<PAGE>
                                                                   Exhibit 10.12


                                     LEASE
                       (Single Tenant; Stand-Alone; Net)

                                   BETWEEN

                              THE IRVINE COMPANY

                                      AND

                               ENDWAVE CORPORATION

<PAGE>

                                 INDEX TO LEASE

ARTICLE I.  BASIC LEASE PROVISIONS...........................................1

ARTICLE II.  PREMISES........................................................2
       SECTION 2.1.     LEASED PREMISES......................................2
       SECTION 2.2.     ACCEPTANCE OF PREMISES...............................2
       SECTION 2.3.     BUILDING NAME AND ADDRESS............................2

ARTICLE III.  TERM................................Error! Bookmark not defined.
       SECTION 3.1.     GENERAL..............................................2
       SECTION 3.2.     DELAY IN POSSESSION..................................2

ARTICLE IV.  RENT AND OPERATING EXPENSES.....................................2
       SECTION 4.1.     BASIC RENT...........................................2
       SECTION 4.2.     OPERATING EXPENSES...................................3
       SECTION 4.3.     SECURITY DEPOSIT.....................................5

ARTICLE V.  USES.............................................................5
       SECTION 5.1.     USE..................................................5
       SECTION 5.2.     SIGNS................................................5
       SECTION 5.3.     HAZARDOUS MATERIALS..................................6

ARTICLE VI.  COMMON AREAS; SERVICES..........................................7
       SECTION 6.1.     UTILITIES AND SERVICES...............................7
       SECTION 6.2.     OPERATION AND MAINTENANCE OF COMMON AREAS............7
       SECTION 6.3.     USE OF COMMON AREAS..................................8
       SECTION 6.4.     PARKING..............................................8
       SECTION 6.5.     CHANGES AND ADDITIONS BY LANDLORD....................8

ARTICLE VII.  MAINTAINING THE PREMISES.......................................8
       SECTION 7.1.     TENANT'S MAINTENANCE AND REPAIR......................8
       SECTION 7.2.     LANDLORD'S MAINTENANCE AND REPAIR....................9
       SECTION 7.3.     ALTERATIONS..........................................9
       SECTION 7.4.     MECHANIC'S LIENS.....................................9
       SECTION 7.5.     ENTRY AND INSPECTION................................10

ARTICLE VIII.  TAXES AND ASSESSMENTS ON TENANT'S PROPERTY...................10

ARTICLE IX.  ASSIGNMENT AND SUBLETTING......................................10
       SECTION 9.1.     RIGHTS OF PARTIES...................................10
       SECTION 9.2.     EFFECT OF TRANSFER..................................11
       SECTION 9.3.     SUBLEASE REQUIREMENTS...............................11
       SECTION 9.4.     CERTAIN TRANSFERS...................................12

ARTICLE X.  INSURANCE AND INDEMNITY.........................................12
       SECTION 10.1.    TENANT'S INSURANCE..................................12
       SECTION 10.2.    LANDLORD'S INSURANCE................................12
       SECTION 10.3.    TENANT'S INDEMNITY..................................12
       SECTION 10.4.    LANDLORD'S NONLIABILITY.............................12
       SECTION 10.5.    WAIVER OF SUBROGATION...............................13

ARTICLE XI.  DAMAGE OR DESTRUCTION..........................................13
       SECTION 11.1.    RESTORATION.........................................13
       SECTION 11.2.    LEASE GOVERNS.......................................14

ARTICLE XII.  EMINENT DOMAIN................................................14
       SECTION 12.1.    TOTAL OR PARTIAL TAKING.............................14
       SECTION 12.2.    TEMPORARY TAKING....................................14
       SECTION 12.3.    TAKING OF PARKING AREA..............................14

ARTICLE XIII.  SUBORDINATION; ESTOPPEL CERTIFICATE; FINANCIALS..............14
       SECTION 13.1.    SUBORDINATION.......................................14
       SECTION 13.2.    ESTOPPEL CERTIFICATE................................15
       SECTION 13.3.    FINANCIALS..........................................15

ARTICLE XIV.  EVENTS OF DEFAULT AND REMEDIES................................15
       SECTION 14.1.    TENANT'S DEFAULTS...................................15
       SECTION 14.2.    LANDLORD'S REMEDIES.................................16
       SECTION 14.3.    LATE PAYMENTS.......................................17
       SECTION 14.4.    RIGHT OF LANDLORD TO PERFORM........................17
       SECTION 14.5.    DEFAULT BY LANDLORD.................................17
       SECTION 14.6.    EXPENSES AND LEGAL FEES.............................18

<PAGE>


       SECTION 14.7.    WAIVER OF JURY TRIAL................................18
       SECTION 14.8.    SATISFACTION OF JUDGMENT............................18
       SECTION 14.9.    LIMITATION OF ACTIONS AGAINST LANDLORD..............18

ARTICLE XV.  END OF TERM....................................................18
       SECTION 15.1.    HOLDING OVER........................................18
       SECTION 15.2.    MERGER ON TERMINATION...............................18
       SECTION 15.3.    SURRENDER OF PREMISES; REMOVAL OF PROPERTY..........18

ARTICLE XVI.  PAYMENTS AND NOTICES..........................................19

ARTICLE XVII.  RULES AND REGULATIONS........................................19

ARTICLE XVIII.  BROKER'S COMMISSION.........................................19

ARTICLE XIX.  TRANSFER OF LANDLORD'S INTEREST...............................19

ARTICLE XX.  INTERPRETATION.................................................19
       SECTION 20.1.    GENDER AND NUMBER...................................19
       SECTION 20.2.    HEADINGS............................................19
       SECTION 20.3.    JOINT AND SEVERAL LIABILITY.........................19
       SECTION 20.4.    SUCCESSORS..........................................19
       SECTION 20.5.    TIME OF ESSENCE.....................................19
       SECTION 20.6.    CONTROLLING LAW/VENUE...............................19
       SECTION 20.7.    SEVERABILITY........................................20
       SECTION 20.8.    WAIVER AND CUMULATIVE REMEDIES......................20
       SECTION 20.9.    INABILITY TO PERFORM................................20
       SECTION 20.10.   ENTIRE AGREEMENT....................................20
       SECTION 20.11.   QUIET ENJOYMENT.....................................20
       SECTION 20.12.   SURVIVAL............................................20
       SECTION 20.13.   INTERPRETATION......................................20

ARTICLE XXI.  EXECUTION AND RECORDING.......................................20
       SECTION 21.1.    COUNTERPARTS........................................20
       SECTION 21.2.    CORPORATE, LIMITED LIABILITY COMPANY AND
                        PARTNERSHIP AUTHORITY...............................20
       SECTION 21.3.    EXECUTION OF LEASE; NO OPTION OR OFFER..............20
       SECTION 21.4.    RECORDING...........................................20
       SECTION 21.5.    AMENDMENTS..........................................21
       SECTION 21.6.    EXECUTED COPY.......................................21
       SECTION 21.7.    ATTACHMENTS.........................................21

ARTICLE XXII.  MISCELLANEOUS................................................21
       SECTION 22.1.    NONDISCLOSURE OF LEASE TERMS........................21
       SECTION 22.2.    GUARANTY............................................21
       SECTION 22.3.    CHANGES REQUESTED BY LENDER.........................21
       SECTION 22.4.    MORTGAGEE PROTECTION................................21
       SECTION 22.5.    COVENANTS AND CONDITIONS............................21
       SECTION 22.6.    SECURITY MEASURES...................................21

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


                                       ii

<PAGE>

                                      LEASE
                              (Single Tenant; Net)

      THIS LEASE is made as of the 2 day of July, 2001, by and between THE
IRVINE COMPANY, a Delaware corporation hereafter called "Landlord," and ENDWAVE
CORPORATION, a Delaware corporation, hereinafter called "Tenant."

                        ARTICLE I. BASIC LEASE PROVISIONS

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

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

2.    Address of Building: 990 Almanor Avenue, Sunnyvale, CA 94085

3.    Use of Premises: General office, marketing, sales, storage, light
      manufacturing, and other legal related uses.

4.    Commencement Date: July 1, 2001

5.    Term: Sixty (60) months, plus such additional days as may be required to
      cause this Lease to terminate on the final day of the calendar month in
      which the Lease termination date falls.

6.    Basic Rent: One Hundred Eight Thousand One Hundred Sixty-Seven Dollars
      ($108,167.00) per month.

      Basic Rent is subject to adjustment as follows:

      Commencing twelve (12) months following the Commencement Date, the Basic
      Rent shall be One Hundred Ten Thousand Eight Hundred Twenty-Nine Dollars
      ($110,829.00) per month.

      Commencing twenty-four (24) months following the Commencement Date, the
      Basic Rent shall be One Hundred Thirteen Thousand Eight Hundred
      Twenty-Four Dollars ($113,824.00) per month.

      Commencing thirty-six (36) months following the Commencement Date, the
      Basic Rent shall be One Hundred Sixteen Thousand Four Hundred Eighty-Seven
      Dollars ($116,487.00) per month.

      Commencing forty-eight (48) months following the Commencement Date, the
      Basic Rent shall be One Hundred Nineteen Thousand Four Hundred Eighty-Two
      Dollars ($119,482.00) per month.

7.    Guarantor(s): N/A

8.    Floor Area: Approximately 33,282 rentable square feet

9.    Security Deposit: $119,482.00

10.   Broker(s): Colliers International

11.   Additional Insureds: Insignia/ESG, Inc.

12.   Address for Payments and Notices:

            LANDLORD                                  TENANT

      THE IRVINE COMPANY                              ENDWAVE CORPORATION
      c/o Insignia/ESG, Inc.                          990 Almanor Avenue
      160 West Santa Clara Street                     Sunnyvale, CA  94085
      Suite 1350
      San Jose, CA  95113

      with a copy of notices to:

      THE IRVINE COMPANY
      P.O. Box 6370
      Newport Beach, CA  92658-6370
      Attn:  Vice President, Operations
            Office Properties

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

14.   Plan Approval Date: N/A


                                       1

<PAGE>


                              ARTICLE II. PREMISES

      SECTION 2.1. LEASED PREMISES. Landlord leases to Tenant and Tenant leases
from Landlord the premises shown in Exhibit A (the "Premises"), containing
approximately the rentable square footage set forth as the "Floor Area" in Item
8 of the Basic Lease Provisions. The Premises consist of all of the rentable
square footage within the building identified in Item 2 of the Basic Lease
Provisions (the Premises together with such building and the underlying real
property, are called the "Building"). The Building is located on the site shown
on Exhibit Y (the "Site"). All references to "Floor Area" in this Lease shall
mean the rentable square footage set forth in Item 8 of the Basic Lease
Provisions. The rentable square footage set forth in Item 8 may include or have
been adjusted by various factors, including, without limitation, a load factor
for any vertical penetrations, stairwells or similar features or areas of the
Building. Tenant agrees that the Floor Area set forth in Item 8 shall be binding
on Landlord and Tenant for purposes of this Lease regardless of whether any
future or differing measurements of the Premises or the Building are consistent
or inconsistent with the Floor Area set forth in Item 8.

      SECTION 2.2. ACCEPTANCE OF PREMISES. Tenant acknowledges that neither
Landlord nor any representative of Landlord has made any representation or
warranty with respect to the Premises, the Building or the Site or their
respective suitability or fitness for any purpose, including without limitation
any representations or warranties regarding zoning or other land use matters,
and that neither Landlord nor any representative of Landlord has made any
representations or warranties regarding (i) what other tenants or uses may be
permitted or intended in the Building or the Site, (ii) any exclusivity of use
by Tenant with respect to its permitted use of the Premises as set forth in Item
3 of the Basic Lease Provisions, or (iii) any construction of portions of the
Site not yet completed. Tenant further acknowledges that neither Landlord nor
any representative of Landlord has agreed to undertake any alterations or
additions or construct any improvements to the Premises except as expressly
provided in this Lease. As of the Commencement Date and subject to Section 2.4
below, Tenant shall be conclusively deemed to have accepted the Premises and
those portions of the Building and Site in which Tenant has any rights under
this Lease, which acceptance shall mean that it is conclusively established that
the Premises and those portions of the Building and Site in which Tenant has any
rights under this Lease were in satisfactory condition and in conformity with
the provisions of this Lease, subject only to those defective or incomplete
portions of the Tenant Improvements constructed by Landlord pursuant to the Work
Letter, if any, attached hereto as Exhibit X ("Work Letter"), which Tenant shall
have itemized on a written punch list and delivered to Landlord within thirty
(30) days after the Commencement Date (as defined in Section 3.1). If no items
are required of Landlord under the Work Letter, Tenant shall, subject to Section
2.4 below, be conclusively deemed to have accepted the Premises, and those
portions of the Building and Site in which Tenant has any rights under this
Lease, in their existing condition as of the Commencement Date, and to have
waived any and all right or claim regardless of the nature thereof against
Landlord arising out of the condition of the Premises, the Building or the Site.
Nothing contained in this Section shall affect the commencement of the Term or
the obligation of Tenant to pay rent. Landlord shall diligently complete all
punch list items of which it is notified as provided above.

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

      SECTION 2.4. LANDLORD'S RESPONSIBILITIES. Landlord agrees and warrants
that the existing electrical, plumbing, and mechanical systems in the Building,
including, without limitation, the HVAC systems serving the Building, shall be
in good operating condition as of the Commencement Date. If a non-compliance
with the foregoing warranty exists as of the Commencement Date, Landlord shall,
promptly after receipt of the written notice from Tenant setting forth the
nature and extent of such non-compliance, rectify same at Landlord's sole cost
and expense.

                                ARTICLE III. TERM

      SECTION 3.1. GENERAL. The Term shall be for the period shown in Item 5 of
the Basic Lease Provisions. The Term shall commence ("Commencement Date") on the
Commencement Date as set forth in Item 4 of the Basic Lease Provisions and shall
end upon the expiration of the period set forth in Item 5 of the Basic Lease
Provisions ("Expiration Date"). The Premises are currently unoccupied and Tenant
shall be afforded possession of same upon the execution and delivery of this
Lease and the delivery by Tenant of all sums and other items required herein
prior to Tenant's occupancy.

                     ARTICLE IV. RENT AND OPERATING EXPENSES

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


                                       2

<PAGE>

      SECTION 4.2. OPERATING EXPENSES.

      (a) Tenant shall pay to Landlord, as additional rent, Tenant's Share of
all Operating Expenses, as defined in Section 4.2(f), incurred by Landlord in
the operation of the Building and the Site. The term "Tenant's Share" means one
hundred percent (100%) of any Operating Expenses determined by Landlord to
benefit or relate substantially to the Building and/or the Site, plus an
allocated portion of any Operating Expenses, as determined from time to time by
Landlord, which benefit or relate both to the Building or the Site and to other
projects owned by Landlord and/or its affiliates. The full amount of any
management fee payable by Landlord for the management of Tenant's Premises that
is calculated as a percentage of the rent payable by Tenant shall be paid in
full by Tenant as additional rent.

      (b) Prior to the start of each full Expense Recovery Period (as defined in
this Section 4.2), Landlord shall give Tenant a written estimate of the amount
of Tenant's Share of Operating Expenses for the applicable Expense Recovery
Period. Failure to provide such estimate shall not relieve Tenant from its
obligation to pay Tenant's Share of Operating Expenses or estimated amounts
thereof, if and when Landlord provides such estimate or final payment amount.
Tenant shall pay the estimated amounts to Landlord in equal monthly
installments, in advance concurrently with payments of Basic Rent. If Landlord
has not furnished its written estimate for any Expense Recovery Period by the
time set forth above, Tenant shall continue to pay monthly the estimated
Tenant's Share of Operating Expenses in effect during the prior Expense Recovery
Period; provided that when the new estimate is delivered to Tenant, Tenant
shall, at the next monthly payment date, pay any accrued estimated Tenant's
Share of Operating Expenses based upon the new estimate. For purposes hereof,
"Expense Recovery Period" shall mean every twelve month period during the Term
(or portion thereof for the first and last lease years) commencing July 1 and
ending June 30, provided that Landlord shall have the right to change the date
on which an Expense Recovery Period commences in which event appropriate
reasonable adjustments shall be made to Tenant's Share of Operating Expenses so
that the amount payable by Tenant shall not materially vary as a result of such
change.

      (c) Within one hundred twenty (120) days after the end of each Expense
Recovery Period, Landlord shall furnish to Tenant a statement showing in
reasonable detail the actual or prorated Tenant's Share of Operating Expenses
incurred by Landlord during the period, and the parties shall within thirty (30)
days thereafter make any payment or allowance necessary to adjust Tenant's
estimated payments of Tenant's Share of Operating Expenses, if any, to the
actual Tenant's Share of Operating Expenses as shown by the annual statement.
Any delay or failure by Landlord in delivering any statement hereunder shall not
constitute a waiver of Landlord's right to require Tenant to pay Tenant's Share
of Operating Expenses pursuant hereto. Any amount due Tenant shall be credited
against installments next coming due under this Section 4.2, and any deficiency
shall be paid by Tenant together with the next installment. Should Tenant fail
to object in writing to Landlord's determination of Tenant's Share of Operating
Expenses within sixty (60) days following delivery of Landlord's expense
statement, Landlord's determination of Tenant's Share of Operating Expenses for
the applicable Expense Recovery Period shall be conclusive and binding on the
parties for all purposes and any future claims to the contrary shall be barred.

      (d) Even though this Lease has terminated and the Tenant has vacated the
Premises, when the final determination is made of Tenant's Share of Operating
Expenses for the Expense Recovery Period in which this Lease terminates, Tenant
shall within thirty (30) days of written notice pay the entire increase over the
estimated Tenant's Share of Operating Expenses already paid. Conversely, any
overpayment by Tenant shall be rebated by Landlord to Tenant not later than
thirty (30) days after such final determination..

      (e) If, at any time during any Expense Recovery Period, any one or more of
the Operating Expenses are increased to a rate(s) or amount(s) in excess of the
rate(s) or amount(s) used in calculating the estimated Tenant's Share of
Operating Expenses for the year, then the estimate of Tenant's Share of
Operating Expenses may be increased by written notice from Landlord for the
month in which such rate(s) or amount(s) becomes effective and for all
succeeding months by an amount equal to Tenant's Share of the increase. If
Landlord gives Tenant written notice of the amount or estimated amount of the
increase, the month in which the increase will or has become effective, then
Tenant shall pay the increase to Landlord as a part of Tenant's monthly payments
of the estimated Tenant's Share of Operating Expenses as provided in Section
4.2(b), commencing with the month following Tenant's receipt of Landlord's
notice. In addition, Tenant shall pay upon written request any such increases
which were incurred prior to the Tenant commencing to pay such monthly increase.

      (f) The term "Operating Expenses" shall mean and include all Site Costs,
as defined in subsection (g), and Property Taxes, as defined in subsection (h).

      (g) The term "Site Costs" shall include all expenses of operation, repair
and maintenance of the Building and the Site, including without limitation all
appurtenant Common Areas (as defined in Section 6.2), and shall include the
following charges by way of illustration but not limitation: water and sewer
charges; insurance premiums and deductibles and/or reasonable premium and
deductible equivalents should Landlord elect to self-insure all or any portion
of any risk that Landlord is authorized to insure hereunder (provided that any
deductible shall be amortized, if necessary, to insure that Tenant is not
allocated in excess of $100,000.00 during any Expense Recovery Period); license,
permit, and inspection fees; heat; light; power; air conditioning; supplies;
materials; equipment; tools; the cost of any environmental, insurance, tax or
other consultant utilized by Landlord in connection with the Building and/or
Site; establishment of reasonable reserves for roof replacements; costs incurred
in connection with compliance with any laws or changes in laws applicable to the
Building or the Site; the cost of any capital investments or replacements (other
than tenant improvements for specific tenants) to the extent of the amortized
amount thereof over the useful life of such capital investments or replacements
calculated at a market cost of funds, all as determined by Landlord, for each
such year of useful life during the Term; costs associated with the maintenance
of an air conditioning, heating and ventilation service agreement; labor;
reasonably allocated wages and salaries, fringe benefits, and payroll taxes for
administrative and other personnel directly applicable to the Building and/or
Site, including both Landlord's personnel and outside personnel; any expense
incurred pursuant to


                                       3

<PAGE>

Sections 6.1, 6.2, 6.4, 7.2, and 10.2; and a reasonable overhead/management fee
for the professional operation of the Building and the Site. It is understood
and agreed that Site Costs may include competitive charges for direct services
provided by any subsidiary, division or affiliate of Landlord. Landlord shall
use reasonable efforts to keep Site Costs at reasonable amounts.

      (h) The term "Property Taxes" as used herein shall include any form of
federal, state, county or local government or municipal taxes, fees, charges or
other impositions of every kind (whether general, special, ordinary or
extraordinary) related to the ownership, leasing or operation of the Premises,
Building or Site, including without limitation, the following: (i) all real
estate taxes or personal property taxes, as such property taxes may be
reassessed from time to time; and (ii) other taxes, charges and assessments
which are levied with respect to this Lease or to the Building and/or the Site,
and any improvements, fixtures and equipment and other property of Landlord
located in the Building and/or the Site, (iii) all assessments and fees for
public improvements, services, and facilities and impacts thereon, including
without limitation arising out of any Community Facilities Districts, "Mello
Roos" districts, similar assessment districts, and any traffic impact mitigation
assessments or fees; (iv) any tax, surcharge or assessment which shall be levied
in addition to or in lieu of real estate or personal property taxes, other than
taxes covered by Article VIII; and (v) taxes based on the receipt of rent
(including gross receipts or sales taxes applicable to the receipt of rent), and
(vi) costs and expenses incurred in contesting the amount or validity of any
Property Tax by appropriate proceedings. Notwithstanding the foregoing, general
net income or franchise taxes imposed against Landlord shall be excluded.

      (i) Notwithstanding any other provisions of this Lease to the contrary, in
no event shall Operating Expenses include any of the following:

            (1) Any ground lease rental affecting all or a portion of the
Building;

            (2) Costs incurred by Landlord for the repair of damage to the
Building or as a result of Landlord's gross negligence or willful misconduct, to
the extent that Landlord is reimbursed by a third party or insurance proceeds;

            (3) Depreciation, amortization and interest payments, except as
provided herein, and except with respect to materials, tools, supplies and
vendor-type equipment purchased by Landlord to enable Landlord to supply
services Landlord might otherwise contract for with a third party where such
depreciation, amortization and interest payments would otherwise have been
included in the charge for such third party's services, all as determined in
accordance with generally accepted accounting principles, consistently applied,
and when depreciation or amortization is permitted or required, the item shall
be amortized over its reasonably anticipated useful life;

            (4) Overhead and profit increments paid to Landlord or to
subsidiaries or affiliates of Landlord for services in the Building to the
extent the same exceeds the cost of such services rendered at the same level of
service for similar quality buildings in the Sunnyvale area, by unaffiliated
third parties on a competitive basis;

            (5) Landlord's general corporate overhead and general administrative
expenses;

            (6) Except for making repairs or keeping permanent systems in
operation while repairs are being made, rentals and other related expenses
incurred in leasing air conditioning systems, elevators or other equipment
ordinarily considered to be of a capital nature, except equipment not affixed to
the Building which is used in providing janitorial or similar services;

            (7) Costs incurred in connection with upgrading the Building to
comply with handicap, life, fire and safety codes in effect prior to the date of
this Lease;

            (8) Tax penalties incurred as a result of Landlord's negligence or
inability or unwillingness to make payments when due or legal fees in connection
therewith or incurred contesting such penalties;

            (9) All assessments and other taxes which are not specifically
charged to Tenant because of what Tenant has done, which can be paid by Landlord
in installments, to the extent not paid by Landlord in the maximum number of
installments permitted by law and charged only to the applicable Expense
Recovery Period;

            (10) Any costs, fines or penalties incurred due to violations by
Landlord of any government rule or authority; and

            (11) Wages, salaries, medical, surgical and general welfare
benefits, pension payments, payroll taxes, workers' compensation costs or other
compensation paid to or for any executive employees above the grade of building
manager.

      (j) Provided Tenant is not then in default hereunder, Tenant shall have
the right to cause a certified public accountant, engaged on a non-contingency
fee basis, to audit Operating Expenses by inspecting Landlord's general ledger
of expenses not more than once during any Expense Recovery Period. However, to
the extent that insurance premiums or any other component of Operating Expenses
is determined by Landlord on the basis of an internal allocation of costs
utilizing information Landlord in good faith deems proprietary, such expense
component shall not be subject to audit so long as it does not exceed the amount
per square foot typically imposed by landlords of other first class office
projects in Orange County, California. Tenant shall give notice to Landlord of
Tenant's intent to audit within sixty (60) days after Tenant's receipt of
Landlord's expense statement which sets forth Landlord's actual Operating
Expenses. Such audit shall be conducted at a mutually agreeable time during
normal


                                       4

<PAGE>

business hours at the office of Landlord or its management agent where such
accounts are maintained. If Tenant's audit determines that actual Operating
Expenses have been overstated by more than five percent (5%), then subject to
Landlord's right to review and/or contest the audit results, Landlord shall
reimburse Tenant for the reasonable out-of-pocket costs of such audit. Tenant's
rent shall be appropriately adjusted to reflect any overstatement in Operating
Expenses. In addition, if any component of Operating Expenses is determined to
be either inappropriate or excessive during an Expense Recovery Period, and if
the Building Cost Base or Property Tax Base also included such component, then
the appropriate Base shall concurrently be adjusted if and to the extent
appropriate. In the event of a dispute between Landlord and Tenant regarding
such audit, either party may elect to submit the matter for binding arbitration
pursuant to Section 14.7(b) below. All of the information obtained by Tenant
and/or its auditor in connection with such audit, as well as any compromise,
settlement, or adjustment reached between Landlord and Tenant as a result
thereof, shall be held in strict confidence and, except as may be required
pursuant to litigation, shall not be disclosed to any third party, directly or
indirectly, by Tenant or its auditor or any of their officers, agents or
employees. Landlord may require Tenant's auditor to execute a separate
confidentiality agreement affirming the foregoing as a condition precedent to
any audit. In the event of a violation of this confidentiality covenant in
connection with any audit, then in addition to any other legal or equitable
remedy available to Landlord, Tenant shall forfeit its right to any
reconciliation or cost reimbursement payment from Landlord due to said audit
(and any such payment theretofore made by Landlord shall be promptly returned by
Tenant), and Tenant shall have no further audit rights under this Lease.
Notwithstanding the foregoing, Tenant shall have no right of audit with respect
to any Expense Recovery Period unless the total Operating Expenses per square
foot for such Expense Recovery Period, as set forth in Landlord's annual expense
reconciliation, exceed the total Operating Expenses per square foot during the
Base Year, as increased by the percentage change in the United States Department
of Labor, Bureau of Labor Statistics, Consumer Price Index for all Urban
Consumers, Los Angeles - Riverside - Orange County Area Average, all items
(1982-84 = 100) (the "Index"), which change in the Index shall be measured by
comparing the Index published for January of the Base Year with the Index
published for January of the applicable Expense Recovery Period.

      SECTION 4.3. SECURITY DEPOSIT. Concurrently with Tenant's delivery of this
Lease, Tenant shall deposit with Landlord the sum, if any, stated in Item 9 of
the Basic Lease Provisions, to be held by Landlord as security for the full and
faithful performance of all of Tenant's obligations under this Lease (the
"Security Deposit"). Landlord shall not be required to keep this Security
Deposit separate from its general funds, and Tenant shall not be entitled to
interest on the Security Deposit. Subject to the last sentence of this Section,
the Security Deposit shall be understood and agreed to be the property of
Landlord upon Landlord's receipt thereof, and may be utilized by Landlord in its
sole and absolute discretion towards the payment of all expenses by Landlord for
which Tenant would be required to reimburse Landlord under this Lease, including
without limitation inducement costs in accordance with Section 14.2(d). Upon any
Event of Default by Tenant (as defined in Section 14.1), Landlord may, in its
sole and absolute discretion, retain, use or apply the whole or any part of the
Security Deposit to pay any sum which Tenant is obligated to pay under this
Lease, sums that Landlord may expend or be required to expend by reason of the
Event of Default by Tenant or any loss or damage that Landlord may suffer by
reason of the Event of Default or costs incurred by Landlord in connection with
the repair or restoration of the Premises pursuant to Section 15.3 of this Lease
upon expiration or earlier termination of this Lease. In no event shall Landlord
be obligated to apply the Security Deposit upon an Event of Default and
Landlord's rights and remedies resulting from an Event of Default, including
without limitation, Tenant's failure to pay Basic Rent, Tenant's Share of
Operating Expenses or any other amount due to Landlord pursuant to this Lease,
shall not be diminished or altered in any respect due to the fact that Landlord
is holding the Security Deposit. If any portion of the Security Deposit is
applied by Landlord as permitted by this Section, Tenant shall within ten (10)
days after written demand by Landlord deposit cash with Landlord in an amount
sufficient to restore the Security Deposit to its original amount. If Tenant is
not in default in its obligations under this Lease, the Security Deposit shall
be returned to Tenant (or, at Landlord's option, to the last assignee of
Tenant's interest in this Lease) within thirty (30) days after the expiration of
the Term and Tenant of the Premises.

                                 ARTICLE V. USES

      SECTION 5.1. USE. Tenant shall use the Premises only for the purposes
stated in Item 3 of the Basic Lease Provisions, all in accordance with
applicable laws and restrictions and pursuant to approvals to be obtained by
Tenant from all relevant and required governmental agencies and authorities. The
parties agree that any contrary use shall be deemed to cause material and
irreparable harm to Landlord and shall entitle Landlord to injunctive relief in
addition to any other available remedy. Tenant shall not use or allow the
Premises to be used for any unlawful purpose, nor shall Tenant permit any
nuisance or commit any waste in the Premises or the Site. Tenant shall not
perform any work or conduct any business whatsoever in the Site other than
inside the Premises. Tenant shall not do or permit to be done anything which
will invalidate or increase all applicable insurance policy(ies) covering the
Building, the Site and/or their contents, and shall comply with all applicable
insurance underwriters rules. Subject to Section 5.3(f), Tenant shall comply at
its expense with all present and future laws, ordinances, restrictions,
regulations, orders, rules and requirements of all governmental authorities that
pertain to Tenant or its use of the Premises, including without limitation all
federal and state occupational health and safety requirements, whether or not
Tenant's compliance will necessitate expenditures or interfere with its use and
enjoyment of the Premises. Tenant shall comply at its expense with all present
and future covenants, conditions, easements or restrictions now or hereafter
affecting or encumbering the Building and/or Site, and any amendments or
modifications thereto, including without limitation the payment by Tenant of any
periodic or special dues or assessments charged against the Premises or Tenant
which may be allocated to the Premises or Tenant in accordance with the
provisions thereof. Tenant shall promptly upon demand reimburse Landlord for any
additional insurance premium charged by reason of Tenant's failure to comply
with the provisions of this Section, and shall indemnify Landlord from any
liability and/or expense resulting from Tenant's noncompliance.

      SECTION 5.2. SIGNS. Except as approved in writing by Landlord, in its sole
and absolute discretion, Tenant shall have no right to maintain signs in any
location in, on or about the Premises, the Building or the Site and


                                       5

<PAGE>

shall not place or erect any signs that are visible from the exterior of the
Building; provided, however, that Landlord shall permit Tenant to install
identity signage in accordance with this Section on the existing sign monument
at the Site. The size, design, graphics, material, style, color and other
physical aspects of any permitted sign shall be subject to Landlord's written
determination, as determined solely by Landlord, prior to installation, that
signage is in compliance with any covenants, conditions or restrictions
encumbering the Premises and Landlord's signage program for the Site, as in
effect from time to time and approved by the City in which the Premises are
located ("Signage Criteria"). Prior to placing or erecting any such signs,
Tenant shall obtain and deliver to Landlord a copy of any applicable municipal
or other governmental permits and approvals and comply with any applicable
insurance requirements for such signage. Tenant shall be responsible for the
cost of any permitted sign, including the fabrication, installation, maintenance
and removal thereof and the cost of any permits therefore. If Tenant fails to
maintain its sign in good condition, or if Tenant fails to remove same upon
termination of this Lease and repair and restore any damage caused by the sign
or its removal, Landlord may do so at Tenant's expense. Landlord shall have the
right to temporarily remove any signs in connection with any repairs or
maintenance in or upon the Building. The term "sign" as used in this Section
shall include all signs, designs, monuments, displays, advertising materials,
logos, banners, projected images, pennants, decals, pictures, notices,
lettering, numerals or graphics.

      SECTION 5.3. HAZARDOUS MATERIALS.

      (a) For purposes of this Lease, the term "Hazardous Materials" includes
(i) any "hazardous material" as defined in Section 25501(o) of the California
Health and Safety Code, (ii) hydrocarbons, polychlorinated biphenyls or
asbestos, (iii) any toxic or hazardous materials, substances, wastes or
materials as defined pursuant to any other applicable state, federal or local
law or regulation, and (iv) any other substance or matter which may result in
liability to any person or entity as result of such person's possession, use,
release or distribution of such substance or matter under any statutory or
common law theory.

      (b) Tenant shall not cause or permit any Hazardous Materials to be brought
upon, stored, used, generated, released or disposed of on, under, from or about
the Premises (including without limitation the soil and groundwater thereunder)
without the prior written consent of Landlord, which consent may be given or
withheld in Landlord's sole and absolute discretion. Notwithstanding the
foregoing, Tenant shall have the right, without obtaining prior written consent
of Landlord, to utilize within the Premises a reasonable quantity of standard
office products that may contain Hazardous Materials (such as photocopy toner,
"White Out", and the like), provided however, that (i) Tenant shall maintain
such products in their original retail packaging, shall follow all instructions
on such packaging with respect to the storage, use and disposal of such
products, and shall otherwise comply with all applicable laws with respect to
such products, and (ii) all of the other terms and provisions of this Section
5.3 shall apply with respect to Tenant's storage, use and disposal of all such
products. Landlord may, in its sole and absolute discretion, place such
conditions as Landlord deems appropriate with respect to Tenant's use of any
such Hazardous Materials, and may further require that Tenant demonstrate that
any such Hazardous Materials are necessary or useful to Tenant's business and
will be generated, stored, used and disposed of in a manner that complies with
all applicable laws and regulations pertaining thereto and with good business
practices. Tenant understands that Landlord may utilize an environmental
consultant to assist in determining conditions of approval in connection with
the storage, generation, release, disposal or use of Hazardous Materials by
Tenant on or about the Premises, and/or to conduct periodic inspections of the
storage, generation, use, release and/or disposal of such Hazardous Materials by
Tenant on and from the Premises, and Tenant agrees that any costs incurred by
Landlord in connection therewith shall be reimbursed by Tenant to Landlord as
additional rent hereunder upon demand.

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

      (d) Landlord and its agents shall have the right, but not the obligation,
to inspect, sample and/or monitor the Premises and/or the soil or groundwater
thereunder at any time to determine whether Tenant is complying with the terms
of this Section 5.3, and in connection therewith Tenant shall provide Landlord
with full access to all facilities, records and personnel related thereto. If
Tenant is not in compliance with any of the provisions of this Section 5.3, or
in the event of a release of any Hazardous Material on, under or about the
Premises caused or permitted by Tenant, its agents, employees, contractors,
licensees or invitees, Landlord and its agents shall have the right, but not the
obligation, without limitation upon any of Landlord's other rights and remedies
under this Lease, to immediately enter upon the Premises without notice and to
discharge Tenant's obligations under this Section 5.3 at Tenant's expense,
including without limitation the taking of emergency or long-term remedial
action. Landlord and its agents shall endeavor to minimize interference with
Tenant's business in connection therewith, but


                                       6

<PAGE>

shall not be liable for any such interference. In addition, Landlord, at
Tenant's expense, shall have the right, but not the obligation, to join and
participate in any legal proceedings or actions initiated in connection with any
claims arising out of the storage, generation, use, release and/or disposal by
Tenant or its agents, employees, contractors, licensees or invitees of Hazardous
Materials on, under, from or about the Premises.

      (e) If the presence of any Hazardous Materials on, under, from or about
the Premises or the Site caused or permitted by Tenant or its agents, employees,
contractors, licensees or invitees results in (i) injury to any person, (ii)
injury to or any contamination of the Premises or the Site, or (iii) injury to
or contamination of any real or personal property wherever situated, Tenant, at
its expense, shall promptly take all actions reasonably approved in advance in
writing by Landlord that are necessary to return the Premises and the Site and
any other affected real or personal property owned by Landlord to the condition
existing prior to the introduction of such Hazardous Materials and to remedy or
repair any such injury or contamination, including without limitation, any
cleanup, remediation, removal, disposal, neutralization or other treatment of
any such Hazardous Materials. However, Landlord's prior written consent shall
not be necessary in the event that the presence of Hazardous Materials on, under
or about the Premises or the Site or any other affected real or personal
property owned by Landlord (i) imposes an immediate threat to the health, safety
or welfare of any individual and (ii) is of such a nature that an immediate
remedial response is necessary and it is not possible to obtain Landlord's
consent before taking such action. To the fullest extent permitted by law,
Tenant shall indemnify, hold harmless, protect and defend (with attorneys
acceptable to Landlord) Landlord and any successors to all or any portion of
Landlord's interest in the Premises and the Site from and against any and all
liabilities, losses, damages, diminution in value, judgments, fines, demands,
claims, recoveries, deficiencies, costs and expenses (including without
limitation attorneys' fees, court costs and other professional expenses),
whether foreseeable or unforeseeable, arising directly or indirectly out of the
use, generation, storage, treatment, release, on- or off-site disposal or
transportation of Hazardous Materials (A) on, into, from, under or about the
Premises during the Term caused by Tenant, its agents and employees or (B) on,
into, from, under or about the Premises, the Building or the Site and any other
real or personal property owned by Landlord caused or permitted by Tenant, its
agents, employees, contractors, licensees or invitees. Such indemnity obligation
shall specifically include, without limitation, the cost of any required or
necessary repair, restoration, cleanup or detoxification of the Premises, the
Building and the Site, the preparation of any closure or other required plans,
whether or not such action is required or necessary during the Term or after the
expiration of this Lease and any loss of rental due to the inability to lease
the Premises or any portion of the Building or Site as a result of such
Hazardous Material or remediation thereof. If it is at any time discovered that
Hazardous Materials have been released on, into, from, under or about the
Premises during the Term, or that Tenant or its agents, employees, contractors,
licensees or invitees may have caused or permitted the release of a Hazardous
Material on, under, from or about the Premises, the Building or the Site or any
other real or personal property owned by Landlord, Tenant shall, at Landlord's
request, immediately prepare and submit to Landlord a comprehensive plan,
subject to Landlord's approval, specifying the actions to be taken by Tenant to
return the Premises, the Building or the Site or any other real or personal
property owned by Landlord to the condition existing prior to the introduction
of such Hazardous Materials. Upon Landlord's approval of such cleanup plan,
Tenant shall, at its expense, and without limitation of any rights and remedies
of Landlord under this Lease or at law or in equity, immediately implement such
plan and proceed to cleanup such Hazardous Materials in accordance with all
applicable laws and as required by such plan and this Lease. The provisions of
this Section 5.3(e) shall expressly survive the expiration or sooner termination
of this Lease.

      (f) Landlord hereby discloses to Tenant, and Tenant hereby acknowledges,
certain facts relating to Hazardous Materials at the Site known by Landlord to
exist as of the date of this Lease, as more particularly described in Exhibit C
attached hereto. Notwithstanding anything to the contrary contained herein,
Tenant shall have no liability or responsibility with respect to the Hazardous
Materials facts described in Exhibit C, nor with respect to any Hazardous
Materials which Tenant proves were neither released on the Premises during the
Term nor caused or permitted by Tenant, its agents, employees, contractors,
licensees or invitees. Notwithstanding the preceding two sentences, Tenant
agrees to notify its agents, employees, contractors, licensees, and invitees of
any exposure or potential exposure to Hazardous Materials at the Premises that
Landlord brings to Tenant's attention. Tenant hereby acknowledges that this
disclosure satisfies any obligation of Landlord to Tenant pursuant to California
Health & Safety Code Section 25359.7, or any amendment or substitute thereto or
any other disclosure obligations of Landlord.

                       ARTICLE VI. COMMON AREAS; SERVICES

      SECTION 6.1. UTILITIES AND SERVICES. Tenant shall be responsible for and
shall pay promptly, directly to the appropriate supplier, all charges for water,
gas, electricity, sewer, heat, light, power, telephone, telecommunications
service, refuse pickup, janitorial service, interior landscape maintenance and
all other utilities, materials and services furnished directly to Tenant or the
Premises or used by Tenant in, on or about the Premises during the Term,
together with any taxes thereon. Landlord shall cause the Premises to be
separately metered for utilities. Landlord shall not be liable for damages or
otherwise for any failure or interruption of any utility or other service
furnished to the Premises, and no such failure or interruption shall be deemed
an eviction or entitle Tenant to terminate this Lease or withhold or abate any
rent due hereunder. Landlord shall at all reasonable times have access to the
Building and Premises, after reasonable prior written or oral notice to Tenant
(except in emergencies), to install, maintain, repair, replace or remove all
electrical and mechanical installations of Landlord. Tenant acknowledges that
the costs incurred by Landlord related to providing above-standard utilities to
Tenant, including, without limitation, telephone lines, may be charged to
Tenant.

      SECTION 6.2. OPERATION AND MAINTENANCE OF COMMON AREAS. During the Term,
Landlord shall operate all Common Areas within the Site. The term "Common Areas"
shall mean all areas of the Site which are not held for exclusive use by persons
entitled to occupy space including Tenant, and their respective employees and
invitees, including without limitation parking areas and structures, driveways,
sidewalks, landscaped and planted areas, and electrical and utility rooms and
roof access entries, if any, in the Building.


                                       7

<PAGE>

      SECTION 6.3. USE OF COMMON AREAS. The occupancy by Tenant of the Premises
shall include the use of the Common Areas as provided in this Article VI,
subject, however, to compliance with all rules and regulations as are prescribed
from time to time by Landlord. Landlord shall operate and maintain the Common
Areas in good condition and repair. All costs incurred by Landlord for the
maintenance and operation of the Common Areas shall be included in Site Costs.
Landlord shall at all times during the Term have exclusive control of the Common
Areas, and may restrain or permit any use or occupancy, except as authorized by
Landlord's rules and regulations. Tenant shall keep the Common Areas clear of
any obstruction or unauthorized use related to Tenant's operations or use of
Premises, including without limitation, planters and furniture. Nothing in this
Lease shall be deemed to impose liability upon Landlord for any damage to or
loss of the property of, or for any injury to, Tenant, its invitees or
employees. Landlord may temporarily close any portion of the Common Areas for
repairs, remodeling and/or alterations, to prevent a public dedication or the
accrual of prescriptive rights, or for any other reason deemed sufficient by
Landlord, without liability to Landlord; provided that Landlord shall not make
any voluntary alteration to the Site that would materially reduce Tenant's
parking.

      SECTION 6.4. PARKING. Tenant shall be entitled to use all of the vehicle
parking spaces on the Common Areas of the Site. All parking spaces shall be used
only for parking of vehicles no larger than full size passenger automobiles,
sports utility vehicles or pickup trucks. Tenant shall not permit or allow any
vehicles that belong to or are controlled by Tenant or Tenant's employees,
suppliers, shippers, customers or invitees to be loaded, unloaded or parked in
areas other than those designated by Landlord for such activities. If Tenant
permits or allows any of the prohibited activities described above, then
Landlord shall have the right, without notice, in addition to such other rights
and remedies that Landlord may have, to remove or tow away the vehicle involved
and charge the costs to Tenant. Parking within the Common Areas shall be limited
to striped parking stalls, and no parking shall be permitted in any driveways,
access ways or in any area which would prohibit or impede the free flow of
traffic within the Common Areas. There shall be no parking of any vehicles for
longer than a forty-eight (48) hour period unless otherwise authorized by
Landlord, and vehicles which have been abandoned or parked in violation of the
terms hereof may be towed away at the owner's expense. Nothing contained in this
Lease shall be deemed to create liability upon Landlord for any damage to motor
vehicles of visitors or employees, for any loss of property from within those
motor vehicles, or for any injury to Tenant, its visitors or employees, unless
ultimately determined to be caused by the sole active negligence or willful
misconduct of Landlord. Landlord shall have the right to establish, and from
time to time amend, and to enforce against all users all reasonable rules and
regulations (including the designation of areas for employee parking) that
Landlord may deem necessary and advisable for the proper and efficient operation
and maintenance of parking within the Common Areas. Landlord shall have the
right to construct, maintain and operate lighting facilities within the parking
areas; to change the area, level, location and arrangement of the parking areas
and improvements therein; to restrict parking by tenants, their officers, agents
and employees to employee parking areas; to enforce parking charges (by
operation of meters or otherwise); and to do and perform such other acts in and
to the parking areas and improvements therein as, in the use of good business
judgment, Landlord shall determine to be advisable. Any person using the parking
area shall observe all directional signs and arrows and any posted speed limits.
Parking areas hall be used only for parking vehicles. Washing, waxing, cleaning
or servicing of vehicles, or the storage of vehicles for longer than 48-hours,
is prohibited unless otherwise authorized by Landlord. Tenant shall be liable
for any damage to the parking areas caused by Tenant or Tenant's employees,
suppliers, shippers, customers or invitees, including without limitation damage
from excess oil leakage. Tenant shall have no right to install any fixtures,
equipment or personal property in the parking areas.

      SECTION 6.5. CHANGES AND ADDITIONS BY LANDLORD. Landlord reserves the
right to make alterations or additions to the Building or the Site, or to the
attendant fixtures, equipment and Common Areas. Landlord may at any time
relocate or remove any of the driveways, sidewalks, landscaped and planted areas
and parking areas of the Common Areas, from time to time. No change shall
entitle Tenant to any abatement of rent or other claim against Landlord,
provided that the change does not deprive Tenant of reasonable access to or use
of the Premises.

                      ARTICLE VII. MAINTAINING THE PREMISES

      SECTION 7.1. TENANT'S MAINTENANCE AND REPAIR. Tenant at its sole expense
shall maintain and make all repairs and replacements necessary to keep the
Premises and the Building in the condition as existed on the Commencement Date
(or on any later date that the improvements may have been installed), excepting
ordinary wear and tear, including without limitation all interior and exterior
glass, windows, doors, door closures, hardware, fixtures, electrical, plumbing,
fire extinguisher equipment and other equipment. Any damage or deterioration of
the Premises shall not be deemed ordinary wear and tear if the same could have
been prevented by good maintenance practices by Tenant. As part of its
maintenance obligations hereunder, Tenant shall, at Landlord's request, provide
Landlord with copies of all maintenance schedules, reports and notices prepared
by, for or on behalf of Tenant. All repairs and replacements shall be at least
equal in quality to the original work, shall be made only by a licensed
contractor approved in writing in advance by Landlord and shall be made only at
the time or times approved by Landlord. Any contractor utilized by Tenant shall
be subject to Landlord's standard reasonable requirements for contractors, as
modified from time to time. Landlord may impose reasonable restrictions and
requirements with respect to repairs, as provided in Section 7.3, and the
provisions of Section 7.4 shall apply to all repairs. Alternatively, Landlord
may elect to perform any repair and maintenance of the electrical and mechanical
systems and any air conditioning, ventilating or heating equipment serving the
Premises and include the cost thereof as part of Tenant's Share of Operating
Expenses. If Tenant fails to properly maintain and/or repair the Premises or the
Building as herein provided following Landlord's notice and the expiration of
the applicable cure period (or earlier if Landlord determines that such work
must be performed prior to such time in order to avoid damage to the Premises or
Building or other detriment), then Landlord may elect, but shall have no
obligation, to perform any repair or maintenance required hereunder on behalf of
Tenant and at Tenant's expense, and Tenant shall reimburse Landlord upon demand
for all costs incurred upon submission of an invoice.


                                       8

<PAGE>

      SECTION 7.2. LANDLORD'S MAINTENANCE AND REPAIR. Subject to Section 7.1 and
Article XI, Landlord shall provide service, maintenance and repair with respect
to any air conditioning, ventilating or heating equipment which serves the
Premises and shall maintain in good repair the roof, foundations, footings, the
exterior surfaces of the exterior walls of the Building (excluding exterior
glass), and the structural, electrical and mechanical systems, except that
Tenant at its expense shall make all repairs which Landlord deems reasonably
necessary as a result of the act or negligence of Tenant, its agents, employees,
invitees, subtenants or contractors. Landlord shall have the right to employ or
designate any reputable person or firm, including any employee or agent of
Landlord or any of Landlord's affiliates or divisions, to perform any service,
repair or maintenance function. Landlord need not make any other improvements or
repairs except as specifically required under this Lease, and nothing contained
in this Section shall limit Landlord's right to reimbursement from Tenant for
maintenance, repair costs and replacement costs as provided elsewhere in this
Lease. Tenant understands that it shall not make repairs at Landlord's expense
or by rental offset. Tenant further understands that Landlord shall not be
required to make any repairs to the roof, foundations, footings, the exterior
surfaces of the exterior walls of the Building (excluding exterior glass), or
structural, electrical or mechanical systems unless and until Tenant has
notified Landlord in writing of the need for such repair and Landlord shall have
a reasonable period of time thereafter to commence and complete said repair, if
warranted. All costs of any maintenance, repairs and replacement on the part of
Landlord provided hereunder shall be considered part of Site Costs. Tenant shall
promptly advise Landlord of any item that requires repair or maintenance by
Landlord hereunder.

      SECTION 7.3. ALTERATIONS. Except as otherwise provided in this Section,
Tenant shall make no alterations, additions, fixtures or improvements
("Alterations") to the Premises or the Building without the prior written
consent of Landlord, which consent may be granted or withheld in Landlord's
reasonable discretion. However, Landlord's consent shall not be required to any
Alterations which cost less than One Dollar ($1.00) per square foot of the
improved portions of the Premises (excluding warehouse square footage) and do
not (i) affect the exterior of the Building or outside areas (or be visible from
adjoining sites), or (ii) affect or penetrate any of the structural portions of
the Building, including but not limited to the roof, or (iii) require any change
to the basic floor plan of the Premises or any change to any structural or
mechanical systems of the Premises, or (iv) fail to comply with any applicable
governmental requirements or require any governmental permit as a prerequisite
to the construction thereof, or (v) result in the Premises requiring building
services beyond the level normally provided to other tenants, or (vi) interfere
in any manner with the proper functioning of, or Landlord's access to, any
mechanical, electrical, plumbing or HVAC systems, facilities or equipment
located in or serving the Building, or (vii) diminish the value of the Premises
including, without limitation, using lesser quality materials than those
existing in the Premises, or (viii) alter or replace Standard Improvements.
Landlord may impose any condition to its consent, including but not limited to a
requirement that the installation and/or removal of all Alterations be covered
by a lien and completion bond satisfactory to Landlord in its sole and absolute
discretion and requirements as to the manner and time of performance of such
work. Landlord shall in all events, whether or not Landlord's consent is
required, have the right to approve the contractor performing the installation
and removal of Alterations and Tenant shall not permit any contractor not
approved by Landlord (which approval shall not be unreasonably withheld or
delayed) to perform any work on the Premises or on the Building. Tenant shall
obtain all required permits for the installation and removal of Alterations and
shall perform the installation and removal of Alterations in compliance with all
applicable laws, regulations and ordinances, including without limitation the
Americans with Disabilities Act, all covenants, conditions and restrictions
affecting the Site, and the Rules and Regulations as described in Article XVII.
Under no circumstances shall Tenant make any Alterations which incorporate any
Hazardous Materials, including without limitation asbestos-containing
construction materials into the Premises, the Building or the Common Area. If
any governmental entity requires, as a condition to any proposed Alterations by
Tenant, that improvements be made to the Common Areas, and if Landlord consents
to such improvements to the Common Areas (which consent may be withheld in the
sole and absolute discretion of Landlord), then Tenant shall, at Tenant's sole
expense, make such required improvements to the Common Areas in such manner,
utilizing such materials, and with such contractors, architects and engineers as
Landlord may require in its sole and absolute discretion. Any request for
Landlord's consent to any proposed Alterations shall be made in writing and
shall contain architectural plans describing the work in detail reasonably
satisfactory to Landlord. Unless Landlord otherwise agrees in writing, all
Alterations made or affixed to the Premises, the Building or to the Common Area
(excluding trade fixtures, equipment and furniture), including without
limitation all Tenant Improvements constructed pursuant to the Work Letter
(except as otherwise provided in the Work Letter), shall become the property of
Landlord and shall be surrendered with the Premises at the end of the Term;
except that Landlord may, by notice to Tenant given at the time of Landlord's
consent to the Alteration, require Tenant to remove by the Expiration Date, or
sooner termination date of this Lease, all or any of the Alterations installed
either by Tenant or by Landlord at Tenant's request, including without
limitation all Tenant Improvements constructed pursuant to the Work Letter
(except as otherwise provided in the Work Letter), and to repair any damage to
the Premises, the Building or the Common Area arising from that removal and
restore the Premises to their condition prior to making such Alterations.

      SECTION 7.4. MECHANIC'S LIENS. Tenant shall keep the Premises and the Site
free from any liens arising out of any work performed, materials furnished, or
obligations incurred by or for Tenant. Upon written request by Landlord, Tenant
shall promptly (but in no event later than five (5) business days following such
request) cause any such lien to be released by posting a bond in accordance with
California Civil Code Section 3143 or any successor statute. In the event that
Tenant shall not, within thirty (30) days following the imposition of any lien,
cause the lien to be released of record by payment or posting of a proper bond,
Landlord shall have, in addition to all other available remedies, the right to
cause the lien to be released by any means it deems proper, including payment of
or defense against the claim giving rise to the lien. All expenses so incurred
by Landlord, including Landlord's attorneys' fees, and any consequential or
other damages incurred by Landlord arising out of such lien, shall be reimbursed
by Tenant upon demand, together with interest from the date of payment by
Landlord at the maximum rate permitted by law until paid. Tenant shall give
Landlord no less than ten (10) days' prior notice in writing before commencing
construction of any kind on the Premises or Common Area and shall again notify
Landlord that construction has commenced, such notice to be given on the actual
date on which construction commences, so that Landlord may post and maintain
notices of nonresponsibility on the Premises or Common Area, as applicable,


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which notices Landlord shall have the right to post and which Tenant agrees it
shall not disturb. Tenant shall also provide Landlord notice in writing within
ten (10) days following the date on which such work is substantially completed.

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

            ARTICLE VIII. TAXES AND ASSESSMENTS ON TENANT'S PROPERTY

      Tenant shall be liable for and shall pay, at least ten (10) days before
delinquency, all taxes and assessments levied against all personal property of
Tenant located in the Premises, and, if required by Landlord, against all Non
Standard Improvements to the Premises (as defined in Section 7.3) made by
Landlord or Tenant, and against any Alterations (as defined in Section 7.3) made
to the Premises or the Building by or on behalf of Tenant. If requested by
Landlord, Tenant shall cause its personal property, Non-Standard Improvements
and Alterations to be assessed and billed separately from the real property of
which the Premises form a part. If any taxes required to be paid by Tenant on
Tenant's personal property, Non-Standard Improvements and/or Alterations are
levied against Landlord or Landlord's property and if Landlord pays the same, or
if the assessed value of Landlord's property is increased by the inclusion of a
value placed upon the personal property, Non-Standard Improvements and/or
Alterations and if Landlord pays the taxes based upon the increased assessment,
Landlord shall have the right to require that Tenant pay to Landlord the taxes
so levied against Landlord or the proportion of the taxes resulting from the
increase in the assessment. In calculating what portion of any tax bill which is
assessed against Landlord separately, or Landlord and Tenant jointly, is
attributable to Tenant's Non-Standard Improvements, Alterations and personal
property, Landlord's reasonable determination shall be conclusive.

                      ARTICLE IX. ASSIGNMENT AND SUBLETTING

      SECTION 9.1. RIGHTS OF PARTIES.

      (a) Notwithstanding any provision of this Lease to the contrary, and
except as to transfers expressly permitted without Landlord's consent pursuant
to Section 9.4, Tenant will not, either voluntarily or by operation of law,
assign, sublet, encumber, or otherwise transfer all or any part of Tenant's
interest in this Lease or the Premises, or permit the Premises to be occupied by
anyone other than Tenant, without Landlord's prior written consent, which
consent shall not unreasonably be withheld in accordance with the provisions of
Section 9.1(b). No assignment (whether voluntary, involuntary or by operation of
law) and no subletting shall be valid or effective without Landlord's prior
written consent and, at Landlord's election, any such assignment or subletting
shall be void and of no force and effect and any such attempted assignment or
subletting shall constitute an Event of Default of this Lease. Landlord shall
not be deemed to have given its consent to any assignment or subletting by any
course of action other than written consent. To the extent not prohibited by
provisions of the Bankruptcy Code, 11 U.S.C. Section 101 et seq., (the
"Bankruptcy Code"), including Section 365(f)(1), Tenant on behalf of itself and
its creditors, administrators and assigns waives the applicability of Section
365(e) of the Bankruptcy Code unless the proposed assignee of the Trustee for
the estate of the bankrupt meets Landlord's standard for consent as set forth in
Section 9.1(b) of this Lease. If this Lease is assigned to any person or entity
pursuant to the provisions of the Bankruptcy Code, any and all monies or other
considerations to be delivered in connection with the assignment shall be
delivered to Landlord, shall be and remain the exclusive property of Landlord
and shall not constitute property of Tenant or of the estate of Tenant within
the meaning of the Bankruptcy Code. Any person or entity to which this Lease is
assigned pursuant to the provisions of the Bankruptcy Code shall be deemed to
have assumed all of the obligations arising under this Lease on and after the
date of the assignment, and shall upon demand execute and deliver to Landlord an
instrument confirming that assumption.

      (b) If Tenant desires to transfer an interest in this Lease or the
Premises, it shall first notify Landlord of its desire and shall submit in
writing to Landlord: (i) the name and address of the proposed transferee; (ii)
the nature of any proposed transferee's business to be carried on in the
Premises; (iii) the terms and provisions of any proposed sublease, assignment or
other transfer, including a copy of the proposed assignment, sublease or
transfer form; (iv) evidence that the proposed assignee, subtenant or transferee
will comply with the requirements of Exhibit D hereto; (v) a completed
Environmental Questionnaire from the proposed assignee, subtenant or transferee;
(vi) any other information requested by Landlord and reasonably related to the
transfer and (vii) the fee described in Section 9.1(e). Except as provided in
Section 9.1 (c), Landlord shall not unreasonably withhold its consent, provided
that the parties agree that it shall be reasonable for Landlord to withhold its
consent if: (1) the use of the Premises will not be consistent with the
provisions of this Lease; (2) a proposed assignee has not demonstrated to the
reasonable satisfaction of Landlord that it is financially responsible or has
failed to submit to Landlord all reasonable information as requested by Landlord
concerning the proposed assignee, including, but not limited to, a certified
balance sheet of the proposed assignee as of a date within ninety (90) days of
the request for Landlord's consent, statements of income or profit and loss of
the proposed assignee for the two-year period preceding the request for
Landlord's consent (3) the proposed assignee or subtenant is a prospect with
whom Landlord is negotiating to become a tenant at another building owned by
Landlord in the vicinity of the Site; or (4) the proposed


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<PAGE>

transfer will impose additional burdens or adverse tax effects on Landlord. If
Landlord consents to the proposed transfer, Tenant may within ninety (90) days
after the date of the consent effect the transfer upon the terms described in
the information furnished to Landlord; provided that any material change in the
terms shall be subject to Landlord's consent as set forth in this Section 9.1.
Landlord shall approve or disapprove any requested transfer within thirty (30)
days following receipt of Tenant's written request, the information set forth
above, and the fee set forth below.

      (c) Notwithstanding the provisions of Section 9.1(b) above, in lieu of
consenting to a proposed assignment Landlord may elect, within the thirty (30)
day period permitted for Landlord to approve or disapprove a requested transfer,
to terminate this Lease, effective thirty (30) days' following written notice by
Landlord of its election to so terminate. Landlord may thereafter, at its
option, assign, sublet or re-let any space so obtained by termination to any
third party, including without limitation the proposed transferee of Tenant.

      (d) In the event that Landlord approves the requested assignment or
subletting, Tenant agrees that fifty percent (50%) of any amounts paid by the
assignee or subtenant, however described, in excess of (i) the Basic Rent
payable by Tenant hereunder, or in the case of a sublease of a portion of the
Premises, in excess of the Basic Rent reasonably allocable to such portion as
determined by Landlord, plus (ii) Tenant's direct out-of-pocket costs, including
without limitation, legal fees and brokerage commissions, which Tenant certifies
to Landlord have been paid to provide occupancy related services to such
assignee or subtenant of a nature commonly provided by landlords of similar
space, shall be the property of Landlord and such amounts shall be payable
directly to Landlord by the assignee or subtenant or, at Landlord's option, by
Tenant within ten (10) days of Tenant's receipt thereof. Landlord shall have the
right to review or audit the books and records of Tenant, or have such books and
records reviewed or audited by an outside accountant, to confirm any such direct
out-of-pocket costs. In the event that such direct out-of-pocket costs claimed
by Tenant are overstated by more than five percent (5%), Tenant shall reimburse
Landlord for any of Landlord's costs related to such review or audit. At
Landlord's request, a written agreement shall be entered into by and among
Tenant, Landlord and the proposed assignee or subtenant confirming the
requirements of this Section 9.1(d).

      (e) Tenant shall pay to Landlord a fee equal to Five Hundred Dollars
($500.00) to process any request by Tenant for an assignment, subletting or
other transfer under this Lease. Tenant shall pay Landlord a sum concurrently
with Tenant's request for consent to any assignment, subletting or other
transfer, and Landlord shall have no obligation to consider such request unless
accompanied by such payment. Such fee is hereby acknowledged as a reasonable
amount to reimburse Landlord for its costs of review and evaluation of a
proposed transfer.

      SECTION 9.2. EFFECT OF TRANSFER. No subletting or assignment, even with
the consent of Landlord, shall relieve Tenant of its obligation to pay rent and
to perform all its other obligations under this Lease. Moreover, Tenant shall
indemnify and hold Landlord harmless, as provided in Section 10.3, for any act
or omission by an assignee or subtenant. Each assignee, other than Landlord,
shall assume all obligations of Tenant under this Lease and shall be liable
jointly and severally with Tenant for the payment of all rent, and for the due
performance of all of Tenant's obligations, under this Lease. No assignment or
subletting shall be effective or binding on Landlord unless documentation in
form and substance satisfactory to Landlord in its reasonable discretion
evidencing the transfer, and in the case of an assignment, the assignee's
assumption of the obligations of Tenant under this Lease, is delivered to
Landlord and both the assignee/subtenant and Tenant deliver to Landlord an
executed consent to transfer instrument prepared by Landlord and consistent with
the requirements of this Article. The acceptance by Landlord of any payment due
under this Lease from any other person shall not be deemed to be a waiver by
Landlord of any provision of this Lease or to be a consent to any transfer.
Consent by Landlord to one or more transfers shall not operate as a waiver or
estoppel to the future enforcement by Landlord of its rights under this Lease or
as a consent to any subsequent transfer.

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

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

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

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


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provisions of this Lease, including without limitation those pertaining to
insurance and indemnification, shall be deemed incorporated by reference into
the sublease despite the termination of this Lease. In the event Landlord does
not elect to take over Tenant's interest in a sublease in the event of any such
termination of this Lease, such sublease shall terminate concurrently with the
termination of this Lease and such subtenant shall have no further rights under
such sublease and Landlord shall have no obligations to such subtenant.

      SECTION 9.4. CERTAIN TRANSFERS. The following shall be deemed to
constitute an assignment of this Lease; (a) the sale of all or substantially all
of Tenant's assets (other than bulk sales in the ordinary course of business),
(b) if Tenant is a corporation, an unincorporated association, a limited
liability company or a partnership, the transfer, assignment or hypothecation of
any stock or interest in such corporation, association, limited liability
company or partnership in the aggregate of twenty-five percent (25%) (except for
publicly traded shares of stock constituting a transfer of twenty-five percent
(25%) or more in the aggregate, so long as no change in the controlling interest
of Tenant occurs as a result thereof), or (c) any other direct or indirect
change of control of Tenant, including, without limitation, change of control of
Tenant's parent company or a merger by Tenant or its parent company.
Notwithstanding the foregoing, Landlord's consent shall not be required for the
assignment of this Lease as a result of any of the transactions in the foregoing
sentence, so long as (i) the net worth of the successor or reorganized entity is
at least equal to the greater of the net worth of Tenant as of the execution of
this Lease by Landlord or the net worth of Tenant immediately prior to the date
of such merger or reorganization, and (ii) Tenant shall provide to Landlord,
prior to such transaction, written notice thereof and such assignment
documentation and other information as Landlord may require in connection
therewith.

                       ARTICLE X. INSURANCE AND INDEMNITY

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

      SECTION 10.2. LANDLORD'S INSURANCE. Landlord may, at its election, provide
any or all of the following types of insurance, with or without deductible and
in amounts and coverages as may be determined by Landlord in its sole and
absolute discretion: "all risk" or similar property insurance, subject to
standard exclusions, covering the Building and/or Site, and such other risks as
Landlord or its mortgagees may from time to time deem appropriate, including
Tenant Improvements made by Landlord pursuant to the Work Letter, and commercial
general liability coverage. At a minimum, however, Landlord shall maintain,
whether as part of blanket coverage policies or otherwise, the following: (i)
standard all-risk property insurance coverage on the Building (and the Leasehold
Improvements therein as of the date hereof) with coverage of not less than
eighty percent (80%) of the full actual replacement cost thereof, and (ii)
comprehensive or commercial general liability insurance insuring Landlord (and
such others as are designated by Landlord) against liability for personal
injury, bodily injury, death and damage to third party property occurring in, on
or about, or resulting from the use or occupancy of the Site, with combined
single limit coverage of at least Three Million Dollars ($3,000,000.00).
Landlord shall not be required to carry insurance of any kind on Tenant's
Alterations or on Tenant's other property, including, leasehold improvements,
trade fixtures, furnishings, equipment, plate glass, signs and all other items
of personal property, and shall not be obligated to repair or replace that
property should damage occur. All proceeds of insurance maintained by Landlord
upon the Building and/or Site shall be the property of Landlord, whether or not
Landlord is obligated to or elects to make any repairs. At Landlord's option,
Landlord may self-insure all or any portion of the risks for which Landlord
elects to provide insurance hereunder.

      SECTION 10.3. INDEMNITY. To the fullest extent permitted by law, Tenant
shall defend, indemnify, protect, save and hold harmless Landlord, its agents,
and any and all affiliates of Landlord, including, without limitation, any
corporations or other entities controlling, controlled by or under common
control with Landlord, from and against any and all claims, liabilities, costs
or expenses arising either before or after the Commencement Date from Tenant's
use or occupancy of the Premises, the Building or the Common Areas, including,
without limitation, the use by Tenant, its agents, employees, invitees or
licensees of any recreational facilities within the Common Areas, or from the
conduct of its business, or from any activity, work, or thing done, permitted or
suffered by Tenant or its agents, employees, invitees or licensees in or about
the Premises, the Building or the Common Areas, or from any Event of Default in
the performance of any obligation on Tenant's part to be performed under this
Lease, or from any act or negligence of Tenant or its agents, employees,
visitors, patrons, guests, invitees or licensees. Landlord may, at its option,
require Tenant to assume Landlord's defense in any action covered by this
Section through counsel satisfactory to Landlord. The provisions of this Section
shall expressly survive the expiration or sooner termination of this Lease.
Tenant's obligations under this Section shall not apply in the event that the
claim, liability, cost or expense is caused solely by the active negligence or
willful misconduct of Landlord. Conversely, Landlord shall indemnify and hold
harmless Tenant from and against claims made or legal actions filed or
threatened against Tenant with respect to the violation of any law, or the
death, bodily injury, personal injury, property damage, or interference with
contractual or property rights suffered by any third party to the extent
proximately caused by the gross negligence or willful misconduct of Landlord or
Landlord's failure to perform an obligation expressly undertaken pursuant to
this Lease after a reasonable period of time shall have lapsed following receipt
of written notice from Landlord to so perform such obligation.

      SECTION 10.4. LANDLORD'S NONLIABILITY. Landlord shall not be liable to
Tenant, its employees, agents and invitees, and Tenant hereby waives all claims
against Landlord and knowingly assumes the risk of for loss of or damage to any
property, or loss or interruption of business or income, or any other loss,
cost, damage, injury or liability whatsoever (including without limitation any
consequential damages and lost profit or opportunity costs) resulting from, but
not limited to, Acts of God, acts of civil disobedience or insurrection, acts or
omissions of third parties and/or of other tenants within the Site or their
agents, employees, contractors, guests or invitees, fire, explosion, falling
plaster, steam, gas, electricity, water or rain which may leak or flow from or
into any part of the Premises or from the breakage, leakage, obstruction or
other defects of the pipes, sprinklers, wires,


                                       12

<PAGE>

appliances, plumbing, air conditioning, electrical works, roof, windows or other
fixtures in the Building, whether the damage or injury results from conditions
arising in the Premises or in the Building, except to the extent such damage or
injury results from the negligence or willful misconduct of Landlord and is not
covered by Tenant's insurance. It is understood that any such condition may
require the temporary evacuation or closure of all or a portion of the Building.
Landlord shall have no liability (including without limitation consequential
damages and lost profit or opportunity costs) and, except as provided in
Sections 11.1 and 12.1 below, there shall be no abatement of rent, by reason of
any injury to or interference with Tenant's business arising from the making of
any repairs, alterations or improvements to any portion of the Building,
including repairs to the Premises, nor shall any related activity by Landlord
constitute an actual or constructive eviction; provided, however, that in making
repairs, alterations or improvements, Landlord shall interfere as little as
reasonably practicable with the conduct of Tenant's business in the Premises.
Neither Landlord nor its agents shall be liable for interference with light or
other similar intangible interests. Tenant shall immediately notify Landlord in
case of fire or accident in the Premises, the Building or the Site and of
defects in any improvements.

      SECTION 10.5. WAIVER OF SUBROGATION. Landlord and Tenant each hereby
waives all rights of recovery against the other and the other's agents on
account of loss and damage occasioned to the property of such waiving party to
the extent only that such loss or damage is required to be insured against, or,
if not required, is actually insured against, under any property insurance
policies contemplated by this Article X; provided however, that (i) the
foregoing waiver shall not apply to the extent of Tenant's obligations to pay
deductibles under any such policies and this Lease and (ii) to the extent Tenant
fails to maintain the insurance required to be maintained by Tenant pursuant to
this Lease, Landlord shall not be deemed to have waived any right of recovery
against Tenant. By this waiver it is the intent of the parties that neither
Landlord nor Tenant shall be liable to any insurance company (by way of
subrogation or otherwise) insuring the other party for any loss or damage
insured against under any property insurance policies contemplated by this
Lease, even though such loss or damage might be occasioned by the negligence of
such party, its agents, employees, contractors, guests or invitees.

                        ARTICLE XI. DAMAGE OR DESTRUCTION

      SECTION 11.1. RESTORATION.

      (a) If the Premises or the Building or a part thereof are materially
damaged by any fire, flood, earthquake or other casualty, Landlord shall have
the right to terminate this Lease upon written notice to Tenant if: (i) Landlord
reasonably determines that proceeds necessary to pay the full cost of repair is
not available from Landlord's insurance, including without limitation earthquake
insurance, plus such additional amounts Tenant elects, at its option, to
contribute, excluding however the deductible (for which Tenant shall be
responsible for Tenant's Share subject to the limitations set forth
hereinabove); (ii) Landlord reasonably determines that the Premises cannot, with
reasonable diligence, be fully repaired by Landlord (or cannot be safely
repaired because of the presence of hazardous factors, including without
limitation Hazardous Materials, earthquake faults, and other similar dangers)
within two hundred seventy (270) days after the date of the damage; (iii) an
uncured Event of Default by Tenant has occurred; or (iv) the material damage
occurs during the final twelve (12) months of the Term. Landlord shall notify
Tenant in writing ("Landlord's Notice") within sixty (60) days after the damage
occurs as to (A) whether Landlord is terminating this Lease as a result of such
material damage and (B) if Landlord is not terminating this Lease, the number of
days within which Landlord has estimated that the Premises, with reasonable
diligence, are likely to be fully repaired. In the event Landlord elects to
terminate this Lease, this Lease shall terminate as of the date specified for
termination by Landlord's Notice (which termination date shall in no event be
later than sixty (60) days following the date of the damage, or, if no such date
is specified, such termination shall be the date of Landlord's Notice).

      (b) If Landlord has the right to terminate this Lease pursuant to Section
11.1(a) and does not elect to so terminate this Lease, and provided that at the
time of Landlord's Notice an Event of Default does not exist hereunder, then
within ten (10) days following delivery of Landlord's Notice pursuant to Section
11.1(a), Tenant may elect to terminate this Lease by written notice to Landlord,
but only if (i) Landlord's Notice specifies that Landlord has determined that
the Premises cannot be repaired, with reasonable diligence, within two hundred
seventy (270) days after the date of damage or (ii) the casualty has occurred
within the final twelve (12) months of the Term and such material damage has a
materially adverse impact on Tenant's continued use of the Premises. If Tenant
fails to provide such termination notice within such ten (10) day period, Tenant
shall be deemed to have waived any termination right under this Section 1l.1(b)
or any other applicable law.

      (c) In the event that neither Landlord nor Tenant terminates this Lease
pursuant to this Section 11.1 as a result of material damage to the Building or
Premises resulting from a casualty, Landlord shall repair all material damage to
the Premises or the Building as soon as reasonably possible and this Lease shall
continue in effect for the remainder of the Term. Subject to any provision to
the contrary in the Work Letter, such repair by Landlord shall include repair of
material damage to the Tenant Improvements constructed pursuant to the Work
Letter, so long as insurance proceeds from insurance required to be carried by
Tenant are made available to Landlord. Landlord shall have no liability to
Tenant in the event that the Premises or the Building has not been fully
repaired within the time period specified by Landlord in Landlord's Notice to
Tenant as described in Section 11.1(a). Notwithstanding the foregoing, the
repair of damage to the Premises to the extent such damage is not material shall
be governed by Sections 7.1 and 7.2.

      (d) Commencing as of the sixth business day following such material damage
to the Building, and ending on the sooner of the date the damage is repaired or
the date this Lease is terminated, the rental to be paid under this Lease shall
be abated in the same proportion that the Floor Area of the Premises that is
rendered unusable by the damage from time to time bears to the total Floor Area
of the Premises, as determined by Landlord.


                                       13

<PAGE>

      (e) Landlord shall not be required to repair or replace any improvements
or fixtures that Tenant is obligated to repair or replace pursuant to Section
7.1 or any other provision of this Lease and Tenant shall continue to be
obligated to so repair or replace any such improvements or fixtures,
notwithstanding any provisions to the contrary in this Article XI. In addition,
in the event the damage or destruction to the Premises or Building are due in
substantial part to the fault or neglect of Tenant or its employees, subtenants,
invitees or representatives, notwithstanding the provisions of Section 10.5, the
costs of such repairs or replacement to the Premises or Building shall be borne
by Tenant to the extent that insurance proceeds sufficient to complete such
repair or replacement are not made available to Landlord and in addition, Tenant
shall not be entitled to terminate this Lease as a result, notwithstanding the
provisions of Section 11.1(b).

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

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

                           ARTICLE XII. EMINENT DOMAIN

      SECTION 12.1. TOTAL OR PARTIAL TAKING. If all or a material portion of the
Premises is taken by any lawful authority by exercise of the right of eminent
domain, or sold to prevent a taking, either Tenant or Landlord may terminate
this Lease effective as of the date possession is required to be surrendered to
the authority. In the event neither party has elected to terminate this Lease as
provided above, then Landlord shall promptly, after receipt of a sufficient
condemnation award, proceed to restore the Premises to substantially their
condition prior to the taking, and a proportionate allowance shall be made to
Tenant for the rent corresponding to the time during which, and to the part of
the Premises of which, Tenant is deprived on account of the taking and
restoration. In the event of a taking, Landlord shall be entitled to the entire
amount of the condemnation award without deduction for any estate or interest of
Tenant; provided that nothing in this Section shall be deemed to give Landlord
any interest in, or prevent Tenant from seeking any award against the taking
authority for, the taking of personal property and fixtures belonging to Tenant
or for relocation or business interruption expenses recoverable from the taking
authority.

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

      SECTION 12.3. TAKING OF PARKING AREA. In the event there shall be a taking
of the parking area of the Site such that more than ten percent (10%) of the
vehicle parking spaces are taken, Landlord may substitute reasonably equivalent
parking in a location reasonably close to the Building; provided that if
Landlord fails to make that substitution within ninety (90) days following the
taking and if the taking materially impairs Tenant's use and enjoyment of the
Premises, Tenant may, at its option, terminate this Lease by written notice to
Landlord. If this Lease is not so terminated by Tenant, there shall be no
abatement of rent and this Lease shall continue in effect.

          ARTICLE XIII. SUBORDINATION; ESTOPPEL CERTIFICATE; FINANCIALS

      SECTION 13.1. SUBORDINATION. At the option of Landlord or any lender of
Landlord's that obtains a security interest in the Building, this Lease shall be
either superior or subordinate to all ground or underlying leases, mortgages and
deeds of trust, if any, which may hereafter affect the Building, and to all
renewals, modifications, consolidations, replacements and extensions thereof;
provided, that so long as no Event of Default exists under this Lease, Tenant's
possession and quiet enjoyment of the Premises shall not be disturbed and this
Lease shall not terminate in the event of termination of any such ground or
underlying lease, or the foreclosure of any such mortgage or deed of trust, to
which this Lease has been subordinated pursuant to this Section. Tenant shall
execute and deliver any documents or agreements requested by Landlord or such
lessor or lender which provide Tenant with the non-disturbance protections set
forth in this Section. In the event of a termination or foreclosure, Tenant
shall become a tenant of and attorn to the successor-in-interest to Landlord
upon the same terms and conditions as are contained in this Lease, and shall
execute any instrument reasonably required by Landlord's successor for that
purpose. Tenant shall also, upon written request of Landlord, execute and
deliver all instruments as may be reasonably required from time to time to
subordinate the rights of Tenant under this Lease to any ground or underlying
lease or to the lien of any mortgage or deed of trust (provided that such
instruments include the nondisturbance and attornment provisions set forth
above), or, if requested by Landlord, to subordinate, in whole or in part, any
ground or underlying lease or the lien of any mortgage or deed of trust to this
Lease. Tenant agrees that any purchaser at a foreclosure sale or lender taking
title under a deed-in-lieu of foreclosure shall not be responsible for any act
or omission of a prior landlord, shall not be subject to any offsets or defenses
Tenant may have against a


                                       14

<PAGE>

prior landlord, and shall not be liable for the return of the security deposit
to the extent it is not actually received by such purchaser or bound by any rent
paid for more than the current month in which the foreclosure occurred.

      SECTION 13.2. ESTOPPEL CERTIFICATE.

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

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

      SECTION 13.3. FINANCIALS.

      (a) Tenant shall deliver to Landlord, prior to the execution of this Lease
and thereafter at any time upon Landlord's request, Tenant's then-most current
tax returns and financial statements, certified true, accurate and complete by
the chief financial officer of Tenant, including a balance sheet and profit and
loss statement for the most recent prior year, or, in the event Tenant is a
publicly traded corporation on a nationally recognized stock exchange, Tenant's
current financial reports filed with the Securities and Exchange Commission
(collectively, the "Statements"), which Statements shall accurately and
completely reflect the financial condition of Tenant. Landlord agrees that it
will keep the Statements confidential, except that Landlord shall have the right
to deliver the same to any proposed purchaser of the Building or Site, and to
any encumbrancer of all or any portion of the Building or Site.

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

                   ARTICLE XIV. EVENTS OF DEFAULT AND REMEDIES

      SECTION 14.1. TENANT'S DEFAULTS. In addition to any other breaches of this
Lease which are defined as Events of Default in this Lease, the occurrence of
any one or more of the following events shall constitute an Event of Default by
Tenant:

      (a) The failure by Tenant to make any payment of Basic Rent or additional
rent required to be made by Tenant, as and when due, where the failure continues
for a period of three (3) days after written notice from Landlord to Tenant;
provided, however, that any such notice shall be in lieu of, and not in addition
to, any notice required under California Code of Civil Procedure Section 1161
and 1161(a) as amended. For purposes of these Events of Default and remedies
provisions, the term "additional rent" shall be deemed to include all amounts of
any type whatsoever other than Basic Rent to be paid by Tenant pursuant to the
terms of this Lease.

      (b) The assignment, sublease, encumbrance or other transfer of this Lease
by Tenant, either voluntarily or by operation of law, whether by judgment,
execution, transfer by intestacy or testacy, or other means, without the prior
written consent of Landlord when consent is required by this Lease.

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

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

      (e) The abandonment of the Premises by Tenant.

      (f) The failure or inability by Tenant to observe or perform any of the
express or implied covenants or provisions of this Lease to be observed or
performed by Tenant, other than as specified in this Section 14.1, where the
failure continues for a period of thirty (30) days after written notice from
Landlord to Tenant or such shorter period as is specified in any other provision
of this Lease; provided, however, that any such notice shall be in lieu of, and
not in addition to, any notice required under California Code of Civil Procedure
Section 1161 and 1161(a) as amended. However, if the nature of the failure is
such that more than thirty (30) days are reasonably required for its cure, then
Tenant shall not be deemed to have committed an Event of Default if Tenant
commences the cure within thirty (30) days, and thereafter diligently pursues
the cure to completion.


                                       15

<PAGE>

      (g) (i) The making by Tenant of any general assignment for the benefit of
creditors; (ii) the filing by or against Tenant of a petition to have Tenant
adjudged a Chapter 7 debtor under the Bankruptcy Code or to have debts
discharged or a petition for reorganization or arrangement under any law
relating to bankruptcy (unless, in the case of a petition filed against Tenant,
the same is dismissed within thirty (30) days); (iii) the appointment of a
trustee or receiver to take possession of substantially all of Tenant's assets
located at the Premises or of Tenant's interest in this Lease, if possession is
not restored to Tenant within thirty (30) days; (iv) the attachment, execution
or other judicial seizure of substantially all of Tenant's assets located at the
Premises or of Tenant's interest in this Lease, where the seizure is not
discharged within thirty (30) days; (v) Tenant's convening of a meeting of its
creditors for the purpose of effecting a moratorium upon or composition of its
debts or (vi) the failure of Tenant to pay its material obligations to creditors
as and when they become due and payable, other than as a result of a good faith
dispute by Tenant as to the amount due to such creditors. Landlord shall not be
deemed to have knowledge of any event described in this Section 14.1(g) unless
notification in writing is received by Landlord, nor shall there be any
presumption attributable to Landlord of Tenant's insolvency. In the event that
any provision of this Section 14.1(g) is contrary to applicable law, the
provision shall be of no force or effect.

      SECTION 14.2. LANDLORD'S REMEDIES.

      (a) If an Event of Default by Tenant occurs, then in addition to any other
remedies available to Landlord, Landlord may exercise the following remedies:

            (i) Landlord may terminate Tenant's right to possession of the
Premises by any lawful means, in which case this Lease shall terminate and
Tenant shall immediately surrender possession of the Premises to Landlord. Such
termination shall not affect any accrued obligations of Tenant under this Lease.
Upon termination, Landlord shall have the right to reenter the Premises and
remove all persons and property. Landlord shall also be entitled to recover from
Tenant:

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

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

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

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

                  (5) At Landlord's election, all other amounts in addition to
or in lieu of the foregoing as may be permitted by law. Any sum, other than
Basic Rent, shall be computed on the basis of the average monthly amount
accruing during the twenty-four (24) month period immediately prior to the Event
of Default, except that if it becomes necessary to compute such rental before
the twenty-four (24) month period has occurred, then the computation shall be on
the basis of the average monthly amount during the shorter period. As used in
Sections 14.2(a)(i) (1) and (2) above, the "worth at the time of award" shall be
computed by allowing interest at the rate of ten percent (10%) per annum. As
used in Section 14.2(a)(i)(3) above, the "worth at the time of award" shall be
computed by discounting the amount at the discount rate of the Federal Reserve
Bank of San Francisco at the time of award plus one percent (1%).

            (ii) Landlord may elect not to terminate Tenant's right to
possession of the Premises, in which event Landlord may continue to enforce all
of its rights and remedies under this Lease, including the right to collect all
rent as it becomes due. Efforts by the Landlord to maintain, preserve or relet
the Premises, or the appointment of a receiver to protect the Landlord's
interests under this Lease, shall not constitute a termination of the Tenant's
right to possession of the Premises. In the event that Landlord elects to avail
itself of the remedy provided by this Section 14.2(a)(ii), Landlord shall not
unreasonably withhold its consent to an assignment or subletting of the Premises
subject to the reasonable standards for Landlord's consent as are contained in
this Lease.

      (b) Landlord shall be under no obligation to observe or perform any
covenant of this Lease on its part to be observed or performed which accrues
after the date of any Event of Default by Tenant unless and until the Event of
Default is cured by Tenant, it being understood and agreed that the performance
by Landlord of its obligations under this Lease are expressly conditioned upon
Tenant's full and timely performance of its obligations under this Lease. The
various rights and remedies reserved to Landlord in this Lease or otherwise
shall be cumulative and, except as otherwise provided by California law,
Landlord may pursue any or all of its rights and remedies at the same time.

      (c) No delay or omission of Landlord to exercise any right or remedy shall
be construed as a waiver of the right or remedy or of any breach or Event of
Default by Tenant. The acceptance by Landlord of rent shall not be a (i) waiver
of any preceding breach or Event of Default by Tenant of any provision of this
Lease, other than the


                                       16

<PAGE>

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

      (d) Any agreement for free or abated rent or other charges, or for the
giving or paying by Landlord to or for Tenant of any cash or other bonus,
inducement or consideration for Tenant's entering into this Lease ("Inducement
Provisions") shall be deemed conditioned upon Tenant's full and faithful
performance of the terms, covenants and conditions of this Lease. Upon an Event
of Default under this Lease by Tenant, any such Inducement Provisions shall
automatically be deemed deleted from this Lease and of no further force or
effect and the amount of any rent reduction or abatement or other bonus or
consideration already given by Landlord or received by Tenant as an Inducement
shall be immediately due and payable by Tenant to Landlord, notwithstanding any
subsequent cure of said Event of Default by Tenant. The acceptance by Landlord
of rent or the cure of the Event of Default which initiated the operation of
this Section 14.1 shall not be deemed a waiver by Landlord of the provisions of
this Section 14.2(d).

      SECTION 14.3. LATE PAYMENTS.

      (a) Any payment due to Landlord under this Lease, including without
limitation Basic Rent, Tenant's Share of Operating Expenses or any other payment
due to Landlord under this Lease, that is not received by Landlord within five
(5) days following notice from Landlord shall bear interest at the maximum rate
permitted by law from the date due until fully paid. The payment of interest
shall not cure any breach or Event of Default by Tenant under this Lease. In
addition, Tenant acknowledges that the late payment by Tenant to Landlord of
Basic Rent and Tenant's Share of Operating Expenses will cause Landlord to incur
costs not contemplated by this Lease, the exact amount of which will be
extremely difficult and impracticable to ascertain. Those costs may include, but
are not limited to, administrative, processing and accounting charges, and late
charges which may be imposed on Landlord by the terms of any ground lease,
mortgage or trust deed covering the Premises. Accordingly, if any Basic Rent or
Tenant's Share of Operating Expenses due from Tenant shall not be received by
Landlord or Landlord's designee within five (5) days following notice from
Landlord, then Tenant shall pay to Landlord, in addition to the interest
provided above, a late charge, which the Tenant agrees is reasonable, in a sum
equal to five percent (5%) of the amount overdue. Acceptance of a late charge by
Landlord shall not constitute a waiver of Tenant's breach or Event of Default
with respect to the overdue amount, nor shall it prevent Landlord from
exercising any of its other rights and remedies.

      (b) Should Tenant deliver to Landlord, at any time during the Term, two
(2) or more insufficient checks, the Landlord may require that all monies then
and thereafter due from Tenant be paid to Landlord by cashier's check. If any
check for any payment to Landlord hereunder is returned by the bank for any
reason, such payment shall not be deemed to have been received by Landlord and
Tenant shall be responsible for any applicable late charge, interest payment and
the charge to Landlord by its bank for such returned check. Nothing in this
Section shall be construed to compel Landlord to accept Basic Rent, Tenant's
Share of Operating Expenses or any other payment from Tenant if there exists an
Event of Default unless such payment fully cures any and all such Event of
Default. Any acceptance of any such payment shall not be deemed to waive any
other right of Landlord under this Lease. Any payment by Tenant to Landlord may
be applied by Landlord, in its sole and absolute discretion, in any order
determined by Landlord to any amounts then due to Landlord.

      SECTION 14.4. RIGHT OF LANDLORD TO PERFORM. All covenants and agreements
to be performed by Tenant under this Lease shall be performed at Tenant's sole
cost and expense and without any abatement of rent or right of set-off. If
Tenant fails to pay any sum of money, other than rent payable to Landlord, or
fails to perform any other act on its part to be performed under this Lease, and
the failure continues beyond any applicable grace period set forth in Section
14.1, then in addition to any other available remedies, Landlord may, at its
election make the payment or perform the other act on Tenant's part and Tenant
hereby grants Landlord the right to enter onto the Premises in order to carry
out such performance. Landlord's election to make the payment or perform the act
on Tenant's part shall not give rise to any responsibility of Landlord to
continue making the same or similar payments or performing the same or similar
acts nor shall Landlord be responsible to Tenant for any damage caused to Tenant
as the result of such performance by Landlord. Tenant shall, promptly upon
demand by Landlord, reimburse Landlord for all sums paid by Landlord and all
necessary incidental costs, together with interest at the maximum rate permitted
by law from the date of the payment by Landlord.

      SECTION 14.5. DEFAULT BY LANDLORD. Landlord shall not be deemed to be in
default in the performance of any obligation under this Lease, and Tenant shall
have no rights to take any action against Landlord, unless and until Landlord
has failed to perform the obligation within thirty (30) days after written
notice by Tenant to Landlord specifying in reasonable detail the nature and
extent of the failure; provided, however, that if the nature of Landlord's
obligation is such that more than thirty (30) days are required for its
performance, then Landlord shall not be deemed to be in default if it commences
performance within the thirty (30) day period and thereafter diligently pursues
the cure to completion. In the event of Landlord's default under this Lease,
Tenant's sole remedies shall be to seek damages or specific performance from
Landlord.


                                       17

<PAGE>

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

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

      SECTION 14.8. SATISFACTION OF JUDGMENT. Should Tenant recover a money
judgment against Landlord, such judgment shall be satisfied only from the
interest of Landlord in the Site and out of the rent or other income from such
property receivable by Landlord or out of consideration received by Landlord
from the sale or other disposition of all or any part of Landlord's right, title
or interest in the Site and no action for any deficiency may be sought or
obtained by Tenant.

      SECTION 14.9. LIMITATION OF ACTIONS AGAINST LANDLORD. Any claim, demand or
right of any kind by Tenant which is based upon or arises in connection with
this Lease, including without limitation any arising under a tort or contract
cause of action, shall be barred unless Tenant commences an action thereon
within six (6) months after the date that the act, omission, event or default
upon which the claim, demand or right arises, has occurred.

                             ARTICLE XV. END OF TERM

      SECTION 15.1. HOLDING OVER. This Lease shall terminate without further
notice upon the expiration of the Term, and any holding over by Tenant after the
expiration shall not constitute a renewal or extension of this Lease, or give
Tenant any rights under this Lease, except when in writing signed by both
parties. Any period of time following the Expiration Date or earlier termination
of this Lease required for Tenant to remove its property or to place the
Premises in the condition required pursuant to Section 15.3 (or for Landlord to
do so if Tenant fails to do so) shall be deemed a holding over by Tenant. If
Tenant holds over for any period after the Expiration Date (or earlier
termination) of the Term without the prior written consent of Landlord, such
possession shall constitute a tenancy at sufferance only and an Event of Default
under this Lease; such holding over with the prior written consent of Landlord
shall constitute a month-to-month tenancy commencing on the first (1st) day
following the termination of this Lease and terminating thirty (30) days
following delivery of written notice of termination by either Landlord or Tenant
to the other . In either of such events, possession shall be subject to all of
the terms of this Lease, except that the monthly Basic Rent shall be one hundred
fifty percent (150%) of the Basic Rent for the month immediately preceding the
date of termination, which amount shall be subject to increase by Landlord
during the holdover period upon thirty (30) days written notice from Landlord.
If Tenant fails to surrender the Premises upon the expiration of this Lease
despite demand to do so by Landlord, Tenant shall indemnify and hold Landlord
harmless from all loss or liability, including without limitation, any claims
made by any succeeding tenant relating to such failure to surrender. Acceptance
by Landlord of rent after the termination shall not constitute a consent to a
holdover or result in a renewal of this Lease. The foregoing provisions of this
Section are in addition to and do not affect Landlord's right of re-entry or any
other rights of Landlord under this Lease or at law.

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

      SECTION 15.3. SURRENDER OF PREMISES; REMOVAL OF PROPERTY. Subject to the
provisions of 7.3 of this Lease, upon the Expiration Date or upon any earlier
termination of this Lease, Tenant shall quit and surrender possession of the
Premises to Landlord in as good order, condition and repair as when received,
reasonable wear and tear and repairs which are Landlord's obligation excepted,
and shall, without expense to Landlord, remove or cause to be removed from the
Premises all personal property and debris, except for any items that Landlord
may by written authorization allow to remain. Tenant shall repair all damage to
the Premises resulting from the removal, which repair shall include the patching
and filling of holes and repair of structural damage, provided that Landlord may
instead elect to repair any structural damage at Tenant's expense. If Tenant
shall fail to comply with the provisions of this Section, Landlord may effect
the removal and/or make any repairs, and the cost to Landlord shall be
additional rent payable by Tenant upon demand. If Tenant fails to remove
Tenant's personal property from the Premises upon the expiration of the Term,
Landlord may remove, store, dispose of and/or retain such personal property, at
Landlord's option, in accordance with then applicable laws, all at the expense
of Tenant. If requested by Landlord, Tenant shall execute, acknowledge and
deliver to Landlord an instrument in writing releasing and quitclaiming to
Landlord all right, title and interest of Tenant in the Premises.


                                       18

<PAGE>

                        ARTICLE XVI. PAYMENTS AND NOTICES

      All sums payable by Tenant to Landlord shall be deemed to be rent under
this Lease and shall be paid, without deduction or offset, in lawful money of
the United States to Landlord at its address set forth in Item 12 of the Basic
Lease Provisions, or at any other place as Landlord may designate in writing.
Unless this Lease expressly provides otherwise, as for example in the payment of
Basic Rent and the Tenant's Share of Operating Costs pursuant to Sections 4.1
and 4.2, all payments shall be due and payable within five (5) days after
demand. Any notice, election, demand, consent, approval or other communication
to be given or other document to be delivered by either party to the other may
be delivered in person or by courier or overnight delivery service to the other
party, or may be deposited in the United States mail, duly registered or
certified, postage prepaid, return receipt requested, and addressed to the other
party at the address set forth in Item 12 of the Basic Lease Provisions, or if
to Tenant, at that address or, from and after the Commencement Date, at the
Premises (whether or not Tenant has departed from, abandoned or vacated the
Premises). Either party may, by written notice to the other, served in the
manner provided in this Article, designate a different address. If any notice or
other document is sent by mail, it shall be deemed served or delivered
seventy-two (72) hours after mailing. If more than one person or entity is named
as Tenant under this Lease, service of any notice upon any one of them shall be
deemed as service upon all of them.

                       ARTICLE XVII. RULES AND REGULATIONS

      Tenant agrees to observe faithfully and comply strictly with the Rules and
Regulations, attached as Exhibit E, and any reasonable and nondiscriminatory
amendments, modifications and/or additions as may be adopted and published by
written notice to tenants by Landlord for the safety, care, security, good
order, or cleanliness of the Premises, Building, Site and Common Areas. One or
more waivers by Landlord of any breach of the Rules and Regulations by Tenant or
by any other tenant(s) shall not be a waiver of any subsequent breach of that
rule or any other. In the case of any conflict between the Rules and Regulations
and this Lease, this Lease shall be controlling.

                       ARTICLE XVIII. BROKER'S COMMISSION

      The parties recognize as the broker(s) who negotiated this Lease the
firm(s), if any, whose name(s) is (are) stated in Item 10 of the Basic Lease
Provisions, and agree that Landlord shall be responsible for the payment of
brokerage commissions to those broker(s) unless otherwise provided in this
Lease. Tenant warrants that it has had no dealings with any other real estate
broker or agent in connection with the negotiation of this Lease, and Tenant
agrees to indemnify and hold Landlord harmless from any cost, expense or
liability (including reasonable attorneys' fees) for any compensation,
commissions or charges claimed by any other real estate broker or agent employed
or claiming to represent or to have been employed by Tenant in connection with
the negotiation of this Lease. The foregoing agreement shall survive the
termination of this Lease.

                  ARTICLE XIX. TRANSFER OF LANDLORD'S INTEREST

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

                           ARTICLE XX. INTERPRETATION

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

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

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

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

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

      SECTION 20.6. CONTROLLING LAW/VENUE. This Lease shall be governed by and
interpreted in accordance with the laws of the State of California. Any
litigation commenced concerning any matters whatsoever


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arising out of or in any way connected to this Lease shall be initiated in the
Superior Court of the county in which the Site is located.

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

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

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

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

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

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

      SECTION 20.13. INTERPRETATION. This Lease shall not be construed in favor
of or against either party, but shall be construed as if both parties prepared
this Lease.

                      ARTICLE XXI. EXECUTION AND RECORDING

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

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

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

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

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


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

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

                           ARTICLE XXII. MISCELLANEOUS

      SECTION 22.1. NONDISCLOSURE OF LEASE TERMS. Tenant acknowledges and agrees
that the terms of this Lease are confidential and constitute proprietary
information of Landlord. Disclosure of the terms could adversely affect the
ability of Landlord to negotiate other leases and impair Landlord's relationship
with other tenants. Accordingly, Tenant agrees that it, and its partners,
officers, directors, employees and attorneys, shall not intentionally and
voluntarily disclose, the terms and conditions of this Lease ("Confidential
Information") to any third party, either directly or indirectly, without the
prior written consent of Landlord, which consent may be given or withheld in
Landlord's sole and absolute discretion. The foregoing restriction shall not
apply if either: (i) Tenant is required to disclose the Confidential Information
in connection with its SEC filings or in response to a subpoena or other
regulatory, administrative or court order, (ii) independent legal counsel to
Tenant delivers a written opinion to Landlord that Tenant is required to
disclose the Confidential Information to, or file a copy of this Lease with, any
governmental agency or any stock exchange; provided however, that in such event,
Tenant shall, before making any such disclosure (A) provide Landlord with prompt
written notice of such required disclosure, (B) at Tenant's sole cost, take all
reasonable legally available steps to resist or narrow such requirement,
including without limitation preparing and filing a request for confidential
treatment of the Confidential Information and (C) if disclosure of the
Confidential Information is required by subpoena or other regulatory,
administrative or court order, Tenant shall provide Landlord with as much
advance notice of the possibility of such disclosure as practical so that
Landlord may attempt to stop such disclosure or obtain an order concerning such
disclosure. The form and content of a request by Tenant for confidential
treatment of the Confidential Information shall be provided to Landlord at least
five (5) business days before its submission to the applicable governmental
agency or stock exchange and is subject to the prior written approval of
Landlord. In addition, Tenant may disclose the terms of this Lease to
prospective assignees of this Lease and prospective subtenants under this Lease
with whom Tenant is actively negotiating such an assignment or sublease.

      SECTION 22.2. [Intentionally omitted]

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

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

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

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

      SECTION 22.7. TERMINATION OF EXISTING LEASE. Landlord and Tenant, as
successor-in-interest by corporate merger with Endgate Corporation, are
currently parties to an office space lease dated March 26, 1997for space located
at 321 Soquel Avenue, Sunnyvale, California (the "Existing Lease"). The parties
agree that the Existing Lease shall terminate effective as of midnight on July
31, 2001, provided that such termination shall not relieve Tenant of (a) any
accrued obligation or liability under the Existing Lease as of said termination
date, or (b) any obligation under the Existing Lease which was reasonably
intended to survive the expiration or termination thereof. Any advance rental
paid by Tenant under the Existing Lease shall be rebated by Landlord or applied
to the rent due hereunder.


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LANDLORD:                              TENANT:

THE IRVINE COMPANY                     ENDWAVE CORPORATION

By: ________________________________   By: ___________________________________
    Clarence W. Barker                    Name :______________________________
    Executive Vice President              Title :_____________________________


By: ________________________________   By: ___________________________________
    William R. Halford                    Name:_______________________________
    President, Office Properties          Title: _____________________________


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