of the damage or destruction as to
whether or not the damage is Partial or Total

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

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

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

     9.2  PARTIAL DAMAGE - INSURED LOSS. If a Premises Partial Damage that is an
Insured Loss occurs, then Lessor shall at Lessor's expense, repair such damage
(but not Lessee's Trade Fixtures or Lessee Owned Alterations and Utility
Installations) as soon as reasonably possible and this Lease shall continue in
full force and effect, provided, however, that Lessee shall, at Lessor's
election, make the repair of any damage or destruction the total cost to repair
of which is $10,000 or less, and, in such event, Lessor shall make any
applicable insurance proceeds available to Lessee on a reasonable basis for that
purpose. Notwithstanding the foregoing, if the required insurance was not in
force or the insurance proceeds are not sufficient to effect such repair, the
Insuring Party shall promptly contribute the shortage in proceeds (except as to
the deductible which is Lessee's responsibility) as and when required to
complete said repairs. In the event, however, such shortage was due to the fact
that, by reason of the unique nature of the improvements, full replacement cost
insurance coverage was not commercially reasonable and available, Lessor shall
have no obligation to pay for the shortage in insurance proceeds or to fully
restore the unique aspects of the Premises unless Lessee provides Lessor with
the funds to cover same, or adequate assurance thereof, within ten (10) days
following receipt of written notice of such shortage and request therefor. If
Lessor receives said funds or adequate assurance thereof within said ten (10)
day period, the party responsible for making the repairs shall complete them as
soon as reasonably possible and this Lease shall remain in full force and
effect. If such funds or assurance are not received, Lessor may nevertheless
elect by written notice to Lessee within ten (10) days thereafter to (i) make
such restoration and repair as is commercially reasonable with Lessor paying any
shortage in proceeds, in which case this Lease shall remain in full force and
effect; or (ii) have this Lease terminate thirty (30) days thereafter. Lessee
shall not be entitled to reimbursement of any funds contributed by Lessee to
repair any such damage or destruction. Premises Partial Damage due to flood or
earthquake shall be subject to Paragraph 9.3, notwithstanding that there may be
some insurance coverage, but the net proceeds of any such insurance shall be
made available for the repairs made by either Party.

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

     9.4  TOTAL DESTRUCTION. Notwithstanding any other provision hereof, if a
Premises Total Destruction occurs, this Lease shall terminate sixty (60) days
following such Destruction. If the damage or destruction was caused by the
gross negligence or willful misconduct of Lessee, Lessor shall have the right
to recover Lessor's damages from Lessee, except as provided in Paragraph 8.6.

     9.5  DAMAGE NEAR END OF TERM. If at any time during the last six (6) months
of this Lease there is damage for which the cost to repair exceeds one (1)
month's Base Rent, whether or not an insured Loss, Lessor may terminate this
Lease effective sixty (60) days following the date of occurrence of such damage
by giving a written termination notice to Lessee within thirty (30) days after
the date of occurrence of such damage. Notwithstanding the foregoing, if Lessee
at that time has an exercisable option to extend this Lease or to purchase the
Premises, then Lessee may preserve this Lease by, (a) exercising such option and
(b) providing Lessor with any shortage in insurance proceeds (or adequate
assurance thereof) needed to make the repairs on or before the earlier of (i)
the date which is ten days after Lessee's receipt of Lessor's written notice
purporting to terminate this Lease, or (ii) the day prior to the date upon which
such option expires. If Lessee duly exercises such option during such period and
provides Lessor with funds (or adequate assurance thereof) to cover any shortage
in insurance proceeds, Lessor shall at Lessor's commercially reasonable expense,
repair such damage as soon as reasonably possible and this Lease shall continue
in full force and effect. If Lessee fails to exercise such option and provide
such funds or assurance during such period, then this Lease shall terminate on
the date specified in the termination notice and Lessee's option shall be
extinguished.

     9.6  ABATEMENT OF RENT; LESSEE'S REMEDIES.

          (a) ABATEMENT. In the event of Premises Partial Damage or Premises
Total Destruction or a Hazardous Substance Condition for which Lessee is not
responsible under this Lease, the Rent payable by Lessee for the period required
for the repair, remediation or restoration of such damage shall be abated in
proportion to the degree to which Lessee's use of the Premises is impaired, but
not to exceed the proceeds received from the Rental Value insurance. All other
obligations of Lessee hereunder shall be performed by Lessee, and Lessor shall
have no liability for any such damage, destruction, remediation, repair or
restoration except as provided herein.

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

     9.7  TERMINATION-ADVANCE PAYMENTS. Upon termination of this Lease pursuant
to Paragraph 6.2(g) or Paragraph 9 an equitable adjustment shall be made
concerning advance Base Rent and any other advance payments made by Lessee to
Lessor. Lessor shall in addition return to Lessee so much of Lessee's Security
Deposit as has not been, or is not then required to be, used by Lessor.

     9.8  WAIVE STATUTES. Lessor and Lessee agree that the terms of this Lease
shall govern the effect of any damage to or destruction of the Premises with
respect to the termination of this Lease and hereby waive the provisions of any
present or future statute to the extent consistent herewith.

10.  REAL PROPERTY TAXES.

     10.1 DEFINITION OF "REAL PROPERTY TAXES." As used herein, the term "REAL
PROPERTY TAXES" shall include any form of assessment, real estate, general,
special, ordinary or extraordinary or rental levy or tax (other than
inheritance, personal income or estate taxes) improvement bond and/or license
fee imposed upon or levied against any legal or equitable interest of Lessor in
the Premises. Lessor's right to other income therefrom and or Lessor's business
of leasing, by any authority having the direct or indirect power to tax and
where the funds are generated


                                     PAGE 5
<PAGE>   7
with reference to the Building address and where the proceeds so generated are
to be applied by the city, county or other local taxing authority of a
jurisdiction within which the Premises are located. The term "REAL PROPERTY
TAXES" shall also include any tax, fee, levy, assessment or charge, or any
increase therein, imposed by reason of events occurring during the term of this
Lease, including but not limited to a change in the ownership of the Premises.

     10.2

          (a) PAYMENT OF TAXES. Lessee shall pay the Real Property Taxes
applicable to the Premises during the term of this Lease. Subject to Paragraph
10.2(b), all such payments shall be made at least ten (10) days prior to any
delinquency date. Lessee shall promptly furnish Lessor with satisfactory
evidence that such taxes have been paid. If any such taxes shall cover any
period of time prior to or after the expiration or termination of this Lease,
Lessee's share of such taxes shall be prorated to cover only that portion of
the tax bill applicable to the period that this Lease is in effect, and Lessor
shall reimburse Lessee for any overpayment. If Lessee shall fail to pay any
required Real Property Taxes, Lessor shall have the right to pay the same and
Lessee shall reimburse Lessor therefor upon demand.

          (b) ADVANCE PAYMENT. In the event Lessee incurs a late charge on any
Rent payment, Lessor may, at Lessor's option estimate the current Real Property
Taxes, and require that such taxes be paid in advance to Lessor by Lessee,
either (i) in a lump sum amount equal to the installment due, at least twenty
(20) days prior to the applicable delinquency date, or (ii) monthly in advance
with the payment of the Base Rent. If Lessor elects to require payment monthly
in advance, the monthly payment shall be an amount equal to the amount of the
estimated installment of taxes divided by the number of months remaining before
the month in which said installment becomes delinquent. When the actual amount
of the applicable tax bill is known, the amount of such equal monthly advance
payments shall be adjusted as required to provide the funds needed to pay the
applicable taxes. If the amount collected by Lessor is insufficient to pay such
Real Property Taxes when due Lessee shall pay Lessor, upon demand, such
additional sums as are necessary to pay such obligations. All moneys paid to
Lessor under this Paragraph may be intermingled with other moneys of Lessor and
shall not bear interest. In the event of a Breach by Lessee in the performance
of its obligations under this Lease, then any balance of funds paid to Lessor
under the provisions of this Paragraph may at the option of Lessor be treated
as an additional Security Deposit.

     10.3 JOINT ASSESSMENT. If the Premises are not separately assessed,
Lessee's liability shall be an equitable proportion of the Real Property Taxes
for all of the land and improvements included within the tax parcel assessed,
such proportion to be conclusively determined by Lessor from the respective
valuations assigned in the assessor's work sheets or such other information as
may be reasonably available.

     10.4 PERSONAL PROPERTY TAXES. Lessee shall pay, prior to delinquency, all
taxes assessed against and levied upon Lessee Owned Alterations, Utility
Installations, Trade Fixtures, furnishings, equipment and all personal property
of Lessee. When possible, Lessee shall cause such property to be assessed and
billed separately from the real property of Lessor. If any of Lessee's said
personal property shall be assessed with Lessor's real property, Lessee shall
pay Lessor the taxes attributable to Lessee's property within ten (10) days
after receipt of a written statement.

11.  UTILITIES. Lessee shall pay for all water, gas, heat, light, power,
telephone, trash disposal and other utilities and services supplied to the
Premises, together with any taxes thereon. If any such services are not
separately metered to Lessee, Lessee shall pay a reasonable proportion, to be
determined by Lessor, of all charges jointly metered.

12.  ASSIGNMENT AND SUBLETTING.

     12.1 LESSOR'S CONSENT REQUIRED.

          (a) Lessee shall not voluntarily or by operation of law assign,
transfer, mortgage or encumber (collectively, "ASSIGN OR ASSIGNMENT") or sublet
all or any part of Lessee's interest in this Lease or in the Premises without
Lessor's prior written consent not to be unreasonably withheld.

          (b) An assignment or subletting without consent shall, at Lessor's
option, be a Default curable after notice per Paragraph 13.1(c), or a
noncurable Breach without the necessity of any notice and grace period. If
Lessor elects to treat such unapproved assignment or subletting as a noncurable
Breach, Lessor may either: (i) terminate this Lease, or (ii) upon thirty (30)
days written notice, increase the monthly Base Rent to one hundred ten percent
(110%) of the Base Rent then in effect.

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

     12.2 TERMS AND CONDITIONS APPLICABLE TO ASSIGNMENT AND SUBLETTING.

          (a) Regardless of Lessor's consent, any assignment or subletting
shall not: (i) be effective without the express written assumption by such
assignee or sublessee of the obligations of Lessee under this Lease, (ii)
release Lessee of any obligations hereunder, or (iii) alter the primary
liability of Lessee for the payment of Rent or for the performance of any other
obligations to be performed by Lessee.

          (b) Lessor may accept Rent or performance of Lessee's obligations
from any person other than Lessee pending approval or disapproval of an
assignment. Neither a delay in the approval or disapproval of such assignment
nor the acceptance of Rent or performance shall constitute a waiver or estoppel
of Lessor's right to exercise its remedies for Lessee's Default or Breach.

          (c) Lessor's consent to any assignment or subletting shall not
constitute a consent to any subsequent assignment or subletting.

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

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

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

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

          a) Lessee hereby assigns and transfers to Lessor all of Lessee's
interest in all Rent payable on any sublease and Lessor may [illegible] such
Rent and apply same toward Lessee's obligations under this Lease provided,
however that until a Breach shall occur [illegible] performance of Lessee's
obligations, Lessee may collect said Rent. Lessor shall not, by reason of the
foregoing or any assignment of such sublease nor by reason of the collection of
Rent be deemed liable to the sublessee for any failure of Lessee to perform and
comply with any of Lessee's obligations to such sublessee. Lessee hereby
revocably authorizes and directs any such sublessee upon receipt of a written
notice


                                     PAGE 7
<PAGE>   8
from Lessor stating that a Breach exists in the performance of Lessee's
obligations under this Lease, to pay to Lessor all Rent due and to become due
under the sublease. Sublessee shall rely upon any such notice from Lessor and
shall pay all Rents to Lessor without any obligation or right to inquire as to
whether such Breach exists, notwithstanding any claim from Lessee to the
contrary.

          (b) In the event of a Breach by Lessee, Lessor may, at its option,
require sublessee to attorn to Lessor in which event Lessor shall undertake the
obligations of the sublessor under such sublease from the time of the exercise
of said option to the expiration of such sublease provided however Lessor shall
not be liable for any prepaid rents or security deposit paid by such sublessee
to such sublessor or for any prior Defaults or Breaches of such sublessor

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

          (d) No sublessee shall further assign or sublet all or any part of
the Premises without Lessor's prior written consent

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

13.  DEFAULT; BREACH; REMEDIES.

     13.1 DEFAULT; BREACH. A "DEFAULT" is defined as a failure by the Lessee to
comply with or perform any of the terms, covenants,  conditions or rules under
this Lease. A "BREACH" is defined as the occurrence of one or more of the
following Defaults and failure of Lessee to cure such Default within any
applicable grace period:

          (a) The abandonment of the Premises, or the vacating of the Premises
without providing a commercially reasonable level of security or where the
coverage of the property insurance described in Paragraph 8.3 is jeopardized as
a result thereof, or without providing reasonable assurances to minimize
potential vandalism

          (b) The failure of Lessee to make any payment of Rent required to be
made by Lessee hereunder whether to Lessor or to a third party, when due, to
provide reasonable evidence of insurance or surety bond, or to fulfill any
obligation under this Lease which endangers or threatens life or property, where
such failure continues for a period of three (3) business days following written
notice to Lessee

          (c) The failure by Lessee to provide (i) reasonable written evidence
of compliance with Applicable Requirements, (ii) the service contracts, (iii)
the rescission of an unauthorized assignment or subletting, (iv) an Estoppel
Certificate, (v) a requested subordination, (vi) evidence concerning any
guaranty and/or Guarantor, (vii) any document requested under Paragraph 42
(easements), or (viii) any other documentation or information which Lessor may
reasonably require of Lessee under the terms of this Lease, where any such
failure continues for a period of ten (10) days following written notice to
Lessee

          (d) A Default by Lessee as to the terms, covenants, conditions or
provisions of this Lease, or of the rules adopted under Paragraph 40 hereof,
other than those described in subparagraphs 13.1(a), (b) or (c), above, where
such Default continues for a period of thirty (30) days after written notice;
provided, however, that if the nature of Lessee's Default is such that more than
thirty (30) days are reasonably required for its cure, then it shall not be
deemed to be a Breach if Lessee commences such cure within said thirty (30) day
period and thereafter diligently prosecutes such cure to completion.

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

          (f) The discovery that any financial statement of Lessee given to
Lessor was materially false.

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

          (a) Terminate Lessee's right to possession of the Premise by any
lawful means, in which case this Lease shall terminate and Lessee shall
immediately surrender possession to Lessor. In such event Lessor shall be
entitled to recover from Lessee: (i) the unpaid Rent which had been earned at
the time of termination; (ii) the worth at the time of award of the amount by
which the unpaid rent which would have been earned after termination until the
time of award exceeds the amount of such rental loss that the Lessee proves
could have been reasonably avoided; (iii) the worth at the time of award of the
amount by which the unpaid rent for the balance of the term after the time of
award exceeds the amount of such rental loss that the Lessee proves could be
reasonably avoided; and (iv) any other amount necessary to compensate Lessor for
all the detriment proximately caused by the Lessee's failure to perform its
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom, including but not limited to the cost of recovering
possession of the Premises, expenses of reletting including necessary renovation
and alteration of the Premises, reasonable attorneys' fees, and that portion of
any leasing commission paid by Lessor in connection with this Lease applicable
to the unexpired term of this Lease. The worth at the time of award of the
amount referred to in provision (iii) of the immediately preceding sentence
shall be computed by discounting such amount at the discount rate of the Federal
Reserve Bank of the District within which the Premises are located at the time
of award plus one percent (1%). Efforts by Lessor to mitigate damages caused by
Lessee's Breach of this Lease shall not waive Lessor's right to recover damages
under Paragraph 12. If termination of this Lease is obtained through the
provisional remedy of unlawful detainer, Lessor shall have the right to recover
in such proceeding any unpaid Rent and damages as are recoverable therein, or
Lessor may reserve the right to recover all or any part thereof in a separate
suit. If a notice and grace period required under Paragraph 13.1 was not
previously given, a notice to pay rent or quit, or to perform or quit given to
Lessee under the unlawful detainer statute shall also constitute the notice
required by Paragraph 13.1. In such case the applicable grace period required by
Paragraph 13.1 and the unlawful detainer statute shall run concurrently and the
failure of Lessee to cure the Default within the greater of the two such grace
periods shall constitute both an unlawful detainer and a Breach of this Lease
entitling Lessor to the remedies provided for in this Lease and/or by said
statute

          (b) Continue the Lease and Lessee's right to possession and recover
the Rent as it becomes due in which event Lessee may sublet or assign subject
only to reasonable limitations. Acts of maintenance, efforts to relet and/or the
appointment of a receiver to protect the Lessor's interests shall not constitute
a termination of the Lessee's right to possession

          (c) Pursue any other remedy now or hereafter available under the laws
or judicial decisions of the state wherein the Premises are located. The
expiration or termination of this Lease and/or the termination of Lessee's right
to possession shall not relieve Lessee from [ILLEGIBLE]


                                     PAGE 8
<PAGE>   9
under any indemnity provisions of this Lease as to matters occurring or accruing
during the term hereof or by reason of Lessee's occupancy of the Premises.

     13.3 INDUCEMENT RECAPTURE. Any agreement for free or abated rent or other
charges, or for the giving or paying by Lessor to or for Lessee of any cash or
other bonus, inducement or consideration for Lessee's entering into this Lease,
all of which concessions are hereinafter referred to as "INDUCEMENT PROVISIONS,"
shall be deemed conditioned upon Lessee's full and faithful performance of all
of the terms, covenants and conditions of this Lease. Upon Breach of this Lease
by Lessee, any such inducement Provision shall automatically be deemed deleted
from this Lease and of no further force or effect, and any rent, other charge,
bonus, inducement or consideration theretofore abated, given or paid by Lessor
under such an inducement Provision shall be immediately due and payable by
Lessee to Lessor, notwithstanding any subsequent cure of said Breach by Lessee.
The acceptance by Lessor of rent or the cure of the Breach which initiated the
operation of this paragraph shall not be deemed a waiver by Lessor of the
provisions of this paragraph unless specifically so stated in writing by Lessor
at the time of such acceptance.

     13.4 LATE CHARGES. Lessee hereby acknowledges that late payment by Lessee
of Rent will cause Lessor to incur costs not contemplated by this Lease, the
exact amount of which will be extremely difficult to ascertain. Such costs
include, but are not limited to, processing and accounting charges, and late
charges which may be imposed upon Lessor by any Lender. Accordingly, if any Rent
shall not be received by Lessor within five (5) days after such amount shall be
due, then, without any requirement for notice to Lessee, Lessee shall pay to
Lessor a one-time late charge equal to four percent (4%) of each such overdue
amount. The parties hereby agree that such late charge represents a fair and
reasonable estimate of the costs Lessor will incur by reason of such late
payment. Acceptance of such late charge by Lessor shall in no event constitute a
waiver of Lessee's Default or Breach with respect to such overdue amount nor
prevent the exercise of any of the other rights and remedies granted hereunder.
In the event that a late charge is payable hereunder, whether or not collected
for three (3) consecutive installments of Base Rent, then notwithstanding any
provision of this Lease to the contrary, Base Rent shall, at Lessor's option,
become due and payable quarterly in advance.

     13.5 INTEREST. Any monetary payment due Lessor hereunder, other than late
charges, not received by Lessor, when due as to scheduled payments (such as Base
Rent) or within thirty (30) days following the date on which it was due for
non-scheduled payment, shall bear interest from the date when due, as to
scheduled payments, or the thirty-first (31st) day after it was due as to
non-scheduled payments. The interest ("INTEREST") charged shall be equal to the
prime rate reported in the Wall Street Journal as published closest prior to the
date when due plus four percent (4%), but shall not exceed the maximum rate
allowed by law. Interest is payable in addition to the potential late charge
provided for in Paragraph 13.4.

     13.6 BREACH BY LESSOR.

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

          (b) PERFORMANCE BY LESSEE ON BEHALF OF LESSOR. In the event that
neither Lessor nor Lender cures said breach within thirty (30) days after
receipt of said notice, or if having commenced said cure they do not diligently
pursue it to completion, then Lessee may elect to cure said breach at Lessee's
expense and offset from Rent an amount equal to the greater of one month's Base
Rent or the Security Deposit, and to pay an excess of such expense under
protest, reserving Lessee's right to reimbursement from Lessor. Lessee shall
document the cost of said cure and supply said documentation to Lessor.

14.  CONDEMNATION. If the Premises or any portion thereof are taken under the
power of eminent domain or sold under the threat of the exercise of said power
(collectively "CONDEMNATION"), this Lease shall terminate as to the part taken
as of the date the condemning authority takes title or possession, whichever
first occurs. If more than ten percent (10%) of any building portion of the
premises, or more than twenty-five percent (25%) of the land area portion of the
premises not occupied by any building, is taken by Condemnation, Lessee may, at
Lessee's option, to be exercised in writing within ten (10) days after Lessor
shall have given Lessee written notice of such taking (or in the absence of such
notice, within ten (10) days after the condemning authority shall have taken
possession) terminate this Lease as of the date the condemning authority takes
such possession. If Lessee does not terminate this Lease in accordance with the
foregoing, this Lease shall remain in full force and effect as to the portion of
the Premises remaining, except that the Base Rent shall be reduced in proportion
to the reduction in utility of the Premises caused by such Condemnation.
Condemnation awards and/or payments shall be the property of Lessor, whether
such award shall be made as compensation for diminution in value of the
leasehold, the value of the part taken, or for severance damages; provided,
however, that Lessee shall be entitled to any compensation for Lessee's
relocation expenses, loss of business goodwill and/or Trade Fixtures, without
regard to whether or not the Lease is terminated pursuant to the provision of
this Paragraph. All Alterations and Utility Installations made to the Premises
by Lessee, for purposes of Condemnation only, shall be considered the property
of the Lessee and Lessee shall be entitled to any and all compensation which is
payable therefor. In the event that this Lease is not terminated by reason of
the Condemnation, Lessor shall repair any damage to the Premises caused by such
Condemnation.

15.  ESTOPPEL CERTIFICATES.

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

          (b) If the Responding Party shall fail to execute or deliver the
Estoppel Certificate within such ten day period the Requesting Party may execute
an Estoppel Certificate stating that (i) the Lease is in full force and effect
without modification except as may be represented by the Requesting Party, (ii)
there are no uncured defaults in the Requesting Party's performance, and (iii)
if Lessor is the Requesting Party not more than one month's rent has been paid
in advance, Prospective purchasers and encumbrancers may rely upon the
Requesting Party's Estoppel Certificate and the Responding Party shall be
estopped from denying the truth of the facts contained in said Certificate.


                                     PAGE 9

<PAGE>   10
          (c)  If Lessor desires to finance, refinance, or sell the Premises, or
     any part thereof, Lessee and all Guarantors shall deliver to any potential
     lender or purchaser designated by Lessor such financial statements as may
     be reasonably required by such lender or purchaser including but not
     limited to Lessee's financial statements for the past three (3) years. All
     such financial statements shall be received by Lessor and such lender or
     purchaser in confidence and shall be used only for the purposes herein set
     forth.

16.  DEFINITION OF LESSOR. The term "Lessor" as used herein shall mean the owner
     or owners at the time in question of the fee title to the Premises or if
     this is a sublease of the Lessee's interest in the prior lease in the event
     of a transfer of Lessor's title or interest in the Premises or this Lease.
     Lessor shall deliver to the transferee or assignee (in cash or by credit)
     any unused Security Deposit held by Lessor. Except as provided in Paragraph
     15, upon such transfer or assignment and delivery of the Security Deposit,
     as aforesaid, the prior Lessor shall be relieved of all liability with
     respect to the obligations and/or covenants under this Lease thereafter to
     be performed by the Lessor. Subject to the foregoing, the obligations
     and/or covenants in this Lease to be performed by the Lessor shall be
     binding only upon the Lessor as hereinabove defined. Notwithstanding the
     above, and subject to the provisions of Paragraph 20 below, the original
     Lessor under this Lease and all subsequent holder's of the Lessor's
     interest in this Lease shall remain liable and responsible with regard to
     the potential duties and liabilities of Lessor pertaining to Hazardous
     Substances as outlined in Paragraph 6 above.

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

18.  DAYS. Unless otherwise specifically indicated to the contrary, the word
     "days" as used in this Lease shall mean and refer to calendar days.

19.  LIMITATION ON LIABILITY. Subject to the provisions of Paragraph 17 above,
     the obligations of Lessor under this Lease shall not constitute personal
     obligations of Lessor, the individual partners of Lessor or its or their
     individual partners, directors, officers or shareholders, and Lessee shall
     look to the Premises, and to no other assets of Lessor, for the
     satisfaction of any liability of Lessor with respect to this Lease, and
     shall not seek recourse against the individual partners of Lessor, or its
     or their individual partners, directors, officers or shareholders, or any
     of their personal assets for such satisfaction.

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

21.  NO PRIOR OR OTHER AGREEMENTS. This Lease contains all agreements between
     the Parties with respect to any matter mentioned herein, and no other
     prior or contemporaneous agreement or understanding shall be effective.
     Lessor and Lessee each represents and warrants to the Brokers that it has
     made, and is relying solely upon, its own investigation as to the nature,
     quality, character and financial responsibility of the other Party to this
     Lease and as to the nature, quality and character of the Premises.

22.  NOTICES.

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

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

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

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

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

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

27.  COVENANTS AND CONDITIONS; CONSTRUCTION OF AGREEMENT. All provisions of this
     Lease to be observed or performed by Lessee are both covenants and
     conditions in construing this Lease, all headings and titles are for the
     convenience of the parties only and shall not be considered a part of this
     Lease. Whenever required by the context, the singular shall include the
     plural and vice versa. This Lease shall not be construed as if prepared by
     one of the parties, but rather according to its fair meaning as a whole, as
     if both parties had prepared it.

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

29.  SUBORDINATION; ATTORNMENT; NON-DISTURBANCE.

     29.1 SUBORDINATION. This Lease and any Option granted hereby shall be
     subject and subordinate to any ground lease mortgage deed of trust or other
     hypothecation or security device (collectively, "Security Device") now or
     hereafter placed upon the Premises to any and all advances made on the
     security thereof, and to all renewals, modifications, and extensions
     thereof. Lessee agrees that the holder's of any such Security Devices in
     this Lease together referred to as "Lender") shall have no liability or
     obligation to perform any of the obligations of Lessor under this Lease.
     Any Lender may elect to have this Lease and/or any Option granted hereby
     superior to the lien of its Security Device by giving written notice
     thereof to Lessee whereupon this Lease and such Options shall be deemed
     prior to such Security Device notwithstanding the relative dates of the
     documentation or recordation thereof.

     29.2 ATTORNMENT. Subject to the non-disturbance provisions of Paragraph
     30.3 Lessee agrees to attorn to a Lender or any other party who acquires
     ownership of the Premises by reason of a foreclosure of a Security Device,
     and that in the event of such foreclosure such new


                                    PAGE 10
<PAGE>   11
owner shall not: (i) be liable for any act or omission of any prior lessor or
with respect to events occurring prior to acquisition of ownership, (ii) be
subject to any offsets or defenses which Lessee might have against any prior
lessor, or (iii) be bound by prepayment of more than one (1) month's rent.

     29.3 NON-DISTURBANCE. With respect to Security Devices entered into by
Lessor after the execution of this Lease. Lessee's subordination of this Lease
shall be subject to receiving a commercially reasonable non-disturbance
agreement (a "NON-DISTURBANCE AGREEMENT") from the Lender which Non-Disturbance
Agreement provides that Lessee's possession of the Premises, and this Lease,
including any options to extend the term hereof, will not be disturbed so long
as Lessee is not in Breach hereof and attorns to the record owner of the
Premises. Further, within sixty (60) days after the execution of this Lease,
Lessor shall use its commercially reasonable efforts to obtain a
Non-Disturbance Agreement from the holder of any pre-existing Security Device
which is secured by the Premises. In the event that Lessor is unable to provide
the Non-Disturbance Agreement within said sixty (60) days, then Lessee may, at
Lessee's option, directly contact Lessor's lender and attempt to negotiate for
the execution and delivery of a Non-Disturbance Agreement.

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

30.  ATTORNEYS' FEES. If any Party or Broker brings an action or proceeding
involving the Premises to enforce the terms hereof or to declare rights
hereunder, the Prevailing Party (as hereafter defined) in any such proceeding,
action, or appeal thereon, shall be entitled to reasonable attorneys' fees.
Such fees may be awarded in the same suit or recovered in a separate suit,
whether or not such action or proceeding is pursued to decision or judgment.
The term, "PREVAILING PARTY" shall include, without limitation, a Party or
Broker who substantially obtains or defeats the relief sought, as the case may
be, whether by compromise, settlement, judgment, or the abandonment by the
other Party or Broker of its claim or defense. The attorneys' fees award shall
not be computed in accordance with any court fee schedule, but shall be such as
to fully reimburse all attorneys' fees reasonably incurred. In addition, Lessor
shall be entitled to attorneys' fees, costs and expenses incurred in the
preparation and service of notices of Default and consultations in connection
therewith, whether or not a legal action is subsequently commenced in
connection with such Default or resulting Breach.

31.  LESSOR'S ACCESS; SHOWING PREMISES; REPAIRS. Lessor and Lessor's agent
shall have the right to enter the Premises at any time, in the case of an
emergency, and otherwise at reasonable times for the purpose of showing the
same to prospective purchasers, lenders, or lessees, and making such
alterations, repairs, improvements or additions to the Premises as Lessor may
deem necessary. All such activities shall be without abatement of rent or
liability to Lessee. Lessor may at any time place on the Premises any ordinary
"FOR SALE" signs and Lessor may during the last six (6) months of the term
hereof place on the Premises any ordinary "FOR LEASE" signs. Lessee may at any
time place on or about the Premises any ordinary "FOR SUBLEASE" sign.

32.  AUCTIONS. Lessee shall not conduct, nor permit to be conducted, any
auction upon the Premises without Lessor's prior written consent, Lessor shall
not be obligated to exercise any standard of reasonableness in determining
whether to permit an auction.

33.  SIGNS. Except for ordinary "FOR SUBLEASE" signs, Lessee shall not place
any sign upon the Premises without Lessor's prior written consent. All signs
must comply with all Applicable Requirements.

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

35.  CONSENTS. Except as otherwise provided herein, wherever in this Lease the
consent of a Party is required to an act by or for the other Party, such
consent shall not be unreasonably withheld or delayed. Lessor's actual
reasonable costs and expenses (including but not limited to architects',
attorneys', engineers' and other consultants' fees) incurred in the
consideration of, or response to, a request by Lessee for any Lessor consent,
including but not limited to consents to an assignment, a subletting or the
presence or use of a Hazardous Substance, shall be paid by Lessee upon receipt
of an invoice and supporting documentation therefor. Lessor's consent to any
act, assignment or subletting shall not constitute an acknowledgment that no
Default or Breach by Lessee of this Lease exists, nor shall such consent be
deemed a waiver of any then existing Default or Breach, except as may be
otherwise specifically stated in writing by Lessor at the time of such consent.
The failure to specify herein any particular condition to Lessor's consent
shall not preclude the imposition by Lessor at the time of consent of such
further or other conditions as are then reasonable with reference to the
particular matter for which consent is being given. In the event that either
Party disagrees with any determination made by the other hereunder and
reasonably requests the reasons for such determination, the determining party
shall furnish its reasons in writing and in reasonable detail within ten (10)
business days following such request.

36.  QUIET POSSESSION. Subject to payment by Lessee of the Rent and performance
of all of the covenants, conditions and provisions on Lessee's part to be
observed and performed under this Lease, Lessee shall have quiet possession and
quiet enjoyment of the Premises during the term hereof.



                                    PAGE 11
<PAGE>   12
the care and cleanliness of the grounds and including the parking, loading and
unloading of vehicles, and that Lessee will pay its fair share of common
expenses incurred in connection therewith.

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

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

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

41.   AUTHORITY. If either Party hereto is a corporation, trust, limited
liability company, partnership or similar entity, each individual executing
this Lease on behalf of such entity represents and warrants that he or she is
duly authorized to execute and deliver this Lease on its behalf. Each party
shall, within thirty (30) days after request, deliver to the other party
satisfactory evidence of such authority.

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

43.   OFFER. Preparation of this Lease by either Party or their agent and
submission of same to the other Party shall not be deemed an offer to lease to
the other Party. This Lease is not intended to be binding until executed and
delivered by all Parties hereto.

44.   AMENDMENTS. This Lease may be modified only in writing, signed by the
Parties in interest at the time of the modification. As long as they do not
materially change Lessee's obligations hereunder. Lessee agrees to make such
reasonable non-monetary modifications to this Lease as may be reasonably
required by a Lender in connection with the obtaining of normal financing or
refinancing of the Premises.

45.   MULTIPLE PARTIES. If more than one person or entity is named herein as
either Lessor or Lessee, such multiple Parties shall have joint and several
responsibility to comply with the terms of this Lease.

46.   MEDIATION AND ARBITRATION OF DISPUTES. An Addendum requiring the
Mediation and/or the Arbitration of all disputes between the Parties and/or
Brokers arising out of this Lease [ ] is [X] is not attached to this Lease.

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

--------------------------------------------------------------------------------
ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN
INDUSTRIAL REAL ESTATE ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL
SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION
TO WHICH IT RELATES. THE PARTIES ARE URGED TO:

1.    SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.

2.    RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF
THE PREMISES. SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE
POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING OF THE PREMISES, THE
STRUCTURAL INTEGRITY, THE CONDITION OF THE ROOF AND OPERATING SYSTEMS, AND THE
SUITABILITY OF THE PREMISES FOR LESSEE'S INTENDED USE.

WARNING: IF THE PREMISES IS LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN
PROVISIONS OF THE LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE
STATE IN WHICH THE PREMISES IS LOCATED.
--------------------------------------------------------------------------------

The parties hereto have executed this Lease at the place and on the dates
specified above their respective signatures.

Executed at: Palo Alto, California       Executed at: Palo Alto, California
           ----------------------------             ----------------------------
on: December   , 2000                    on: December   , 2000
  -------------------------------------    -------------------------------------
By: LESSOR:                              By: LESSEE:
Communications & Power Industries        Communications & Power Industries, Inc.
---------------------------------------  ---------------------------------------
Holding Corporation
---------------------------------------  ---------------------------------------

By: /s/ LYNN E. HARVEY                   By: /s/ LYNN E. HARVEY
   ------------------------------------     ------------------------------------
Name Printed: Lynn E. Harvey             Name Printed: Lynn E. Harvey
             --------------------------               --------------------------
Title: Chief Financial Officer           Title: Chief Financial Officer
      ---------------------------------        ---------------------------------

By:                                      By:
   ------------------------------------     ------------------------------------
Name Printed:                            Name Printed:
             --------------------------               --------------------------
Title:                                   Title:
      ---------------------------------        ---------------------------------
Address: 607 Hansen Way; Mail Stop       Address: 607 Hansen Way; Mail Stop
         A-200                                    A-200
       --------------------------------         --------------------------------
P.O. Box 51110, Palo Alto, CA 94303      P.O. Box 51110, Palo Alto, CA 94303
---------------------------------------  ---------------------------------------
Telephone (650) 846-2900                 Telephone (650) 846-2900
               ------------------------                 ------------------------
Facsimile (650) 846-3276                 Facsimile (650) 846-3276
               ------------------------                 ------------------------
Federal ID No.                           Federal ID No.
              -------------------------                -------------------------

NOTE: These forms are often modified to meet changing requirements of law and
industry needs. Always write or call to make sure you are utilizing the most
current form. AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION, 700 So. Flower
Street, Suite 600, Los Angeles, California 90017 (213) 687-8777 Fax No.
(213) 687-8616



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