<PAGE>

                                                                    Exhibit 10.2

                              STANDARD OFFICE LEASE
                              ---------------------

         This Standard Office Lease ("Lease") is made and entered into as of the
1st day of November, 2000, by and between ARDEN REALTY LIMITED PARTNERSHIP, a
Maryland limited partnership ("Landlord"), and NEWPORT CORPORATION, a Nevada
corporation ("Tenant").

         Landlord hereby leases to Tenant and Tenant hereby leases from Landlord
the premises described as Suite Nos. 100 and 225, as designated on the plans
attached hereto and incorporated herein as Exhibit "A" ("Premises"), of the
project ("Project") whose address is 1821 E. Dyer Road, Santa Ana, California
for the Term and upon the terms and conditions hereinafter set forth, and
Landlord and Tenant hereby agree as follows:

                                 ARTICLE 1
                                 ---------
                             BASIC LEASE PROVISIONS
                             ----------------------

A. Term:                           The period from the Commencement Date through
                                   the Expiration Date.

   Commencement Date:              November 1, 2000.

   Expiration Date:                January 31, 2006 (subject to adjustment as
                                   provided in Article 2 below).

B. Square Footage:                 Approximately 65,255 rentable square feet on
                                   the first (1/st/) floor and 12,488 rentable
                                   square feet on the second (2/nd/) floor.

C. `Basic Rental:

                                                        Approximate Monthly
                         Annual            Monthly       Basic Rental Per
      Lease Year      Basic Rental       Basic Rental  Rentable Square Foot
      ----------     --------------      ------------  --------------------
          1          $  932,916.00       $77,743.00           $1.00
          2          $  960,903.48       $80,075.29           $1.03
          3          $  988,890.96       $82,407.58           $1.06
          4          $1,016,878.40       $84,739.87           $1.09
          5          $1,054,190.08       $87,849.59           $1.13

`*Commencing after expiration of the Abatement Period.

D. Intentionally Omitted

E. Tenant's Proportionate Share:      67.57%, based upon a total of 115,061
                                      rentable square feet in the Project.

F. Security Deposit:                  None.

G. Permitted Use:                     General office, research and development,
                                      and, subject to applicable laws as further
                                      provided in Article 7, manufacturing of
                                      fiber optical devices and equipment and
                                      any other legally permitted uses
                                      consistent with the quality of the Project
                                      as a first-class office and research and
                                      development project.

H. Brokers:                           CB Richard Ellis and Voit Commercial
                                      Brokerage.


                                                                 Initials:______
                                                                          ______
<PAGE>

I. Parking Passes:                    Tenant shall have the use of four (4)
                                      parking passes for each 1,000 rentable
                                      square feet contained in the Premises,
                                      which equals three hundred ten (310)
                                      passes, of which 290 shall be unreserved
                                      and 20 shall be reserved, as provided in
                                      Article 23 hereof.

J. First Month's Rent:                The first full month's rent of $77,743.00
                                      and the first month's estimated Operating
                                      Costs of $18,787.89 shall be due and
                                      payable by Tenant to Landlord upon
                                      Tenant's execution of this Lease.

                                   ARTICLE 2
                                   ---------

                                 TERM/PREMISES
                                 -------------

         The Term of this Lease shall commence on the Commencement Date as set
forth in Article 1.A. of the Basic Lease Provisions and shall end on the
Expiration Date set forth in Article 1.A. of the Basic Lease Provisions.
Notwithstanding the fact that the Commencement Date has occurred, Tenant shall
not be responsible for the payment of Basic Rental during the period ("Abatement
Period") from the Commencement Date until January 31, 2001 (as such date may be
extended for Landlord Delays pursuant to Section 5.2 of the Tenant Work Letter).
For purposes of this Lease, the term "Lease Year" shall mean each consecutive
twelve (12) month period during the Lease Term, with the first Lease Year
commencing on the day after the date of expiration of the Abatement Period;
however, (a) if the date of expiration of the Abatement Period falls on a day
other than the last day of a calendar month, the first Lease Year shall end on
the last day of the eleventh (11th) month after the date of expiration of the
Abatement Period and the second (2nd) and each succeeding Lease Year shall
commence on the first day of the next calendar month, and (b) the last Lease
Year shall end on the Expiration Date. As of the date of this Lease, the parties
anticipate the date of expiration of the Abatement Period will be January 31,
2001. However, if the actual date of expiration of the Abatement Period is other
than January 31, 2001, the Expiration Date shall be revised to be the date which
is the fifth (5th) anniversary of the date of expiration of the Abatement
Period; provided, however, that if the date of expiration of the Abatement
Period is a date other than the last day of a month, the Expiration Date shall
be the last day of the month which is sixty (60) months after the month in which
the date of expiration of the Abatement Period falls, unless extended or earlier
terminated pursuant to this Lease. Any such revision to the Expiration Date
shall be memorialized in the Commencement Letter. If Landlord is unable to
deliver possession of the Premises to Tenant on or before the anticipated date
of expiration of the Abatement Period, Landlord shall not be subject to any
liability for its failure to do so, and such failure shall not affect the
validity of this Lease nor the obligations of Tenant hereunder. Landlord and
Tenant hereby stipulate that the Premises contains the number of square feet
specified in Article 1.B. of the Basic Lease Provisions. Landlord may deliver to
Tenant a Commencement Letter in a form substantially similar to that attached
hereto as Exhibit "C", which Tenant shall execute and return to Landlord within
ten (10) days of receipt thereof. Failure of Tenant to timely execute and
deliver the Commencement Letter shall constitute acknowledgment by Tenant that
the statements included in such notice are true and correct, without exception.

                                   ARTICLE 3
                                   ---------

                                     RENTAL
                                     ------

         (a) Basic Rental. Commencing upon expiration of the Abatement Period,
             ------------
Tenant agrees to pay to Landlord during the Term hereof, at Landlord's office or
to such other person or at such other place as directed from time to time by
written notice to Tenant from Landlord, the initial monthly and annual sums as
set forth in Article 1.C of the Basic Lease Provisions, payable in advance on
the first day of each calendar month, without demand, setoff or deduction, and
in the event this Lease commences or the date of expiration of this Lease occurs
other than on the first day or last day of a calendar month, the rent for such
month shall be prorated.

                                                                 Initials:______
                                                                          ______

                                      -2-
<PAGE>

Notwithstanding the foregoing, the first full month's rent and estimated Direct
Costs shall be paid to Landlord in accordance with Article 1.J. of the Basic
Lease Provisions.

         (b) Direct Costs. Tenant shall pay an additional sum throughout the
             ------------
Lease Term equal to the product of the amount set forth in Article 1.E. of the
Basic Lease Provisions multiplied by the amount of "Direct Costs" (as defined
hereinbelow). In the event either the Premises and/or the Project is expanded or
reduced, then Tenant's Proportionate Share shall be appropriately adjusted, and
as to the calendar year in which such change occurs, Tenant's Proportionate
Share for such year shall be determined on the basis of the number of days
during that particular calendar year that such Tenant's Proportionate Share was
in effect. In the event this Lease shall terminate on any date other than the
last day of a calendar year, the additional sum payable hereunder by Tenant
during the calendar year in which this Lease terminates shall be prorated on the
basis of the relationship which the number of days which have elapsed from the
commencement of said calendar year to and including said date on which this
Lease terminates bears to three hundred sixty-five (365). Any and all amounts
due and payable by Tenant pursuant to Article 3(b),(c) and (d) hereof shall be
deemed "Additional Rent" and Landlord shall be entitled to exercise the same
rights and remedies upon default in these payments as Landlord is entitled to
exercise with respect to defaults in monthly Basic Rental payments.

         (c) Definitions. As used herein the term "Direct Costs" shall mean the
             -----------
sum of the following:

             (i)   "Tax Costs", which shall mean any and all real estate taxes
and other similar charges on real property or improvements, assessments, water
and sewer charges, and all other charges assessed, reassessed or levied upon the
Project and appurtenances thereto and the parking or other facilities thereof,
or the real property thereunder (collectively the "Real Property") or
attributable thereto or on the rents, issues, profits or income received or
derived therefrom which are assessed, reassessed or levied by the United States,
the State of California or any local government authority or agency or any
political subdivision thereof, and shall include Landlord's reasonable legal
fees, costs and disbursements paid by Landlord in connection with proceedings
for reduction of Tax Costs or any part thereof during the applicable calendar
year; provided, however, if at any time after the date of this Lease the methods
of taxation now prevailing shall be altered so that in lieu of or as a
supplement to or a substitute for the whole or any part of any Tax Costs, there
shall be assessed, reassessed or levied (a) a tax, assessment, reassessment,
levy, imposition or charge wholly or partially as a net income, capital or
franchise levy or otherwise on the rents, issues, profits or income derived
therefrom, or (b) a tax, assessment, reassessment, levy (including but not
limited to any municipal, state or federal levy), imposition or charge measured
by or based in whole or in part upon the Real Property and imposed upon
Landlord, or (c) a license fee measured by the rent payable under this Lease,
then all such taxes, assessments, reassessments or levies or the part thereof so
measured or based, shall be deemed to be included in the term "Direct Costs."
Notwithstanding any contrary provisions of this Lease, Tax Costs shall
specifically exclude all excess profit taxes, franchise taxes, gift taxes,
capital stock taxes, inheritance taxes, estate taxes, excise taxes, sales or
transactions taxes, federal and state income taxes, taxes applied or measured by
Landlord's general or net income and any tax against the Premises that is paid
by Tenant as a separate charge.

             (ii)  "Operating Costs", which shall mean all costs and expenses
incurred by Landlord in connection with the maintenance, operation, replacement,
ownership and repair of the Project, the equipment, the intrabuilding network
cable, adjacent walks, malls and landscaped and common areas and the parking
structure, areas and facilities of the Project, including, but not limited to,
salaries, wages, medical, surgical and general welfare benefits and pension
payments, payroll taxes, fringe benefits, employment taxes, workers'
compensation, uniforms and dry cleaning thereof for all persons who perform
duties connected with the operation, maintenance and repair of the Project, its
equipment, the intrabuilding network cable and the adjacent walks and landscaped
areas, including janitorial, gardening, security, parking, operating engineer,
elevator, painting, plumbing, electrical, carpentry, heating, ventilation, air
conditioning, window washing, hired services, a reasonable allowance for
depreciation of the cost of acquiring or the rental expense of personal property
used in the maintenance, operation and repair of the Project, accountant's fees
incurred in the preparation of rent adjustment statements, legal fees, real
estate

                                                                 Initials:______
                                                                          ______

                                      -3-
<PAGE>

tax consulting fees, personal property taxes on property used in the maintenance
and operation of the Project, fees, costs, expenses or dues payable pursuant to
the terms of any covenants, conditions or restrictions or owners' association
pertaining to the Project, capital expenditures incurred that are reasonably
expected to effect economies of operation of, or stability of services to, the
Project and capital expenditures required by government regulations, laws, or
ordinances including, but not limited to the Americans with Disabilities Act;
costs incurred (capital or otherwise) on a regular recurring basis every three
(3) or more years for certain maintenance projects (e.g., parking lot slurry
coat or replacement of lobby and elevator cab carpeting); the cost of all
charges for electricity, gas, water and other utilities furnished to the
Project, including any taxes thereon; the cost of all charges for fire and
extended coverage, liability and all other insurance for the Project carried by
Landlord; the cost of all building and cleaning supplies and materials; the cost
of all charges for cleaning, maintenance and service contracts and other
services with independent contractors and administration fees; a property
management fee (which fee shall be competitive with the fee charged by
comparable buildings in the vicinity of the Project for comparable quality and
level of services, and may be imputed if Landlord has internalized management or
otherwise acts as its own property manager) and license, permit and inspection
fees relating to the Project. All permitted capital expenditures shall be
amortized over their useful life as reasonably determined by Landlord. In the
event, during any calendar year, the Project is less than ninety-five percent
(95%) occupied at all times, Operating Costs shall be adjusted to reflect the
Operating Costs of the Project as though ninety-five percent (95%) were occupied
at all times, and the increase or decrease in the sums owed hereunder shall be
based upon such Operating Costs as so adjusted. Notwithstanding anything to the
contrary contained herein, Operating Costs shall not include costs incurred by
Landlord to repair and/or maintain the foundation and walls (exterior and
interior) of the Project or the roof structure of the Project. Further, during
the first twelve (12) months of the Lease Term (commencing as of the
Commencement Date), Operating Costs shall not include costs incurred by Landlord
to repair and/or maintain the roof membrane of the Project or the heating,
ventilating and air conditioning units installed at the Project as of the date
of this Lease.

                   Notwithstanding anything above to the contrary, Operating
Costs shall not include (1) the cost of providing any service directly to and
paid directly by any tenant (outside of such tenant's Direct Cost payments); (2)
the cost of any items for which Landlord is reimbursed by insurance proceeds,
condemnation awards, a tenant of the Project, or otherwise to the extent so
reimbursed; (3) any real estate brokerage commissions or other costs incurred in
procuring tenants, or any fee in lieu of commission; (4) amortization of
principal and interest on mortgages or ground lease payments (if any); (5) costs
of items considered capital repairs, replacements, improvements and equipment
under generally accepted accounting principles consistently applied except as
expressly included in Operating Costs pursuant to the definition above; (6)
costs incurred by Landlord due to the violation by Landlord or any tenant of the
terms and conditions of any lease of space in the Project or the violation of
any law, code, regulation, ordinance or the like; (7) Landlord's general
corporate overhead and general administrative expenses; (8) any compensation
paid to clerks, attendants or other persons in commercial concessions operated
by Landlord (other than in the parking facility for the Project); (9) costs
incurred in connection with upgrading the Project to comply with disability,
life, seismic, fire and safety codes, ordinances, statutes, or other laws in
effect prior to the Commencement Date, including, without limitation, the
Americans with Disabilities Act ("ADA"), including penalties or damages incurred
due to such non-compliance; (10) bad debt expenses and interest, principal,
points and fees on debts (except in connection with the financing of items which
may be included in Operating Costs) or amortization on any ground lease,
mortgage or mortgages or any other debt instrument encumbering the Project
(including the land on which the Project is situated); (11) marketing costs,
including leasing commissions, attorneys' fees in connection with the
negotiation and preparation of letters, deal memos, letters of intent, leases,
subleases and/or assignments, space planning costs, and other costs and expenses
incurred in connection with lease, sublease and/or assignment negotiations and
transactions with present or prospective tenants or other occupants of the
Project, including attorneys' fees and other costs and expenditures incurred in
connection with disputes with present or prospective tenants or other occupants
of the Project; (12) real estate brokers' leasing commissions; (13) costs,
including permit, license and inspection costs, incurred with respect to the
installation of other tenants' or occupants' improvements made for tenants or
other occupants in the Project or incurred in renovating or otherwise improving,
decorating, painting or redecorating vacant space for tenants or other occupants
in the Project; (14) any costs expressly excluded from Operating Costs

                                                                 Initials:______
                                                                          ______

                                      -4-
<PAGE>

elsewhere in this Lease; (15) costs of any items (including, but not limited to,
costs incurred by Landlord for the repair of damage to the Project) to the
extent Landlord receives reimbursement from insurance proceeds or from a third
party (except that any deductible amount under any insurance policy shall be
included within Operating Costs); (16) rentals and other related expenses for
leasing an HVAC system, elevators, or other items (except when needed in
connection with normal repairs and maintenance of the Project) which if
purchased, rather than rented, would constitute a capital improvement not
included in Operating Costs pursuant to this Lease; (17) depreciation,
amortization and interest payments, except as specifically included in Operating
Costs pursuant to the terms of this Lease and except on 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; (18) costs incurred by
Landlord for alterations (including structural additions), repairs, equipment
and tools which are of a capital nature and/or which are considered capital
improvements or replacements under generally accepted accounting principles,
consistently applied, except as specifically included in Operating Costs
pursuant to the terms of this Lease; (19) expenses in connection with services
or other benefits which are not offered to Tenant or for which Tenant is charged
for directly but which are provided to another tenant or occupant of the
Project, without charge; (20) electric power costs or other utility costs for
which any tenant directly contracts with the local public service company; (21)
costs incurred in connection with the operation of retail stores selling
merchandise and restaurants in the Project to the extent such costs are in
excess of the costs Landlord reasonably estimates would have been incurred had
such space been used for general office use; (22) costs (including in connection
therewith all attorneys' fees and costs of settlement, judgments and/or payments
in lieu thereof) arising from claims, disputes or potential disputes in
connection with potential or actual claims litigation or arbitrations pertaining
to Landlord and/or the Project, other than such claims or disputes respecting
any services or equipment used in the operation of the Building by Landlord;
(23) costs associated with the operation of the business of the partnership
which constitutes Landlord as the same are distinguished from the costs of
operation of the Project; (24) costs incurred in connection with the original
construction of the Project; (25) costs of correcting defects in or inadequacy
of the initial design or construction of the Project; and (26) costs incurred to
remove, remedy, contain, or treat any Hazardous Material.

                   It is understood that Operating Costs shall be reduced by all
cash discounts, trade discounts, or quantity discounts received by Landlord or
Landlord's managing agent in the purchase of any goods, utilities, or services
in connection with the operation of the Project. Landlord shall make payments
for goods, utilities and services in a timely manner. Landlord agrees to keep
records of Operating Costs in accordance with a system of accounts and
accounting practices consistently maintained on a year-to-year basis.

         (d) Determination of Payment.
             ------------------------

             (i)    Landlord shall give Tenant a yearly expense estimate
statement (the "Estimate Statement") which shall set forth Landlord's reasonable
estimate (the "Estimate") of what the total amount of Direct Costs for the then-
current calendar year shall be (the "Estimated Direct Costs"). The failure of
Landlord to timely furnish the Estimate Statement for any calendar year shall
not preclude Landlord from enforcing its rights to collect any Estimated Direct
Costs under this Article 3. Tenant shall pay, with its next installment of
Monthly Basic Rental due, a fraction of the Estimated Direct Costs for the then-
current calendar year (reduced by any amounts paid pursuant to the last sentence
of this Section 3(d)(i)). Such fraction shall have as its numerator the number
of months which have elapsed in such current calendar year to the month of such
payment, both months inclusive, and shall have twelve (12) as its denominator.
Until a new Estimate Statement is furnished, Tenant shall pay monthly, with the
monthly Basic Rental installments, an amount equal to one-twelfth (1/12) of the
total Estimated Direct Costs set forth in the previous Estimate Statement
delivered by Landlord to Tenant.

             (ii)   In addition, Landlord shall endeavor to give to Tenant on or
before the first day of April following the end of each calendar year, a
statement (the "Statement") which

                                                                 Initials:______
                                                                          ______

                                      -5-
<PAGE>

shall state the Direct Costs incurred or accrued for such preceding calendar
year. Upon receipt of the Statement for each calendar year during the Term, if
amounts paid by Tenant as Estimated Direct Costs are less than Tenant's actual
Proportionate Share of Direct Costs as specified on the Statement, Tenant shall
pay, with its next installment of monthly Basic Rental due, the full amount of
Tenant's actual Proportionate Share of Direct Costs for such calendar year, less
the amounts, if any, paid during such calendar year as Estimated Direct Costs.
If, however, the Statement indicates that amounts paid by Tenant as Estimated
Direct Costs are greater than Tenant's actual Proportionate Share of Direct
Costs as specified on the Statement, such overpayment shall be credited against
Tenant's next installments of Estimated Direct Costs. The failure of Landlord to
timely furnish the Statement for any calendar year shall not prejudice Landlord
from enforcing its rights under this Article 3. Even though the Term has expired
and Tenant has vacated the Premises, when the final determination is made of
Tenant's Proportionate Share of the Direct Costs for the calendar year in which
this Lease terminates, and if the amounts paid by Tenant as Estimated Direct
Costs are less than Tenant's actual Proportionate Share of Direct Costs
reflected by the Statement, Tenant shall, within thirty (30) days after delivery
of the Statement, pay to Landlord an amount as calculated pursuant to the
provisions of this Article 3(d). However, if Tenant has paid more in Estimated
Direct Costs than the actual amount of Tenant's Proportionate Share of Direct
Costs for the calendar year in which this Lease terminates, Landlord shall
refund such overpayment to Tenant within thirty (30) days after the date of the
Statement. The provisions of this Section 3(d)(ii) shall survive the expiration
or earlier termination of the Term.

             (iii)  Within eighteen (18) months after receipt of a Statement by
Tenant ("Review Period"), if Tenant disputes the amount set forth in the
Statement, Tenant's employees or an independent certified public accountant
(which accountant is a member of a nationally or regionally recognized
accounting firm and is hired on a non-contingency fee basis), designated by
Tenant, may, after reasonable notice to Landlord and at reasonable times,
inspect Landlord's records at Landlord's offices, provided that Tenant is not
then in default after expiration of all applicable notice and cure periods of
any obligation under this Lease (including, but not limited to, the payment of
the amount in dispute) and provided further that Tenant and such accountant or
representative shall, and each of them shall use their commercially reasonable
efforts to cause their respective agents and employees to, maintain all
information contained in Landlord's records in strict confidence.
Notwithstanding the foregoing, Tenant shall only have the right to review
Landlord's records one (1) time during any twelve (12) month period. Tenant's
failure to dispute the amounts set forth in any Statement within the Review
Period shall be deemed to be Tenant's approval of such Statement and Tenant,
thereafter, waives the right or ability to dispute the amounts set forth in such
Statement. If after such inspection, but within thirty (30) days after the
Review Period, Tenant notifies Landlord in writing that Tenant still disputes
such amounts, a certification as to the proper amount shall be made in
accordance with Landlord's standard accounting practices, at Tenant's expense,
by an independent certified public accountant selected by Landlord and Tenant in
good faith and who is a member of a nationally or regionally recognized
accounting firm, which certification shall be binding upon Landlord and Tenant.
Landlord shall cooperate in good faith with Tenant and the accountant to show
Tenant and the accountant the information upon which the certification is to be
based. However, if such certification by the accountant proves that the Direct
Costs set forth in the Statement were overstated by more than five percent (5%),
then the cost of the accountant and the cost of such certification shall be paid
for by Landlord. Promptly following the parties' receipt of such certification,
the parties shall make such appropriate payments or reimbursements, as the case
may be, to each other, as are determined to be owing pursuant to such
certification. Tenant agrees that this section shall be the sole method to be
used by Tenant to dispute the amount of any Direct Costs payable by Tenant
pursuant to the terms of this Lease, and Tenant hereby waives any other rights
at law or in equity relating thereto.

             (iv)   If the Project is a part of a multi-building development,
those Direct Costs attributable to such development as a whole (and not
attributable solely to any individual building therein) shall be allocated by
Landlord to the Project and to the other buildings within such development on an
equitable basis.

                                                                 Initials:______
                                                                          ______

                                      -6-
<PAGE>

                                   ARTICLE 4
                                   ---------

                             INTENTIONALLY OMITTED
                             ---------------------

                                   ARTICLE 5
                                   --------

                                 HOLDING OVER
                                 ------------

         Should Tenant, without Landlord's written consent, hold over after
termination of this Lease, Tenant shall become a tenant from month to month,
only upon each and all of the terms herein provided as may be applicable to a
month to month tenancy and any such holding over shall not constitute an
extension of this Lease. During such holding over, Tenant shall pay in advance,
monthly, Basic Rental at one hundred fifty percent (150%) of the rate in effect
for the last month of the Term of this Lease, in addition to, and not in lieu
of, all other payments required to be made by Tenant hereunder including but not
limited to Tenant's Proportionate Share of Direct Costs. Nothing contained in
this Article 5 shall be construed as consent by Landlord to any holding over of
the Premises by Tenant, and Landlord expressly reserves the right to require
Tenant to surrender possession of the Premises to Landlord as provided in this
Lease upon the expiration or earlier termination of the Term. If Landlord
provides Tenant with at least sixty (60) days prior written notice that Landlord
has a signed proposal or lease from a succeeding tenant to lease the Premises,
and if Tenant fails to surrender the Premises upon the later of (i) the date of
expiration of such sixty (60) day period, or (ii) the date of expiration or
termination of this Lease, Tenant agrees to indemnify, defend and hold Landlord
harmless from all costs, loss, expense or liability, actually paid by or awarded
against Landlord, including without limitation, claims made by any succeeding
tenant and real estate brokers claims and attorney's fees and costs.

                                   ARTICLE 6
                                   ---------

                            PERSONAL PROPERTY TAXES
                            -----------------------

         Tenant shall pay, prior to delinquency, all taxes assessed against or
levied upon trade fixtures, furnishings, equipment and all other personal
property of Tenant located in the Premises. In the event any or all of Tenant's
trade fixtures, furnishings, equipment and other personal property shall be
assessed and taxed with property of Landlord, or if the cost or value of any
leasehold improvements in the Premises exceeds the cost or value of a
Project-standard buildout as reasonably determined by Landlord and if the tax
bill or other evidence from the tax assessor's office indicates that real
property taxes for the Project are increased as a result of the circumstances so
created by Tenant, Tenant shall pay to Landlord its share of such taxes within
ten (10) days after delivery to Tenant by Landlord of a statement in writing
specifically setting forth the amount of such taxes applicable to Tenant's
property or above-standard improvements. Tenant shall assume and pay to Landlord
at the time of paying Basic Rental any excise, sales, use, rent, occupancy,
garage, parking, gross receipts or other taxes (other than net income taxes)
which may be imposed on or on account of letting of the Premises or the payment
of Basic Rental or any other sums due or payable hereunder, and which Landlord
may be required to pay or collect under any law now in effect or hereafter
enacted. Tenant shall pay directly to the party or entity entitled thereto all
business license fees, gross receipts taxes and similar taxes and impositions
which may from time to time be assessed against or levied upon Tenant, as and
when the same become due and before delinquency. Notwithstanding anything to the
contrary contained herein, any sums payable by Tenant under this Article 6 shall
not be included in the computation of "Tax Costs."

                                   ARTICLE 7
                                   ---------

                                      USE
                                      ---

         Tenant shall use and occupy the Premises only for the use set forth in
Article 1.G. of the Basic Lease Provisions and shall not use or occupy the
Premises or permit the same to be used or occupied for any other purpose without
the prior written consent of Landlord, which consent may be given or withheld in
Landlord's sole and absolute discretion, and Tenant agrees that it will use the
Premises in such a manner so as not to interfere with or infringe the rights of
other tenants in the Project. Tenant shall, at its sole cost and expense,
promptly determine which laws,

                                                                 Initials:______
                                                                          ______


                                      -7-
<PAGE>

statutes, ordinances and governmental regulations or requirements are in force
or which may hereafter be in force relating to or affecting (i) the condition,
use or occupancy of the Premises or the Project excluding structural changes to
the Project not related to Tenant's particular use of the Premises, and (ii)
improvements installed or constructed in the Premises by or for the benefit of
Tenant, and Tenant shall comply with all such applicable laws throughout the
Lease Term. Tenant shall not do or permit to be done anything which would
invalidate or increase the cost of any fire and extended coverage insurance
policy covering the Project and/or the property located therein and Tenant shall
comply with all rules, orders, regulations and requirements of any organization
which sets out standards, requirements or recommendations commonly referred to
by major fire insurance underwriters. Tenant shall promptly upon demand
reimburse Landlord for any additional premium charges for any such insurance
policy assessed or increased by reason of Tenant's failure to comply with the
provisions of this Article.

                                   ARTICLE 8
                                   ---------

                             CONDITION OF PREMISES
                             ---------------------

         The Premises shall be initially improved as provided in, and subject
to, the Tenant Work Letter attached hereto as Exhibit "D" and made a part
hereof. The existing leasehold improvements in the Premises as of the date of
this Lease, together with the Improvements (as defined in the Tenant Work
Letter) may be collectively referred to herein as the "Tenant Improvements." The
taking of possession of the Premises by Tenant shall conclusively establish that
the Premises and the Project were at such time in satisfactory condition,
subject to "punch-list" items and latent defects. Tenant hereby waives
subsection 1 of Section 1932 and Sections 1941 and 1942 of the Civil Code of
California or any successor provision of law.

         Landlord reserves the right from time to time, but subject to payment
by and/or reimbursement from Tenant as otherwise provided herein: (i) to
install, use, maintain, repair, replace and relocate for service to the Premises
and/or other parts of the Project pipes, ducts, conduits, wires, appurtenant
fixtures, and mechanical systems, wherever located in the Premises or the
Project, (ii) to alter, close or relocate any facility in the Premises or the
Common Areas or otherwise conduct any of the above activities for the purpose of
complying with a general plan for fire/life safety for the Project or otherwise
and (iii) to comply with any federal, state or local law, rule or order with
respect thereto or the regulation thereof not currently in effect. Landlord
shall attempt to perform any such work with the least inconvenience to Tenant as
possible, but in no event shall Tenant be permitted to withhold or reduce Basic
Rental or other charges due hereunder as a result of same, make any claim for
constructive eviction or otherwise make claim against Landlord for interruption
or interference with Tenant's business and/or operations.

                                   ARTICLE 9
                                   ---------

                            REPAIRS AND ALTERATIONS
                            -----------------------

         Landlord shall maintain the structural portions of the Project
including the foundation, floor/ceiling slabs, roof, curtain wall, exterior
glass, columns, beams, shafts, stairs, stairwells, elevator cabs and common
areas and shall also maintain and repair the basic mechanical, electrical,
lifesafety, plumbing, sprinkler systems and heating, ventilating and
air-conditioning systems (provided, however, that Landlord's obligation with
respect to any such systems shall be to repair and maintain those portions of
the systems located in the core of the Project or in other areas outside of the
Premises, but Tenant shall be responsible to repair and maintain any
distribution of such systems throughout the Premises). Notwithstanding anything
to the contrary contained herein, Landlord shall, at its sole cost and expense
and not as an Operating Cost hereunder, repair and/or maintain the following
structural systems of the Project: (a) foundation and walls (exterior and
interior); (b) roof structure; (c) roof membrane (for the first twelve (12)
months of the Lease Term only (i.e., the first twelve (12) months after the
Commencement Date)); (d) the existing heating, ventilating and air conditioning
units (also for the first twelve (12) months of the Lease Term only (i.e., the
first twelve (12) months after the Commencement Date)). After the twelve (12)
month periods specified in the immediately preceding sentence, Landlord shall
continue to maintain and repair such items; however, the cost of such
maintenance and repairs shall be included in Operating Costs. Notwithstanding
any provision set forth in this Article 9 to the contrary, if Tenant provides
written notice to Landlord of an event or

                                                                 Initials:______
                                                                          ______

                                      -8-
<PAGE>

circumstance which requires the action of Landlord with respect to repair and/or
maintenance of the Premises only (and not any other portion of the Project), and
Landlord fails to provide such action within a reasonable period of time, given
the circumstances, after the receipt of such notice, but in no event earlier
than thirty (30) days after Landlord's receipt of such notice, then Tenant may
proceed to take the required action upon delivery of an additional ten (10)
business days notice to Landlord specifying that Tenant is taking such required
action, and if such action was required under the terms of the Lease to be taken
by Landlord and was not taken by Landlord within such ten (10) business day
period, then Tenant shall be entitled to prompt reimbursement by Landlord of
Tenant's actual and reasonable costs in taking such action. In the event Tenant
takes such action, and such work will affect the Project systems or the
structural integrity of the Project, Tenant shall use only those contractors
used by Landlord in the Project for work on such Project systems or structure
unless such contractors are unwilling or unable to perform, or timely perform,
such work, in which event Tenant may utilize the services of any other qualified
contractor which normally and regularly performs similar work in first-class
office buildings. Except as expressly provided as Landlord's obligation in this
Article 9, Tenant shall keep the Premises in good condition and repair. All
damage or injury to the Premises or the Project resulting from the negligence of
Tenant, its employees, agents or visitors, guests, invitees or licensees or by
the use of the Premises shall be promptly repaired by Tenant, at its sole cost
and expense, to the reasonable satisfaction of Landlord; provided, however, that
for damage to the Project as a result of casualty or for any repairs that may
impact the mechanical, electrical, plumbing, heating, ventilation or air-
conditioning systems of the Project, Landlord shall have the right (but not the
obligation) to select the contractor and oversee all such repairs. Landlord may
make any repairs which are not promptly made by Tenant after Tenant's receipt of
written notice and the reasonable opportunity of Tenant to make said repair
within thirty (30) days from receipt of said written notice, and charge Tenant
for the cost thereof, which cost shall be paid by Tenant within ten (10) days
from invoice from Landlord. Tenant shall be responsible for the design and
function of all non-standard improvements of the Premises, whether or not
installed by Landlord at Tenant's request. Tenant waives all rights to make
repairs at the expense of Landlord, or to deduct the cost thereof from the rent.
Tenant shall make no alterations, changes or additions in or to the Premises
(collectively, "Alterations") without Landlord's prior written consent, which
consent shall not be unreasonably withheld, conditioned or delayed, and then
only by contractors or mechanics approved by Landlord in writing and upon the
approval by Landlord in writing of fully detailed and dimensioned plans and
specifications (if applicable) pertaining to the Alterations in question, to be
prepared and submitted by Tenant at its sole cost and expense. Notwithstanding
anything to the contrary contained herein, Tenant may make strictly cosmetic
changes to the finish work in the Premises (the "Cosmetic Alterations"), without
Landlord's consent, provided that the aggregate cost of any such alterations
does not exceed One Hundred Thousand Dollars ($100,000) in any twelve (12) month
period, and further provided that such alterations do not (i) require any
structural or other substantial modifications to the Premises, (ii) require any
changes to, nor adversely affect, the systems and equipment of the Project, and
(iii) affect the exterior appearance of the Project. Tenant shall give Landlord
at least thirty (30) days prior notice of such Cosmetic Alterations, which
notice shall be accompanied by reasonably adequate evidence that such changes
meet the criteria contained in this Article 9. Tenant shall at its sole cost and
expense obtain all necessary approvals and permits pertaining to any
Alterations. Tenant shall construct such Alterations in a good and workmanlike
manner, in conformance with all applicable federal, state, county and municipal
laws, rules and regulations, pursuant to a valid building permit, and in
conformance with Landlord's construction rules and regulations. If Landlord, in
approving any Alterations, specifies a commencement date therefor, Tenant shall
not commence any work with respect to such Alterations prior to such date.
Tenant hereby indemnifies, defends and agrees to hold Landlord free and harmless
from all liens and claims of lien, and all other liability, claims and demands
arising out of any work done or material supplied to the Premises by or at the
request of Tenant in connection with any Alterations. Prior to the commencement
of any Alterations, Tenant shall provide Landlord with evidence that Tenant
carries "Builder's All Risk" insurance in an amount reasonably approved by
Landlord covering the construction of such Alterations, and such other insurance
as Landlord may reasonably require, it being understood that all such
Alterations shall be insured by Tenant pursuant to Article 14 of this Lease
immediately upon completion thereof. If permitted Alterations are made, they
shall be made at Tenant's sole cost and expense and shall be and become the
property of Landlord, except that Landlord may, by written notice to Tenant
given at the time of Tenant's request for consent to such Alterations (provided
Tenant requests that Landlord make such a determination at the time of Tenant's
request for consent), require Tenant

                                                                 Initials:______
                                                                          ______

                                      -9-
<PAGE>

at Tenant's expense to remove all partitions, counters, railings and other
Alterations installed by Tenant, and to repair any damages to the Premises
caused by such removal. However, nothing contained herein is in intended to, nor
shall, provide Landlord with an ownership interest in any of Tenant's trade
fixtures, equipment and other personal property and Tenant shall be entitled to
remove such items from the Premises at any time during the Lease Term (and shall
be required to remove such items upon the expiration or earlier termination of
this Lease as provided in Section 29(b) below) provided that Tenant shall repair
any damage to the Premises resulting from such removal. Any and all costs
attributable to or related to the applicable building codes of the city in which
the Project is located (or any other authority having jurisdiction over the
Project) arising from Tenant's plans, specifications, improvements, alterations
or otherwise shall be paid by Tenant at its sole cost and expense. With regard
to repairs, Alterations or any other work arising from or related to this
Article 9, Landlord shall be entitled to receive an administrative/supervision
fee (which fee shall not exceed three percent (3%) of the cost of the work). The
construction of initial improvements to the Premises shall be governed by the
terms of the Tenant Work Letter and not the terms of this Article 9.

                                  ARTICLE 10
                                  ----------

                                     LIENS
                                     -----

         Tenant shall keep the Premises and the Project free from any mechanics'
liens, vendors liens or any other liens arising out of any work performed,
materials furnished or obligations incurred by Tenant, and agrees to defend,
indemnify and hold harmless Landlord from and against any such lien or claim or
action thereon, together with costs of suit and reasonable attorneys' fees
incurred by Landlord in connection with any such claim or action. Before
commencing any work of alteration, addition or improvement to the Premises,
Tenant shall give Landlord at least ten (10) business days' written notice of
the proposed commencement of such work (to afford Landlord an opportunity to
post appropriate notices of non-responsibility). In the event that there shall
be recorded against the Premises or the Project or the property of which the
Premises is a part any claim or lien arising out of any such work performed,
materials furnished or obligations incurred by Tenant and such claim or lien
shall not be removed or discharged by bond or otherwise within ten (10) business
days after written notice from Landlord to Tenant, Landlord shall have the right
but not the obligation, upon a second (2/nd/) written notice to Tenant and the
expiration of another five (5) business day cure period, to pay and discharge
said lien without regard to whether such lien shall be lawful or correct or to
require that Tenant deposit with Landlord in cash, lawful money of the United
States, one hundred fifty percent (150%) of the amount of such claim, which sum
may be retained by Landlord until such claim shall have been removed of record
or until judgment shall have been rendered on such claim and such judgment shall
have become final, at which time Landlord shall have the right to apply such
deposit in discharge of the judgment on said claim and any actual and reasonable
costs, including reasonable attorneys' fees and costs incurred by Landlord, and
shall remit the balance thereof to Tenant.

                                  ARTICLE 11
                                  ----------

                               PROJECT SERVICES
                               ----------------

         (a) Landlord agrees to furnish to the Premises, at a cost to be
included in Operating Costs, from 8:00 a.m. to 6:00 p.m. Mondays through Fridays
and 9:00 a.m. to 1:00 p.m. on Saturdays, excepting local and national holidays,
air conditioning and heat all in such reasonable quantities as is reasonably
necessary for the comfortable occupancy of the Premises. In addition, Landlord
shall provide electric current for normal lighting and normal office machines;
such electricity shall be separately metered (which meters shall be installed at
Landlord's sole cost and expense) and Tenant shall make payment directly to the
entity providing such electricity. Furthermore, Landlord shall provide, on a
twenty-four (24) hours per day seven (7) days per week basis, elevator service
and water on the same floors as the Premises for lavatory and drinking purposes.
Tenant shall be responsible for employing a janitorial and maintenance service
for the Premises, which contractor shall provide services five (5) days per week
and shall be reasonably approved by Landlord, and Tenant hereby acknowledges
that Landlord shall have no obligation whatsoever to provide such services in
the Premises. Tenant shall comply with all rules and regulations which Landlord
may reasonably establish for the proper functioning and

                                                                 Initials:______
                                                                          ______

                                      -10-
<PAGE>

protection of the common area air conditioning, heating, elevator, electrical
intrabuilding network cable and plumbing systems. Except as provided in Section
11(f) below, Landlord shall not be liable for, and there shall be no rent
abatement as a result of, any stoppage, reduction or interruption of any such
services caused by governmental rules, regulations or ordinances, riot, strike,
labor disputes, breakdowns, accidents, necessary repairs or other cause.

         (b) Tenant will not, without the prior written consent of Landlord
(which consent shall not be unreasonably withheld, delayed or conditioned), use
any apparatus or device in the Premises which will in any way increase the
amount of electricity or water usually furnished or supplied for use of the
Premises as general office space; nor connect any apparatus, machine or device
with water pipes or electric current (except through existing electrical outlets
in the Premises), for the purpose of using electric current or water.

         (c) If Tenant shall require electric current in excess of that which
Landlord is obligated to furnish under Article 11(a) above, Tenant shall first
obtain the written consent of Landlord, which shall not be unreasonably
withheld, conditioned or delayed; provided, however, that Tenant acknowledges
that any additional equipment required in order to supply such excess
electricity to the Premises shall be the responsibility of Tenant.

         (d) If any lights, machines or equipment (including but not limited to
computers) are used by Tenant in the Premises which materially affect the
temperature otherwise maintained by the air conditioning system, or generate
substantially more heat in the Premises than would be generated by the building
standard lights and usual office equipment, Landlord shall have the right to
install any machinery and equipment which Landlord reasonably deems necessary to
restore temperature balance, including but not limited to modifications to the
standard air conditioning equipment, and the cost thereof, including the cost of
installation and any additional cost of operation and maintenance occasioned
thereby, shall be paid by Tenant to Landlord upon demand by Landlord. Except in
the case of Landlord's gross negligence and willful misconduct, Landlord shall
not be liable for loss of or injury to property or injury to, or interference
with, Tenant's business (including, but not limited to, loss of profits),
through or in connection with or incidental to failure to furnish any of the
services or utilities specified in this Article 11.

         (e) If Tenant requires heating, ventilation and/or air conditioning
during times other than the times provided in Article 11(a) above, Tenant shall
give Landlord such advance notice as Landlord shall reasonably require and shall
pay Landlord's standard charge for such after-hours use.

         (f) An "Abatement Event" shall be defined as an event that prevents
Tenant from having the normal and reasonable ability to use the Premises or any
portion thereof, as a result of any failure to provide services or access to the
Premises, where such event is not caused by the negligence or willful misconduct
of Tenant, its agents, employees or contractors. Tenant shall give Landlord
notice ("Abatement Notice") of any such Abatement Event, and if such Abatement
Event continues beyond the "Eligibility Period" (as that term is defined below),
then the Basic Rental and Tenant's Proportionate Share of Direct Costs shall be
abated entirely or reduced, as the case may be, after expiration of the
Eligibility Period for such time that Tenant continues to be so prevented from
having the normal and reasonable ability to use the Premises or a portion
thereof, in the proportion that the rentable area of the portion of the Premises
that Tenant is prevented from having the normal and reasonable ability to use
bears to the total rentable area of the Premises; provided, however, in the
event that Tenant is prevented from having the normal and reasonable ability to
use a portion of the Premises for a period of time in excess of the Eligibility
Period and the remaining portion of the Premises is not sufficient to allow
Tenant to effectively conduct its business therein, then for such time after
expiration of the Eligibility Period during which Tenant is so prevented from
having the normal and reasonable ability to use such portion of the Premises,
the Basic Rental and Tenant's Proportionate Share of Direct Costs for the entire
Premises shall be abated entirely for such time as Tenant continues to be so
prevented from having the normal and reasonable ability to use the Premises. The
term "Eligibility Period" shall mean a period of three (3) consecutive business
days after Landlord's receipt of any Abatement Notice(s). Such right to abate
Basic Rental and Tenant's Proportionate Share of Direct Costs shall be Tenant's
sole and exclusive remedy at law or in equity for an Abatement Event.

                                                                 Initials:______
                                                                          ______

                                      -11-
<PAGE>

                                  ARTICLE 12
                                  ----------

                              RIGHTS OF LANDLORD
                              ------------------

         Landlord and its agents shall have the right, upon at least twenty-four
(24) hours' prior notice (except that no notice shall be required in the case of
an emergency) to enter the Premises at all reasonable times for the purpose of
examining or inspecting the same, serving or posting and keeping posted thereon
notices as provided by law, or which Landlord reasonably deems necessary for the
protection of Landlord or the Property, showing the same to prospective tenants,
lenders or purchasers of the Project, in the case of an emergency, and for
making such alterations, repairs, improvements or additions to the Premises or
to the Project as Landlord may reasonably deem necessary or desirable. If Tenant
shall not be personally present to open and permit an entry into the Premises at
any time when such an entry by Landlord is necessary or permitted hereunder,
Landlord may enter by means of a master key or may enter forcibly, only in the
case of an emergency, without liability to Tenant and without affecting this
Lease, except that Landlord shall be responsible for any damage resulting from
Landlord's negligence or willful misconduct to the extent such damage is not
covered by insurance required to be carried by Tenant under this Lease or
actually carried by Tenant.

                                  ARTICLE 13
                                  ----------

                INDEMNITY; EXEMPTION OF LANDLORD FROM LIABILITY
                -----------------------------------------------

         (a)   Indemnity. Tenant shall indemnify, defend and hold Landlord
               ---------
harmless from any and all claims arising from Tenant's use of the Premises or
the Project including Tenant's Signage rights set forth in Article 33 or from
the conduct of its business or from any activity, work or thing which may be
permitted or suffered by Tenant in or about the Premises or the Project and
shall further indemnify, defend and hold Landlord harmless from and against any
and all claims arising from any breach or default in the performance of any
obligation on Tenant's part to be performed under this Lease or arising from any
negligence or willful misconduct of Tenant or any of its agents, contractors,
employees or invitees, patrons, customers or members in or about the Project and
from any and all costs, attorneys' fees and costs, expenses and liabilities
incurred in the defense of any claim or any action or proceeding brought
thereon, including negotiations in connection therewith. Tenant hereby assumes
all risk of damage to property or injury to persons in or about the Premises
from any cause, and Tenant hereby waives all claims in respect thereof against
Landlord, excepting where the damage is attributable to the gross negligence or
willful misconduct of Landlord.

         (b)   Exemption of Landlord from Liability. Landlord shall not be
               ------------------------------------
liable for injury to Tenant's business, or loss of income therefrom, or, except
in connection with damage or injury resulting from the negligence or willful
misconduct of Landlord, or its authorized agents (in which case Landlord shall
be responsible for such damage to the extent not covered by insurance required
to be carried by Tenant under this Lease or actually carried by Tenant), for
damage that may be sustained by the person, goods, wares, merchandise or
property of Tenant, its employees, invitees, customers, agents, or contractors,
or any other person in, on or about the Premises directly or indirectly caused
by or resulting from fire, steam, electricity, gas, water, or rain which may
leak or flow from or into any part of the Premises, or from the breakage,
leakage, obstruction or other defects of the pipes, sprinklers, wires,
appliances, plumbing, air conditioning, light fixtures, or mechanical or
electrical systems or from intrabuilding network cable, whether such damage or
injury results from conditions arising upon the Premises or upon other portions
of the Project or from other sources or places and regardless of whether the
cause of such damage or injury or the means of repairing the same is
inaccessible to Tenant.

         Tenant acknowledges that Landlord's election to provide mechanical
surveillance or to post security personnel in the Project is solely within
Landlord's discretion; Landlord shall have no liability in connection with the
decision whether or not to provide such services and Tenant hereby waives all
claims based thereon. Landlord shall not be liable for losses due to theft,
vandalism, or like causes.


                                                   Initials: ___________________
                                                             ___________________

                                      -12-
<PAGE>

                                  ARTICLE 14
                                  ----------

                                  INSURANCE
                                  ---------

         (a)   Tenant's Insurance. Tenant, shall at all times during the Term of
               ------------------
this Lease, and at its own cost and expense, procure and continue in force the
following insurance coverage: (i) Commercial General Liability Insurance with a
combined single limit for bodily injury and property damages of not less than
Two Million Dollars ($2,000,000) per occurrence and Three Million Dollars
($3,000,000) in the annual aggregate, including products liability coverage if
applicable, covering the insuring provisions of this Lease and the performance
of Tenant of the indemnity and exemption of Landlord from liability agreements
set forth in Article 13 hereof; (ii) a policy of standard fire, extended
coverage and special extended coverage insurance (all risks), including a
vandalism and malicious mischief endorsement, and sprinkler leakage coverage
where sprinklers are provided in an amount equal to the full replacement value
new without deduction for depreciation of all (A) Tenant Improvements,
Alterations, fixtures and other improvements in the Premises and (B) trade
fixtures, furniture, equipment and other personal property installed by or at
the expense of Tenant; (iii) Worker's Compensation coverage as required by law;
and (iv) business interruption, loss of income and extra expense insurance
covering failure of Tenant's telecommunications equipment and covering all other
perils, failures or interruptions. Tenant shall carry and maintain during the
entire Lease Term (including any option periods, if applicable), at Tenant's
sole cost and expense, increased amounts of the insurance required to be carried
by Tenant pursuant to this Article 14 and such other reasonable types of
insurance coverage and in such reasonable amounts covering the Premises and
Tenant's operations therein, as may be reasonably required by Landlord, but
Landlord shall only be entitled to require such increased amounts and/or other
coverages if they are then generally required by owners of comparable office
buildings in the Orange County, California area.


         (b)   Form of Policies. The aforementioned minimum limits of policies
               ----------------
and Tenant's procurement and maintenance thereof shall in no event limit the
liability of Tenant hereunder. The Commercial General Liability Insurance policy
shall name Landlord, Landlord's property manager, Landlord's lender(s) and such
other persons or firms as Landlord specifies from time to time, as additional
insureds with an appropriate endorsement to the policy(s). All such insurance
policies carried by Tenant shall be with companies having a rating of not less
than A-VIII in Best's Insurance Guide. Tenant shall furnish to Landlord, from
the insurance companies, or cause the insurance companies to furnish,
certificates of coverage. No such policy shall be cancelable or subject to
reduction of coverage or other modification or cancellation except after thirty
(30) days prior written notice to Landlord by the insurer. All such policies
shall be endorsed to agree that Tenant's policy is primary and that any
insurance carried by Landlord is excess and not contributing with any Tenant
insurance requirement hereunder. Tenant shall, at least twenty (20) days prior
to the expiration of such policies, furnish Landlord with renewals or binders.
Tenant agrees that if Tenant does not take out and maintain such insurance or
furnish Landlord with renewals or binders, Landlord may (but shall not be
required to) procure said insurance on Tenant's behalf and charge Tenant the
cost thereof, which amount shall be payable by Tenant upon demand with interest
(at the rate set forth in Section 20(e) below) from the date such sums are
extended. Tenant shall have the right to provide such insurance coverage
pursuant to blanket policies obtained by Tenant, provided such blanket policies
expressly afford coverage to the Premises and to Tenant as required by this
Lease.


         (c)   Landlord's Insurance. Landlord shall, as a cost to be included in
               --------------------
Operating Costs, procure and maintain at all times during the Term of this
Lease, a policy or policies of insurance covering loss or damage to the Project
in the amount of the full replacement costs without deduction for depreciation
thereof (exclusive of Tenant's trade fixtures, inventory, personal property and
equipment), providing protection against all perils included within the
classification of fire and extended coverage, vandalism coverage and malicious
mischief, sprinkler leakage, water damage, and special extended coverage on
building. Additionally, Landlord may (but shall not be required to) carry: (i)
Bodily Injury and Property Damage Liability Insurance and/or Excess Liability
Coverage Insurance; and (ii) Earthquake and/or Flood Damage Insurance; and (iii)
Rental Income Insurance at its election or if required by its lender from time
to time during the Term hereof, in such amounts and with such limits as Landlord
or its lender may reasonably deem appropriate. The costs of such insurance shall
be included in Operating Costs.


                                                       Initials: _______________
                                                                 _______________

                                      -13-
<PAGE>

         (d)   Waiver of Subrogation. Landlord and Tenant each agree to have
               ---------------------
their respective insurers issuing the insurance described in Sections 14(a)(ii),
14(a)(iv) and the first sentence of Section 14(c) waive any rights of
subrogation that such companies may have against the other party. Tenant hereby
waives any right that Tenant may have against Landlord and Landlord hereby
waives any right that Landlord may have against Tenant as a result of any loss
or damage to the extent such loss or damage is insurable under such policies.


         (e)   Compliance with Law. Tenant agrees that it will not, at any time,
               -------------------
during the Term of this Lease, carry any stock of goods or do anything in or
about the Premises that will in any way tend to increase the insurance rates
upon the Project. Tenant agrees to pay Landlord forthwith upon demand the amount
of any increase in premiums for insurance against loss by fire that may be
charged during the Term of this Lease on the amount of insurance to be carried
by Landlord on the Project resulting from the foregoing, or from Tenant doing
any act in or about said Premises that does so increase the insurance rates,
whether or not Landlord shall have consented to such act on the part of Tenant.
If Tenant installs upon the Premises any electrical equipment which constitutes
an overload of electrical lines of the Premises, Tenant shall at its own cost
and expense in accordance with all other Lease provisions, and subject to the
provisions of Article 9, 10 and 11, hereof, make whatever changes are necessary
to comply with requirements of the insurance underwriters and any governmental
authority having jurisdiction thereover, but nothing herein contained shall be
deemed to constitute Landlord's consent to such overloading. Tenant shall, at
its own expense, comply with all requirements of the insurance authority having
jurisdiction over the Project necessary for the maintenance of reasonable fire
and extended coverage insurance for the Premises, including without limitation
thereto, the installation of fire extinguishers or an automatic dry chemical
extinguishing system.


                                  ARTICLE 15
                                  ----------

                           ASSIGNMENT AND SUBLETTING
                           -------------------------

         Tenant shall have no power to, either voluntarily, involuntarily, by
operation of law or otherwise, sell, assign, transfer or hypothecate this Lease,
or sublet the Premises or any part thereof, or permit the Premises or any part
thereof to be used or occupied by anyone other than Tenant or Tenant's employees
without the prior written consent of Landlord which shall not be unreasonably
withheld, delayed or conditioned. If Tenant is a corporation, unincorporated
association, partnership or limited liability company, the sale, assignment,
transfer or hypothecation of any class of stock or other ownership interest in
such corporation, association, partnership or limited liability company in
excess of fifty percent (50%) in the aggregate shall be deemed an assignment
within the meaning and provisions of this Article 15. Tenant may transfer its
interest pursuant to this Lease only upon the following express conditions,
which conditions are agreed by Landlord and Tenant to be reasonable:

         (a)   That the proposed transferee shall be subject to the prior
written consent of Landlord, which consent will not be unreasonably withheld,
delayed or conditioned but, without limiting the generality of the foregoing, it
shall be reasonable for Landlord to deny such consent if:

               (i)   The use to be made of the Premises by the proposed
transferee is (a) not generally consistent with the character and nature of all
other tenancies in the Project, or (b) a use which conflicts with any so-called
"exclusive" then in favor of, or for any use which is the same as that stated in
any percentage rent lease to, another tenant of the Project or any other
buildings which are in the same complex as the Project, or (c) a use which would
be prohibited by any other portion of this Lease (including but not limited to
any Rules and Regulations then in effect);

               (ii)  The financial responsibility of the proposed transferee is
not reasonably satisfactory to Landlord;

               (iii) The proposed transferee is either a governmental agency or
instrumentality thereof; or

               (iv)  Either the proposed transferee or any person or entity
which directly or indirectly controls, is controlled by or is under common
control with the proposed transferee


                                                      Initials: ________________
                                                                ________________

                                      -14-
<PAGE>

(A) occupies space in the Project at the time of the request for consent, or (B)
is negotiating with Landlord or has negotiated with Landlord during the six (6)
month period immediately preceding the date of the proposed transfer, to lease
space in the Project.

     (b)   Whether or not Landlord consents to any such transfer, Tenant shall
pay to Landlord reasonable attorneys' fees and out-of-pocket costs incurred in
connection with the proposed transfer up to the aggregate sum of $1,500.00;

     (c)   That the proposed transferee shall execute an agreement pursuant to
which it shall agree to perform faithfully and be bound by all of the terms,
covenants, conditions, provisions and agreements of this Lease applicable to
that portion of the Premises so transferred; and

     (d)   That an executed duplicate original of said assignment and assumption
agreement or other transfer on a form reasonably approved by Landlord, shall be
delivered to Landlord within five (5) business days after the execution thereof,
and that such transfer shall not be binding upon Landlord until the delivery
thereof to Landlord and the execution and delivery of Landlord's consent
thereto. Landlord shall grant or deny consent to a proposed Transfer by written
notice to Tenant within ten (10) business days after Landlord's receipt of an
executed duplicate original of the Transfer document together with a completed
lease application by the Transferee and financial information reasonably
requested by Landlord. Landlord's failure to withhold its consent by written
notice to Tenant within said ten (10) business day period shall be deemed to
constitute Landlord's consent to such Transfer. It shall be a condition to
Landlord's consent to any subleasing, assignment or other transfer of part or
all of Tenant's interest in the Premises (hereinafter referred to as a
"Transfer") that (i) upon Landlord's consent to any Transfer, Tenant shall pay
and continue to pay fifty percent (50%) of any "Transfer Premium" (defined
below), received by Tenant from the transferee; (ii) any sublessee of part or
all of Tenant's interest in the Premises shall agree that in the event Landlord
gives such sublessee notice that Tenant is in default under this Lease, such
sublessee shall thereafter make all sublease or other payments directly to
Landlord, which will be received by Landlord without any liability whether to
honor the sublease or otherwise (except to credit such payments against sums due
under this Lease), and any sublessee shall agree to attorn to Landlord or its
successors and assigns at their request should this Lease be terminated for any
reason, except that in no event shall Landlord or its successors or assigns be
obligated to accept such attornment; (iii) any such Transfer and consent shall
be effected on forms supplied by Landlord and/or its legal counsel; and (iv)
Landlord may require that Tenant not then be in default hereunder in any
respect. "Transfer Premium" shall mean all rent, additional rent or other
consideration payable by a subtenant or assignee (collectively, "Transferee") in
connection with a Transfer in excess of the rent and Additional Rent payable by
Tenant under this Lease during the term of the Transfer and if such Transfer is
less than all of the Premises, the Transfer Premium shall be calculated on a
rentable square foot basis. In any event, the Transfer Premium shall be
calculated after deducting the reasonable expenses incurred by Tenant for (1)
any changes, alterations and improvements to the Premises paid for by Tenant in
connection with the Transfer, (2) any other out-of-pocket monetary concessions
provided by Tenant to the Transferee, (3) any brokerage commissions paid for by
Tenant in connection with the Transfer, (4) any reasonable attorneys' fees
incurred by Tenant in connection with the Transfer, and (5) any other customary
and reasonable out-of-pocket expenses incurred by Tenant with the Transfer. If a
sublease is structured as a "gross" sublease, the estimated cost of utilities
that are included within the gross sublease rent shall be deducted in
calculating the amount of the Transfer Premium, if any. "Transfer Premium" shall
also include, but not be limited to, key money, bonus money or other cash
consideration paid by a Transferee to Tenant in connection with such Transfer,
and any payment in excess of fair market value for services rendered by Tenant
to the Transferee and any payment in excess of fair market value for assets,
fixtures, inventory, equipment, or furniture transferred by Tenant to the
Transferee in connection with such Transfer. Any sale, assignment,
hypothecation, transfer or subletting of this Lease which is not in compliance
with the provisions of this Article 15 shall be void. In no event shall the
consent by Landlord to an assignment or subletting be construed as relieving
Tenant, any assignee, or sublessee from obtaining the express written consent of
Landlord to any further assignment or subletting, or as releasing Tenant from
any liability or obligation hereunder whether or not then accrued and Tenant
shall continue to be fully liable therefor. No collection or acceptance of rent
by Landlord from any person other than Tenant shall be deemed a waiver of any
provision of this Article 15 or the acceptance of any assignee or subtenant
hereunder, or a release of Tenant (or of any successor of

                                                      Initials: ________________
                                                                ________________

                                      -15-
<PAGE>

Tenant or any subtenant). Notwithstanding anything to the contrary in this
Lease, if Tenant or any proposed Transferee claims that Landlord has
unreasonably withheld or delayed its consent under this Article 15 or otherwise
has breached or acted unreasonably under this Article 15, their sole remedies
shall be a declaratory judgment and an injunction for the relief sought without
any monetary damages, and Tenant hereby waives all other remedies, including,
without limitation, any right at law or equity to terminate this Lease, on its
own behalf and, to the extent permitted under all applicable laws, on behalf of
the proposed Transferee.

         The term "Affiliate" shall mean (i) any entity that is controlled by,
controls or is under common control with, Tenant or (ii) any entity that merges
with, is acquired by, or acquires Tenant through the purchase of stock or assets
and where the net worth of the surviving entity as of the date such transaction
is not less than that of Tenant immediately prior to the transaction, calculated
under generally accepted accounting principles. Notwithstanding anything to the
contrary contained in this Article 15, an assignment or subletting of all or a
portion of the Premises to an Affiliate of Tenant shall not be deemed a Transfer
under this Article 15, provided that Tenant notifies Landlord of any such
assignment or sublease and promptly supplies Landlord with any documents or
information requested by Landlord regarding such assignment or sublease or such
affiliate, and further provided that such assignment or sublease is not a
subterfuge by Tenant to avoid its obligations under this Lease. An assignee of
Tenant's entire interest in this Lease pursuant to the immediately preceding
sentence may be referred to herein as an "Affiliated Assignee." "Control," as
used in this Article 15, shall mean the ownership, directly or indirectly, of
greater than fifty percent (50%) of the voting securities of, or possession of
the right to vote, in the ordinary direction of its affairs, of greater than
fifty percent (50%) of the voting interest in, an entity.

         In addition, except as provided in the immediately preceding paragraph,
notwithstanding anything to the contrary contained in this Article 15, Landlord
shall have the option, by giving written notice to Tenant within ten (10)
business days after Landlord's receipt of a request for consent to a proposed
Transfer to a third party other than an Affiliate, to terminate this Lease as to
the portion of the Premises that is the subject of the Transfer. If this Lease
is so terminated with respect to less than the entire Premises, the Basic Rental
and Tenant's Proportionate Share shall be prorated based on the number of
rentable square feet retained by Tenant as compared to the total number of
rentable square feet contained in the original Premises, and this Lease as so
amended shall continue thereafter in full force and effect, and upon the request
of either party, the parties shall execute written confirmation of the same.

                                  ARTICLE 16
                                  ----------

                             DAMAGE OR DESTRUCTION
                             ---------------------

         If the Project is damaged by fire or other insured casualty and the
insurance proceeds have been made available therefor by the holder or holders of
any mortgages or deeds of trust covering the Premises or the Project, the damage
shall be repaired by Landlord to the extent such insurance proceeds are
available therefor and provided such repairs can, in Landlord's sole opinion, be
completed within two hundred seventy (270) days after the necessity for repairs
as a result of such damage becomes known to Landlord without the payment of
overtime or other premiums, and until such repairs are completed rent shall be
equitably abated considering the nature, extent and duration of the interruption
in Tenant's ability to utilize the Premises (but there shall be no abatement of
rent by reason of any portion of the Premises being unusable for a period equal
to one (1) day or less). However, if the damage is due to the fault or neglect
of Tenant, its employees, agents, contractors, guests, invitees and the like,
there shall be no abatement of rent, unless and to the extent Landlord receives
rental income insurance proceeds. Upon the occurrence of any damage to the
Premises, Tenant shall assign to Landlord (or to any party designated by
Landlord) all insurance proceeds payable to Tenant under Section 14(a)(ii)(A)
above; provided, however, that if the cost of repair of improvements within the
Premises by Landlord exceeds the amount of insurance proceeds received by
Landlord from Tenant's insurance carrier, as so assigned by Tenant, such excess
costs shall be paid by Tenant to Landlord prior to Landlord's repair of such
damage. If repairs cannot, in Landlord's reasonable opinion, be completed within
two hundred seventy (270) days after the necessity for repairs as a result of
such damage becomes known to Landlord without the payment of overtime or other
premiums, Landlord may, at its option, either (i) make them in a reasonable time
and in such

                                                      Initials: ________________
                                                                ________________

                                      -16-
<PAGE>

event this Lease shall continue in effect and the rent shall be abated, if at
all, in the manner provided in this Article 16, or (ii) elect not to effect such
repairs and instead terminate this Lease, by notifying Tenant in writing of such
termination within sixty (60) days after Landlord learns of the necessity for
repairs as a result of damage, such notice to include a termination date giving
Tenant ninety (90) days to vacate the Premises. In addition, Landlord may elect
to terminate this Lease if the Project shall be damaged by fire or other
casualty or cause, whether or not the Premises are affected, and the damage is
not fully covered, except for deductible amounts, by Landlord's insurance
policies. Finally, if the Premises or the Project is damaged to any substantial
extent during the last twelve (12) months of the Term, unless Tenant exercises
(or has exercised) an Option to extend the Term in accordance with the terms of
Article 31 below (which option to extend must be exercised on or before the
earlier of (A) the date which is thirty (30) days after the date of such damage
or destruction, or (B) the date specified in Section 31(c)(iv) below, if the
damage or destruction occurs between the date which is twelve (12) months prior
to the end of the Term and the date specified in Section 31(c)(iv) below), then
notwithstanding anything contained in this Article 16 to the contrary, Landlord
shall have the option to terminate this Lease by giving written notice to Tenant
of the exercise of such option within sixty (60) days after Landlord learns of
the necessity for repairs as the result of such damage. In the event that the
Premises or the Project is destroyed or damaged to any substantial extent during
the last twelve (12) months of the Lease Term and if such damage shall take
longer than sixty (60) days to repair and if such damage is not the result of
the negligence or willful misconduct of Tenant or Tenant's employees, licensees,
invitees or agents, then notwithstanding anything in this Article 16 to the
contrary, Tenant shall have the option to terminate this Lease by written notice
to Landlord of the exercise of such option within sixty (60) days after Tenant
learns of the necessity for repairs as the result of such damage. A total
destruction of the Project shall automatically terminate this Lease. Except as
provided in this Article 16, there shall be no abatement of rent and no
liability of Landlord by reason of any injury to or interference with Tenant's
business or property arising from such damage or destruction or the making of
any repairs, alterations or improvements in or to any portion of the Project or
the Premises or in or to fixtures, appurtenances and equipment therein. Tenant
understands that Landlord will not carry insurance of any kind on Tenant's
furniture, furnishings, trade fixtures or equipment, and that Landlord shall not
be obligated to repair any damage thereto or replace the same. Except for
proceeds relating to those Alterations Tenant has the right to remove at the end
of the Lease Term and those relating to Tenant's furniture, furnishings, trade
fixtures and equipment, Tenant acknowledges that Tenant shall have no right to
any proceeds of insurance relating to property damage. With respect to any
damage which Landlord is obligated to repair or elects to repair, Tenant, as a
material inducement to Landlord entering into this Lease, irrevocably waives and
releases its rights under the provisions of Sections 1932 and 1933 of the
California Civil Code.


                                  ARTICLE 17
                                  ----------

                                 SUBORDINATION
                                 -------------

         Landlord represents and warrants to Tenant that as of the date of this
Lease, there are no ground leases, mortgages or deeds of trust encumbering
Landlord's right, title or interest in or to the Project. This Lease is subject
and subordinate to all ground or underlying leases, mortgages and deeds of trust
which affect the property or the Project, including all renewals, modifications,
consolidations, replacements and extensions thereof; provided, however, if the
lessor under any such lease or the holder or holders of any such mortgage or
deed of trust shall advise Landlord that they desire or require this Lease to be
prior and superior thereto, upon written request of Landlord to Tenant, Tenant
agrees to promptly execute, acknowledge and deliver any and all documents or
instruments which Landlord or such lessor, holder or holders deem necessary or
desirable for purposes thereof. Landlord shall have the right to cause this
Lease to be and become and remain subject and subordinate to any and all ground
or underlying leases, mortgages or deeds of trust which may hereafter be
executed covering the Premises, the Project or the property or any renewals,
modifications, consolidations, replacements or extensions thereof, for the full
amount of all advances made or to be made thereunder and without regard to the
time or character of such advances, together with interest thereon and subject
to all the terms and provisions thereof; provided, however, that such
subordination shall not be effective until Landlord obtains from the lender or
other party in question a commercially reasonable non-disturbance agreement
stating to the effect that (i) such lender or other party will not disturb
Tenant's right of possession under this Lease if Tenant is not then or
thereafter in breach of any

                                                      Initials: ________________
                                                                ________________

                                      -17-
<PAGE>

covenant or provision of this Lease beyond any applicable notice and cure
periods, (ii) Tenant shall not be joined as a party defendant, except to the
extent required by law, in any action or proceeding which may be instituted or
taken by the ground lessor of such superior lease for the purpose of terminating
such superior lease or any foreclosure action or proceeding that may be
instituted or taken by the holder of any such superior mortgage or other lien,
(iii) this Lease shall automatically become a lease directly between any
successor to Landlord's interest in the Project and Tenant, and (iv) Tenant's
rights under this Lease shall not be materially and adversely affected in any
way. Tenant agrees, within ten (10) days after Landlord's written request
therefor, to execute, acknowledge and deliver upon request any and all documents
or instruments requested by Landlord or necessary or proper to assure the
subordination of this Lease to any such mortgages, deed of trust, or leasehold
estates. Tenant agrees that in the event any proceedings are brought for the
foreclosure of any mortgage or deed of trust or any deed in lieu thereof, to
attorn to the purchaser or any successors thereto upon any such foreclosure sale
or deed in lieu thereof as so requested to do so by such purchaser and to
recognize such purchaser as the lessor under this Lease; Tenant shall, within
ten (10) days after request execute such further instruments or assurances as
such purchaser may reasonably deem necessary to evidence or confirm such
attornment. Provided that Tenant has received the non-disturbance agreement
referred to herein, Tenant agrees to provide copies of any notices of Landlord's
default under this Lease to any mortgagee or deed of trust beneficiary whose
address has been provided to Tenant and Tenant shall provide such mortgagee or
deed of trust beneficiary a commercially reasonable time (not to exceed an
additional thirty (30) days beyond the time provided to Landlord) after receipt
of such notice within which to cure any such default. Tenant waives the
provisions of any current or future statute, rule or law which may give or
purport to give Tenant any right or election to terminate or otherwise adversely
affect this Lease and the obligations of the Tenant hereunder in the event of
any foreclosure proceeding or sale.


                                  ARTICLE 18
                                  ----------

                                EMINENT DOMAIN
                                --------------


         If the whole of the Premises or the Project or so much thereof as to
render the balance unusable by Tenant shall be taken under power of eminent
domain, or is sold, transferred or conveyed in lieu thereof, this Lease shall
automatically terminate as of the date of such condemnation, or as of the date
possession is taken by the condemning authority, at Landlord's option; provided,
however, that in no event shall Landlord be entitled to terminate this Lease in
such circumstance unless Landlord terminates the leases of all other tenants
whose premises are similarly situated and affected by the condemnation. No award
for any partial or entire taking shall be apportioned, and Tenant hereby assigns
to Landlord any award which may be made in such taking or condemnation, together
with any and all rights of Tenant now or hereafter arising in or to the same or
any part thereof; provided, however, that nothing contained herein shall be
deemed to give Landlord any interest in or to require Tenant to assign to
Landlord any award made to Tenant for the taking of personal property,
Alterations trade fixtures belonging to Tenant and removable by Tenant at the
expiration of the Term hereof as provided hereunder, loss of goodwill, moving
expenses or for the interruption of, or damage to, Tenant's business. In the
event of a partial taking described in this Article 18, or a sale, transfer or
conveyance in lieu thereof, which does not result in a termination of this
Lease, the rent shall be apportioned according to the ratio that the part of the
Premises remaining useable by Tenant bears to the total area of the Premises.
Tenant hereby waives any and all rights it might otherwise have pursuant to
Section 1265.130 of the California Code of Civil Procedure.


                                  ARTICLE 19
                                  ----------

                                    DEFAULT
                                    -------

     (a)  Default of Tenant. Each of the following acts or omissions of Tenant
          -----------------
shall constitute an "Event of Default":

          (i)  Failure or refusal to pay Basic Rental, Additional Rent or any
other amount to be paid by Tenant to Landlord hereunder within five (5) business
calendar days after notice that the same is due or payable hereunder; said five
(5) business day period shall be in lieu


                                                      Initials: ________________
                                                                ________________

                                      -18-
<PAGE>

of, and not in addition to, the notice requirements of Section 1161 of the
California Code of Civil Procedure or any similar or successor law;

          (ii)  Except as set forth in items (i) above and (iii) through and
including (vi) below, failure to perform or observe any other covenant or
condition of this Lease to be performed or observed within thirty (30) days
following written notice to Tenant of such failure; provided, however, if the
nature of such default is such that the same cannot be reasonably cured within a
thirty (30) day period, Tenant shall not be deemed to be in default if Tenant
diligently commences such cure within such period and thereafter diligently
proceeds to rectify and cure said default. Such thirty (30) day notice shall be
in lieu of, and not in addition to, any required under Section 1161 of the
California Code of Civil Procedure or any similar or successor law;

          (iii) The taking in execution or by similar process or law (other than
by eminent domain) of the estate hereby created;


          (iv)  The filing by Tenant or any guarantor hereunder in any court
pursuant to any statute of a petition in bankruptcy or insolvency or for
reorganization or arrangement for the appointment of a receiver of all or a
portion of Tenant's property; the filing against Tenant or any guarantor
hereunder of any such petition, or the commencement of a proceeding for the
appointment of a trustee, receiver or liquidator for Tenant, or for any
guarantor hereunder, or of any of the property of either, or a proceeding by any
governmental authority for the dissolution or liquidation of Tenant or any
guarantor hereunder, if such proceeding shall not be dismissed or trusteeship
discontinued within ninety (90) days after commencement of such proceeding or
the appointment of such trustee or receiver; or the making by Tenant or any
guarantor hereunder of an assignment for the benefit of creditors. Tenant hereby
stipulates to the lifting of the automatic stay in effect and relief from such
stay for Landlord in the event Tenant files a petition under the United States
Bankruptcy laws, for the purpose of Landlord pursuing its rights and remedies
against Tenant and/or a guarantor of this Lease;

          (v)   Tenant's failure to cause to be released any mechanics liens
filed against the Premises or the Project within twenty (20) days after the date
the same shall have been filed or recorded; or


          (vi)  Tenant's failure to observe or perform according to the
provisions of Articles 7, 17 or 25 within ten (10) business days after notice
from Landlord.


     (b)  Landlord Default. Notwithstanding anything to the contrary set forth
          ----------------
in this Lease, Landlord shall be in default in the performance of any obligation
required to be performed by Landlord pursuant to this Lease if Landlord fails to
perform such obligation within thirty (30) days after the receipt of notice from
Tenant specifying in detail Landlord's failure to perform; provided, however, 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 in default under this
Lease if it shall commence such performance within such thirty (30) day period
and thereafter diligently pursue the same to completion. Upon any such default
by Landlord under this Lease, Tenant may, except as otherwise specifically
provided in this Lease to the contrary, exercise any of its rights provided at
law or in equity.


                                  ARTICLE 20
                                  ----------

                                   REMEDIES
                                   --------

     (a)  Upon the occurrence of an Event of Default under this Lease as
provided in Article 19 hereof, Landlord may exercise all of its remedies as may
be permitted by law, including but not limited to the remedy provided by Section
1951.4 of the California Civil Code, and including without limitation,
terminating this Lease, reentering the Premises and removing all persons and
property therefrom, which property may be stored by Landlord at a warehouse or
elsewhere at the risk, expense and for the account of Tenant. If Landlord elects
to terminate this Lease, Landlord shall be entitled to recover from Tenant the
aggregate of all amounts permitted by law, including but not limited to (i) the
worth at the time of award of the amount of any unpaid rent which had been
earned at the time of such termination; plus (ii) the worth at the time of award
of the amount by which the unpaid rent which would have been earned after
termination until the time of award exceeds the amount of such rental loss that
Tenant proves

                                                      Initials: ________________
                                                                ________________

                                      -19-
<PAGE>

could have been reasonably avoided; plus (iii) the worth at the time of award of
the amount by which the unpaid rent for the balance of the Lease Term after the
time of award exceeds the amount of such rental loss that Tenant proves could
have been reasonably avoided; plus (iv) 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 therefrom; and (v) at Landlord's election, such other
reasonable amounts in addition to or in lieu of the foregoing as may be
permitted from time to time by applicable law. The term "rent" as used in this
Article 20(a) shall be deemed to be and to mean all sums of every nature
required to be paid by Tenant pursuant to the terms of this Lease, whether to
Landlord or to others. As used in items (i) and (ii), above, the "worth at the
time of award" shall be computed by allowing interest at the rate set forth in
item (e), below, but in no case greater than the maximum amount of such interest
permitted by law. As used in item (iii), above, the "worth at the time of award"
shall be computed by discounting such amount at the discount rate of the Federal
Reserve Bank of San Francisco at the time of award plus one percent (1%).

     (b)  Nothing in this Article 20 shall be deemed to affect Landlord's right
to indemnification for liability or liabilities arising prior to the termination
of this Lease for personal injuries or property damage under the indemnification
clause or clauses contained in this Lease.

     (c)  Notwithstanding anything to the contrary set forth herein, Landlord's
re-entry to perform acts of maintenance or preservation of or in connection with
efforts to relet the Premises or any portion thereof, or the appointment of a
receiver upon Landlord's initiative to protect Landlord's interest under this
Lease shall not terminate Tenant's right to possession of the Premises or any
portion thereof and, until Landlord does elect to terminate this Lease, this
Lease shall continue in full force and effect and Landlord may enforce all of
Landlord's rights and remedies hereunder including, without limitation, the
remedy described in California Civil Code Section 1951.4 (lessor may continue
lease in effect after lessee's breach and abandonment and recover rent as it
becomes due, if lessee has the right to sublet or assign, subject only to
reasonable limitations). Accordingly, if Landlord does not elect to terminate
this Lease on account of any default by Tenant, Landlord may, from time to time,
without terminating this Lease, enforce all of its rights and remedies under
this Lease, including the right to recover all rent as it becomes due.


     (d)  Notwithstanding any contrary provisions contained in this Lease, to
the extent required by law (if at all), Landlord shall use commercially
reasonable efforts to mitigate Landlord's damages in an Event of Default. All
rights, powers and remedies of Landlord hereunder and under any other agreement
now or hereafter in force between Landlord and Tenant shall be cumulative and
not alternative and shall be in addition to all rights, powers and remedies
given to Landlord by law, and the exercise of one or more rights or remedies
shall not impair Landlord's right to exercise any other right or remedy.

     (e)  Any amount due from Tenant to Landlord hereunder which is not paid
when due shall bear interest at the lower of thirteen percent (13%) per annum or
the maximum lawful rate of interest from the due date until paid, unless
otherwise specifically provided herein, but the payment of such interest shall
not excuse or cure any default by Tenant under this Lease. In addition to such
interest: (i) if Basic Rental is not paid within ten (10) days after notice that
the same is due, a late charge equal to ten percent (10%) of the amount overdue
or $100, whichever is greater, shall be assessed and shall accrue for each
calendar month or part thereof until such rental, including the late charge, is
paid in full, which late charge Tenant hereby agrees is a reasonable estimate of
the damages Landlord shall suffer as a result of Tenant's late payment and (ii)
an additional charge of $25 shall be assessed for any check given to Landlord by
or on behalf of Tenant which is not honored by the drawee thereof; which damages
include Landlord's additional administrative and other costs associated with
such late payment and unsatisfied checks and the parties agree that it would be
impracticable or extremely difficult to fix Landlord's actual damage in such
event. Such charges for interest and late payments and unsatisfied checks are
separate and cumulative and are in addition to and shall not diminish or
represent a substitute for any or all of Landlord's rights or remedies under any
other provision of this Lease.

                                                      Initials: ________________
                                                                ________________

                                      -20-
<PAGE>

                              ARTICLE 21
                              ----------

                    Transfer of Landlord's Interest
                    -------------------------------

         In the event of any transfer or termination of Landlord's interest in
the Premises or the Project by sale, assignment, transfer, foreclosure,
deed-in-lieu of foreclosure or otherwise whether voluntary or involuntary,
Landlord shall be automatically relieved of any and all obligations and
liabilities on the part of Landlord from and after the date of such transfer or
termination, including furthermore without limitation, the obligation of
Landlord under Article 4 and California Civil Code 1950.7 above to return the
security deposit, provided said security deposit is transferred to said
transferee. Subject to Tenant's rights under Article 17 above, Tenant agrees to
attorn to the transferee upon any such transfer and to recognize such transferee
as the lessor under this Lease and Tenant shall, within ten (10) days after
request, execute such further instruments or assurances as such transferee may
reasonably deem necessary to evidence or confirm such attornment.

                                  ARTICLE 22
                                  ----------

                                    BROKER
                                    ------

         In connection with this Lease, Landlord and Tenant warrant and
represent that they have had dealings only with firm(s) set forth in Article
1.H. of the Basic Lease Provisions (who shall be compensated by Landlord
pursuant to separate agreement) and that they know of no other person or entity
who is or might be entitled to a commission, finder's fee or other like payment
in connection herewith. Each party does hereby indemnify and agree to hold the
other and their agents, members, partners, representatives, officers,
affiliates, shareholders, employees, successors and assigns harmless from and
against any and all loss, liability and expenses that the other may incur should
such warranty and representation prove incorrect, inaccurate or false.

                                   ARTICLE 23
                                   ----------

                                    PARKING
                                    -------

         Tenant shall be entitled to use, commencing on the date of Tenant's
occupancy of the Premises, the number of unreserved and reserved parking passes
set forth in Section 1(I) of the Basic Lease Provisions, which parking passes
shall pertain to the Project parking facility and which reserved parking passes
shall be at a location to be mutually agreed upon by Landlord and Tenant. Tenant
shall not be required to pay a fee to Landlord for such parking at any time
during the Lease Term or any applicable Option Term; however, Tenant shall be
responsible for the full amount of any taxes imposed by any governmental
authority in connection with the renting of such parking passes by Tenant or the
use of the parking facility by Tenant. Tenant's continued right to use the
parking passes is conditioned upon Tenant abiding by all reasonable and
non-discriminatory rules and regulations which are prescribed from time to time
for the orderly operation and use of the parking facility where the parking
passes are located, including any sticker or other identification system
established by Landlord, Tenant's cooperation in seeing that Tenant's employees
and visitors also comply with such rules and regulations, and Tenant not being
in default under this Lease after expiration of applicable cure periods.
Landlord specifically reserves the right to change the size, configuration,
design, layout and all other aspects of the Project parking facility at any time
and Tenant acknowledges and agrees that Landlord may, without incurring any
liability to Tenant and without any abatement of rent under this Lease, from
time to time, close-off or restrict access to the Project parking facility for
purposes of permitting or facilitating any such construction, alteration or
improvements. Landlord may relocate any reserved parking spaces rented by Tenant
to another location in the Parking project facility. Landlord may delegate its
responsibilities hereunder to a parking operator or a lessee of the parking
facility in which case such parking operator or lessee shall have all the rights
of control attributed hereby to the Landlord. The parking passes rented by
Tenant pursuant to this Article 23 are provided to Tenant solely for use by
Tenant's own personnel and such passes may not be transferred, assigned,
subleased or otherwise alienated by Tenant without Landlord's prior approval.
Tenant may validate visitor parking by such method or methods as the Landlord
may establish, at the validation rate from time to time generally applicable to
visitor parking.

                                                                Initial:________
                                                                        ________

                                      -21-
<PAGE>

                                  ARTICLE 24
                                  ----------

                                    WAIVER
                                    ------

         No waiver by a party of any provision of this Lease shall be deemed to
be a waiver of any other provision hereof or of any subsequent breach by the
other party of the same or any other provision. No provision of this Lease may
be waived by a party, except by an instrument in writing executed by the waiving
party. Landlord's consent to or approval of any act by Tenant requiring
Landlord's consent or approval shall not be deemed to render unnecessary the
obtaining of Landlord's consent to or approval of any subsequent act of Tenant,
whether or not similar to the act so consented to or approved. No act or thing
done by Landlord or Landlord's agents during the Term of this Lease shall be
deemed an acceptance of a surrender of the Premises, and no agreement to accept
such surrender shall be valid unless in writing and signed by Landlord. The
subsequent acceptance of rent hereunder by Landlord shall not be deemed to be a
waiver of any preceding breach by Tenant of any term, covenant or condition of
this Lease, other than the failure of Tenant to pay the particular rent so
accepted, regardless of Landlord's knowledge of such preceding breach at the
time of acceptance of such rent. Any payment by Tenant or receipt by Landlord of
an amount less than the total amount then due hereunder shall be deemed to be in
partial payment only thereof and not a waiver of the balance due or an accord
and satisfaction, notwithstanding any statement or endorsement to the contrary
on any check or any other instrument delivered concurrently therewith or in
reference thereto. Accordingly, Landlord may accept any such amount and
negotiate any such check without prejudice to Landlord's right to recover all
balances due and owing and to pursue its other rights against Tenant under this
Lease, regardless of whether Landlord makes any notation on such instrument of
payment or otherwise notifies Tenant that such acceptance or negotiation is
without prejudice to Landlord's rights.

                              ARTICLE 25
                              ----------

                             ESTOPPEL CERTIFICATE
                             --------------------

         Tenant shall, at any time and from time to time, upon not less than ten
(10) days' prior written notice from Landlord, execute, acknowledge and deliver
to Landlord a statement in writing certifying the following information, (but
not limited to the following information in the event further information is
requested by Landlord): (i) that this Lease is unmodified and in full force and
effect (or, if modified, stating the nature of such modification and certifying
that this Lease, as modified, is in full force and effect); (ii) the dates to
which the rental and other charges are paid in advance, if any; (iii) the amount
of Tenant's security deposit, if any; and (iv) acknowledging that there are not,
to Tenant's actual knowledge, any uncured defaults on the part of Landlord
hereunder, and no events or conditions then in existence which, with the passage
of time or notice or both, would constitute a default on the part of Landlord
hereunder, or specifying such defaults, events or conditions, if any are
claimed. It is expressly understood and agreed that any such statement may be
relied upon by any prospective purchaser or encumbrancer of all or any portion
of the Real Property. Tenant's failure to deliver such statement within such
time shall constitute an admission by Tenant that all statements contained
therein are true and correct.

                                  ARTICLE 26
                                  ----------

                             LIABILITY OF LANDLORD
                             ---------------------


         Notwithstanding anything in this Lease to the contrary, any remedy of
Tenant for the collection of a judgment (or other judicial process) requiring
the payment of money by Landlord in the event of any default by Landlord
hereunder or any claim, cause of action or obligation, contractual, statutory or
otherwise by Tenant against Landlord concerning, arising out of or relating to
any matter relating to this Lease and all of the covenants and conditions or any
obligations, contractual, statutory, or otherwise set forth herein, shall be
limited solely and exclusively to an amount which is equal to the lesser of (i)
the interest of Landlord in and to the Project, and (ii) the interest Landlord
would have in the Project if the Project were encumbered by third party debt in
an amount equal to eighty percent (80%) of the then current value of the
Project. No other property or assets of Landlord, or any member, officer,
director, shareholder, partner, trustee, agent, servant or employee of Landlord
(the "Representative") shall be subject

                                                                Initial:________
                                                                        ________

                                      -22-
<PAGE>

to levy, execution or other enforcement procedure for the satisfaction of
Tenant's remedies under or with respect to this Lease, Landlord's obligations to
Tenant, whether contractual, statutory or otherwise, the relationship of
Landlord and Tenant hereunder, or Tenant's use or occupancy of the Premises.
Tenant further understands that any liability, duty or obligation of Landlord to
Tenant shall automatically cease and terminate as of the date that Landlord or
any of Landlord's Representatives no longer have any right, title or interest in
or to the Project, except for any claim that occurred prior to the transfer of
Landlord's interest. Notwithstanding anything to the contrary in this Lease,
except in the case of Landlord's gross negligence or willful misconduct,
Landlord shall not be liable for injury or damage to, or interference with,
Tenant's business, including but not limited to, loss of profits, loss of rents
or other revenues, loss of business opportunity, loss of goodwill or loss of
use.

                                  ARTICLE 27
                                  ----------

                             INABILITY TO PERFORM
                             --------------------

         This Lease and the obligations of Tenant hereunder shall not be
affected or impaired because Landlord is unable to fulfill any of its
obligations hereunder or is delayed in doing so, if such inability or delay is
caused by reason of any prevention, delay, stoppage due to strikes, lockouts,
acts of God, or any other cause previously, or at such time, beyond the
reasonable control or anticipation of Landlord (collectively, a "Force Majeure")
and Landlord's obligations under this Lease shall be forgiven and suspended by
any such Force Majeure.

                                  ARTICLE 28
                                  ----------

                                HAZARDOUS WASTE
                                ---------------

          (a) Tenant shall not cause or permit any Hazardous Material (as
defined in Article 28(d) below) to be brought, kept or used in or about the
Project by Tenant, its agents, employees, contractors, or invitees except for
general office supplies typically used in the ordinary course of business (e.g.,
copier toner, liquid paper, glue, ink, and cleaning solvents). Tenant
indemnifies Landlord from and against any breach by Tenant of the obligations
stated in the preceding sentence, and agrees to defend and hold Landlord
harmless from and against any and all claims, judgments, damages, penalties,
fines, costs, liabilities, or losses (including, without limitation, diminution
in value of the Project, damages for the loss or restriction or use of rentable
or usable space or of any amenity of the Project, damages arising from any
adverse impact or marketing of space in the Project, and sums paid in settlement
of claims, attorneys' fees and costs, consultant fees, and expert fees) which
arise during or after the Term of this Lease as a result of such breach. This
indemnification of Landlord by Tenant includes, without limitation, costs
incurred in connection with any investigation of site conditions or any cleanup,
remedial, removal, or restoration work required by any federal, state, or local
governmental agency or political subdivision because of Hazardous Material
present in the soil or ground water on or under the Project caused by Tenant.
Without limiting the foregoing, if the presence of any Hazardous Material on the
Project caused or permitted by Tenant results in any contamination of the
Project and subject to the provisions of Articles 9, 10 and 11, hereof, Tenant
shall promptly take all actions at its sole expense as are necessary to return
the Project to the condition existing prior to the introduction of any such
Hazardous Material and the contractors to be used by Tenant for such work must
be approved by Landlord, which approval shall not be unreasonably withheld so
long as such actions would not potentially have any material adverse long-term
or short-term effect on the Project and so long as such actions do not
materially interfere with the use and enjoyment of the Project by the other
tenants thereof.

          (b) In no event shall the cost of complying with Laws relating to
Hazardous Materials on the Project be included as an Operating Cost.

          (c) It shall not be unreasonable for Landlord to withhold its consent
to any proposed Transfer if (i) the proposed Transferee's anticipated use of the
Premises involves the generation, storage, use, treatment, or disposal of
Hazardous Material; or (ii) the proposed Transferee is subject to an enforcement
order issued by any governmental authority in connection with the use, disposal,
or storage of a Hazardous Material and such Transferee has not fully complied
with such enforcement order.

                                                                Initial:________
                                                                        ________

                                      -23-
<PAGE>

          (d) As used herein, the term "Hazardous Material" means any hazardous
or toxic substance, material, or waste which is or becomes regulated by any
local governmental authority, the State of California or the United States
Government. The term "Hazardous Material" includes, without limitation, any
material or substance which is (i) defined as "Hazardous Waste," "Extremely
Hazardous Waste," or "Restricted Hazardous Waste" under Sections 25115, 25117 or
25122.7, or listed pursuant to Section 25140, of the California Health and
Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law), (ii)
defined as a "Hazardous Substance" under Section 25316 of the California Health
and Safety Code, Division 20, Chapter 6.8 (Carpenter-Presley-Tanner Hazardous
Substance Account Act), (iii) defined as a "Hazardous Material," "Hazardous
Substance," or "Hazardous Waste" under Section 25501 of the California Health
and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response
Plans and Inventory), (iv) defined as a "Hazardous Substance" under Section
25281 of the California Health and Safety Code, Division 20, Chapter 6.7
(Underground Storage of Hazardous Substances), (v) petroleum, (vi) asbestos,
(vii) listed under Article 9 or defined as Hazardous or extremely hazardous
pursuant to Article 11 of Title 22 of the California Administrative Code,
Division 4, Chapter 20, (viii) designated as a "Hazardous Substance" pursuant to
Section 311 of the Federal Water Pollution Control Act (33 U.S.C. ss. 1317),
(ix) defined as a "Hazardous Waste" pursuant to Section 1004 of the Federal
Resource Conservation and Recovery Act, 42 U.S.C. ss. 6901 et seq. (42 U.S.C.
ss. 6903), or (x) defined as a "Hazardous Substance" pursuant to Section 101 of
the Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. ss. 9601 et seq. (42 U.S.C. ss. 9601). (e) As used herein, the term
"Laws" mean any applicable federal, state or local laws, ordinances, or
regulations relating to any Hazardous Material affecting the Project, including,
without limitation, the laws, ordinances, and regulations referred to in Article
28(d) above.

                              ARTICLE 29
                              ----------

                   SURRENDER OF PREMISES; REMOVAL OF PROPERTY
                   ------------------------------------------

          (a) The voluntary or other surrender of this Lease by Tenant to
Landlord, or a mutual termination hereof, shall not work a merger, and shall at
the option of Landlord, operate as an assignment to it of any or all subleases
or subtenancies affecting the Premises.

          (b) Upon the expiration of the Term of this Lease, or upon any earlier
termination of this Lease, Tenant shall quit and surrender possession of the
Premises to Landlord in substantially the same condition as the Premises are now
and hereafter may be improved by Landlord or Tenant, reasonable wear and tear,
damages caused by casualty or condemnation resulting in termination of this
Lease and repairs which are Landlord's obligation excepted, and shall, without
expense to Landlord, remove or cause to be removed from the Premises all debris
and rubbish, all furniture, equipment, business and trade fixtures,
free-standing cabinet work, moveable partitioning, telephone and data cabling
and other articles of personal property owned by Tenant or installed or placed
by Tenant at its own expense in the Premises, and all similar articles of any
other persons claiming under Tenant unless Landlord exercises its option to have
any subleases or subtenancies assigned to it, and Tenant shall repair all damage
to the Premises resulting from the installation and removal of such items to be
removed.

          (c) Whenever Landlord shall reenter the Premises as provided in
Article 12 hereof, or as otherwise provided in this Lease, any property of
Tenant not removed by Tenant upon the expiration of the Term of this Lease (or
within forty-eight (48) hours after a termination by reason of Tenant's
default), as provided in this Lease, shall be considered abandoned and Landlord
may remove any or all of such items and dispose of the same in any manner or
store the same in a public warehouse or elsewhere for the account and at the
expense and risk of Tenant (subject to all applicable laws), and if Tenant shall
fail to pay the cost of storing any such property after it has been stored for a
period of ninety (90) days or more, Landlord may sell any or all of such
property at public or private sale, in such manner and at such times and places
as Landlord, in its sole discretion, may deem proper, without notice or to
demand upon Tenant, for the payment of all or any part of such charges or the
removal of any such property, and shall apply the proceeds of such sale as
follows: first, to the cost and expense of such sale, including reasonable
attorneys' fees for services rendered; second, to the payment of the cost of or
charges for storing any such property; third, to the payment of any other sums
of money which may then

                                                                Initial:________
                                                                        ________

                                      -24-
<PAGE>

or thereafter be due to Landlord from Tenant under any of the terms hereof; and
fourth, the balance, if any, to Tenant.

          (d) All fixtures, leasehold improvements, Alterations and/or
appurtenances attached to or built into the Premises prior to or during the
Term, whether by Landlord or Tenant and whether at the expense of Landlord or
Tenant, or of both, shall be and remain part of the Premises and shall not be
removed by Tenant at the end of the Term unless otherwise expressly provided for
in this Lease or unless such removal is required by Landlord or unless Landlord
has otherwise consented to such removal by Tenant. Such fixtures, leasehold
improvements, Alterations, additions, improvements and/or appurtenances shall
include but not be limited to: all floor coverings, drapes, paneling, built-in
cabinetry, molding, doors, vaults (including vault doors), plumbing systems,
security systems, electrical systems, lighting systems, silencing equipment,
communication systems, all fixtures and outlets for the systems mentioned above
and for all telephone, radio, telegraph and television purposes, and any special
flooring or ceiling installations.

                                  ARTICLE 30
                                  ----------

                                 MISCELLANEOUS
                                 -------------

          (a) Severability; Entire Agreement. Any provision of this Lease which
              ------------------------------
shall prove to be invalid, void, or illegal shall in no way affect, impair or
invalidate any other provision hereof and such other provisions shall remain in
full force and effect. This Lease and the Exhibits and any Addendum attached
hereto constitute the entire agreement between the parties hereto with respect
to the subject matter hereof, and no prior agreement or understanding pertaining
to any such matter shall be effective for any purpose. No provision of this
Lease may be amended or supplemented except by an agreement in writing signed by
the parties hereto or their successor in interest.

          (b) Attorneys' Fees; Waiver of Jury Trial.
              -------------------------------------

               (i) In any action to enforce the terms of this Lease, including
any suit by Landlord for the recovery of rent or possession of the Premises, the
losing party shall pay the successful party a reasonable sum for attorneys' fees
and costs in such suit and such attorneys' fees and costs shall be deemed to
have accrued prior to the commencement of such action and shall be paid whether
or not such action is prosecuted to judgment.

               (ii)  Should Landlord, without fault on Landlord's part, be made
a party to any litigation instituted by Tenant or by any third party against
Tenant, or by or against any person holding under or using the Premises by
license of Tenant, or for the foreclosure of any lien for labor or material
furnished to or for Tenant or any such other person or otherwise arising out of
or resulting from any act or transaction of Tenant or of any such other person
in connection with this Lease, Tenant covenants to save and hold Landlord
harmless from any judgment rendered against Landlord or the Premises or any part
thereof and from all costs and expenses, including reasonable attorneys' fees
and costs incurred by Landlord in connection with such litigation.

               (iii) When legal services are rendered by an attorney at law who
is an employee of a party, attorneys' fees and costs incurred by that party
shall be deemed to include an amount based upon the number of hours spent by
such employee on such matters multiplied by an appropriate billing rate
determined by taking into consideration the same factors, including but not
limited by, the importance of the matter, time applied, difficulty and results,
as are considered when an attorney not in the employ of a party is engaged to
render such service.

               (iv) EACH PARTY HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY
IN ANY ACTION SEEKING SPECIFIC PERFORMANCE OF ANY PROVISION OF THIS LEASE, FOR
DAMAGES FOR ANY BREACH UNDER THIS LEASE, OR OTHERWISE FOR ENFORCEMENT OF ANY
RIGHT OR REMEDY HEREUNDER.

          (c)  Time of Essence. Each of Tenant's covenants herein is a condition
               ---------------
and time is of the essence with respect to the performance of every provision of
this Lease.

                                                                Initial:________
                                                                        ________

                                      -25-
<PAGE>

          (d) Headings; Joint and Several. The article headings contained in
              ---------------------------
this Lease are for convenience only and do not in any way limit or amplify any
term or provision hereof. The terms "Landlord" and "Tenant" as used herein shall
include the plural as well as the singular, the neuter shall include the
masculine and feminine genders and the obligations herein imposed upon Tenant
shall be joint and several as to each of the persons, firms or corporations of
which Tenant may be composed.

          (e) Reserved Area. Tenant hereby acknowledges and agrees that the
              -------------
exterior walls of the Premises and the area between the finished ceiling of the
Premises and the slab of the floor of the project thereabove have not been
demised hereby and the use thereof together with the right to install, maintain,
use, repair and replace pipes, ducts, conduits and wires leading through, under
or above the Premises in locations which will not materially interfere with
Tenant's use of the Premises and serving other parts of the Project are hereby
excepted and reserved unto Landlord.

          (f) NO OPTION. THE SUBMISSION OF THIS LEASE BY LANDLORD, ITS AGENT OR
              ---------
REPRESENTATIVE FOR EXAMINATION OR EXECUTION BY TENANT DOES NOT CONSTITUTE AN
OPTION OR OFFER TO LEASE THE PREMISES UPON THE TERMS AND CONDITIONS CONTAINED
HEREIN OR A RESERVATION OF THE PREMISES IN FAVOR OF TENANT, IT BEING INTENDED
HEREBY THAT THIS LEASE SHALL ONLY BECOME EFFECTIVE UPON THE EXECUTION HEREOF BY
LANDLORD AND TENANT AND DELIVERY OF A FULLY EXECUTED LEASE TO TENANT.

          (g) Use of Project Name; Improvements. Tenant shall not be allowed to
              ---------------------------------
use the name, picture or representation of the Project, or words to that effect,
in connection with any business carried on in the Premises or otherwise (except
as Tenant's address) without the prior written consent of Landlord. In the event
that Landlord undertakes any additional improvements on the Real Property
including but not limited to new construction or renovation or additions to the
existing improvements, Landlord shall not be liable to Tenant for any noise,
dust, vibration or interference with access to the Premises or disruption in
Tenant's business caused thereby; provided, however, that Landlord shall use
reasonable efforts not to interfere with Tenant's conduct of business in the
Premises.

          (h) Rules and Regulations. Tenant shall observe faithfully and comply
              ---------------------
strictly with the Rules and Regulations attached to this Lease as Exhibit "B"
and made a part hereof, and such other Rules and Regulations as Landlord may
from time to time reasonably adopt for the safety, care and cleanliness of the
Project, the facilities thereof, or the preservation of good order therein.
Landlord shall not be liable to Tenant for violation of any such Rules and
Regulations, or for the breach of any covenant or condition in any lease by any
other tenant in the Project; provided, however, that Landlord shall not enforce
the Rules and Regulations in a discriminatory manner. A waiver by Landlord of
any Rule or Regulation for any other tenant shall not constitute nor be deemed a
waiver of the Rule or Regulation for this Tenant.

          (i) Quiet Possession. Upon Tenant's paying the Basic Rent, Additional
              ----------------
Rent and other sums provided hereunder and observing and performing all of the
covenants, conditions and provisions on Tenant's part to be observed and
performed hereunder, Tenant shall have quiet possession of the Premises for the
entire Term hereof, subject to all of the provisions of this Lease.

          (j) Rent. All payments required to be made hereunder to Landlord shall
              ----
be deemed to be rent, whether or not described as such.

          (k) Successors and Assigns. Subject to the provisions of Article
              ----------------------
15 hereof, all of the covenants, conditions and provisions of this Lease shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective heirs, personal representatives, successors and assigns.

          (l) Notices. Any notice required or permitted to be given hereunder
              -------
shall be in writing and may be given by personal service evidenced by a signed
receipt or sent by registered or certified mail, return receipt requested, or
via overnight courier, and shall be effective upon proof of delivery, addressed
to Tenant at the Premises or to Landlord at the management office

                                                                Initial:________
                                                                        ________

                                      -26-
<PAGE>

for the Project, with a copy to Landlord, c/o Arden Realty, Inc., 11601 Wilshire
Boulevard, Fourth Floor, Los Angeles, California 90025, Attn: Legal Department.
Either party may by notice to the other specify a different address for notice
purposes except that, upon Tenant's taking possession of the Premises, the
Premises shall constitute Tenant's address for notice purposes. A copy of all
notices to be given to Landlord hereunder shall be concurrently transmitted by
Tenant to such party hereafter designated by notice from Landlord to Tenant.

          (m) Persistent Delinquencies. In the event that Tenant shall be
              ------------------------
delinquent by more than fifteen (15) days in the payment of rent on three (3)
separate occasions in any twelve (12) month period, Landlord shall have the
right to require Tenant to pay Rent quarterly in advance.

          (n) Right of Landlord to Perform. All covenants and agreements to be
              ----------------------------
performed by Tenant under any of the terms of this Lease shall be performed by
Tenant at Tenant's sole cost and expense and without any abatement of rent. If
Tenant shall fail to pay any sum of money, other than rent, required to be paid
by it hereunder or shall fail to perform any other act on its part to be
performed hereunder, and such failure shall continue beyond any applicable
notice and cure period set forth in this Lease, Landlord may, but shall not be
obligated to, without waiving or releasing Tenant from any obligations of
Tenant, make any such payment or perform any such other act on Tenant's part to
be made or performed as is in this Lease provided. All sums so paid by Landlord
and all reasonable incidental costs, together with interest thereon at the rate
of ten percent (10%) per annum from the date of such payment by Landlord, shall
be payable to Landlord on demand and Tenant covenants to pay any such sums, and
Landlord shall have (in addition to any other right or remedy of Landlord) the
same rights and remedies in the event of the nonpayment thereof by Tenant as in
the case of default by Tenant in the payment of the rent.

          (o) Access, Changes in Project, Facilities, Name.
              --------------------------------------------

              (i)   Every part of the Project except the inside surfaces of all
walls, windows and doors bounding the Premises (including exterior building
walls, core corridor walls and doors and any core corridor entrance), and any
space in or adjacent to the Premises used for shafts, stacks, pipes, conduits,
fan rooms, ducts, electric or other utilities, sinks or other building
facilities, and the use thereof, as well as access thereto through the Premises
for the purposes of operation, maintenance, decoration and repair, are reserved
to Landlord.

              (ii)  Upon prior notice to Tenant (except that no notice shall be
required in an emergency), Tenant shall permit Landlord to install, use and
maintain pipes, ducts and conduits within the walls, columns and ceilings of the
Premises.

              (iii) Upon prior notice to Tenant (except that no notice shall be
required in an emergency), Landlord reserves the right, without incurring any
liability to Tenant therefor, to make such changes in or to the Project and the
fixtures and equipment thereof, as well as in or to the street entrances, halls,
passages, elevators, stairways and other improvements thereof, as it may deem
necessary or desirable.

              (iv)  Upon prior notice to Tenant, Landlord may adopt any name
for the Project and Landlord reserves the right to change the name or address of
the Project at any time.

          (p) Signing Authority. If Tenant is a corporation, partnership or
              -----------------
limited liability company, each individual executing this Lease on behalf of
said entity represents and warrants that he or she is duly authorized to execute
and deliver this Lease on behalf of said entity in accordance with: (i) if
Tenant is a corporation, a duly adopted resolution of the Board of Directors of
said corporation or in accordance with the By-laws of said corporation, (ii) if
Tenant is a partnership, the terms of the partnership agreement, and (iii) if
Tenant is a limited liability company, the terms of its operating agreement, and
that this Lease is binding upon said entity in accordance with its terms.
Concurrently with Tenant's execution of this Lease, Tenant shall provide to
Landlord a copy of: (i) if Tenant is a corporation, such resolution of the Board
of Directors authorizing the execution of this Lease on behalf of such
corporation, which copy of resolution shall be duly certified by the secretary
or an assistant secretary of the corporation to be a true copy of a resolution
duly adopted by the Board of Directors of said corporation and shall be in the
form of Exhibit "E" or in some other form reasonably acceptable to Landlord,
(ii) if Tenant is a partnership, a copy of the provisions of the partnership
agreement granting the requisite authority to each individual executing this
Lease on behalf of said partnership, and (iii)

                                                                Initial:________
                                                                        ________

                                      -27-
<PAGE>

if Tenant is a limited liability company, a copy of the provisions of its
operating agreement granting the requisite authority to each individual
executing this Lease on behalf of said limited liability company.

     (q)  Identification of Tenant.
          ------------------------

          (i)  If Tenant constitutes more than one person or entity, (A) each of
them shall be jointly and severally liable for the keeping, observing and
performing of all of the terms, covenants, conditions and provisions of this
Lease to be kept, observed and performed by Tenant, (B) the term "Tenant" as
used in this Lease shall mean and include each of them jointly and severally,
and (C) the act of or notice from, or notice or refund to, or the signature of,
any one or more of them, with respect to the tenancy of this Lease, including,
but not limited to, any renewal, extension, expiration, termination or
modification of this Lease, shall be binding upon each and all of the persons or
entities executing this Lease as Tenant with the same force and effect as if
each and all of them had so acted or so given or received such notice or refund
or so signed.

          (ii) If Tenant is a partnership (or is comprised of two or more
persons, individually and as co-partners of a partnership) or if Tenant's
interest in this Lease shall be assigned to a partnership (or to two or more
persons, individually and as co-partners of a partnership) pursuant to Article
15 hereof (any such partnership and such persons hereinafter referred to in this
Article 30(q)(ii) as "Partnership Tenant"), the following provisions of this
Lease shall apply to such Partnership Tenant:

               (A)  The liability of each of the parties comprising Partnership
Tenant shall be joint and several.

               (B)  Each of the parties comprising Partnership Tenant hereby
consents in advance to, and agrees to be bound by, any written instrument which
may hereafter be executed, changing, modifying or discharging this Lease, in
whole or in part, or surrendering all or any part of the Premises to the
Landlord, and by notices, demands, requests or other communication which may
hereafter be given, by the individual or individuals authorized to execute this
Lease on behalf of Partnership Tenant under Subparagraph (p) above.

               (C)  Any bills, statements, notices, demands, requests or other
communications given or rendered to Partnership Tenant or to any of the parties
comprising Partnership Tenant shall be deemed given or rendered to Partnership
Tenant and to all such parties and shall be binding upon Partnership Tenant and
all such parties.

               (D)  If Partnership Tenant admits new partners, all of such new
partners shall, by their admission to Partnership Tenant, be deemed to have
assumed performance of all of the terms, covenants and conditions of this Lease
on Tenant's part to be observed and performed.

               (E)  Partnership Tenant shall give prompt notice to Landlord of
the admission of any such new partners, and, upon demand of Landlord, shall
cause each such new partner to execute and deliver to Landlord an agreement in
form reasonably satisfactory to Landlord, wherein each such new partner shall
assume performance of all of the terms, covenants and conditions of this Lease
on Partnership Tenant's part to be observed and performed (but neither
Landlord's failure to request any such agreement nor the failure of any such new
partner to execute or deliver any such agreement to Landlord shall terminate the
provisions of clause (D) of this Article 30(q)(ii) or relieve any such new
partner of its obligations thereunder).

          (r)  Intentionally Omitted.
               ---------------------

          (s)  Survival of Obligations. Any obligations of Tenant occurring
               -----------------------
prior to the expiration or earlier termination of this Lease shall survive such
expiration or earlier termination.

          (t)  Confidentiality. Tenant acknowledges that the content of this
               ---------------
Lease and any related documents are confidential information. Tenant shall keep
such confidential information strictly confidential and shall not disclose such
confidential information to any person or entity

                                                                Initial:________
                                                                        ________

                                      -28-
<PAGE>

other than Tenant's financial, legal and space planning consultants and any
proposed subtenants or assignees, or as otherwise required by law.

          (u) Governing Law. This Lease shall be governed by and construed in
              -------------
accordance with the laws of the State of California. No conflicts of law rules
of any state or country (including, without limitation, California conflicts of
law rules) shall be applied to result in the application of any substantive or
procedural laws of any state or country other than California. All
controversies, claims, actions or causes of action arising between the parties
hereto and/or their respective successors and assigns, shall be brought, heard
and adjudicated by the courts of the State of California, with venue in the
County of Orange. Each of the parties hereto hereby consents to personal
jurisdiction by the courts of the State of California in connection with any
such controversy, claim, action or cause of action, and each of the parties
hereto consents to service of process by any means authorized by California law
and consent to the enforcement of any judgment so obtained in the courts of the
State of California on the same terms and conditions as if such controversy,
claim, action or cause of action had been originally heard and adjudicated to a
final judgment in such courts. Each of the parties hereto further acknowledges
that the laws and courts of California were freely and voluntarily chosen to
govern this Lease and to adjudicate any claims or disputes hereunder.

          (v) Exhibits and Addendum.  The Exhibits and Addendum, if applicable,
              ---------------------
attached hereto are incorporated herein by this reference as if fully set forth
herein.

                                  ARTICLE 31
                                  ----------

                               OPTIONS TO EXTEND
                               -----------------

          (a) Option Rights. Landlord hereby grants the Tenant named in this
              -------------
Lease (the "Original Tenant") two (2) option(s) ("Options") to extend the Lease
Term for the entire Premises for a period of five (5) years each (each, an
"Option Term"), which options shall be exercisable only by written notice
delivered by Tenant to Landlord set forth below. The rights contained in this
Article 31 shall be personal to the Original Tenant and may only be exercised by
the Original Tenant (and not any assignee, sublessee or other transferee of the
Original Tenant's interest in this Lease) if the Original Tenant occupies the
entire Premises as of the date of Tenant's Acceptance (as defined in Section
31(c) below). Tenant shall not be entitled to exercise the second (2nd) Option
unless Tenant has extended the Lease Term for the first Option Term.

          (b) Option Rent. The rent payable by Tenant during the Option Term
              -----------
("Option Rent") shall be equal to ninety-five percent (95%) of the "Market Rent"
(defined below), but in no event shall the Option Rent be less than Tenant is
paying under this Lease on the month immediately preceding the Option Term for
Monthly Basic Rental, including all escalations, Direct Costs, additional rent
and other charges. "Market Rent" shall mean the applicable Monthly Basic Rental,
including all escalations, Direct Costs, additional rent and other charges at
which tenants, as of the time of Landlord's "Option Rent Notice" (as defined
below), are entering into leases for non-sublease, non-encumbered, space
comparable in size, location and quality to the Premises in renewal transactions
for a term comparable to the Option Term which comparable space is located in
office buildings comparable to the Project in the immediate vicinity of the
Project, taking into consideration rental abatement concessions and all other
concessions and also taking into consideration the value of the existing
improvements in the Premises to Tenant, as compared to the value of the existing
improvements in such comparable space, with such value to be based upon the age,
quality and layout of the improvements and the extent to which the same could be
utilized by Tenant with consideration given to the fact that the improvements
existing in the Premises are specifically suitable to Tenant. In addition, the
Market Rent shall take into consideration that Tenant shall be entitled to a
refurbishment allowance for each Option Term in the amount of One Dollar ($1.00)
per rentable square foot of the Premises, which refurbishment allowance may be
used by Tenant only for costs of permanently affixed improvements within the
Premises.

          (c) Exercise of Options.  The Options  shall be exercised  by Tenant
              -------------------
only in the following manner: (i) Tenant shall not be in default after
expiration of applicable cure periods, and shall not have been in default after
expiration of applicable cure periods under this Lease more than three (3)
times, on the delivery date of the Interest Notice and Tenant's Acceptance;

                                                                Initial:________
                                                                        ________

                                      -29-
<PAGE>

(ii) Tenant shall deliver written notice ("Interest Notice") to Landlord not
more than ten (10) months nor less than nine (9) months prior to the expiration
of the initial Lease Term or first Option Term (as applicable), stating that
Tenant is interested in exercising the Option, (iii) within fifteen (15)
business days of Landlord's receipt of Tenant's written notice, Landlord shall
deliver notice ("Option Rent Notice") to Tenant setting forth the Option Rent;
and (iv) if Tenant desires to exercise such Option, Tenant shall provide
Landlord written notice within five (5) business days after receipt of the
Option Rent Notice ("Tenant's Acceptance") and upon, and concurrent with such
exercise, Tenant may, at its option, object to the Option Rent contained in the
Option Rent Notice. Tenant's failure to deliver the Interest Notice or Tenant's
Acceptance on or before the dates specified above shall be deemed to constitute
Tenant's election not to exercise the Option. If Tenant timely and properly
exercises its Option, the initial Lease Term or first Option Term (as
applicable), shall be extended for the Option Term upon all of the terms and
conditions set forth in this Lease, except that the rent for the Option Term
shall be as indicated in the Option Rent Notice unless Tenant, concurrently with
Tenant's Acceptance, objects to the Option Rent contained in the Option Rent
Notice, in which case the parties shall follow the procedure and the Option Rent
shall be determined, as set forth in Section 31(d) below.

     (d)  Determination of Market Rent. If Tenant timely and appropriately
          ----------------------------
objects to the Market Rent in Tenant's Acceptance, Landlord and Tenant shall
attempt to agree upon the Market Rent using their best good-faith efforts. If
Landlord and Tenant fail to reach agreement within thirty (30) days following
Tenant's Acceptance ("Outside Agreement Date"), then each party shall make a
separate determination of the Market Rent which shall be submitted to each other
and to arbitration in accordance with the following items (i) through (vii):

          (i)     Landlord and Tenant shall each appoint, within ten (10) days
of the Outside Agreement Date, one arbitrator who shall by profession be a
current real estate broker or appraiser of comparable commercial properties in
the immediate vicinity of the Project, and who has been active in such field
over the last five (5) years. The determination of the arbitrators shall be
limited solely to the issue of whether Landlord's or Tenant's submitted Market
Rent is the closest to the actual Market Rent as determined by the arbitrators,
taking into account the requirements of item (b), above (i.e., the arbitrators
may only select Landlord's or Tenant's determination of Market Rent and shall
not be entitled to make a compromise determination).

          (ii)    The two arbitrators so appointed shall within five (5)
business days of the date of the appointment of the last appointed arbitrator
agree upon and appoint a third arbitrator who shall be qualified under the same
criteria set forth hereinabove for qualification of the initial two arbitrators.

          (iii)   The three arbitrators shall within fifteen (15) days of the
appointment of the third arbitrator reach a decision as to whether the parties
shall use Landlord's or Tenant's submitted Market Rent, and shall notify
Landlord and Tenant thereof.

          (iv)    The decision of the majority of the three arbitrators shall be
binding upon Landlord and Tenant.

          (v)     If either Landlord or Tenant fails to appoint an arbitrator
within ten (10) days after the applicable Outside Agreement Date, the arbitrator
appointed by one of them shall reach a decision, notify Landlord and Tenant
thereof, and such arbitrator's decision shall be binding upon Landlord and
Tenant.

          (vi)    If the two arbitrators fail to agree upon and appoint a third
arbitrator, or both parties fail to appoint an arbitrator, then the appointment
of the third arbitrator or any arbitrator shall be dismissed and the matter to
be decided shall be forthwith submitted to arbitration under the provisions of
the American Arbitration Association, but subject to the instruction set forth
in this item (d).

          (vii)   The cost of arbitration shall be paid by Landlord and
Tenant equally.

                                                                 Initials:______
                                                                          ______

                                      -30-
<PAGE>

                                  ARTICLE 32
                                  ----------

                            RIGHT OF FIRST REFUSAL
                            ----------------------

     Landlord hereby grants to Tenant a right of first refusal with respect to
all leasable office spaces in the Project (collectively, "First Refusal Space").
Notwithstanding the foregoing (i) such first refusal right of Tenant shall
commence only following the expiration or earlier termination of (A) any
existing lease pertaining to the First Refusal Space, and (B) as to any First
Refusal Space which is vacant as of the date of this Lease, the first lease
pertaining to any portion of such First Refusal Space entered into by Landlord
after the date of this Lease (collectively, the "Superior Leases"), including
any renewal or extension of such existing or future lease, whether or not such
renewal or extension is pursuant to an express written provision in such lease,
and regardless of whether any such renewal or extension is consummated pursuant
to a lease amendment or a new lease, and (ii) such first refusal right shall be
subordinate and secondary to all rights of expansion, first refusal, first offer
or similar rights granted to the tenants of the Superior Leases (the rights
described in items (i) and (ii), above to be known collectively as "Superior
Rights"). Tenant's right of first refusal shall be on the terms and conditions
set forth in this Article 32.

     (a) Procedure. Landlord shall notify Tenant (the "First Refusal Notice")
         ---------
from time to time when Landlord determines that Landlord shall commence the
marketing of any First Refusal Space because such space shall become available
for lease to third parties, where no holder of a Superior Right desires to lease
such space. The First Refusal Notice shall describe the space so offered to
Tenant and shall set forth Landlord's proposed economic terms and conditions
applicable to Tenant's lease of such space (collectively, the "Economic Terms").
Notwithstanding the foregoing, Landlord's obligation to deliver the First
Refusal Notice shall not apply during the last nine (9) months of the initial
Lease Term or first Option Term unless Tenant has delivered an Interest Notice
to Landlord pursuant to Section 31(c) above nor shall Landlord be obligated to
deliver the First Refusal Notice during the last eight (8) months of the initial
Lease Term or first Option Term unless Tenant has timely delivered Tenant's
Acceptance to Landlord pursuant to Section 31(c) above.

     (b) Procedure for Acceptance. If Tenant wishes to exercise Tenant's right
         ------------------------
of first refusal with respect to the space described in the First Refusal
Notice, then within fifteen (15) days after delivery of the First Refusal Notice
to Tenant, Tenant shall deliver notice to Landlord of Tenant's intention to
exercise its right of first refusal with respect to the entire space described
in the First Refusal Notice. If concurrently with Tenant's exercise of the first
refusal right, Tenant notifies Landlord that it does not accept the Economic
Terms set forth in the First Refusal Notice, Landlord and Tenant shall, for a
period of twenty (20) days after Tenant's exercise, negotiate in good faith to
reach agreement as to such Economic Terms. If Tenant does not so notify Landlord
that it does not accept the Economic Terms set forth in the First Refusal Notice
concurrently with Tenant's exercise of the first refusal right, the Economic
Terms shall be as set forth in the First Refusal Notice. In addition, if Tenant
does not exercise its right of first refusal within the fifteen (15) day period,
or, if Tenant exercises its first refusal right but timely objects to Landlord's
determination of the Economic Terms and if Landlord and Tenant are unable to
reach agreement on such Economic Terms within said twenty (20) day period, then
Landlord shall be free to lease the space described in the First Refusal Notice
to anyone to whom Landlord desires on any terms Landlord desires and Tenant's
right of first refusal shall terminate as to the First Refusal Space described
in the First Refusal Notice; provided, however, that if Landlord intends to
enter into a lease upon Economic Terms which are more favorable to a third (3rd)
party tenant than those Economic Terms proposed by Landlord in the First Refusal
Notice, Landlord shall first deliver written notice to Tenant ("Second Chance
Notice") providing Tenant with the opportunity to lease the First Refusal Space
on such more favorable Economic Terms. Tenant's failure to elect to lease the
First Refusal Space upon such more favorable Economic Terms by written notice to
Landlord within five (5) business days after Tenant's receipt of such Second
Chance Notice from Landlord shall be deemed to constitute Tenant's election not
to lease such space upon such more favorable Economic Terms, in which case
Landlord shall be entitled to lease such space to any third (3rd) party on terms
no more favorable to the third (3rd) party than those set forth in the Second
Chance Notice. If Landlord does lease such First Refusal Space to a third (3rd)
party tenant pursuant to the terms and conditions of this Article 32 above,
Tenant shall have no further right to lease such First Refusal Space.
Notwithstanding anything to

                                                                 Initials:______
                                                                          ______

                                      -31-
<PAGE>

the contrary contained herein, Tenant must elect to exercise its right of first
refusal, if at all, with respect to all of the space offered by Landlord to
Tenant at any particular time, and Tenant may not elect to lease only a portion
thereof.

     (c) Lease of First Refusal Space. If Tenant timely exercises Tenant's right
         ----------------------------
to lease the First Refusal Space as set forth herein, Landlord and Tenant shall
execute an amendment adding such First Refusal Space to this Lease upon the same
non-economic terms and conditions as applicable to the initial Premises, and the
economic terms and conditions as provided in this Article 32. Tenant shall
commence payment of rent for the First Refusal Space and the Lease Term of the
First Refusal Space shall commence upon the date of delivery of such space to
Tenant, except to the extent that any Landlord construction obligations are
included as a component of the agreed upon Economic Terms. The Lease Term for
the First Refusal Space shall expire co-terminously with Tenant's lease of the
initial Premises.

     (d) No Defaults. The rights contained in this Article 32 shall be personal
         -----------
to the Original Tenant, and may only be exercised by the Original Tenant (and
not any other assignee, sublessee or other transferee of the Original Tenant's
interest in this Lease) if Tenant occupies the entire Premises as of the date of
the First Refusal Notice. Tenant shall not have the right to lease First Refusal
Space as provided in this Article 32 if, as of the date of the First Refusal
Notice, or, at Landlord's option, as of the scheduled date of delivery of such
First Refusal Space to Tenant, Tenant is in default under this Lease after
expiration of applicable cure periods or Tenant has previously been in default
under this Lease after expiration of applicable cure periods more than three (3)
times.

                                  ARTICLE 33
                                  ----------

                               SIGNAGE/DIRECTORY
                              -----------------

     Provided Tenant is not in default hereunder after expiration of applicable
cure periods, Tenant, at Landlord's sole cost and expense, shall have the right
to Project-standard lobby directory signage during the Lease Term. Further
provided Tenant is not in default hereunder after expiration of applicable cure
periods, Tenant shall have (a) the exclusive right, at Tenant's sole cost and
expense, to install signage on the exterior of the Project at a location to be
mutually agreed upon by Landlord and Tenant and (b) the non-exclusive right, at
Tenant's sole cost and expense, to install a strip on the Project's "monument"
sign (collectively, "Tenant's Signage"). Tenant's Signage shall be subject to
Landlord's approval as to size, design, location, graphics, materials, colors
and similar specifications and shall be consistent with the exterior design,
materials and appearance of the Project and the Project's signage program and
shall be further subject to all applicable local governmental laws, rules,
regulations, codes and Tenant's receipt of all permits and other governmental
approvals and any applicable covenants, conditions and restrictions. Tenant's
Signage shall be personal to the Original Tenant or any Affiliate Assignee and
may not be assigned to any other assignee or sublessee, or any other person or
entity. Landlord has the right, but not the obligation, to oversee the
installation of Tenant's Signage. In connection with any assignment of Tenant's
interest under this Lease to an Affiliate Assignee, which assignment is
permitted by Landlord pursuant to the provisions of Article 15 hereof, Tenant's
Signage may be assigned to such Affiliate Assignee with Landlord's prior
consent, which consent shall not be unreasonably withheld by Landlord so long as
the name of the Affiliate Assignee is not an "Objectionable Name," as that term
is defined below. Should the name of the Original Tenant change, Tenant shall be
entitled to modify, at Tenant's sole cost and expense, Tenant's Signage to
reflect Tenant's new name, but only if Tenant's new name is not an
"Objectionable Name." The term "Objectionable Name" shall mean any name that
relates (i) to an entity that is of a character or reputation, or is associated
with a political orientation or faction that is materially inconsistent with the
quality of the Project, or which would otherwise reasonably offend a landlord of
a building comparable to the Project, taking into consideration the level and
visibility of Tenant's Signage, or (ii) conflicts with any covenants in other
leases of space in the Project. The cost to maintain and operate, if any,
Tenant's Signage shall be paid for by Tenant, and if applicable Tenant shall be
separately metered for such expense (the cost of separately metering any utility
usage shall also be paid for by Tenant). Upon the expiration of the Lease Term,
or other earlier termination of this Lease, Tenant shall be responsible for any
and all costs associated with the removal of Tenant's Signage, including, but
not limited to, the

                                                                 Initials:______
                                                                          ______

                                      -32-
<PAGE>

cost to repair and restore the Project and the monument to their original
condition, normal wear and tear excepted.

     IN WITNESS WHEREOF, the parties have executed this Lease, consisting of the
foregoing provisions and Articles, including all exhibits and other attachments
referenced therein, as of the date first above written.


"LANDLORD"                               ARDEN REALTY LIMITED PARTNERSHIP,
                                         a Maryland limited partnership

                                         By:  ARDEN REALTY, INC.,
                                              a Maryland corporation
                                              Its:  Sole General Partner

                                              By:__________________________
                                                    VICTOR J. COLEMAN
                                                    Its:  President and COO

                                              By:__________________________
                                                    Its:___________________

"TENANT"                                 NEWPORT CORPORATION,
                                         a Nevada corporation

                                         By:  ________________________________
                                         Print Name:__________________________
                                                Title:________________________

                                         By:  ________________________________
                                         Print Name:__________________________
                                                Title:________________________


                                                                 Initials:______
                                                                          ______

                                      -33-
<PAGE>

                                  EXHIBIT "A"
                                  -----------

                                   PREMISES
                                   --------


                                    [PLAN]


[LOGO]              SUITE 100
Arden Realty, Inc   1821 E DYER RD. BLDG
                    SANTA ANA, CA 92705


                                  EXHIBIT "A"                    Initials:______
                                                                          ______


                                      -1-
<PAGE>

                                    [PLAN]


[LOGO]              SUITE 250 - VACANT [_]
Arden Realty, Inc   1821 E DYER RD. BLDG
                    SANTA ANA, CA 92705




                                 EXHIBIT "A"                     Initials:______
                                                                          ______


                                      -2-
<PAGE>

                                  EXHIBIT "B"
                                  ----------

                             RULES AND REGULATIONS
                             ---------------------

     1.  No sign, advertisement or notice shall be displayed, printed or affixed
on or to the Premises or to the outside or inside of the Project or so as to be
visible from outside the Premises or Project without Landlord's prior written
consent. Landlord shall have the right to remove any non-approved sign,
advertisement or notice, without notice to and at the expense of Tenant, and
Landlord shall not be liable in damages for such removal. All approved signs or
lettering on doors and walls shall be printed, painted, affixed or inscribed at
the expense of Tenant by Landlord or by a person selected by Landlord and in a
manner and style reasonably acceptable to Landlord.

     2.  Tenant shall not obtain for use on the Premises ice, waxing, cleaning,
interior glass polishing, rubbish removal, towel or other similar services, or
accept barbering or bootblackening, or coffee cart services, milk, soft drinks
or other like services on the Premises, except from persons authorized by
Landlord and at the hours and under regulations fixed by Landlord. No vending
machines or machines of any description shall be installed, maintained or
operated upon the Premises without Landlord's prior written consent, which
consent shall not be unreasonably withheld, delayed or conditioned.

     3.  The sidewalks, halls, passages, exits, entrances, elevators and
stairways shall not be obstructed by Tenant or used for any purpose other than
for ingress and egress from Tenant's Premises. Under no circumstances is trash
to be stored in the corridors. Notice must be given to Landlord for any large
deliveries. Furniture, freight and other large or heavy articles, and all other
deliveries may be brought into the Project only at times and in the manner
designated by Landlord, and always at Tenant's sole responsibility and risk. All
damage done to the Project by moving or maintaining such furniture, freight or
articles shall be repaired by Landlord at Tenant's expense. Tenant shall not
take or permit to be taken in or out of entrances or passenger elevators of the
Project, any item normally taken, or which Landlord otherwise reasonably
requires to be taken, in or out through service doors or on freight elevators.
Tenant shall move all supplies, furniture and equipment as soon as received
directly to the Premises, and shall move all waste that is at any time being
taken from the Premises directly to the areas designated for disposal.

     4.  Toilet rooms, toilets, urinals, wash bowls and other apparatus shall
not be used for any purpose other than for which they were constructed and no
foreign substance of any kind whatsoever shall be thrown therein.

     5.  Except for normal artwork, Tenant shall not overload the floor of the
Premises or mark, drive nails, screw or drill into the partitions, ceilings or
floor or in any way deface the Premises. Tenant shall not place typed,
handwritten or computer generated signs in the corridors or any other common
areas. Should there be a need for signage additional to the Project standard
tenant placard, a written request shall be made to Landlord to obtain approval
prior to any installation. All costs for said signage shall be Tenant's
responsibility.

     6.  In no event shall Tenant place a load upon any floor of the Premises or
portion of any such flooring exceeding the floor load per square foot of area
for which such floor is designed to carry and which is allowed by law, or any
machinery or equipment which shall cause excessive vibration to the Premises or
noticeable vibration to any other part of the Project. Prior to bringing any
heavy safes, vaults, large computers or similarly heavy equipment into the
Project, Tenant shall inform Landlord in writing of the dimensions and weights
thereof and shall obtain Landlord's consent thereto, which consent shall not be
unreasonably withheld, delayed or conditioned. Such consent shall not constitute
a representation or warranty by Landlord that the safe, vault or other equipment
complies, with regard to distribution of weight and/or vibration, with the
provisions of this Rule 6 nor relieve Tenant from responsibility for the
consequences of such noncompliance, and any such safe, vault or other equipment
which Landlord determines to constitute a danger of damage to the Project or a
nuisance to other tenants, either alone or in combination with other heavy
and/or vibrating objects and equipment, shall be promptly removed by Tenant, at
Tenant's cost, upon Landlord's written notice of such determination and demand
for removal thereof.

                                  EXHIBIT "B"                    Initials:______
                                                                          ______

                                      -1-
<PAGE>

     7.  Tenant shall not use or keep in the Premises or Project any kerosene,
gasoline or inflammable, explosive or combustible fluid or material, or use any
method of heating or air-conditioning other than that supplied by Landlord.

     8.  Tenant shall not lay linoleum, tile, carpet or other similar floor
covering so that the same shall be affixed to the floor of the Premises in any
manner except as approved by Landlord.

     9.  Tenant shall not install or use any blinds, shades, awnings or screens
in connection with any window or door of the Premises and shall not use any
drape or window covering facing any exterior glass surface other than the
standard drapes, blinds or other window covering established by Landlord.

     10. Tenant shall cooperate with Landlord in obtaining maximum effectiveness
of the cooling system by closing window coverings when the sun's rays fall
directly on windows of the Premises. Tenant shall not obstruct, alter, or in any
way impair the efficient operation of Landlord's heating, ventilating and air-
conditioning system. Tenant shall not tamper with or change the setting of any
thermostats or control valves.

     11. The Premises shall not be used for manufacturing or for the storage of
merchandise except as such storage may be incidental to the permitted use of the
Premises. Tenant shall not, without Landlord's prior written consent, occupy or
permit any portion of the Premises to be occupied or used for the manufacture or
sale of liquor or tobacco in any form, or a barber or manicure shop, or as an
employment bureau. The Premises shall not be used for lodging or sleeping or for
any improper, objectionable or immoral purpose. No auction shall be conducted on
the Premises.

     12. Tenant shall not make, or permit to be made, any unseemly or disturbing
noises, or disturb or interfere with occupants of Project or neighboring
buildings or premises or those having business with it by the use of any musical
instrument, radio, phonographs or unusual noise, or in any other way.

     13. No bicycles, vehicles or animals of any kind shall be brought into or
kept in or about the Premises, and no cooking shall be done or permitted by any
tenant in the Premises, except that the preparation of coffee, tea, hot
chocolate and similar items for tenants, their employees and visitors shall be
permitted. No tenant shall cause or permit any unusual or objectionable odors to
be produced in or permeate from or throughout the Premises. The foregoing
notwithstanding, Tenant shall have the right to use a microwave and to heat
microwavable items typically heated in an office. No hot plates, toaster ovens
or similar open element cooking apparatus shall be permitted in the Premises,
except toasters.

     14. The sashes, sash doors, skylights, windows and doors that reflect or
admit light and air into the halls, passageways or other public places in the
Project shall not be covered or obstructed by any tenant, nor shall any bottles,
parcels or other articles be placed on the window sills.

     15. No additional locks or bolts of any kind shall be placed upon any of
the doors or windows by any tenant, nor shall any changes be made in existing
locks or the mechanisms thereof unless Landlord is first notified thereof, gives
written approval, and is furnished a key therefor. Each tenant must, upon the
termination of his tenancy, give to Landlord all keys and key cards of stores,
offices, or toilets or toilet rooms, either furnished to, or otherwise procured
by, such tenant, and in the event of the loss of any keys so furnished, such
tenant shall pay Landlord the cost of replacing the same or of changing the lock
or locks opened by such lost key if Landlord shall deem it necessary to make
such change. If more than two keys for one lock are desired, Landlord will
provide them upon payment therefor by Tenant. Tenant shall not key or re-key any
locks. All locks shall be keyed by Landlord's locksmith only.

     16. Landlord shall have the right to prohibit any advertising by any tenant
which, in Landlord's reasonable opinion, tends to impair the reputation of the
Project or its desirability as an office building and upon written notice from
Landlord any tenant shall refrain from and discontinue such advertising.

                                  EXHIBIT"B"                     Initials:______
                                                                          ______

                                      -2-
<PAGE>

     17. Landlord reserves the right to control access to the Project by all
persons after reasonable hours of generally recognized business days and at all
hours on Sundays and legal holidays. Each tenant shall be responsible for all
persons for whom it requests after hours access and shall be liable to Landlord
for all acts of such persons. Landlord shall have the right from time to time to
establish reasonable and non-discriminatory rules pertaining to freight elevator
usage, including the allocation and reservation of such usage for tenants'
initial move-in to their premises, and final departure therefrom.

     18. Any person employed by any tenant to do janitorial work shall, while in
the Project and outside of the Premises, be subject to and under the control and
direction of the Office of the Project or its designated representative such as
security personnel (but not as an agent or servant of Landlord, and the Tenant
shall be responsible for all acts of such persons).

     19. All doors opening on to public corridors shall be kept closed, except
when being used for ingress and egress. Tenant shall cooperate and comply with
any reasonable safety or security programs, including fire drills and air raid
drills, and the appointment of "fire wardens" developed by Landlord for the
Project, or required by law. Before leaving the Premises unattended, Tenant
shall close and securely lock all doors or other means of entry to the Premises
and shut off all lights and water faucets in the Premises.

     20. The requirements of tenants will be attended to only upon application
to the Office of the Project.

     21. Canvassing, soliciting and peddling in the Project are prohibited and
each tenant shall cooperate to prevent the same.

     22. All office equipment of any electrical or mechanical nature shall be
placed by tenants in the Premises in settings approved by Landlord, to absorb or
prevent any vibration, noise or annoyance.

     23. No air-conditioning unit or other similar apparatus shall be installed
or used by any tenant without the prior written consent of Landlord, which
consent shall not be unreasonably withheld, conditioned or delayed. Tenant shall
pay the cost of all electricity used for air-conditioning in the Premises if
such electrical consumption exceeds normal office requirements, regardless of
whether additional apparatus is installed pursuant to the preceding sentence.

     24. There shall not be used in any space, or in the public halls of the
Project, either by any tenant or others, any hand trucks except those equipped
with rubber tires and side guards.

     25. All electrical ceiling fixtures hung in offices or spaces along the
perimeter of the Project must be fluorescent and/or of a quality, type, design
and bulb color reasonably approved by Landlord.

     26. Parking.

         (a) Project  parking  facility  hours shall be 7:00 a.m. to 7:00 p.m.,
Monday through Friday, and closed on weekends, state and federal holidays
excepted, as such hours may be revised from time to time by Landlord.

         (b) Automobiles  must be parked entirely within the stall lines on the
floor.

         (c) All directional signs and arrows must be observed.

         (d) The speed limit shall be 5 miles per hour.

         (e) Parking is prohibited in areas not striped for parking.

         (f) Parking cards (if applicable) or any other device or form of
identification supplied by Landlord (or its operator) shall remain the property
of Landlord (or its operator). Such parking identification device must be
displayed as requested and may not be mutilated in any manner. The serial number
of the parking identification device may not be obliterated. Devices are not
transferable or assignable and any device in the possession of an unauthorized
holder will be void. There will be a replacement charge to the Tenant or person
designated by


                                  EXHIBIT"B"                     Initials:______
                                                                          ______

                                      -3-
<PAGE>

Tenant of $25.00 for loss of any parking card. If parking cards are implemented
by Landlord, there shall be a security deposit of $25.00 due at issuance for
each card key issued to Tenant.

          (g) Tenant may validate visitor parking by such method or methods as
the Landlord may approve, at the validation rate from time to time generally
applicable to visitor parking.

          (h) Landlord (and its operator) may refuse to permit any person who
violates the within rules to park in the Project parking facility, and any
violation of the rules shall subject the automobile to removal from the Project
parking facility at the parker's expense. In either of said events, Landlord (or
its operator) shall refund a prorata portion of the current monthly parking rate
and the sticker or any other form of identification supplied by Landlord (or its
operator) will be returned to Landlord (or its operator).

          (i) Project parking facility managers or attendants are not authorized
to make or allow any exceptions to these Rules and Regulations.

          (j) All responsibility for any loss or damage to automobiles or any
personal property therein is assumed by the parker.

          (k) Loss or theft of parking identification devices from automobiles
must be reported to the Project parking facility manager immediately, and a lost
or stolen report must be filed by the parker at that time.

          (l) The Parking facilities are for the sole purpose of parking one
automobile per space. Washing, waxing, cleaning or servicing of any vehicles by
the parker or his agents is prohibited.

          (m) Landlord (and its operator) reserves the right to refuse the
issuance of monthly stickers or other parking identification devices to any
Tenant and/or its employees who refuse to comply with the above Rules and
Regulations and all City, State or Federal ordinances, laws or agreements.

          (n) Tenant agrees to acquaint all employees with these Rules and
Regulations.

          (o) No vehicle shall be stored in the Project parking facility for a
period of more than one (1) week.

     27.  The Project is a non-smoking Project. Smoking or carrying lighted
cigars or cigarettes in the Premises or the Project, including the elevators in
the Project, is prohibited.


                                  EXHIBIT "B"                    Initials:______
                                                                          ______

                                      -4-
<PAGE>

                                  EXHIBIT "C"
                                  ----------

                          NOTICE OF LEASE TERM DATES
                       AND TENANT'S PROPORTIONATE SHARE
                       --------------------------------

TO:____________________________                DATE: __________________________
_______________________________
_______________________________


RE:  Lease dated ________________, 200_, between_______________________________
     _______________________________ ("Landlord"), and ________________________
     _______________________________ ("Tenant"), concerning Suite ________,
     located at __________________________________.

Ladies and Gentlemen:

     In accordance with the Lease, Landlord wishes to advise and/or confirm
the following:

     1.   That the Premises have been accepted herewith by the Tenant as being
substantially complete in accordance with the Lease and that there is no
deficiency in construction except as follows:

     2.  That the Tenant has taken possession of the Premises and acknowledges
that under the provisions of the Lease the Term of said Lease commenced on
___________(i.e., the Commencement Date under the Lease), the Abatement Period
expired on _________, and the Expiration Date shall be _____________.

     3.   That in accordance with the Lease, the Abatement Period expired on
_____________ and Basic Rental commenced to accrue on the day following the date
of expiration of the Abatement Period.

     4.   If the date of expiration of the Abatement Period is other than the
last day of the month, the first billing will contain a prorata adjustment. Each
billing thereafter shall be for the full amount of the monthly installment as
provided for in said Lease.

     5.   Effective as of the day after the date of expiration of the Abatement
Period, rent is due and payable in advance on the first day of each and every
month during the Term of said Lease. Your rent checks should be made payable to
________________________ at ___________________________________________________.

     6.   The exact number of rentable square feet within the Premises is
__________ square feet.

     7.   Tenant's Proportionate Share, as adjusted based upon the exact number
of rentable square feet within the Premises is _______%.


AGREED AND ACCEPTED:

TENANT:

___________________________________,

a _________________________________

By: _______________________________
     Its: _________________________



                                 EXHIBIT ONLY
                       ***DO NOT SIGN - INITIAL ONLY***

                                  EXHIBIT "C"                   Initials:_______
                                      -1-                                _______
<PAGE>

                                  EXHIBIT "D"
                                  ----------


                              TENANT WORK LETTER
                              ------------------

     This Tenant Work Letter shall set forth the terms and conditions relating
to the renovation of the tenant improvements in the Premises. This Tenant Work
Letter is essentially organized chronologically and addresses the issues of the
renovation of the Premises, in sequence, as such issues will arise.

                                   SECTION 1
                                   ---------

                LANDLORD'S INITIAL CONSTRUCTION IN THE PREMISES
                -----------------------------------------------

     Landlord has constructed, at its sole cost and expense, the base, shell and
core (i) of the Premises, and (ii) of the floor of the Project on which the
Premises is located (collectively, the "Base, Shell and Core"). Tenant has
inspected and hereby approves the condition of the Base, Shell and Core, and
agrees that the Base, Shell and Core shall be delivered to Tenant in its current
"as-is" condition. The improvements to be initially installed in the Premises
shall be designed and constructed pursuant to this Tenant Work Letter. Any costs
of initial design and construction of any improvements to the Premises shall be
an "Improvement Allowance Item", as that term is defined in Section 2.2 of this
Tenant Work Letter.

                                   SECTION 2
                                   ---------

                                 IMPROVEMENTS
                                 ------------

     2.1   Improvement Allowance. Tenant shall be entitled to a one-time
           ---------------------
improvement allowance (the "Improvement Allowance") in the amount of $691,040.00
for the costs relating to the initial design and construction of Tenant's
improvements which are permanently affixed to the Premises (the "Improvements").
In no event shall Landlord be obligated to make disbursements pursuant to this
Tenant Work Letter in a total amount which exceeds the Improvement Allowance and
in no event shall Tenant be entitled to any credit for any unused portion of the
Improvement Allowance not used by Tenant by December 31, 2001.

     2.2   Disbursement of the Improvement Allowance. Except as otherwise set
           -----------------------------------------
forth in this Tenant Work Letter, the Improvement Allowance shall be disbursed
by Landlord (each of which disbursements shall be made pursuant to Landlord's
disbursement process) for costs related to the construction of the Improvements
and for the following items and costs (collectively, the "Improvement Allowance
Items"): (i) payment of the fees of the "Architect" and the "Engineers," as
those terms are defined in Section 3.1 of this Tenant Work Letter, and payment
of the fees incurred by, and the cost of documents and materials supplied by,
Landlord and Landlord's consultants in connection with the preparation and
review of the "Construction Drawings," as that term is defined in Section 3.1 of
this Tenant Work Letter; (ii) the cost of permits; (iii) the cost of any changes
in the Base, Shell and Core required by the Construction Drawings; (iv) the cost
of any changes to the Construction Drawings or Improvements required by
applicable building codes (the "Code"); and (v) the "Landlord Supervision Fee",
as that term is defined in Section 4.3.2 of this Tenant Work Letter. However, in
no event shall more than Three and 00/100 Dollars ($3.00) per usable square foot
of the Tenant Improvement Allowance be used for the items described in (i) and
(ii) above; any additional amount incurred as a result of (i) and (ii) above
shall be deemed to constitute an Over-Allowance Amount.

     2.3  Standard Improvement Package. Landlord has established specifications
          ----------------------------
(the "Specifications") for the Project standard components to be used in the
construction of the Improvements in the Premises (collectively, the "Standard
Improvement Package"), which Specifications are available upon request. The
quality of Improvements shall be equal to or of greater quality than the quality
of the Specifications, provided that Landlord may, at Landlord's option, require
the Improvements to comply with certain Specifications.

                                  EXHIBIT "D"                   Initials:_______
                                      -1-                                _______
<PAGE>

                                   SECTION 3
                                   ---------

                             CONSTRUCTION DRAWINGS
                             ---------------------

     3.1  Selection of Architect/Construction Drawings. Tenant shall retain an
          --------------------------------------------
architect/space planner reasonably approved by Landlord (the "Architect ") to
prepare the "Construction Drawings," as that term is defined in this Section
3.1. Tenant shall also retain the engineering consultants designated by Landlord
(the "Engineers ") to prepare all plans and engineering working drawings
relating to the structural, mechanical, electrical, plumbing, HVAC and
lifesafety work of the Tenant Improvements. The plans and drawings to be
prepared by Architect and the Engineers hereunder shall be known collectively as
the "Construction Drawings." All Construction Drawings shall comply with the
drawing format and specifications as reasonably determined by Landlord, and
shall be subject to Landlord's reasonable approval. Tenant and Architect shall
verify, in the field, the dimensions and conditions as shown on the relevant
portions of the base building plans, and Tenant and Architect shall be solely
responsible for the same, and Landlord shall have no responsibility in
connection therewith. Landlord's review of the Construction Drawings as set
forth in this Section 3, shall be for its sole purpose and shall not imply
Landlord's review of the same, or obligate Landlord to review the same, for
quality, design, Code compliance or other like matters. Accordingly,
notwithstanding that any Construction Drawings are reviewed by Landlord or its
space planner, architect, engineers and consultants, and notwithstanding any
advice or assistance which may be rendered to Tenant by Landlord or Landlord's
space planner, architect, engineers, and consultants, Landlord shall have no
liability whatsoever in connection therewith and shall not be responsible for
any omissions or errors contained in the Construction Drawings.

     3.2  Final Space Plan. On or before the date set forth in Schedule 1,
          ----------------
attached hereto, Tenant and the Architect shall prepare the final space plan for
Improvements in the Premises (collectively, the "Final Space Plan"), which Final
Space Plan shall include a layout and designation of all offices, rooms and
other partitioning, their intended use, and equipment to be contained therein,
and shall deliver the Final Space Plan to Landlord for Landlord's approval.

     3.3  Final Working Drawings. On or before the date set forth in Schedule 1,
          ----------------------
Tenant, the Architect and the Engineers shall complete the architectural and
engineering drawings for the Premises, and the final architectural working
drawings in a form which is complete to allow subcontractors to bid on the work
and to obtain all applicable permits (collectively, the "Final Working
Drawings") and shall submit the same to Landlord for Landlord's approval.

     3.4  Permits. The Final Working Drawings shall be approved by Landlord (the
          -------
"Approved Working Drawings") prior to the commencement of the construction of
the Improvements. Tenant shall cause the Architect to immediately submit the
Approved Working Drawings to the appropriate municipal authorities for all
applicable building permits necessary to allow "Contractor," as that term is
defined in Section 4.1, below, to commence and fully complete the construction
of the Improvements (the "Permits"). No changes, modifications or alterations in
the Approved Working Drawings may be made without the prior written consent of
Landlord, which consent shall not be unreasonably withheld, delayed or
conditioned.

     3.5  Time Deadlines. Tenant shall use its best, good faith efforts and all
          --------------
due diligence to cooperate with the Architect, the Engineers, and Landlord to
complete all phases of the Construction Drawings and the permitting process and
to receive the permits, and with Contractor for approval of the "Cost Proposal,"
as that term is defined in Section 4.2 of this Tenant Work Letter, as soon as
possible after the execution of the Lease, and, in that regard, shall meet with
Landlord on a scheduled basis to be determined by Landlord, to discuss Tenant's
progress in connection with the same. The applicable dates for approval of
items, plans and drawings as described in this Section 3, Section 4 below, and
in this Tenant Work Letter are set forth and further elaborated upon in Schedule
1 (the "Time Deadlines"), attached hereto. Tenant agrees to comply with the Time
Deadlines.

                                   SECTION 4
                                   ---------

                       CONSTRUCTION OF THE IMPROVEMENTS
                       --------------------------------

     4.1   Contractor. The contractor that shall construct the Improvements
           ----------
shall be a contractor selected pursuant to the following procedure. The Final
Working Drawings shall be

                                  EXHIBIT "D"                   Initials:_______
                                      -2-                                _______
<PAGE>

submitted by Landlord to two (2) general contractors: one (1) such general
contractor shall be selected by Landlord and the other general contractor shall
be selected by Tenant on or before the date the Final Working Drawings are
approved by Landlord and Tenant and which contractor so selected by Tenant shall
be subject to Landlord's reasonable approval. Each such contractor shall be
invited to submit a sealed, fixed price contract bid (on such bid form as
Landlord shall designate) to construct the Improvements. Each contractor shall
be notified in the bid package of the time schedule for construction of the
Improvements. The subcontractors utilized by the Contractor shall be subject to
Landlord's reasonable approval and the bidding instructions shall provide that
as to work affecting the structure of the Project and/or the systems and
equipment of the Project, Landlord shall be entitled to designate the
subcontractors. The bids shall be submitted promptly to Landlord and a
reconciliation shall be performed by Landlord to adjust inconsistent or
incorrect assumptions so that a like-kind comparison can be made and a low
bidder determined. Landlord shall select the contractor who shall be the lowest
bidder and who states that it will be able to meet Landlord's construction
schedule. The contractor selected may be referred to herein as the "Contractor."

     4.2  Cost Proposal. After the Approved Working Drawings are signed by
          -------------
Landlord and Tenant, Landlord shall provide Tenant with a cost proposal in
accordance with the Approved Working Drawings, which cost proposal shall
include, as nearly as possible, the cost of all Improvement Allowance Items to
be incurred by Tenant in connection with the construction of the Improvements
(the "Cost Proposal"). Tenant shall approve and deliver the Cost Proposal to
Landlord within five (5) business days of the receipt of the same, and upon
receipt of the same by Landlord, Landlord shall be released by Tenant to
purchase the items set forth in the Cost Proposal and to commence the
construction relating to such items. The date by which Tenant must approve and
deliver the Cost Proposal to Landlord shall be known hereafter as the "Cost
Proposal Delivery Date".

     4.3 Construction of Improvements by Contractor under the Supervision of
         -------------------------------------------------------------------
         Landlord.
         --------

         4.3.1 Over-Allowance Amount. On the Cost Proposal Delivery Date, Tenant
               ---------------------
shall deliver to Landlord an amount (the "Over-Allowance Amount") equal to the
difference between (i) the amount of the Cost Proposal and (ii) the amount of
the Improvement Allowance (less any portion thereof already disbursed by
Landlord, or in the process of being disbursed by Landlord, on or before the
Cost Proposal Delivery Date). The Over-Allowance Amount shall be disbursed by
Landlord prior to the disbursement of any then remaining portion of the
Improvement Allowance, and such disbursement shall be pursuant to the same
procedure as the Improvement Allowance. In the event that, after the Cost
Proposal Delivery Date, any revisions, changes, or substitutions shall be made
to the Construction Drawings or the Improvements, any additional costs which
arise in connection with such revisions, changes or substitutions or any other
additional costs shall be paid by Tenant to Landlord immediately upon Landlord's
request as an addition to the Over-Allowance Amount.

         4.3.2 Landlord's Retention of Contractor. Landlord shall independently
               ----------------------------------
retain Contractor, on behalf of Tenant, to construct the Improvements in
accordance with the Approved Working Drawings and the Cost Proposal and Landlord
shall supervise the construction by Contractor, and Tenant shall pay a
construction supervision and management fee (the "Landlord Supervision Fee") to
Landlord in an amount equal to the product of (i) three percent (3%) and (ii) an
amount equal to the Improvement Allowance.

                                   SECTION 5
                                   ---------

                        COMPLETION OF THE IMPROVEMENTS
                        ------------------------------

     5.1  Substantial Completion. For purposes of this Lease, "Substantial
          ----------------------
Completion" of the Improvements in the Premises shall occur upon the completion
of construction of the Improvements in the Premises pursuant to the Approved
Working Drawings, with the exception of any punch list items and any tenant
fixtures, work-stations, built-in furniture, or equipment to be installed by
Tenant.

     5.2  Delay of the Substantial Completion of the Premises. Except as
          ---------------------------------------------------
provided in this Section 5, the date of expiration of the Abatement Period and
Tenant's obligation to pay rent for the Premises shall occur as set forth in the
Lease. However, if there shall be a delay or there are delays in the Substantial
Completion of the Improvements in the Premises as a result of a

                                  EXHIBIT "D"                   Initials:_______
                                      -3-                                _______
<PAGE>

"Landlord Delay" (as that term is defined below) then, notwithstanding anything
to the contrary set forth in the Lease or this Tenant Work Letter, the Abatement
Period shall be extended for the number of days of Landlord Delay. The term
"Landlord Delay" shall mean any delays in the Substantial Completion of the
Improvements that are due to any act or omission by Landlord, its agents or
contractors, including but not limited to unreasonable delays in giving
authorizations or approvals required hereunder and delays due to the acts or
omission of Landlord or its agents where such acts or omissions delay the
Substantial Completion of the Improvements, provided that Tenant acts in a
commercially reasonable manner to mitigate any such delay.

                                   SECTION 6
                                   ---------

                                 MISCELLANEOUS
                                 -------------

     6.1  Tenant's Representative. Tenant has designated Russ Hill as its sole
          -----------------------
representative with respect to the matters set forth in this Tenant Work Letter,
who, until further notice to Landlord, shall have full authority and
responsibility to act on behalf of the Tenant as required in this Tenant Work
Letter.

     6.2  Landlord's Representative. Prior to commencement of construction of
          -------------------------
Improvements, Landlord shall designate a representative with respect to the
matters set forth in this Tenant Work Letter, who, until further notice to
Tenant, shall have full authority and responsibility to act on behalf of the
Landlord as required in this Tenant Work Letter.

     6.3  Time of the Essence in This Tenant Work Letter. Unless otherwise
          ----------------------------------------------
indicated, all references herein to a "number of days" shall mean and refer to
calendar days.

     6.4  Punchlist. Concurrently with Landlord's delivery of the Premises to
          ---------
Tenant, a representative of Landlord and a representative of Tenant shall
perform a walk-through inspection of the Improvements in the Premises to
identify any "punchlist" items (i.e., minor defects or conditions in such
Improvements that do not impair Tenant's ability to utilize the Premises for the
purposes permitted hereunder), which items Landlord shall repair or correct no
later than thirty (30) days after the date of such walk-through (unless the
nature of such repair or correction is such that more than thirty (30) days are
required for completion, in which case, Landlord shall commence such repair or
correction work within such thirty (30) day period and diligently prosecute the
same to completion).

                                  EXHIBIT "D"                   Initials:_______
                                      -4-                                _______
<PAGE>

                                  SCHEDULE 1
                                  ----------

                                TIME DEADLINES
                                --------------

    Dates                                          Actions to be Performed
    -----                                          -----------------------

    A.    December, 2000*                          Tenant to deliver Final Space
                                                   Plan to Landlord.

    B.    December, 2000*                          Tenant to deliver Final
                                                   Working Drawings to Landlord.

    C.    Five (5) business days after the         Tenant to approve Cost
          receipt of the Cost Proposal by Tenant.  Proposal and deliver Cost
                                                   Proposal to Landlord.

*      Landlord and Tenant agree that these dates will be flexible, that as a
       result, Substantial Completion of the Improvements is unlikely to occur
       upon the date originally contemplated, but that the Abatement Period
       shall nevertheless expire upon the date specified in Article 2 of the
       Lease, subject to extension only for Landlord Delays as provided in, and
       subject to, Section 5.2 of the Tenant Work Letter.

                                   SCHEDULE 1                   Initials:_______
                                      -1-                                _______
<PAGE>

                                  EXHIBIT "E"
                                  -----------

                               CERTIFIED COPY OF
                        BOARD OF DIRECTORS RESOLUTIONS
                                      OF
                              NEWPORT CORPORATION

     The undersigned, being the duly elected Corporate Secretary of Newport
Corporation, a Nevada corporation ("Corporation"), hereby certifies that the
following is a true, full and correct copy of the resolutions adopted by the
Corporation by unanimous written consent in lieu of a special meeting of its
Board of Directors, and that said resolutions have not been amended or revoked
as of the date hereof.

     RESOLVED, that the Corporation, is hereby authorized to execute, deliver
and fully perform that certain document entitled Standard Office Lease ("Lease")
by and between the Corporation and Arden Realty Limited Partnership, a Maryland
limited partnership, for the lease of space at 1821 E. Dyer Road, Santa Ana,
California.

     RESOLVED FURTHER, that the Corporation is hereby authorized and directed to
make, execute and deliver any and all, consents, certificates, documents,
instruments, amendments, confirmations, guarantees, papers or writings as may be
required in connection with or in furtherance of the Lease (collectively with
the Lease, the "Documents") or any transactions described therein, and to do any
and all other acts necessary or desirable to effectuate the foregoing
resolution.

     RESOLVED FURTHER, that the following officers acting together:
_______________ as _____________; and ____________ as _______________ are
authorized to execute and deliver the Documents on behalf of the Corporation,
together with any other documents and/or instruments evidencing or ancillary to
the Documents, and in such forms and on such terms as such officer(s) shall
approve, the execution thereof to be conclusive evidence of such approval and to
execute and deliver on behalf of the Corporation all other documents necessary
to effectuate said transaction in conformance with these resolutions.

Date:  _____________, 200_                    __________________________________
                                              __________, Corporate Secretary


                                 EXHIBIT ONLY
                       ***DO NOT SIGN - INITIAL ONLY***

                                  EXHIBIT "E"                   Initials:_______
                                      -1-                                _______
<PAGE>

                             STANDARD OFFICE LEASE
                                BY AND BETWEEN
                       ARDEN REALTY LIMITED PARTNERSHIP,

                        a Maryland limited partnership,

                                 AS LANDLORD,

                                      AND


                             NEWPORT CORPORATION,
                             a Nevada corporation,

                                   AS TENANT



                              SUITES 100 and 225

                               1821 E. Dyer Road

                                                              Initials:_________
                                                                       _________
<PAGE>

                               TABLE OF CONTENTS
                               -----------------

<TABLE>
<CAPTION>
                                                                                               Page
                                                                                               ----
<S>                                                                                            <C>
ARTICLE 1    BASIC LEASE PROVISIONS.........................................................      1

ARTICLE 2    TERM/PREMISES..................................................................      2

ARTICLE 3    RENTAL.........................................................................      2
    (a)      Basic Rental...................................................................      2
    (b)      Direct Costs...................................................................      3
    (c)      Definitions....................................................................      3
    (d)      Determination of Payment.......................................................      5

ARTICLE 4    INTENTIONALLY OMITTED..........................................................      7

ARTICLE 5    HOLDING OVER...................................................................      7

ARTICLE 6    PERSONAL PROPERTY TAXES........................................................      7

ARTICLE 7    USE............................................................................      7

ARTICLE 8    CONDITION OF PREMISES..........................................................      8

ARTICLE 9    REPAIRS AND ALTERATIONS........................................................      8

ARTICLE 10   LIENS..........................................................................     10

ARTICLE 11   PROJECT SERVICES...............................................................     10

ARTICLE 12   RIGHTS OF LANDLORD.............................................................     12

ARTICLE 13   INDEMNITY; EXEMPTION OF LANDLORD FROM LIABILITY................................     12
    (a)      Indemnity......................................................................     12
    (b)      Exemption of Landlord from Liability...........................................     12

ARTICLE 14   INSURANCE......................................................................     13
    (a)      Tenant's Insurance.............................................................     13
    (b)      Form of Policies...............................................................     13
    (c)      Landlord's Insurance...........................................................     13
    (d)      Waiver of Subrogation..........................................................     14
    (e)      Compliance with Law............................................................     14

ARTICLE 15   ASSIGNMENT AND SUBLETTING......................................................     14

ARTICLE 16   DAMAGE OR DESTRUCTION..........................................................     16

ARTICLE 17   SUBORDINATION..................................................................     17

ARTICLE 18   EMINENT DOMAIN.................................................................     18

ARTICLE 19   DEFAULT........................................................................     18

ARTICLE 20   REMEDIES.......................................................................     19

ARTICLE 21   TRANSFER OF LANDLORD'S INTEREST................................................     21

ARTICLE 22   BROKER.........................................................................     21

ARTICLE 23   PARKING........................................................................     21

ARTICLE 24   WAIVER.........................................................................     22
</TABLE>

                                                              Initials:_________
                                     (ii)                              _________
<PAGE>

<TABLE>
<CAPTION>
                                                                                               Page
                                                                                               ----
<S>                                                                                            <C>
ARTICLE 25   ESTOPPEL CERTIFICATE...........................................................     22

ARTICLE 26   LIABILITY OF LANDLORD..........................................................     22

ARTICLE 27   INABILITY TO PERFORM...........................................................     23

ARTICLE 28   HAZARDOUS WASTE................................................................     23

ARTICLE 29   SURRENDER OF PREMISES; REMOVAL OF PROPERTY.....................................     24

ARTICLE 30   MISCELLANEOUS..................................................................     25
    (a)      Severability; Entire Agreement.................................................     25
    (b)      Attorneys' Fees; Waiver of Jury Trial..........................................     25
    (c)      Time of Essence................................................................     25
    (d)      Headings; Joint and Several....................................................     26
    (e)      Reserved Area..................................................................     26
    (f)      NO OPTION......................................................................     26
    (g)      Use of Project Name; Improvements..............................................     26
    (h)      Rules and Regulations..........................................................     26
    (i)      Quiet Possession...............................................................     26
    (j)      Rent...........................................................................     26
    (k)      Successors and Assigns.........................................................     26
    (l)      Notices........................................................................     26
    (m)      Persistent Delinquencies.......................................................     27
    (n)      Right of Landlord to Perform...................................................     27
    (o)      Access, Changes in Project, Facilities, Name...................................     27
    (p)      Signing Authority..............................................................     27
    (q)      Identification of Tenant.......................................................     28
    (r)      Intentionally Omitted..........................................................     28
    (s)      Survival of Obligations........................................................     28
    (t)      Confidentiality................................................................     28
    (u)      Governing Law..................................................................     29
    (v)      Exhibits and Addendum..........................................................     29

ARTICLE 31   OPTIONS TO EXTEND..............................................................     29
    (a)      Option Rights..................................................................     29
    (b)      Option Rent....................................................................     29
    (c)      Exercise of Options............................................................     29
    (d)      Determination of Market Rent...................................................     30

ARTICLE 32   RIGHT OF FIRST REFUSAL.........................................................     31
    (a)      Procedure......................................................................     31
    (b)      Procedure for Acceptance.......................................................     31
    (c)      Lease of First Refusal Space...................................................     32
    (d)      No Defaults....................................................................     32

ARTICLE 33   SIGNAGE/DIRECTORY..............................................................     32
</TABLE>

    Exhibit "A"   Premises
    Exhibit "B"   Rules and Regulations
    Exhibit "C"   Notice of Lease Term Dates and Tenant's Proportionate Share
    Exhibit "D"   Tenant Work Letter
    Exhibit "E"   Form of Resolutions

                                                              Initials:_________
                                                                       _________
                                     (iii)
<PAGE>

                                     INDEX
                                     -----

                                                                       Page(s)
                                                                       -------

Abatement Event..............................................................11
Abatement Notice.............................................................11
Abatement Period..............................................................2
ADA...........................................................................4
Additional Rent...............................................................3
Affiliate....................................................................16
Affiliated Assignee..........................................................16
Alterations...................................................................9
Approved Working Drawings.............................................Exhibit D
Architect.............................................................Exhibit D
Base, Shell and Core..................................................Exhibit D
Basic Rental..................................................................1
Brokers.......................................................................1
Code..................................................................Exhibit D
Commencement Date.............................................................1
Construction Drawings.................................................Exhibit D
Contractor............................................................Exhibit D
Control......................................................................16
Cosmetic Alterations..........................................................9
Cost Proposal.........................................................Exhibit D
Cost Proposal Delivery Date...........................................Exhibit D
Direct Costs..................................................................3
Economic Terms...............................................................31
Eligibility Period...........................................................11
Engineers.............................................................Exhibit D
Estimate......................................................................5
Estimate Statement............................................................5
Estimated Direct Costs........................................................5
Event of Default.............................................................18
Expiration Date...............................................................1
Final Space Plan......................................................Exhibit D
Final Working Drawings................................................Exhibit D
First Month's Rent............................................................2
First Refusal Notice.........................................................31
First Refusal Space..........................................................30
Force Majeure................................................................23
Hazardous Material...........................................................23
Improvement Allowance.................................................Exhibit D
Improvement Allowance Items...........................................Exhibit D
Improvements..........................................................Exhibit D
Interest Notice..............................................................29
Landlord......................................................................1
Landlord Delay........................................................Exhibit D
Landlord Supervision Fee..............................................Exhibit D
Laws.........................................................................24
Lease.........................................................................1
Lease Year....................................................................2
Market Rent..................................................................29
Objectionable Name...........................................................32
Operating Costs...............................................................3
Option Rent..................................................................29
Option Rent Notice...........................................................29
Option Term..................................................................29
Options......................................................................29
Original Tenant..............................................................29
Outside Agreement Date.......................................................30
Over-Allowance Amount.................................................Exhibit D
Parking Passes................................................................2
Partnership Tenant...........................................................28

                                                              Initials:_________
                                     (iv)                              _________
<PAGE>

                                                                       Page(s)
                                                                       -------

Permits...............................................................Exhibit D
Permitted Use.................................................................1
Premises......................................................................1
Project.......................................................................1
Real Property.................................................................3
Representative...............................................................22
Review Period.................................................................6
Second Chance Notice.........................................................31
Security Deposit..............................................................1
Specifications........................................................Exhibit D
Square Footage................................................................1
Standard Improvement Package..........................................Exhibit D
Statement.....................................................................5
Substantial Completion................................................Exhibit D
Superior Leases..............................................................30
Superior Rights..............................................................30
Tax Costs.....................................................................3
Tenant........................................................................1
Tenant Improvements...........................................................8
Tenant's Acceptance..........................................................29
Tenant's Signage.............................................................32
Tenant's Proportionate Share..................................................1
Term..........................................................................1
Time Deadlines........................................................Exhibit D
Transfer.....................................................................15
Transfer Premium.............................................................15
Transferee...................................................................15

                                                              Initials:_________
                                      (v)                              _________