<PAGE>   1
                                                                   Exhibit 10.24


                                  OFFICE LEASE

                                THE WATER GARDEN

                          WATER GARDEN COMPANY L.L.C.,
                      a Delaware Limited Liability Company,
                                  as Landlord,
                                       and

                      INTEGRATED INFORMATION SYSTEMS, INC.,
                             a Delaware corporation

                                   as Tenant.
<PAGE>   2
                                THE WATER GARDEN

                       SUMMARY OF BASIC LEASE INFORMATION

         The undersigned hereby agree to the following terms of this Summary of
Basic Lease Information (the "Summary"). This Summary is hereby incorporated
into and made a part of the attached Office Lease (the "Office Lease") which
pertains to the "Project," as that term is defined in the Office Lease, commonly
known as "The Water Garden" located in Santa Monica, California. This Summary
and the Office Lease are collectively referred to herein as the "Lease". Each
reference in the Office Lease to any term of this Summary shall have the meaning
set forth in this Summary for such term. In the event of a conflict between the
terms of this Summary and the Office Lease, the terms of the Office Lease shall
prevail. Any capitalized terms used herein and not otherwise defined herein
shall have the meanings set forth in the Office Lease.

<TABLE>
<CAPTION>


TERMS OF LEASE
(References are to
the Office Lease)                                            DESCRIPTION

<S>      <C>                                                <C>
1.       Date:                                               March 10, 2000.

2.       Landlord:                                           WATER GARDEN COMPANY L.L.C., a Delaware Limited
                                                             Liability Company

3.       Tenant:                                             INTEGRATED INFORMATION SYSTEMS, INC.,
                                                             a Delaware corporation

4.       Premises (Article 1).

         4.1      Building Address:                          1620 26th Street
                                                             Suite 2040 North
                                                             Santa Monica, California  90404.

         4.2      Premises:                                  Approximately 4,852 rentable (4,119 usable) square feet
                                                             of space located on the 2nd floor of the Building, as
                                                             further set forth in Exhibit A to the Office Lease.

5.       Lease Term (Article 2).

         5.1      Length of Term:                            Five (5) years.

         5.2      Lease Commencement Date:                   The Lease Commencement Date shall occur as set forth in
                                                             Article 2 of the Office Lease.  The Lease Commencement
                                                             Date is anticipated to be May 1, 2000.

         5.3      Lease Expiration Date:                     The last day of the month in which the 60th anniversary
                                                             of the Lease Commencement Date occurs.

6.       Base Rent (Article 3):
</TABLE>
<TABLE>
<CAPTION>

                                                         Monthly Installment of     Annual Rental Rate per Rentable
       Lease Year              Annual Base Rent                 Base Rent                      Square Foot
       ----------              ----------------                 ---------                      -----------
<S>                            <C>                       <C>                        <C>
           1                      $189,228.00                  $15,769.00                        $39.00
           2                      $196,797.12                  $16,399.76                        $40.56
           3                      $204,657.36                  $17,054.78                        $42.18
</TABLE>
<PAGE>   3
<TABLE>
<CAPTION>

<S>                               <C>                          <C>                               <C>
           4                      $212,857.24                  $17,738.10                        $43.87
           5                      $221,348.24                  $18,445.69                        $45.62

</TABLE>

<TABLE>
<CAPTION>

7.       Additional Rent (Article 4).

<S>               <C>                                        <C>
         7.1      Base Year:                                 The calendar year of 2000.

         7.2      Tenant's Share:                            Approximately 1.46%.

8.       Security Deposit (Section 21.1):                    N/A.

         Letter of Credit (Section 21.2):                    $230,000.00.

9.       Parking Pass Ratio (Article 28):                    Three (3) parking passes for every 1,000 rentable
                                                             square feet of the Premises.

10.      Broker(s) (Section 29.18):                           Trammell Crow Company
                                                              2425 Olympic Boulevard
                                                              Suite 520 East
                                                              Santa Monica, California 90404

                                                                      and
                                                             Lee & Associates
                                                             12011 San Vicente Boulevard, Suite 700
                                                             Los Angeles, California  90049

11.      Address of Tenant (Section 29.13):                  1560 West Fountainhead Parkway
                                                             Second Floor
                                                             Tempe, AZ  85282
                                                             Attention:  Corporate Counsel
                                                             (Prior to and after the Lease Commencement Date)

</TABLE>

The foregoing terms of this Summary are hereby agreed to by Landlord and Tenant.



                                   "Landlord":

                                    WATER GARDEN COMPANY L.L.C.,
                                    a Delaware Limited Liability Company

                                    By:/s/ David Chen
                                    -------------------------------------
                                           David Chen
                                           Vice President

                                    "Tenant":

                                     INTEGRATED INFORMATION SYSTEMS, INC.,
                                     a Delaware corporation

                                     By:  /s/     [Illegible ]
                                        ----------------------------------

                                     Its:        VP & Corp. Counsel
                                         ---------------------------------

                                     By:
                                         -----------------------------------

                                     Its: ----------------------------------


                                      (ii)
<PAGE>   4
<TABLE>
<CAPTION>


                                TABLE OF CONTENTS

                                                                                                              Page
                                                                                                              ----


<S>                                                                                                             <C>
SUMMARY OF BASIC LEASE INFORMATION..............................................................................i

ARTICLE 1 PREMISES, BUILDING, PROJECT, AND COMMON AREAS.........................................................1

ARTICLE 2 LEASE TERM............................................................................................2

ARTICLE 3 BASE RENT.............................................................................................3

ARTICLE 4 ADDITIONAL RENT.......................................................................................3

ARTICLE 5 USE OF PREMISES.......................................................................................9

ARTICLE 6 SERVICES AND UTILITIES................................................................................9

ARTICLE 7 REPAIRS .............................................................................................11

ARTICLE 8 ADDITIONS AND ALTERATIONS............................................................................11

ARTICLE 9 COVENANT AGAINST LIENS...............................................................................12

ARTICLE 10 INSURANCE...........................................................................................12

ARTICLE 11 DAMAGE AND DESTRUCTION..............................................................................14

ARTICLE 12 NONWAIVER...........................................................................................15

ARTICLE 13 CONDEMNATION........................................................................................16

ARTICLE 14 ASSIGNMENT AND SUBLETTING...........................................................................16

ARTICLE 15 SURRENDER OF PREMISES;  REMOVAL OF TRADE FIXTURES...................................................19

ARTICLE 16 HOLDING OVER........................................................................................19

ARTICLE 17 ESTOPPEL CERTIFICATES...............................................................................19

ARTICLE 18 SUBORDINATION.......................................................................................20

ARTICLE 19 DEFAULTS; REMEDIES..................................................................................20

ARTICLE 20 ATTORNEYS' FEES.....................................................................................21

ARTICLE 21 LETTER OF CREDIT....................................................................................21

ARTICLE 22 SUBSTITUTION OF OTHER PREMISES......................................................................23

ARTICLE 23 SIGNS ............................................................................................. 23

ARTICLE 24 COMPLIANCE WITH LAW.................................................................................23

ARTICLE 25 LATE CHARGES........................................................................................23

ARTICLE 26 LANDLORD'S RIGHT TO CURE DEFAULT; PAYMENTS BY TENANT................................................24

ARTICLE 27 ENTRY BY LANDLORD...................................................................................24

ARTICLE 28 TENANT PARKING......................................................................................24

ARTICLE 29 MISCELLANEOUS PROVISIONS............................................................................25
</TABLE>
                                       (i)
<PAGE>   5
         EXHIBITS

         A........OUTLINE OF PREMISES

         B........FORM OF NOTICE OF LEASE TERM DATES

         C........RULES AND REGULATIONS

         D........FORM OF TENANT'S ESTOPPEL CERTIFICATE

         E........TENANT WORK LETTER

         F........FORM OF LETTER OF CREDIT

                                      (ii)
<PAGE>   6
                                THE WATER GARDEN

                                  OFFICE LEASE

         This Office Lease, which includes the preceding Summary of Basic Lease
Information (the "Summary") attached hereto and incorporated herein by this
reference (the Office Lease and Summary are sometimes collectively referred to
herein as the "Lease"), dated as of the date set forth in Section 1 of the
Summary is made by and between WATER GARDEN COMPANY L.L.C., a Delaware Limited
Liability Company ("Landlord"), and INTEGRATED INFORMATION SYSTEMS, INC., a
Delaware corporation ("Tenant").

ARTICLE 1
                  PREMISES, BUILDING, PROJECT, AND COMMON AREAS


         1.1 Premises, Building, Project and Common Areas. Upon and subject to
the terms hereinafter set forth in this Lease, Landlord hereby leases to Tenant
and Tenant hereby leases from Landlord the premises set forth in Section 4.2 of
the Summary (the "Premises"), which Premises are located in the "Building," as
that term is defined in Section 1.1.2, below. The outline of the Premises is set
forth in Exhibit A attached hereto.

         1.1.1 The Premises. Upon and subject to the terms hereinafter set forth
in this Lease, Landlord hereby leases to Tenant and Tenant hereby leases from
Landlord the premises set forth in Section 4.2 of the Summary (the "Premises"),
which Premises are located in the "Building," as that term is defined in Section
1.1.2, below. The outlines of the Premises is set forth in Exhibit A attached
hereto.

         1.1.2 The Building and The Project. The Premises are a part of the
building set forth in Section 4.1 of the Summary (the "Building") located in
Santa Monica, California. The Building is part of an office project known as
"The Water Garden" which contains another office building (the "Adjacent
Building"). The term "Project," as used in this Lease, shall mean (i) the
Building, the Adjacent Building, and the "Common Areas", as that term is defined
in Section 1.1.3 below, (ii) the land (which is improved with landscaping,
subterranean parking facilities and other improvements) upon which the Building,
the Adjacent Building, and the Common Areas are located, and (iii) at Landlord's
discretion, any additional real property, areas, buildings or other improvements
added thereto pursuant to the terms of Section 1.1.4 of this Lease.

         1.1.3 Common Areas. Tenant shall have the non-exclusive right to use in
common with other tenants in the Project, and subject to the rules and
regulations referred to in Article 5 of this Lease, those portions of the
Project which are provided, from time to time, for use in common by Landlord,
Tenant and any other tenants of the Project, whether or not those areas are open
to the general public (such areas, together with such other portions of the
Project designated by Landlord, in its discretion, including certain areas
designated for the exclusive use of certain tenants, or to be shared by Landlord
and certain tenants, such as balconies abutting tenants' premises, are
collectively referred to herein as the "Common Areas"). The Common Areas shall
consist of the "Project Common Areas" and the "Building Common Areas". The term
"Project Common Areas", as used in this Lease, shall mean the portion of the
Project designated as such by Landlord. "Building Common Areas", as used in this
Lease, shall mean the portions of the Common Areas located within the Building
designated as such by Landlord. The manner in which the Common Areas are
maintained and operated shall be at the sole discretion of Landlord, provided
that Landlord shall maintain and operate the same in a manner consistent with
that of other first-class, mid-rise office buildings (including the office
buildings to be constructed adjacent to the Project as "Phase II" of The Water
Garden, hereafter referred to as "Phase II") in the Santa Monica, California
area, which are comparable in terms of size, quality of construction,
appearance, and services and amenities (the "Comparable Buildings").

         1.1.4 Landlord's Use and Operation of the Building, Project, and Common
Areas. Landlord reserves the right from time to time without notice to Tenant
(i) to close temporarily any of the Common Areas; (ii) to make changes to the
Common Areas, including, without limitation, changes in the location, size,
shape and number of street entrances, driveways, ramps, entrances, exits,
passages, stairways and other ingress and egress, direction of traffic,
landscaped areas, loading and unloading areas, and walkways; (iii) to expand the

                                      -1-
<PAGE>   7
Building or the Adjacent Building; (iv) to add additional buildings and
improvements to the Common Areas; (v) to designate land outside the Project to
be part of the Project, and in connection with the improvement of such land to
add additional buildings and common areas to the Project; provided that,
notwithstanding anything to the contrary contained in this Lease, the Project
shall not be expanded to include more than the land located in Santa Monica,
California, which has Olympic Boulevard as its Southern boundary, Cloverfield
Boulevard as its Western boundary, Colorado Avenue as its Northern boundary, and
26th street as its Eastern boundary; (vi) to use the Common Areas while engaged
in making additional improvements, repairs or alterations to the Project or to
any adjacent land, or any portion thereof; and (vii) to do and perform such
other acts and make such other changes in, to or with respect to the Project,
Common Areas and Building or the expansion thereof as Landlord may, in the
exercise of sound business judgment, deem to be appropriate.


         1.2 Verification of Rentable Square Feet of Premises, Building, and
Project. For purposes of this Lease, "rentable square feet" shall be calculated
pursuant to Standard Method for Measuring Floor Area in Office Buildings, ANSI
Z65.1 - 1996 ("BOMA"), provided that the rentable square footage of the Building
and the other buildings in the Project shall include all of (and the rentable
square footage of the Premises therefore shall include a portion of) (i) the
Building Common Areas and (ii) the occupied space of the portion of the Project
dedicated to the service of the Project. The rentable square feet of the
Premises, Building, and the Project are subject to verification from time to
time by Landlord's planner/designer and such verification shall be made in
accordance with the provisions of this Article 1. In the event that Landlord's
planner/designer determines that the amounts thereof are different from those
set forth in this Lease, all amounts, percentages and figures appearing or
referred to in this Lease based upon such incorrect amount (including, without
limitation, the amount of the "Rent" and any "Security Deposit," as those terms
are defined in Article 4 and Article 21 of this Lease, respectively) shall be
modified in accordance with such determination. If such determination is made,
it will be confirmed in writing by Landlord to Tenant.

         1.3 Base, Shell and Core Work in the Premises. Except as specifically
set forth in this Lease and in the Tenant Work Letter attached hereto as Exhibit
E (the "Tenant Work Letter"), Landlord shall not be obligated to provide or pay
for any improvement work or services related to the improvement of the Premises.
Tenant also acknowledges that Landlord has made no representation or warranty
regarding the condition of the Premises or the Project except as specifically
set forth in this Lease and the Tenant Work Letter.

                                   ARTICLE 2
                                   LEASE TERM

         The terms and provisions of this Lease shall be effective as of the
date of this Lease. The term of this Lease (the "Lease Term") shall be as set
forth in Section 5.1 of the Summary, shall commence on the earlier to occur of
(i) the date Tenant opens for business in the Premises, and (ii) the date of
"Substantial Completion", as that term is defined in this Article 2, of the
Premises by Landlord (the "Lease Commencement Date"), and shall terminate on the
date set forth in Section 5.3 of the Summary (the "Lease Expiration Date")
unless this Lease is sooner terminated as hereinafter provided. For purposes of
this Lease, the term "Lease Year" shall mean each consecutive twelve (12) month
period during the Lease Term; provided, however, that the first Lease Year shall
commence on the Lease Commencement Date and end on the last day of the eleventh
month thereafter and the second and each succeeding Lease Year shall commence on
the first day of the next calendar month; and further provided that the last
Lease Year shall end on the Lease Expiration Date. For purposes of this Lease,
"Substantial Completion" of the Premises shall occur upon the completion of
construction, as reasonably determined by Landlord, of the "Tenant
Improvements," as that term is defined in Section 1 of the Tenant Work Letter,
in the Premises pursuant to the plans and drawings which are prepared pursuant
to the terms of the Tenant Work Letter, with the exception of any punch list
items and any tenant fixtures, work-stations, built-in furniture, or equipment
to be installed by Tenant in the Premises pursuant to the terms of the Tenant
Work Letter or to be installed under the supervision of "Contractor" as that
term is defined in Section 4.1 of the Tenant Work Letter. At any time during the
Lease Term, Landlord may deliver to Tenant a notice (the "Notice of Lease Term
Dates") in substantially the form as set forth in Exhibit B attached hereto,
which notice Tenant shall execute and return to Landlord within five (5) days of
receipt thereof, and thereafter the dates set forth on such notice shall be
conclusive and binding upon Tenant. Failure of Tenant to

                                      -2-
<PAGE>   8
timely execute and deliver the Notice of Lease Term Dates shall constitute an
acknowledgment by Tenant that the statements included in such notice are true
and correct, without exception.

                                    ARTICLE 3
                                   BASE RENT

         Tenant shall pay, without notice or demand, to Landlord or Landlord's
agent at the management office of the Project, or at such other place as
Landlord may from time to time designate in writing, in currency or a check for
currency which, at the time of payment, is legal tender for private or public
debts in the United States of America, base rent ("Base Rent") as set forth in
Section 6 of the Summary, payable in equal monthly installments as set forth in
Section 6 of the Summary in advance on or before the first day of each and every
month during the Lease Term, without any setoff or deduction whatsoever. The
Base Rent for the first full month of the Lease Term shall be paid at the time
of Tenant's execution of this Lease by certified or cashier's check. If any Rent
payment date (including the Lease Commencement Date) falls on a day of the month
other than the first day of such month or if any payment of Rent is for a period
which is shorter than one month, the Rent for any fractional month shall accrue
on a daily basis for the period from the date such payment is due to the end of
such calendar month or to the end of the Lease Term at a rate per day which is
equal to 1/365 of the Rent. All other payments or adjustments required to be
made under the terms of this Lease that require proration on a time basis shall
be prorated on the same basis.

                                   ARTICLE 4
                                 ADDITIONAL RENT


         4.1 General Terms. As set forth in this Article 4, in addition to
paying the Base Rent specified in Article 3 of this Lease, Tenant shall pay
"Tenant's Share" of the annual "Project Expenses," as those terms are defined in
Sections 4.2.6 and 4.2.4 of this Lease, respectively, allocated to the tenants
of the Building pursuant to the terms of Section 4.3.1 below, to the extent such
Project Expenses allocated to the tenants of the Building which are in excess of
such Project Expenses applicable to the "Base Year," as that term is defined in
Section 4.2.1 of this Lease. Such payments by Tenant, together with any and all
other amounts payable by Tenant to Landlord pursuant to the terms of this Lease,
are hereinafter collectively referred to as the "Additional Rent", and the Base
Rent and the Additional Rent are sometimes herein collectively referred to as
"Rent." All amounts due under this Article 4 as Additional Rent shall be payable
for the same periods and in the same manner as the Base Rent. Without limitation
on other obligations of Tenant which survive the expiration of the Lease Term,
the obligations of Tenant to pay the Additional Rent provided for in this
Article 4 shall survive the expiration of the Lease Term.

         4.2 Definitions. As used in this Article 4, the following terms shall
have the meanings hereinafter set forth:

         4.2.1 "Base Year" shall mean the period set forth in Section 7.1 of the
Summary.

         4.2.2 "Expense Year" shall mean each calendar year in which any portion
of the Lease Term falls, through and including the calendar year in which the
Lease Term expires.

         4.2.3 "Operating Expenses" shall mean all expenses, costs and amounts
of every kind and nature incurred in connection with the ownership, management,
maintenance, repair, replacement, restoration or operation of the Project,
including, without limitation, any amounts paid or incurred for (i) the cost of
supplying all utilities, the cost of operating, maintaining, repairing,
renovating, complying with conservation measures in connection with, and
managing the utility systems, mechanical systems, sanitary and storm drainage
systems, and elevator systems, and the cost of supplies and equipment,
maintenance, and service contracts in connection therewith; (ii) the cost of
licenses, certificates, permits and inspections and the cost of contesting the
validity or applicability of any governmental enactments which may affect
Operating Expenses, and the costs incurred in connection with the implementation
and operation of a transportation system management program or a municipal or
public shuttle service or parking program; (iii) the cost of all insurance
carried in connection with the Project, or any portion thereof; (iv) the cost of
landscaping, relamping, and all supplies, tools, equipment and materials used in
the operation, repair and maintenance of the Project, or any portion thereof;
(v)

                                      -3-
<PAGE>   9
the cost of parking area repair, restoration, and maintenance, including, but
not limited to, resurfacing, repainting, restriping, and cleaning; (vi) fees,
charges and other costs, including consulting fees, legal fees and accounting
fees, of all contractors and consultants; (vii) payments under any equipment
rental agreements or management agreements (including the cost of any management
fee and the fair rental value of any office space provided thereunder); (viii)
wages, salaries and other compensation and benefits of all persons engaged in
the operation, maintenance, management, or security of the Project, or any
portion thereof, including employer's Social Security taxes, unemployment taxes
or insurance, and any other taxes which may be levied on such wages, salaries,
compensation and benefits; (ix) payments under any easement, license, operating
agreement, declaration, restrictive covenant, or instrument pertaining to the
sharing of costs by the Project, or any portion thereof; (x) the cost of
operation, repair, maintenance and replacement of all systems and equipment
which serve the Project in whole or part; (xi) the cost of janitorial services,
alarm and security service, window cleaning, trash removal, replacement of wall
and floor coverings, ceiling tiles and fixtures in lobbies, corridors, restrooms
and other common or public areas or facilities, maintenance and replacement of
curbs and walkways, repair to roofs and re-roofing; (xii) the cost of any
capital improvements made to the Project which are intended as a labor-saving
device or to effect other economies in the operation or maintenance of the
Project, or any portion thereof, or made to all or any portion of the Project,
or any portion thereof, after the Lease Commencement Date that are required
under any governmental law or regulation that was not applicable to the Project
at the time that permits for the construction of the Building were obtained;
provided, however, that each such permitted capital expenditure shall be
amortized (including interest on the unamortized cost) over its useful life as
reasonably determined; and (xiii) the cost of operations, maintenance, repairs,
and other expenditures (whether capital or non-capital in nature) with respect
to the "Child Care Facilities," as that term is defined in Section 29.9 below,
and their lease at the Project. Notwithstanding the foregoing, for purposes of
this Lease, Operating Expenses shall not, however, include:

         (a) costs, including marketing costs, legal fees, space planners' fees,
advertising and promotional expenses, and brokerage fees incurred in connection
with the original construction or development, or original or future leasing of
the Project, and costs, including permit, license and inspection costs, incurred
with respect to the installation of tenant improvements made for new tenants
initially occupying space in the Project after the Lease Commencement Date or
incurred in renovating or otherwise improving, decorating, painting or
redecorating vacant space for tenants or other occupants of the Project
(excluding, however, such costs relating to any common areas of the Project or
parking facilities);

         (b) except as set forth in this Section 4.2.3, depreciation, interest
and principal payments on mortgages and other debt costs, if any, penalties and
interest, costs of capital repairs and alterations, and costs of capital
improvements and equipment;

         (c) costs for which the Landlord is reimbursed by any tenant or
occupant of the Project or by insurance by its carrier or any tenant's carrier
or by anyone else, and electric power costs for which any tenant directly
contracts with the local public service company;

         (d) any bad debt loss, rent loss, or reserves for bad debts or rent
loss;

         (e) costs associated with the operation of the business of the
partnership or entity which constitutes the Landlord, as the same are
distinguished from the costs of operation of the Project (which shall
specifically include, but not be limited to, accounting costs associated with
the operation of the Project). Costs associated with the operation of the
business of the partnership or entity which constitutes the Landlord include
costs of partnership accounting and legal matters, costs of defending any
lawsuits with any mortgagee (except as the actions of the Tenant may be in
issue), costs of selling, syndicating, financing, mortgaging or hypothecating
any of the Landlord's interest in the Project, and costs incurred in connection
with any disputes between Landlord and its employees, between Landlord and
Project management, or between Landlord and other tenants or occupants, and
Landlord's general corporate overhead and general and administrative expenses;

                                      -4-
<PAGE>   10
         (f) the wages and benefits of any employee who does not devote
substantially all of his or her employed time to the Project unless such wages
and benefits are prorated to reflect time spent on operating and managing the
Project vis-a-vis time spent on matters unrelated to operating and managing the
Project; provided, that in no event shall Operating Expenses for purposes of
this Lease include wages and/or benefits attributable to personnel above the
level of Project manager;

         (g) amount paid as ground rental for the Project by the Landlord;

         (h) except for a Project management fee to the extent allowed pursuant
to item (m), below, overhead and profit increment paid to the Landlord or to
subsidiaries or affiliates of the Landlord for services in the Project to the
extent the same exceeds the costs of such services rendered by qualified,
first-class unaffiliated third parties on a competitive basis;


         (i) any compensation paid to clerks, attendants or other persons in
commercial concessions operated by the Landlord, provided that any compensation
paid to any concierge at the Project shall be includable as an Operating
Expense;

         (j) rentals and other related expenses incurred in leasing air
conditioning systems, elevators or other equipment which if purchased the cost
of which would be excluded from Operating Expenses as a capital cost, except
equipment not affixed to the Project which is used in providing janitorial or
similar services and, further excepting from this exclusion such equipment
rented or leased to remedy or ameliorate an emergency condition in the Project;

         (k) all items and services for which Tenant or any other tenant in the
Project reimburses Landlord or which Landlord provides selectively to one or
more tenants (other than Tenant) without reimbursement;

         (l) costs, other than those incurred in ordinary maintenance and
repair, for sculpture, paintings or other objects of art;

         (m) fees payable by Landlord for management of the Project in excess of
three and one-half percent (3.5%) (the "Management Fee Cap") of Landlord's gross
rental revenues, adjusted and grossed up to reflect a one hundred percent (100%)
occupancy of the Building with all tenants paying rent, including base rent,
pass-throughs, and parking fees (but excluding the cost of after hours services
or utilities) from the Project for any calendar year or portion thereof;

         (n) any costs expressly excluded from Operating Expenses elsewhere in
this Lease;

         (o) rent for any office space occupied by Project management personnel
to the extent the size or rental rate of such office space exceeds the size or
fair market rental value of office space occupied by management personnel of the
Comparable Buildings in the vicinity of the Building, with adjustment where
appropriate for the size of the applicable project;

         (p) costs arising from the gross negligence or wilful misconduct of
Landlord or its agents, employees, vendors, contractors, or providers of
materials or services;

         (q) costs incurred to comply with laws relating to the removal of
hazardous material (as defined under applicable law) which was in existence in
the Building or on the Project prior to the Lease Commencement Date, and was of
such a nature that a federal, State or municipal governmental authority, if it
had then had knowledge of the presence of such hazardous material, in the state,
and under the conditions that it then existed in the Building or on the Project,
would have then required the removal of such hazardous material or other
remedial or containment action with respect thereto; and costs incurred to
remove, remedy, contain, or treat hazardous material, which hazardous material
is brought into the Building or onto the Project after the date hereof by
Landlord or any other tenant of the Project and is of such a nature, at that
time, that a federal, State or municipal governmental authority, if it had then
had knowledge of the presence of such hazardous material, in the state, and
under the conditions, that it then exists in the

                                      -5-
<PAGE>   11
         Building or on the Project, would have then required the removal of
         such hazardous material or other remedial or containment action with
         respect thereto; and

                  (r)      costs arising from Landlord's charitable or political
                           contributions.

         If the Project is not fully occupied during all or a portion of any
Expense Year, Landlord shall make an appropriate adjustment to the variable
components of Operating Expenses for such year employing sound accounting and
management principles, to determine the amount of Operating Expenses that would
have been paid had the Project been fully occupied; and the amount so determined
shall be deemed to have been the amount of Operating Expenses for such year. In
no event shall the components of Project Expenses for any Expense Year related
to electrical costs be less than the components of Project Expenses related to
electrical costs in the Base Year.

         4.2.4 "Project Expenses" shall mean the sum of "Operating Expenses" and
"Tax Expenses".

         4.2.5 "Tax Expenses" shall mean all federal, state, county, or local
governmental or municipal taxes, fees, charges or other impositions of every
kind and nature, whether general, special, ordinary or extraordinary (including,
without limitation, real estate taxes, general and special assessments, transit
taxes, leasehold taxes or taxes based upon the receipt of rent, including gross
receipts or sales taxes applicable to the receipt of rent, unless required to be
paid by Tenant, personal property taxes imposed upon the fixtures, machinery,
equipment, apparatus, systems and equipment, appurtenances, furniture and other
personal property used in connection with all or any portion of the Project),
which shall be paid during any Expense Year (without regard to any different
fiscal year used by such governmental or municipal authority) because of or in
connection with the ownership, leasing and operation of the Project, or any
portion thereof.

         4.2.5.1 Tax Expenses shall include, without limitation:

             (i) Any assessment, tax, fee, levy or charge in addition to, or in
         substitution, partially or totally, of any assessment, tax, fee, levy
         or charge previously included within the definition of real property
         tax, it being acknowledged by Tenant and Landlord that Proposition 13
         was adopted by the voters of the State of California in the June 1978
         election ("Proposition 13") and that assessments, taxes, fees, levies
         and charges may be imposed by governmental agencies for such services
         as fire protection, street, sidewalk and road maintenance, refuse
         removal and for other governmental services formerly provided without
         charge to property owners or occupants, and, in further recognition of
         the decrease in the level and quality of governmental services and
         amenities as a result of Proposition 13, Tax Expenses shall also
         include any governmental or private assessments or the Project's
         contribution towards a governmental or private cost-sharing agreement
         for the purpose of augmenting or improving the quality of services and
         amenities normally provided by governmental agencies. It is the
         intention of Tenant and Landlord that all such new and increased
         assessments, taxes, fees, levies, and charges and all similar
         assessments, taxes, fees, levies and charges be included within the
         definition of Tax Expenses for the purposes of this Lease;

             (ii) Any assessment, tax, fee, levy, or charge allocable to or
         measured by the area of the Premises or the Rent payable hereunder,
         including, without limitation, any gross income tax with respect to the
         receipt of such rent, or upon or with respect to the possession,
         leasing, operating, management, maintenance, alteration, repair, use or
         occupancy by Tenant of the Premises, or any portion thereof;

             (iii) Any assessment, tax, fee, levy or charge, upon this
         transaction or any document to which Tenant is a party, creating or
         transferring an interest or an estate in the Premises; and


             (iv) Any possessory taxes charged or levied in lieu of real estate
         taxes.


                                      -6-
<PAGE>   12
             4.2.5.2 Any expenses incurred in attempting to protest, reduce or
minimize Tax Expenses shall be included in Tax Expenses in the Expense Year such
expenses are paid.


             4.2.5.3 Tax refunds shall be credited against Tax Expenses and
refunded to Tenant regardless of when received, based on the Expense Year to
which the refund is applicable, provided that in no event shall the amount to be
refunded to Tenant for any such Expense Year exceed the total amount paid by
Tenant as Additional Rent under this Article 4 for such Expense Year.


             4.2.5.4 The amount of Tax Expenses for the Base Year attributable
to the valuation of the Project, inclusive of tenant improvements, shall be
known as "Base Taxes." If, in any comparison year subsequent to the Base Year,
the amount of Tax Expenses decreases, then for purposes of all subsequent
comparison years, including the comparison year in which such decrease in Tax
Expenses occurs, the Base Taxes shall be decreased by an amount equal to the
decrease in Tax Expenses.


             4.2.6 "Tenant's Share" shall mean the percentage set forth in
Section 7.2 of the Summary. Tenant's Share was calculated by multiplying the
number of rentable square feet of the Premises by 100, and dividing the product
by the total rentable square feet in the Building.


         4.3      Allocation and Calculation of Project Expenses.


             4.3.1 Allocation of Project Expenses to Tenants of the Building.
Project Expenses (i.e., Operating Expenses and Tax Expenses) are determined
annually for the Project as a whole. Since the Building is only one of the
buildings which constitute the Project, Project Expenses shall be allocated by
Landlord, in its reasonable discretion, to both the tenants of the Building and
the tenants of the other buildings in the Project. The portion of Project
Expenses allocated to the tenants of the Building shall consist of (i) all
Project Expenses attributable solely to the Building and (ii) an equitable
portion of Project Expenses attributable to the Project as a whole and not
attributable solely to the Building, the Adjacent Building or to any other
building of the Project. Additionally, in allocating Project Expenses to the
tenants of the Building, Landlord shall have the right, from time to time, to
equitably allocate some or all of the Project Expenses allocable to tenants of
the Building among different tenants of the Building (the "Cost Pools"). Such
Cost Pools may include, but shall not be limited to, the office space tenants of
the Building and the retail space tenants of the Building.


             4.3.2 Calculation of Project Expenses. Notwithstanding anything to
the contrary set forth in this Article 4, when calculating the Project Expenses
for the Base Year, such Project Expenses shall not include any increase in Tax
Expenses attributable to special assessments, charges, costs, or fees, or due to
modifications or changes in governmental laws or regulations, including but not
limited to the institution of a split tax roll, and Operating Expenses shall
exclude market-wide labor-rate increases due to extraordinary circumstances,
including, but not limited to, boycotts and strikes, and utility rate increases
due to extraordinary circumstances including, but not limited to, conservation
surcharges, boycotts, embargoes or other shortages and amortized costs relating
to capital improvements.


         4.4      Calculation and Payment of Additional Rent.


             4.4.1 Calculation of Excess. For every Expense Year ending or
commencing within the Lease Term, Tenant shall pay to Landlord, in the manner
set forth in Section 4.4.2, below, and as Additional Rent, an amount equal to
Tenant's Share of Project Expenses for such Expense Year in excess of Tenant's
Share of Project Expenses for the Base Year (the "Excess").


             4.4.2 Statement of Actual Project Expenses and Payment by Tenant.
Landlord shall endeavor to give to Tenant on or before the first day of April
following the end of each Expense Year, a statement (the "Statement") which
shall state the Project Expenses incurred or accrued for such preceding Expense
Year and the amount thereof allocated to the tenants of the Building, and which
shall indicate the amount, if any, of Tenant's Share of Project Expenses in
excess of Tenant's Share of Project Expenses for the Base Year. Upon receipt of
the Statement for each Expense Year ending during the Lease Term, Tenant shall
pay, with its next installment of Base Rent due, the full amount of Tenant's
Share of Project Expenses for such Expense Year in excess of Tenant's Share of
Project Expenses for the Base Year, less the amounts, if any, paid

                                      -7-
<PAGE>   13
during such Expense Year as "Estimated Additional Rent," as that term is defined
in Section 4.4.3, below. If the amount of Tenant's Share of Project Expenses for
such Expense Year in excess of Tenant's Share of Project Expenses for the Base
Year is less than the amount paid by Tenant as Estimated Additional Rent during
the applicable period of the Expense Year (but not including any period of the
Expense Year which occurs after the Lease has terminated), Landlord shall pay
the difference to Tenant together with the applicable Statement, even if the
Lease has terminated or expired. The failure of Landlord to timely furnish the
Statement for any Expense Year shall not prejudice Landlord or Tenant from
enforcing its rights under this Article 4. Even though the Lease Term has
expired and Tenant has vacated the Premises, when the final determination is
made of Tenant's Share of Project Expenses allocated to the tenants of the
Building for the Expense Year in which this Lease terminates, if Tenant's Share
of Project Expenses for such Expense Year is in excess of Tenant's Share of
Project Expenses for the Base Year, then Tenant shall immediately pay to
Landlord an amount as calculated pursuant to the provisions of Section 4.4.1 of
this Lease. The provisions of this Section 4.4.2 shall survive the expiration or
earlier termination of the Lease Term.

             4.4.3 Statement of Estimated Project Expenses. In addition,
Landlord shall endeavor to 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 Project Expenses for the then-current
Expense Year shall be, the amount thereof to be allocated to the tenants of the
Building, and the estimated amount of Tenant's Share of Project Expenses in
excess of Tenant's Share of the Project Expenses for the Base Year (the
"Estimated Additional Rent"). The failure of Landlord to timely furnish the
Estimate Statement for any Expense Year shall not preclude Landlord from
enforcing its rights to collect any Estimated Additional Rent under this Article
4. If, pursuant to the Estimate Statement, Estimated Additional Rent is
calculated for the then-current Expense Year, Tenant shall pay, with its next
installment of Base Rent due, a fraction of the Estimated Additional Rent for
the then-current Expense Year (reduced by any amounts paid pursuant to the last
sentence of this Section 4.4.3). Such fraction shall have as its numerator the
number of months which have elapsed in such current Expense Year, including the
month of such payment, and twelve (12) as its denominator. Until a new Estimate
Statement is furnished (which Landlord shall have the right to deliver to Tenant
at any time), Tenant shall pay monthly, with the monthly Base Rent installments,
an amount equal to one-twelfth (1/12) of the total Estimated Additional Rent set
forth in the previous Estimate Statement delivered by Landlord to Tenant.


         4.5 Taxes and Other Charges for Which Tenant Is Directly Responsible.
Tenant shall reimburse Landlord upon demand for any and all taxes required to be
paid by Landlord, excluding state, local and federal personal or corporate
income taxes measured by the net income of Landlord from all sources and estate
and inheritance taxes, whether or not now customary or within the contemplation
of the parties hereto, when:


             4.5.1 Said taxes are measured by or reasonably attributable to the
cost or value of Tenant's equipment, furniture, fixtures and other personal
property located in the Premises, or by the cost or value of any leasehold
improvements made in or to the Premises by or for Tenant, to the extent the cost
or value of such leasehold improvements exceeds the cost or value of a building
standard build-out as determined by Landlord regardless of whether title to such
improvements shall be vested in Tenant or Landlord;

             4.5.2 Said taxes are assessed upon or with respect to the
possession, leasing, operation, management, maintenance, alteration, repair, use
or occupancy by Tenant of the Premises or any portion of the Project (including
the Project parking facility); or


             4.5.3 Said taxes are assessed upon this transaction or any document
to which Tenant is a party creating or transferring an interest or an estate in
the Premises.


         4.6 LANDLORD'S BOOKS AND RECORDS. Within ninety (90) days after receipt
of a Statement by Tenant, if Tenant disputes the amount of Additional Rent set
forth in the Statement, an independent certified public accountant (which
accountant is a member of a nationally recognized accounting firm and is not
working on a contingency fee basis), designated and paid for by Tenant, may,
after reasonable notice to Landlord and at reasonable times, inspect Landlord's
records with respect to the Statement at Landlord's offices, provided that
Tenant is not then in default under this Lease and Tenant has paid all amounts
required to be paid under the applicable Estimate Statement and Statement, as
the case may be. In connection with such

                                      -8-
<PAGE>   14
inspection, Tenant and Tenant's agents must agree in advance to follow
Landlord's reasonable rules and procedures regarding inspections of Landlord's
records, and shall execute a commercially reasonable confidentiality agreement
regarding such inspection. Tenant's failure to dispute the amount of Additional
Rent set forth in any Statement within ninety (90) days of Tenant's receipt of
such Statement 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, Tenant still disputes such
Additional Rent, a determination as to the proper amount shall be made, at
Tenant's expense, by an independent certified public accountant (the
"Accountant") selected by Landlord and subject to Tenant's reasonable approval;
provided that if such determination by the Accountant proves that Operating
Expenses were overstated by more than five percent (5%), then the cost of the
Accountant and the cost of such determination shall be paid for by Landlord.
Tenant hereby acknowledges that Tenant's sole right to inspect Landlord's books
and records and to contest the amount of Operating Expenses payable by Tenant
shall be as set forth in this Section 4.6, and Tenant hereby waives any and all
other rights pursuant to applicable law to inspect such books and records and/or
to contest the amount of Operating Expenses payable by Tenant.

                                    ARTICLE 5
                                USE OF PREMISES

         Tenant shall use the Premises solely for general office purposes
consistent with the character of the Project as a first-class office building
project, and Tenant shall not use or permit the Premises to be used for any
other purpose or purposes whatsoever without the prior written consent of
Landlord, which may be withheld in Landlord's sole discretion. Tenant further
covenants and agrees that Tenant shall not use, or suffer or permit any person
or persons to use, the Premises or any part thereof for any use or purpose
contrary to the provisions of the Rules and Regulations set forth in Exhibit C,
attached hereto, or in violation of the laws of the United States of America,
the State of California, or the ordinances, regulations or requirements of the
local municipal or county governing body or other lawful authorities having
jurisdiction over the Project. Tenant shall comply with all recorded covenants,
conditions, and restrictions now or hereafter affecting the Project. Tenant
shall not use or allow another person or entity to use any part of the Premises
for the storage, use, treatment, manufacture or sale of "Hazardous Material," as
that term is defined in Section 29.23 of this Lease.


                                   ARTICLE 6
                             SERVICES AND UTILITIES


         6.1 Standard Tenant Services. Landlord shall provide the following
services on all days (unless otherwise stated below) during the Lease Term.


             6.1.1 Subject to all governmental rules, regulations and guidelines
applicable thereto, Landlord shall provide heating and air conditioning when
necessary for normal comfort for normal office use in the Premises, from Monday
through Friday, during the period from 8 A.M. to 6 P.M. and on Saturday during
the period from 9 A.M. to 1 P.M., except for the date of observation of New
Year's Day, Independence Day, Labor Day, Memorial Day, Thanksgiving Day,
Christmas Day and, at Landlord's discretion, other locally or nationally
recognized holidays (collectively, the "Holidays").

             6.1.2 Landlord shall provide adequate electrical wiring and
facilities and power for normal general office use as determined by Landlord.
Tenant shall bear the cost, as a component of Operating Expenses, of replacement
of lamps, starters and ballasts for lighting fixtures within the Premises.

             6.1.3 Landlord shall provide city water from the regular Building
outlets for drinking, lavatory and toilet purposes.

             6.1.4 Landlord shall provide janitorial services Monday through
Friday except the date of observation of the Holidays, in and about the Premises
and window washing services in a manner consistent with other first-class office
buildings in the Santa Monica, California area.


         6.2 Overstandard Tenant Use. Tenant shall not, without Landlord's prior
written consent, use heat-generating machines, machines other than normal
fractional horsepower office machines, or equipment or lighting other than
Building standard lights in the Premises, which


                                      -9-
<PAGE>   15
may affect the temperature otherwise maintained by the air conditioning system
or increase the water normally furnished for the Premises by Landlord pursuant
to the terms of Section 6.1 of this Lease. If such consent is given, Landlord
shall have the right to install supplementary air conditioning units or other
facilities in the Premises, including supplementary or additional metering
devices, and the cost thereof, including the cost of installation, operation and
maintenance, increased wear and tear on existing equipment and other similar
charges, shall be paid by Tenant to Landlord upon billing by Landlord. If Tenant
uses water, electricity, heat or air conditioning in excess of that supplied by
Landlord pursuant to Section 6.1 of this Lease, Tenant shall pay to Landlord,
upon billing, the cost of such excess consumption, the cost of the installation,
operation, and maintenance of equipment which is installed in order to supply
such excess consumption, and the cost of the increased wear and tear on existing
equipment caused by such excess consumption; and Landlord may install devices to
separately meter any increased use and in such event Tenant shall pay the
increased cost directly to Landlord, on demand, including the cost of such
additional metering devices. If Tenant desires to use heat, ventilation or air
conditioning during hours other than those for which Landlord is obligated to
supply such utilities pursuant to the terms of Section 6.1 of this Lease, Tenant
shall give Landlord such prior notice, as Landlord shall from time to time
establish as appropriate, of Tenant's desired use and Landlord shall supply such
utilities to Tenant at such hourly cost to Tenant as Landlord shall from time to
time establish. Amounts payable by Tenant to Landlord for such use of additional
utilities shall be deemed Additional Rent hereunder and shall be billed on a
monthly basis.


         6.3 Interruption of Use. Tenant agrees that Landlord shall not be
liable for damages, by abatement of Rent or otherwise, for failure to furnish or
delay in furnishing any service (including telephone and telecommunication
services), or for any diminution in the quality or quantity thereof, when such
failure or delay or diminution is occasioned, in whole or in part, by repairs,
replacements, or improvements, by any strike, lockout or other labor trouble, by
inability to secure electricity, gas, water, or other fuel at the Building or
Project after reasonable effort to do so, by any accident or casualty
whatsoever, by act or default of Tenant or other parties, or by any other cause
beyond Landlord's reasonable control; and such failures or delays or diminution
shall never be deemed to constitute an eviction or disturbance of Tenant's use
and possession of the Premises or relieve Tenant from paying Rent or performing
any of its obligations under this Lease. Furthermore, Landlord shall not be
liable under any circumstances for a loss of, or injury to, property or for
injury to, or interference with, Tenant's business, including, without
limitation, loss of profits, however occurring, through or in connection with or
incidental to a failure to furnish any of the services or utilities as set forth
in this Article 6, including, but not limited to, a failure to provide
telecommunications, including telephone risers. Landlord may comply with
voluntary controls or guidelines promulgated by any governmental entity relating
to the use or conservation of energy, water, gas, light or electricity or the
reduction of automobile or other emissions without creating any liability of
Landlord to Tenant under this Lease, provided that the Premises are not thereby
rendered untenantable.


         6.4 Rent Abatement. If Landlord fails to perform the obligations
required of Landlord under the terms of this Lease and such failure causes all
or a portion of the Premises to be untenantable and unusable by Tenant and such
failure relates to the nonfunctioning of the heat, ventilation, and air
conditioning system in the Premises, the electricity in the Premises, the
nonfunctioning of the elevator service to the Premises, or a failure to provide
access to the Premises, Tenant shall give Landlord notice (the "Initial
Notice"), specifying such failure to perform by Landlord (the "Landlord
Default"). If Landlord has not cured such Landlord Default within five (5)
business days after the receipt of the Initial Notice (the "Eligibility
Period"), Tenant may deliver an additional notice to Landlord (the "Additional
Notice"), specifying such Landlord Default and Tenant's intention to abate the
payment of Rent under this Lease. If Landlord does not cure such Landlord
Default within five (5) business days of receipt of the Additional Notice,
Tenant may, upon written notice to Landlord, immediately abate Rent payable
under this Lease for that portion of the Premises rendered untenantable and not
used by Tenant, for the period beginning on the date five (5) business days
after the Initial Notice to the earlier of the date Landlord cures such Landlord
Default or the date Tenant recommences the use of such portion of the Premises.
Such right to abate Rent shall be Tenant's sole and exclusive remedy at law or
in equity for a Landlord Default. Except as provided in this Section 6.4,
nothing contained herein shall be interpreted to mean that Tenant is excused
from paying Rent due hereunder.

                                      -10-
<PAGE>   16
                                   ARTICLE 7
                                    REPAIRS

         Tenant shall, at Tenant's own expense, keep the Premises, including all
improvements, fixtures and furnishings therein, in good order, repair and
condition at all times during the Lease Term. In addition, Tenant shall, at
Tenant's own expense, but under the supervision and subject to the prior
approval of Landlord, and within any reasonable period of time specified by
Landlord, promptly and adequately repair all damage to the Premises and replace
or repair all damaged, broken, or worn fixtures and appurtenances; provided
however, that, at Landlord's option, or if Tenant fails to make such repairs,
Landlord may, but need not, make such repairs and replacements, and Tenant shall
pay Landlord the cost thereof, including a percentage of the cost thereof (to be
uniformly established for the Building and/or the Project) sufficient to
reimburse Landlord for all overhead, general conditions, fees and other costs or
expenses arising from Landlord's involvement with such repairs and replacements
forthwith upon being billed for same. Notwithstanding the foregoing, Landlord
shall be responsible for repairs to the exterior walls, foundation and roof of
the Building, the structural portions of the floors of the Building, and the
systems and equipment of the Building, except to the extent that such repairs
are required due to the negligence of Tenant; provided, however, that if such
repairs are due to the negligence of Tenant, Landlord shall nevertheless make
such repairs at Tenant's expense, or, if covered by Landlord's insurance, Tenant
shall only be obligated to pay any deductible in connection therewith. Landlord
may, but shall not be required to, enter the Premises at all reasonable times to
make such repairs, alterations, improvements or additions to the Premises or to
the Project or to any equipment located in the Project as Landlord shall desire
or deem necessary or as Landlord may be required to do by governmental or
quasi-governmental authority or court order or decree. Tenant hereby waives and
releases its right to make repairs at Landlord's expense under Sections 1941 and
1942 of the California Civil Code or under any similar law, statute, or
ordinance now or hereafter in effect.

                                   ARTICLE 8
                            ADDITIONS AND ALTERATIONS


         8.1 Landlord's Consent to Alterations. Tenant may not make any
improvements, alterations, additions or changes to the Premises (collectively,
the "Alterations") without first procuring the prior written consent of Landlord
to such Alterations, which consent shall be requested by Tenant not less than
thirty (30) days prior to the commencement thereof, and which consent shall not
be unreasonably withheld by Landlord; provided however, that Tenant may make
strictly cosmetic changes to the finish work in the Premises, not requiring any
structural or other substantial modifications to the Premises, upon thirty (30)
days prior notice to Landlord. The construction of the initial improvements to
the Premises shall be governed by the terms of the Tenant Work Letter and not
the terms of this Article 8.

         8.2 Manner of Construction. Landlord may impose, as a condition of its
consent to any and all Alterations or repairs of the Premises or about the
Premises, such requirements as Landlord in its sole discretion may deem
desirable, including, but not limited to, the requirement that upon Landlord's
request, Tenant shall, at Tenant's expense, remove such Alterations upon the
expiration or any early termination of the Lease Term, and/or the requirement
that Tenant utilize for such purposes only contractors, materials, mechanics and
materialmen selected by Landlord. Tenant shall construct such Alterations and
perform such repairs in conformance with any and all applicable federal, state,
county or municipal laws, rules and regulations and pursuant to a valid building
permit, issued by the City of Santa Monica, all in conformance with Landlord's
construction rules and regulations. All work with respect to any Alterations
must be done in a good and workmanlike manner and diligently prosecuted to
completion to the end that the Premises shall at all times be a complete unit
except during the period of work. In performing the work of any such
Alterations, Tenant shall have the work performed in such manner so as not to
obstruct access to the Project or any portion thereof, by any other tenant of
the Project, and so as not to obstruct the business of Landlord or other tenants
in the Project, or interfere with the labor force working in the Project. In
addition to Tenant's obligations under Article 9 of this Lease, upon completion
of any Alterations, Tenant agrees to cause a Notice of Completion to be recorded
in the office of the Recorder of the County of Los Angeles in accordance with
Section 3093 of the Civil Code of the State of California or any successor
statute, and Tenant shall deliver to the Project management office a
reproducible copy of the "as built" drawings of the Alterations.

                                      -11-
<PAGE>   17
         8.3 Payment for Improvements. In the event Tenant orders any
Alterations or repair work directly from Landlord, or from the contractor
selected by Landlord, the charges for such work shall be deemed Additional Rent
under this Lease, payable within five (5) days of billing therefor, either
periodically during construction or upon the substantial completion of such
work, at Landlord's option. Upon completion of such work, Tenant shall deliver
to Landlord evidence of payment, contractors' affidavits and full and final
waivers of all liens for labor, services or materials. Tenant shall pay to
Landlord a percentage of the cost of such work sufficient to compensate Landlord
for all overhead, general conditions, fees and other costs and expenses arising
from Landlord's involvement with such work.


         8.4 Construction Insurance. In the event that Tenant makes any
Alterations Tenant agrees to carry "Builder's All Risk" insurance in an amount
approved by Landlord covering the construction of such Alterations, and such
other insurance as Landlord may require, it being understood and agreed that all
of such Alterations shall be insured by Tenant pursuant to Article 10 of this
Lease immediately upon completion thereof. In addition, Landlord may, in its
discretion, require Tenant to obtain a lien and completion bond or some
alternate form of security satisfactory to Landlord in an amount sufficient to
ensure the lien-free completion of such Alterations and naming Landlord as a
co-obligee.


         8.5 Landlord's Property. All Alterations, improvements, fixtures and/or
equipment which may be installed or placed in or about the Premises, and all
signs installed in, on or about the Premises, from time to time, shall be at the
sole cost of Tenant and shall be and become the property of Landlord, except
that Tenant may remove any Alterations, improvements, fixtures and/or equipment
which Tenant can substantiate to Landlord have not been paid for with any Tenant
improvement allowance funds provided to Tenant by Landlord, provided Tenant
repairs any damage to the Premises and Building caused by such removal.
Furthermore, if Landlord, as a condition to Landlord's consent to any
Alteration, requires that Tenant remove any Alteration upon the expiration or
early termination of the Lease Term, Landlord may, by written notice to Tenant
prior to the end of the Lease Term, or given following any earlier termination
of this Lease, require Tenant, at Tenant's expense, to remove such Alterations
and to repair any damage to the Premises and Building caused by such removal. If
Tenant fails to complete such removal and/or to repair any damage caused by the
removal of any Alterations, Landlord may do so and may charge the cost thereof
to Tenant.

                                   ARTICLE 9
                             COVENANT AGAINST LIENS

         Tenant has no authority or power to cause or permit any lien or
encumbrance of any kind whatsoever, whether created by act of Tenant, operation
of law or otherwise, to attach to or be placed upon the Project or Premises, and
any and all liens and encumbrances created by Tenant shall attach to Tenant's
interest only. Landlord shall have the right at all times to post and keep
posted on the Premises any notice which it deems necessary for protection from
such liens. Tenant covenants and agrees not to suffer or permit any lien of
mechanics or materialmen or others to be placed against the Project, the
Building or the Premises, or any portion thereof, with respect to work or
services claimed to have been performed for or materials claimed to have been
furnished to Tenant or the Premises, and, in case of any such lien attaching or
notice of any lien, Tenant covenants and agrees to cause it to be immediately
released and removed of record. Notwithstanding anything to the contrary set
forth in this Lease, in the event that such lien is not released and removed on
or before the date occurring five (5) days after notice of such lien is
delivered by Landlord to Tenant, Landlord, at its sole option, may immediately
take all action necessary to release and remove such lien, without any duty to
investigate the validity thereof, and all sums, costs and expenses, including
reasonable attorneys' fees and costs, incurred by Landlord in connection with
such lien shall be deemed Additional Rent under this Lease and shall immediately
be due and payable by Tenant.

                                   ARTICLE 10
                                    INSURANCE


         10.1 Indemnification and Waiver. To the extent not prohibited by law,
Landlord, its members and their respective partners, subpartners, officers,
agents, servants, employees, and independent contractors (collectively,
"Landlord Parties") shall not be liable for, any damage either to person or
property or resulting from the loss of use thereof, which damage is sustained by
Tenant. Tenant shall indemnify, defend, protect, and hold harmless Landlord
Parties from

                                      -12-
<PAGE>   18
any and all loss, cost, damage, expense and liability (including without
limitation court costs and reasonable attorneys' fees) incurred in connection
with or arising from any cause in, on or about the Premises, either prior to,
during, or after the expiration of the Lease Term, provided that the terms of
the foregoing indemnity shall not apply to the gross negligence or wilful
misconduct of Landlord. The provisions of this Section 10.1 shall survive the
expiration or sooner termination of this Lease with respect to any claims or
liability occurring prior to such expiration or termination. Notwithstanding
anything to the contrary contained in this Lease, nothing in this Lease shall
impose any obligations on Tenant or Landlord to be responsible or liable for,
and each hereby releases the other from all liability for, consequential damages
other than those consequential damages incurred by Landlord in connection with a
holdover of the Premises by Tenant after the expiration or earlier termination
of this Lease or incurred by Landlord in connection with any repair, physical
construction or improvement work performed by or on behalf of Tenant in the
Project (but Tenant shall not be responsible for any direct or consequential
damages resulting from Landlord's or contractor's acts in connection with the
completion by Landlord of the tenant improvements in the Premises pursuant to
the Tenant Work Letter).


         10.2 Tenant's Compliance with Landlord's Fire and Casualty Insurance.
Tenant shall, at Tenant's expense, comply with all insurance company
requirements pertaining to the use of the Premises. If Tenant's conduct or use
of the Premises causes any increase in the premium for such insurance policies
then Tenant shall reimburse Landlord for any such increase. Tenant, at Tenant's
expense, shall comply with all rules, orders, regulations or requirements of the
American Insurance Association (formerly the National Board of Fire
Underwriters) and with any similar body.

         10.3 Tenant's Insurance. Tenant shall maintain the following coverages
in the following amounts.

             10.3.1 Commercial General Liability Insurance covering the insured
against claims of bodily injury, personal injury and property damage arising out
of Tenant's operations, assumed liabilities or use of the Premises, including a
Broad Form endorsement covering the insuring provisions of this Lease and the
performance by Tenant of the indemnity agreements set forth in Section 10.1 of
this Lease, for limits of liability not less than:
<TABLE>
<CAPTION>

<S>                                                 <C>
         Bodily Injury and
         Property Damage Liability                   $2,000,000 each occurrence
                                                     $2,000,000 annual aggregate

         Personal Injury Liability                   $2,000,000 each occurrence
                                                     $2,000,000 annual aggregate
                                                     0% Insured's participation
</TABLE>


             10.3.2 Physical Damage Insurance covering (i) all office furniture,
trade fixtures, office equipment, merchandise and all other items of Tenant's
property on the Premises installed by, for, or at the expense of Tenant, (ii)
the Tenant Improvements and any other improvements which exist in the Premises
as of the Lease Commencement Date (excluding the "Base Building," as that term
is defined hereinbelow), and (iii) all other improvements, alterations and
additions to the Premises. The term "Base Building," for purposes of this Lease,
shall mean the structural portions of the Building, and the public restrooms and
the systems and equipment located in the internal core of the Building on the
floor or floors on which the Premises are located. Such insurance shall be
written on an "all risks" of physical loss or damage basis, for the full
replacement cost value new without deduction for depreciation of the covered
items and in amounts that meet any co-insurance clauses of the policies of
insurance and shall include a vandalism and malicious mischief endorsement,
sprinkler leakage coverage and earthquake sprinkler leakage coverage.

             10.3.3 Workers Compensation Insurance in form and with limits in
accordance with the laws of the State of California, including Occupational
Disease Insurance, and Voluntary Compensation Insurance, and Employer's
Liability Insurance with limits not less than Five Hundred Thousand Dollars
($500,000.00) per occurrence; per employee for disease; and in the aggregate for
disease.


                                      -13-
<PAGE>   19
         10.4 Form of Policies. The minimum limits of policies of insurance
required of Tenant under this Lease shall in no event limit the liability of
Tenant under this Lease. Such insurance shall (i) name Landlord, Trammell Crow
Company, and any other party Landlord specifies, as an additional insured; (ii)
specifically cover the liability assumed by Tenant under this Lease, including,
but not limited to, Tenant's obligations under Section 10.1 of this Lease; (iii)
be issued by an insurance company having a rating of not less than A-X in Best's
Insurance Guide or which is otherwise acceptable to Landlord and licensed to do
business in the State of California; (iv) be primary insurance as to all claims
thereunder and provide that any insurance carried by Landlord is excess and is
non-contributing with any insurance requirement of Tenant; (v) provide that said
insurance shall not be canceled or coverage changed unless thirty (30) days'
prior written notice shall have been given to Landlord and any mortgagee of
Landlord; and (vi) contain a cross-liability endorsement or severability of
interest clause acceptable to Landlord. Tenant shall deliver said policy or
policies or certificates thereof to Landlord on or before the Lease Commencement
Date and at least thirty (30) days before the expiration dates thereof.

         10.5 Subrogation. Landlord and Tenant agree to have their respective
insurance companies issuing property damage insurance waive any rights of
subrogation that such companies may have against Landlord or Tenant, as the case
may be, so long as the insurance carried by Landlord and Tenant, respectively,
is not invalidated thereby. As long as such waivers of subrogation are contained
in their respective insurance policies, Landlord and Tenant hereby waive any
right that either may have against the other on account of any loss or damage to
their respective property to the extent such loss or damage is insurable under
policies of insurance for fire and all risk coverage, theft, or other similar
insurance.

         10.6 Additional Insurance Obligations. Tenant shall carry and maintain
during the entire Lease Term, at Tenant's sole cost and expense, increased
amounts of the insurance required to be carried by Tenant pursuant to this
Article 10, 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 requested by Landlord, but in no event in excess of the amounts
and types of insurance then being required by landlords of other Comparable
Buildings.

                                   ARTICLE 11
                             DAMAGE AND DESTRUCTION

         11.1 Repair of Damage to Premises by Landlord. Tenant shall promptly
notify Landlord of any damage to the Premises resulting from fire or any other
casualty. If the Base Building or any Common Areas serving or providing access
to the Premises shall be damaged by fire or other casualty, Landlord shall
promptly and diligently, subject to reasonable delays for insurance adjustment
or other matters beyond Landlord's reasonable control, and subject to all other
terms of this Article 11, restore the Base Building and such Common Areas. Such
restoration shall be to substantially the same condition of the Base Building
and the Common Areas prior to the casualty, except for modifications required by
zoning and building codes and other laws or by the holder of a mortgage on the
Building or Project or any other modifications to the Base Building or the
Common Areas deemed desirable by Landlord, provided that access to the Premises
and any common restrooms serving the Premises shall not be materially impaired.
Tenant shall, at Tenant's sole cost and expense, repair any injury or damage to
the Premises which is not part of the Base Building, in accordance with Article
8, above, and shall return the Premises to their original condition. Landlord
shall not be liable for any inconvenience or annoyance to Tenant or its
visitors, or injury to Tenant's business resulting in any way from such damage
or the repair of the Base Building or the Common Areas; provided, however, that
if such fire or other casualty shall have damaged the Base Building or Common
Areas necessary to Tenant's occupancy, and if such damage is not the result of
the negligence or wilful misconduct of Tenant or Tenant's employees,
contractors, licensees, or invitees, Landlord shall allow Tenant a proportionate
abatement of Rent to the extent Landlord is reimbursed from the proceeds of
rental interruption insurance purchased by Landlord as part of Operating
Expenses, during the time and to the extent the Premises are unfit for occupancy
for the purposes permitted under this Lease as the sole result of the damage to
the Base Building or the Common Areas, and not occupied by Tenant as a result
thereof.


         11.2 Landlord's Option to Repair. Notwithstanding the terms of Section
11.1 of this Lease, Landlord may elect not to rebuild and/or restore the
Premises, Building and/or Project; and instead terminate this Lease by notifying
Tenant in writing of such termination within sixty (60) days after the date of
damage, such notice to include a termination date giving Tenant

                                      -14-
<PAGE>   20
ninety (90) days to vacate the Premises, but Landlord may so elect only if the
Building or Project shall be damaged by fire or other casualty or cause, whether
or not the Premises are affected, and one or more of the following conditions is
present: (i) repairs to be made by Landlord cannot reasonably be completed
within one hundred twenty (120) days after the date of damage (when such repairs
are made without the payment of overtime or other premiums); (ii) the holder of
any mortgage on the Building or Project or ground lessor with respect to the
Building or Project shall require that the insurance proceeds or any portion
thereof be used to retire the mortgage debt, or shall terminate the ground
lease, as the case may be; (iii) the damage which is required to be repaired by
Landlord is not fully covered, except for deductible amounts, by Landlord's
insurance policies; or (iv) any owner of any other portion of the Project, other
than Landlord, does not intend to repair the damage to such portion of the
Project; provided, however, that if Landlord does not elect to terminate this
Lease pursuant to Landlord's termination right as provided above, and the
repairs cannot, in the reasonable opinion of Landlord, be completed within one
hundred eighty (180) days after being commenced, Tenant may elect, no earlier
than sixty (60) days after the date of the damage and not later than ninety (90)
days after the date of such damage, to terminate this Lease by written notice to
Landlord effective as of the date specified in the notice, which date shall not
be less than thirty (30) days nor more than sixty (60) days after the date such
notice is given by Tenant. Furthermore, if neither Landlord nor Tenant has
terminated this Lease, and the repairs are not actually completed within such
180-day period, Tenant shall have the right to terminate this Lease during the
first five (5) business days of each calendar month following the end of such
period until such time as the repairs are complete, by notice to Landlord (the
"Damage Termination Notice"), effective as of a date set forth in the Damage
Termination Notice (the "Damage Termination Date"), which Damage Termination
Date shall not be less than ten (10) business days following the end of each
such month. Notwithstanding the foregoing, if Tenant delivers a Damage
Termination Notice to Landlord, then Landlord shall have the right to suspend
the occurrence of the Damage Termination Date for a period ending thirty (30)
days after the Damage Termination Date set forth in the Damage Termination
Notice by delivering to Tenant, within five (5) business days of Landlord's
receipt of the Damage Termination Notice, a certificate of Landlord's contractor
responsible for the repair of the damage certifying that it is such contractor's
good faith judgment that the repairs shall be substantially completed within
thirty (30) days after the Damage Termination Date. If repairs shall be
substantially completed prior to the expiration of such thirty-day period, then
the Damage Termination Notice shall be of no force or effect, but if the repairs
shall not be substantially completed within such thirty-day period, then this
Lease shall terminate upon the expiration of such thirty-day period. At any
time, from time to time, after the date occurring sixty (60) days after the date
of the damage, Tenant may request that Landlord inform Tenant of Landlord's
reasonable opinion of the date of completion of the repairs and Landlord shall
respond to such request within five (5) business days.


         11.3 Waiver of Statutory Provisions. The provisions of this Lease,
including this Article 11, constitute an express agreement between Landlord and
Tenant with respect to any and all damage to, or destruction of, all or any part
of the Premises, the Building or the Project, and any statute or regulation of
the State of California, including, without limitation, Sections 1932(2) and
1933(4) of the California Civil Code, with respect to any rights or obligations
concerning damage or destruction in the absence of an express agreement between
the parties, and any other statute or regulation, now or hereafter in effect,
shall have no application to this Lease or any damage or destruction to all or
any part of the Premises, the Building or the Project.

         11.4 Damage Near End of Term. In the event that the Premises, the
Building, or the Project is destroyed or damaged to any substantial extent
during the last eighteen (18) months of the Lease Term, then notwithstanding
anything contained in this Article 11, Landlord shall have the option to
terminate this Lease by giving written notice to Tenant of the exercise of such
option within thirty (30) days after such damage or destruction, in which event
this Lease shall cease and terminate as of the date of such notice, Tenant shall
pay the Base Rent and Additional Rent, properly apportioned up to such date of
damage, and both parties hereto shall thereafter be freed and discharged of all
further obligations hereunder, except as provided for in provisions of this
Lease which by their terms survive the expiration or earlier termination of the
Lease Term.

                                   ARTICLE 12
                                   NONWAIVER

         No waiver of any provision of this Lease shall be implied by any
failure of Landlord to enforce any remedy on account of the violation of such
provision, even if such violation shall



                                      -15-
<PAGE>   21
continue or be repeated subsequently, and any waiver by Landlord of any
provision of this Lease may only be in writing. Additionally, no express waiver
shall affect any provision other than the one specified in such waiver and then
only for the time and in the manner specifically stated. No receipt of monies by
Landlord from Tenant after the termination of this Lease shall in any way alter
the length of the Lease Term or of Tenant's right of possession hereunder, or
after the giving of any notice shall reinstate, continue or extend the Lease
Term or affect any notice given Tenant prior to the receipt of such monies, it
being agreed that after the service of notice or the commencement of a suit, or
after final judgment for possession of the Premises, Landlord may receive and
collect any Rent due, and the payment of said Rent shall not waive or affect
said notice, suit or judgment.

                                   ARTICLE 13
                                  CONDEMNATION

         If the whole or any part of the Premises, Building or Project shall be
taken by power of eminent domain or condemned by any competent authority for any
public or quasi-public use or purpose, or if Landlord shall grant a deed or
other instrument in lieu of such taking by eminent domain or condemnation,
Landlord shall have the option to terminate this Lease upon ninety (90) days'
notice, provided such notice is given no later than one hundred eighty (180)
days after the date of such taking, condemnation, reconfiguration, vacation,
deed or other instrument. If more than twenty-five percent (25%) of the rentable
square feet of the Premises is taken, or if access to the Premises is
substantially impaired, Tenant shall have the option to terminate this Lease
upon ninety (90) days' notice, provided such notice is given no later than one
hundred eighty (180) days after the date of such taking. Landlord shall be
entitled to the entire award or payment in connection therewith, except that
Tenant shall have the right to file any separate claim available to Tenant for
any taking of Tenant's personal property and fixtures belonging to Tenant and
removable by Tenant upon expiration of the Lease Term pursuant to the terms of
this Lease, and for moving expenses, so long as such claims do not diminish the
award available to Landlord, its ground lessor with respect to the Building or
Project or its mortgagee, and such claim is payable separately to Tenant. All
Rent shall be apportioned as of the date of such termination, or the date of
such taking, whichever shall first occur. If any part of the Premises shall be
taken, and this Lease shall not be so terminated, the Rent shall be
proportionately abated. Tenant hereby waives any and all rights it might
otherwise have pursuant to Section 1265.130 of The California Code of Civil
Procedure.


                                   ARTICLE 14
                           ASSIGNMENT AND SUBLETTING

         14.1 Transfers. Tenant shall not, without the prior written consent of
Landlord, assign, mortgage, pledge, hypothecate, encumber, or permit any lien to
attach to, or otherwise transfer, this Lease or any interest hereunder, permit
any assignment, or other transfer of this Lease or any interest hereunder by
operation of law, sublet the Premises or any part thereof, or permit the use of
the Premises by any persons other than Tenant and its employees (all of the
foregoing are hereinafter sometimes referred to collectively as "Transfers" and
any person to whom any Transfer is made or sought to be made is hereinafter
sometimes referred to as a "Transferee"). If Tenant desires Landlord's consent
to any Transfer, Tenant shall notify Landlord in writing, which notice (the
"Transfer Notice") shall include (i) the proposed effective date of the
Transfer, which shall not be less than forty-five (45) days nor more than one
hundred eighty (180) days after the date of delivery of the Transfer Notice,
(ii) a description of the portion of the Premises to be transferred (the
"Subject Space"), (iii) all of the material terms of the proposed Transfer and
the consideration therefor (including calculation of the "Transfer Premium", as
that term is defined in Section 14.3 below, in connection with such Transfer),
the name and address of the proposed Transferee, and a copy of all existing
executed and/or proposed documentation pertaining to the proposed Transfer,
including all existing operative documents to be executed to evidence such
Transfer or the agreements incidental or related to such Transfer, and (iv)
current financial statements of the proposed Transferee certified by an officer,
partner or owner thereof, and any other information reasonably required by
Landlord to determine the financial responsibility, character, and reputation of
the proposed Transferee, nature of such Transferee's business and proposed use
of the Subject Space, and such other information as Landlord may reasonably
require. Any Transfer made without Landlord's prior written consent shall, at
Landlord's option, be null, void and of no effect, and shall, at Landlord's
option, constitute a default by Tenant under this Lease. Whether or not Landlord
consents to any proposed Transfer,


                                      -16-
<PAGE>   22
Tenant shall pay Landlord's review and processing fees, as well as any
reasonable legal fees incurred by Landlord, within thirty (30) days after
written request by Landlord.

         14.2     Landlord's Consent. Landlord shall not unreasonably withhold
its consent to any proposed Transfer of the Subject Space to the Transferee on
the terms specified in the Transfer Notice. Without limitation as to other
reasonable grounds for withholding consent, the parties hereby agree that it
shall be reasonable under this Lease and under any applicable law for Landlord
to withhold consent to any proposed Transfer where one or more of the following
apply:

                  14.2.1 The Transferee is of a character or reputation or
engaged in a business which is not consistent with the quality of the Building
or the Project, or would be a significantly less prestigious occupant of the
Building than Tenant;

                  14.2.2 The Transferee is either a governmental agency or
instrumentality thereof;

                  14.2.3 The Transferee is not a party of reasonable financial
worth and/or financial stability in light of the responsibilities involved under
the Lease on the date consent is requested;

                  14.2.4 The proposed Transfer would cause a violation of
another lease for space in the Project, or would give an occupant of the Project
a right to cancel its lease;

                  14.2.5 The terms of the proposed Transfer will allow the
Transferee to exercise a right of renewal, right of expansion, right of first
offer, or other similar right held by Tenant (or will allow the Transferee to
occupy space leased by Tenant pursuant to any such right); or

                  14.2.6 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, (i) occupies space in the Project at the
time of the request for consent, (ii) is negotiating with Landlord to lease
space in the Project at such time, or (iii) has negotiated with Landlord during
the twelve (12)-month period immediately preceding the Transfer Notice.

If Landlord consents to any Transfer pursuant to the terms of this Section 14.2
(and does not exercise any recapture rights Landlord may have under Section 14.4
of this Lease), Tenant may within six (6) months after Landlord's consent, but
not later than the expiration of said six-month period, enter into such Transfer
of the Premises or portion thereof, upon substantially the same terms and
conditions as are set forth in the Transfer Notice furnished by Tenant to
Landlord pursuant to Section 14.1 of this Lease, provided that if there are any
material changes in the terms and conditions from those specified in the
Transfer Notice (i) such that Landlord would initially have been entitled to
refuse its consent to such Transfer under this Section 14.2, or (ii) which would
cause the proposed Transfer to be more favorable to the Transferee than the
terms set forth in Tenant's original Transfer Notice, Tenant shall again submit
the Transfer to Landlord for its approval and other action under this Article 14
(including Landlord's right of recapture, if any, under Section 14.4 of this
Lease). 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 Section 14.2 or otherwise has breached or acted unreasonably
under this Article 14, their sole remedies shall be declaratory judgment and an
injunction for the relief sought without any monetary damages, and Tenant hereby
waives all other remedies on its own behalf and, to the extent permitted under
all applicable laws, on behalf of the proposed Transferee.

         14.3     Transfer Premium. If Landlord consents to a Transfer, as a
condition thereto which the parties hereby agree is reasonable, Tenant shall pay
to Landlord fifty percent (50%) of any "Transfer Premium," as that term is
defined in this Section 14.3, received by Tenant from such Transferee. "Transfer
Premium" shall mean all rent, additional rent or other consideration payable by
such Transferee in excess of the Rent and Additional Rent payable by Tenant
under this Lease on a per rentable square foot basis if less than all of the
Premises is transferred. "Transfer Premium" shall also include, but not be
limited to, key money and bonus money paid by Transferee to Tenant in connection
with such Transfer, and any payment in excess of fair market value for services
rendered by Tenant to Transferee or for assets, fixtures, inventory, equipment,
or furniture transferred by Tenant to Transferee in connection with such
Transfer.



                                      -17-
<PAGE>   23
         14.4     Landlord's Option as to Subject Space. Notwithstanding
anything to the contrary contained in this Article 14, in the event Tenant
contemplates a Transfer of all or a portion of the Premises (or in the event of
any other Transfer or Transfers entered into by Tenant as a subterfuge in order
to avoid the terms of this Section 14.4), Tenant shall give Landlord notice (the
"Intention to Transfer Notice") of such contemplated Transfer (whether or not
the contemplated Transferee or the terms of such contemplated Transfer have been
determined). The Intention to Transfer Notice shall specify the portion of and
amount of rentable square feet of the Premises which Tenant intends to Transfer
(the "Contemplated Transfer Space"), the contemplated date of commencement of
the Contemplated Transfer (the "Contemplated Effective Date"), and the
contemplated length of the term of such contemplated Transfer, and shall specify
that such Intention to Transfer Notice is delivered to Landlord pursuant to this
Section 14.4 in order to allow Landlord to elect to recapture the Contemplated
Transfer Space. Thereafter, Landlord shall have the option, by giving written
notice to Tenant (the "Recapture Election Notice") within thirty (30) days after
receipt of any Intention to Transfer Notice, to recapture the Contemplated
Transfer Space. In the event the term of such contemplated Transfer is for less
than the entirety of the remaining term of this Lease, the Recapture Election
Notice shall specify the portion of the remaining term of this Lease in excess
of the term set forth in the Intention to Transfer Notice for which Landlord so
elects to recapture the Contemplated Transfer Space. In the event such option is
exercised by Landlord, this Lease shall be canceled and terminated with respect
to such Contemplated Transfer Space as of the Contemplated Effective Date until
the date specified in the Recapture Election Notice. In the event of a recapture
by Landlord, if this Lease shall be canceled with respect to less than the
entire Premises, the Rent reserved herein shall be prorated on the basis of the
number of rentable square feet retained by Tenant in proportion to the number of
rentable square feet contained in the Premises, and this Lease as so amended
shall continue thereafter in full force and effect, and upon request of either
party, the parties shall execute written confirmation of the same. If Landlord
declines, or fails to timely elect to recapture such Contemplated Transfer Space
under this Section 14.4, then, subject to the other terms of this Article 14,
for a period of nine (9) months (the "Nine Month Period") commencing on the last
day of such thirty (30) day period, Landlord shall not have any right to
recapture the Contemplated Transfer Space with respect to any Transfer made
during the Nine Month Period, provided that any such Transfer is substantially
on the terms set forth in the Intention to Transfer Notice, and provided further
that any such Transfer shall be subject to the remaining terms of this Article
14. If such a Transfer is not so consummated within the Nine Month Period (or if
a Transfer is so consummated, then upon the expiration of the term of any
Transfer of such Contemplated Transfer Space consummated within such Nine Month
Period), Tenant shall again be required to submit a new Intention to Transfer
Notice to Landlord with respect any contemplated Transfer, as provided above in
this Section 14.4.

         14.5     Effect of Transfer. If Landlord consents to a Transfer, (i)
the terms and conditions of this Lease shall in no way be deemed to have been
waived or modified, (ii) such consent shall not be deemed consent to any further
Transfer by either Tenant or a Transferee, (iii) Tenant shall deliver to
Landlord, promptly after execution, an original executed copy of all
documentation pertaining to the Transfer in form reasonably acceptable to
Landlord, (iv) Tenant shall furnish upon Landlord's request a complete
statement, certified by an independent certified public accountant, or Tenant's
chief financial officer, setting forth in detail the computation of any Transfer
Premium Tenant has derived and shall derive from such Transfer, and (v) no
Transfer relating to this Lease or agreement entered into with respect thereto,
whether with or without Landlord's consent, shall relieve Tenant or any
guarantor of the Lease from liability under this Lease.

         14.6     Additional Transfers. For purposes of this Lease, the term
"Transfer" shall also include (i) if Tenant is a partnership, the withdrawal or
change, voluntary, involuntary or by operation of law, of twenty-five percent
(25%) or more of the partners, or transfer of twenty-five percent or more of
partnership interests, within a twelve (12)-month period, or the dissolution of
the partnership without immediate reconstitution thereof, and (ii) if Tenant is
a closely held corporation (i.e., whose stock is not publicly held and not
traded through an exchange or over the counter), (A) the dissolution, merger,
consolidation or other reorganization of Tenant or, (B) the sale or other
transfer of more than an aggregate of twenty-five percent (25%) of the voting
shares of Tenant (other than to immediate family members by reason of gift or
death) within a twelve (12)-month period, or (C) the sale, mortgage,
hypothecation or pledge of more than an aggregate of twenty-five percent (25%)
of the value of the unencumbered assets of Tenant within a twelve (12)-month
period.



                                      -18-
<PAGE>   24
                                   ARTICLE 15
                             SURRENDER OF PREMISES;
                            REMOVAL OF TRADE FIXTURES

         15.1     Surrender of Premises. No act or thing done by Landlord or any
agent or employee of Landlord during the Lease Term shall be deemed to
constitute an acceptance by Landlord of a surrender of the Premises unless such
intent is specifically acknowledged in a writing signed by Landlord. The
delivery of keys to the Premises to Landlord or any agent or employee of
Landlord shall not constitute a surrender of the Premises or effect a
termination of this Lease, whether or not the keys are thereafter retained by
Landlord, and notwithstanding such delivery Tenant shall be entitled to the
return of such keys at any reasonable time upon request until this Lease shall
have been properly terminated. The voluntary or other surrender of this Lease by
Tenant, whether accepted by Landlord or not, or a mutual termination hereof,
shall not work a merger, and at the option of Landlord shall operate as an
assignment to Landlord of all subleases or subtenancies affecting the Premises.

         15.2     Removal of Tenant Property by Tenant. Upon the expiration of
the Lease Term, or upon any earlier termination of this Lease, Tenant shall,
subject to the provisions of this Article 15, quit and surrender possession of
the Premises to Landlord in as good order and condition as when Tenant took
possession and as thereafter improved by Landlord and/or Tenant, reasonable wear
and tear and repairs which are specifically made the responsibility of Landlord
hereunder excepted. Upon such expiration or termination, Tenant shall, without
expense to Landlord, remove or cause to be removed from the Premises all debris
and rubbish, and such items of furniture, equipment, free-standing cabinet work,
and other articles of personal property owned by Tenant or installed or placed
by Tenant at its expense in the Premises, and such similar articles of any other
persons claiming under Tenant, as Landlord may, in its sole discretion, require
to be removed, and Tenant shall repair at its own expense all damage to the
Premises and Building resulting from such removal.

                                   ARTICLE 16
                                  HOLDING OVER

         If Tenant holds over after the expiration of the Lease Term hereof,
with or without the express or implied consent of Landlord, such tenancy shall
be from month-to-month only, and shall not constitute a renewal hereof or an
extension for any further term, and in such case Base Rent shall be payable at a
monthly rate equal to twice the Base Rent applicable during the last rental
period of the Lease Term under this Lease. Such month-to-month tenancy shall be
subject to every other applicable term, covenant and agreement contained herein.
Nothing contained in this Article 16 shall be construed as consent by Landlord
to any holding over 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 other termination of this Lease. The
provisions of this Article 16 shall not be deemed to limit or constitute a
waiver of any other rights or remedies of Landlord provided herein or at law. If
Tenant fails to surrender the Premises upon the termination or expiration of
this Lease, in addition to any other liabilities to Landlord accruing therefrom,
Tenant shall protect, defend, indemnify and hold Landlord harmless from all
loss, costs (including reasonable attorneys' fees) and liability resulting from
such failure, including, without limiting the generality of the foregoing, any
claims made by any succeeding tenant founded upon such failure to surrender
(including such tenant's lost profits) and any lost profits to Landlord
resulting therefrom.

                                   ARTICLE 17
                              ESTOPPEL CERTIFICATES


         Within ten (10) days following a request in writing by Landlord, Tenant
shall execute and deliver to Landlord an estoppel certificate, which, as
submitted by Landlord, shall be substantially in the form of Exhibit D, attached
hereto (or such other form as may be required by any prospective mortgagee or
purchaser of the Project, or any portion thereof), indicating therein any
exceptions thereto that may exist at that time, and shall also contain any other
information reasonably requested by Landlord or Landlord's mortgagee or
prospective mortgagee. Tenant shall execute and deliver whatever other
instruments may be reasonably required for such purposes. Failure of Tenant to
timely execute and deliver such estoppel certificate or other instruments shall
constitute an acceptance of the Premises and an acknowledgment by Tenant that
statements included in the estoppel certificate are true and correct, without
exception.



                                      -19-
<PAGE>   25
                                   ARTICLE 18
                                  SUBORDINATION

         This Lease shall be subject and subordinate to all present and future
ground or underlying leases of the Building or Project and to the lien of any
first mortgage or trust deed, now or hereafter in force against the Building or
Project, if any, and to all renewals, extensions, modifications, consolidations
and replacements thereof, and to all advances made or hereafter to be made upon
the security of such mortgages or trust deeds, unless the holders of such
mortgages or trust deeds, or the lessors under such ground lease or underlying
leases, require in writing that this Lease be superior thereto. Tenant covenants
and agrees in the event any proceedings are brought for the foreclosure of any
such mortgage or deed in lieu thereof, to attorn, without any deductions or
set-offs whatsoever, to the purchaser or any successors thereto upon any such
foreclosure sale or deed in lieu thereof if so requested to do so by such
purchaser, and to recognize such purchaser as the lessor under this Lease.
Tenant shall, within five (5) days of request by Landlord, execute such further
instruments or assurances as Landlord may reasonably deem necessary to evidence
or confirm the subordination or superiority of this Lease to any such mortgages,
trust deeds, ground leases or underlying leases. 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 hereunder in the event of any foreclosure proceeding
or sale.

                                   ARTICLE 19
                               DEFAULTS; REMEDIES

         19.1     Defaults. The occurrence of any of the following shall
constitute a default of this Lease by Tenant:

                  19.1.1 Any failure by Tenant to pay any Rent or any other
charge required to be paid under this Lease, or any part thereof, when due; or

                  19.1.2 Any failure by Tenant to observe or perform any other
provision, covenant or condition of this Lease to be observed or performed by
Tenant where such failure continues for fifteen (15) days after written notice
thereof from Landlord to Tenant; or

                  19.1.3 Abandonment or vacation of the Premises by Tenant; or

                  19.1.4 To the extent permitted by law, a general assignment by
Tenant or any guarantor of the Lease for the benefit of creditors, or the filing
by or against Tenant or any guarantor of any proceeding under an insolvency or
bankruptcy law, unless in the case of a proceeding filed against Tenant or any
guarantor the same is dismissed within sixty (60) days, or the appointment of a
trustee or receiver to take possession of all or substantially all of the assets
of Tenant or any guarantor, unless possession is restored to Tenant or such
guarantor within thirty (30) days, or any execution or other judicially
authorized seizure of all or substantially all of Tenant's assets located upon
the Premises or of Tenant's interest in this Lease, unless such seizure is
discharged within thirty (30) days; or

                  19.1.5 The hypothecation or assignment of this Lease or
subletting of the Premises, or attempts at such actions, in violation of Article
14 hereof; or

                  19.1.6 The failure by Tenant to occupy the Premises within
thirty (30) days after the Substantial Completion of the Premises.

         19.2     Remedies Upon Default. Upon the occurrence of any event of
default by Tenant, Landlord shall have, in addition to any other remedies
available to Landlord at law or in equity, the option to pursue any one or more
of the following remedies, each and all of which shall be cumulative and
nonexclusive, without any notice or demand whatsoever.

                  19.2.1 Terminate this Lease, in which event Tenant shall
immediately surrender the Premises to Landlord, and if Tenant fails to do so,
Landlord may, without prejudice to any other remedy which it may have for
possession or arrearages in rent, enter upon and take possession of the Premises
and expel or remove Tenant and any other person who may be occupying the
Premises or any part thereof, without being liable for prosecution or any claim
or damages therefor; and Landlord may recover from Tenant the following:



                                      -20-
<PAGE>   26
                  (i) The worth at the time of award of any unpaid rent which
         has 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
         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, specifically including but not
         limited to, brokerage commissions and advertising expenses incurred,
         expenses of remodeling the Premises or any portion thereof for a new
         tenant, whether for the same or a different use, and any special
         concessions made to obtain a new tenant; and

                  (v) At Landlord's election, such other 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 Section 19.2 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 Paragraphs 19.2.1(i)
and (ii), above, the "worth at the time of award" shall be computed by allowing
interest at the rate set forth in Article 25 of this Lease, but in no case
greater than the maximum amount of such interest permitted by law. As used in
Paragraph 19.2.1(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%).

                  19.2.2 Landlord shall have 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.

19.3 Sublessees of Tenant. Whether or not Landlord elects to terminate this
Lease on account of any default by Tenant as set forth in this Article 19,
Landlord shall have the right to terminate any and all subleases, licenses,
concessions or other consensual arrangements for possession entered into by
Tenant and affecting the Premises or may, in Landlord's sole discretion, succeed
to Tenant's interest in such subleases, licenses, concessions or arrangements.
In the event of Landlord's election to succeed to Tenant's interest in any such
subleases, licenses, concessions or arrangements, Tenant shall, as of the date
of notice by Landlord of such election, have no further right to or interest in
the rent or other consideration receivable thereunder.

                                   ARTICLE 20
                                 ATTORNEYS' FEES

         If either party commences litigation against the other for the specific
performance of this Lease, for damages for the breach hereof or otherwise for
enforcement of any remedy hereunder, the parties hereto agree to and hereby do
waive any right to a trial by jury and, in the event of any such commencement of
litigation, the prevailing party shall be entitled to recover from the other
party such costs and reasonable attorneys' fees as may have been incurred.

                                   ARTICLE 21
                       SECURITY DEPOSIT; LETTER OF CREDIT

         21.1     Security Deposit. Concurrently with Tenant's execution of this
Lease, Tenant shall deposit with Landlord by certified or cashier's check a
security deposit (the "Security Deposit") in the amount set forth in Section 8
of the Summary. The Security Deposit shall be held by Landlord as security for
the faithful performance by Tenant of all the terms, covenants,





                                      -21-
<PAGE>   27
and conditions of this Lease to be kept and performed by Tenant during the Lease
Term. If Tenant defaults with respect to any provisions of this Lease,
including, but not limited to, the provisions relating to the payment of Rent,
Landlord may, but shall not be required to, use, apply or retain all or any part
of the Security Deposit for the payment of any Rent or any other sum in default,
or for the payment of any amount that Landlord may spend or become obligated to
spend by reason of Tenant's default, or to compensate Landlord for any other
loss or damage that Landlord may suffer by reason of Tenant's default. If any
portion of the Security Deposit is so used or applied, Tenant shall, within five
(5) days after written demand therefor, deposit cash with Landlord in an amount
sufficient to restore the Security Deposit to its original amount, and Tenant's
failure to do so shall be a default under this Lease. If Tenant shall fully and
faithfully perform every provision of this Lease to be performed by it, the
Security Deposit, or any balance thereof, shall be returned to Tenant, or, at
Landlord's option, to the last assignee of Tenant's interest hereunder, within
sixty (60) days following the expiration of the Lease Term. Tenant shall not be
entitled to any interest on the Security Deposit.

         21.2     Letter of Credit.

                  21.2.1 Delivery of the Letter of Credit. Tenant shall deliver
to Landlord, on or before May 1, 2000, an unconditional, clean, irrevocable
letter of credit (the "L-C") in the amount of Two Hundred Thirty Thousand and
No/100 Dollars ($230,000.00) (the "L-C Amount"), which L-C shall be issued by a
money-center bank (a bank which accepts deposits, maintains accounts, has a
local Los Angeles office which will negotiate a letter of credit and whose
deposits are insured by the FDIC) reasonably acceptable to Landlord, and which
L-C shall be in a form and content as set forth in Exhibit F, attached to this
Lease. Tenant shall pay all expenses, points and/or fees charged by such bank in
connection with the issuance, transfer, or drawing of the L-C.

                  21.2.2 Application of the L-C. The L-C shall be held by
Landlord as security for the faithful performance by Tenant of all the terms,
covenants, and conditions of this Lease to be kept and performed by Tenant
during the Lease Term. The L-C shall not be mortgaged, assigned or encumbered in
any manner whatsoever by Tenant without the prior written consent of Landlord.
If Tenant defaults with respect to any provisions of this Lease, including, but
not limited to, the provisions relating to the payment of Rent, or if Tenant
fails to renew the L-C at least thirty (30) days before its expiration, Landlord
may, but shall not be required to, immediately draw upon all or any portion of
the L-C for payment of any Rent or any other sum in default, or for the payment
of any amount that Landlord may reasonably spend or may become obligated to
spend by reason of Tenant's default, or to compensate Landlord for any other
loss or damage that Landlord may suffer by reason of Tenant's default.
Additionally, if at any time Tenant fails to renew the L-C at least thirty (30)
days before its expiration, such failure shall be a material default under this
Lease, and Landlord may, but shall not be required to, draw upon all or any
portion of the L-C and hold any amounts so drawn as a part of the "L-C Security
Deposit," defined below. The use, application or retention of the L-C, or any
portion thereof, by Landlord shall not (a) prevent Landlord from exercising any
other right or remedy provided by this Lease or by law, it being intended that
Landlord shall not first be required to proceed against the L-C, nor (b) operate
as a limitation on any recovery to which Landlord may otherwise be entitled. Any
amount of the L-C which is drawn upon by Landlord, but is not used or applied by
Landlord shall be held by Landlord and deemed a security deposit (the "L-C
Security Deposit"). If any portion of the L-C is drawn upon, Tenant shall,
within five (5) days after written demand therefor, either (i) deposit cash with
Landlord (which cash shall be applied by Landlord to the L-C Security Deposit)
in an amount sufficient to cause the sum of the L-C Security Deposit and the
amount of the remaining L-C to be equivalent to the amount of the L-C then
required under this Lease or (ii) reinstate the L-C to the amount then required
under this Lease, and if any portion of the L-C Security Deposit is used or
applied, Tenant shall, within five (5) days after written demand therefor,
deposit cash with Landlord (which cash shall be applied by Landlord to the L-C
Security Deposit) in an amount sufficient to restore the L-C Security Deposit to
the amount then required under this Lease, and Tenant's failure to do so shall
be a default under this Lease. Tenant acknowledges that Landlord has the right
to transfer or mortgage its interest in the Project and the Building and in this
Lease and Tenant agrees that in the event of any such transfer or mortgage,
Landlord shall have the right to transfer or assign the L-C Security Deposit
and/or the L-C to the transferee or mortgagee, and in the event of such
transfer, Tenant shall look solely to such transferee or mortgagee for the
return of the L-C Security Deposit and/or the L-C.



                                      -22-
<PAGE>   28
                                   ARTICLE 22
                         SUBSTITUTION OF OTHER PREMISES

         Landlord shall have the privilege of moving Tenant to other space in
the Building comparable to the Premises, and all terms hereof shall apply to the
new space with equal force; provided that Tenant's then existing monetary
obligations under this Lease shall not be increased as a result of such
relocation of the Premises. In such event, Landlord shall give Tenant at least
sixty (60) days prior notice, shall provide Tenant, at Landlord's sole cost and
expense, with tenant improvements at least equal in quality to those in the
Premises and shall move Tenant's effects to the new space at Landlord's sole
cost and expense at such time and in such manner as to inconvenience Tenant as
little as practicable. In addition, Landlord shall reimburse Tenant for the
reasonable costs and expenses incurred by Tenant in connection with such
relocation (including, but not limited to, the costs of reasonable supplies of
replacement stationery and telephone installations), within thirty (30) days of
Landlord's receipt of an invoice therefor. Simultaneously with such relocation
of the Premises, the parties shall immediately execute an amendment to this
Lease stating the relocation of the Premises.

                                   ARTICLE 23
                                      SIGNS

         Tenant's identifying signage shall be provided by Landlord, at Tenant's
cost, and such signage shall be comparable to that used by Landlord for other
similar floors in the Building and shall comply with Landlord's Building
standard signage program. Any signs, notices, logos, pictures, names or
advertisements which are installed and that have not been separately approved by
Landlord may be removed without notice by Landlord at the sole expense of
Tenant. Tenant may not install any signs on the exterior or roof of the Project
or the Common Areas. Any signs, window coverings, or blinds (even if the same
are located behind the Landlord-approved window coverings for the Building), or
other items visible from the exterior of the Premises or Building, shall be
subject to the prior approval of Landlord, in its sole discretion. Tenant's
identifying entry on the building directory located in the lobby of the Building
shall be provided by Landlord, at Tenant's cost.

                                   ARTICLE 24
                               COMPLIANCE WITH LAW

         Tenant shall not do anything or suffer anything to be done in or about
the Premises which will in any way conflict with any law, statute, ordinance or
other governmental rule, regulation or requirement now in force or which may
hereafter be enacted or promulgated. At its sole cost and expense, Tenant shall
promptly comply with all such governmental measures, other than the making of
structural changes or changes to the Building's life safety system. Should any
standard or regulation now or hereafter be imposed on Landlord or Tenant by a
state, federal or local governmental body charged with the establishment,
regulation and enforcement of occupational, health or safety standards for
employers, employees, landlords or tenants, then Tenant agrees, at its sole cost
and expense, to comply promptly with such standards or regulations. The judgment
of any court of competent jurisdiction or the admission of Tenant in any
judicial action, regardless of whether Landlord is a party thereto, that Tenant
has violated any of said governmental measures, shall be conclusive of that fact
as between Landlord and Tenant.

                                   ARTICLE 25
                                  LATE CHARGES

         If any installment of Rent or any other sum due from Tenant shall not
be received by Landlord or Landlord's designee within five (5) days after said
amount is due, then Tenant shall pay to Landlord a late charge equal to five
percent (5%) of the overdue amount plus any attorneys' fees incurred by Landlord
by reason of Tenant's failure to pay Rent and/or other charges when due
hereunder. The late charge shall be deemed Additional Rent and the right to
require it shall be in addition to all of Landlord's other rights and remedies
hereunder or at law and shall not be construed as liquidated damages or as
limiting Landlord's remedies in any manner. In addition to the late charge
described above, any Rent or other amounts owing hereunder which are not paid
within five (5) days after the date they are due shall bear interest from the
date when due until paid at a rate per annum equal to the lesser of (i) eighteen
percent (18%) per annum or (ii) the highest rate permitted by applicable law.




                                      -23-
<PAGE>   29
                                   ARTICLE 26
              LANDLORD'S RIGHT TO CURE DEFAULT; PAYMENTS BY TENANT

         26.1     Landlord's Cure. All covenants and agreements to be kept or
performed by Tenant under this Lease shall be performed by Tenant at Tenant's
sole cost and expense and without any reduction of Rent. If Tenant shall fail to
perform any of its obligations under this Lease, within a reasonable time after
such performance is required by the terms of this Lease, Landlord may, but shall
not be obligated to, after reasonable prior notice to Tenant (except in the case
of an emergency), make any such payment or perform any such act on Tenant's part
without waiving its rights based upon any default of Tenant and without
releasing Tenant from any obligations hereunder.

         26.2     Tenant's Reimbursement. Except as may be specifically provided
to the contrary in this Lease, Tenant shall pay to Landlord, within fifteen (15)
days after delivery by Landlord to Tenant of statements therefor: (i) sums equal
to expenditures reasonably made and obligations incurred by Landlord in
connection with the remedying by Landlord of Tenant's defaults pursuant to the
provisions of Section 26.1; (ii) sums equal to all losses, costs, liabilities,
damages and expenses referred to in Article 10 of this Lease; and (iii) sums
equal to all expenditures made and obligations incurred by Landlord in
collecting or attempting to collect the Rent or in enforcing or attempting to
enforce any rights of Landlord under this Lease or pursuant to law, including,
without limitation, all legal fees and other amounts so expended. Tenant's
obligations under this Section 26.2 shall survive the expiration or sooner
termination of the Lease Term.

                                   ARTICLE 27
                                ENTRY BY LANDLORD

         Landlord reserves the right at all reasonable times and upon reasonable
notice to Tenant (except in the case of an emergency) to enter the Premises to
(i) inspect them; (ii) show the Premises to prospective purchasers, mortgagees
or tenants, or to the ground or underlying lessors; (iii) post notices of
nonresponsibility; or (iv) alter, improve or repair the Premises or the Building
if necessary to comply with current building codes or other applicable laws, or
for structural alterations, repairs or improvements to the Building.
Notwithstanding anything to the contrary contained in this Article 27, Landlord
may enter the Premises at any time to (A) perform services required of Landlord;
(B) take possession due to any breach of this Lease in the manner provided
herein; and (C) perform any covenants of Tenant which Tenant fails to perform.
Landlord may make any such entries without the abatement of Rent and may take
such reasonable steps as required to accomplish the stated purposes. Tenant
hereby waives any claims for damages or for any injuries or inconvenience to or
interference with Tenant's business, lost profits, any loss of occupancy or
quiet enjoyment of the Premises, and any other loss occasioned thereby. For each
of the above purposes, Landlord shall at all times have a key with which to
unlock all the doors in the Premises, excluding Tenant's vaults, safes and
special security areas designated in advance by Tenant. In an emergency,
Landlord shall have the right to use any means that Landlord may deem proper to
open the doors in and to the Premises. Any entry into the Premises by Landlord
in the manner hereinbefore described shall not be deemed to be a forcible or
unlawful entry into, or a detainer of, the Premises, or an actual or
constructive eviction of Tenant from any portion of the Premises.

                                   ARTICLE 28
                                 TENANT PARKING

         Tenant hereby rents from Landlord, commencing on the Lease Commencement
Date, the amount of parking passes set forth in Section 9 of the Summary, on a
monthly basis throughout the Lease Term, which parking passes shall pertain to
the Project parking facility. Tenant shall pay to Landlord for automobile
parking passes on a monthly basis the prevailing rate charged from time to time
for parking passes in the Project. At any time during the Lease Term, Landlord
shall have the right to convert any of the parking passes rented by Tenant to
passes to be used in tandem parking spaces and/or valet assisted parking areas.
Tenant's continued right to use the parking passes is conditioned upon Tenant
abiding by all rules and regulations which are prescribed from time to time for
the orderly operation and use of the Project parking facility and upon Tenant's
cooperation in seeing that Tenant's employees and visitors also comply with such
rules and regulations. 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



                                      -24-
<PAGE>   30
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
delegate its responsibilities hereunder to a parking operator in which case such
parking operator shall have all the rights of control attributed hereby to the
Landlord. The parking passes rented by Tenant pursuant to this Article 28 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.

                                   ARTICLE 29
                            MISCELLANEOUS PROVISIONS

         29.1     Binding Effect. Subject to all other provisions of this Lease,
each of the provisions of this Lease shall extend to and shall, as the case may
require, bind or inure to the benefit not only of Landlord and of Tenant, but
also of their respective successors or assigns, provided this clause shall not
permit any assignment by Tenant contrary to the provisions of Article 14 of this
Lease.

         29.2     Modification of Lease. Should any current or prospective
mortgagee or ground lessor for the Building or Project require a modification or
modifications of this Lease, which modification or modifications will not cause
an increased cost or expense to Tenant or in any other way materially and
adversely change the rights and obligations of Tenant hereunder, then and in
such event, Tenant agrees that this Lease may be so modified and agrees to
execute whatever documents are reasonably required therefor and to deliver the
same to Landlord within ten (10) days following a request therefor. Should
Landlord or any such prospective mortgagee or ground lessor require execution of
a short form of Lease for recording, containing, among other customary
provisions, the names of the parties, a description of the Premises and the
Lease Term, Tenant agrees to execute and deliver such short form of Lease to
Landlord within ten (10) days following the request therefor.

         29.3     Transfer of Landlord's Interest. Tenant acknowledges that
Landlord has the right to transfer all or any portion of its interest in the
Project or Building and in this Lease, and Tenant agrees that in the event of
any such transfer, Landlord shall automatically be released from all liability
under this Lease and Tenant agrees to look solely to such transferee for the
performance of Landlord's obligations hereunder after the date of transfer.
Tenant further acknowledges that Landlord may assign its interest in this Lease
to the holder of any mortgage or deed of trust as additional security, but
agrees that an assignment shall not release Landlord from its obligations
hereunder and Tenant shall continue to look to Landlord for the performance of
its obligations hereunder.

         29.4     Prohibition Against Recording. Except as provided in Section
29.3 of this Lease, neither this Lease, nor any memorandum, affidavit or other
writing with respect thereto, shall be recorded by Tenant or by anyone acting
through, under or on behalf of Tenant, and the recording thereof in violation of
this provision shall make this Lease null and void at Landlord's election.

         29.5     Captions. The captions of Articles and Sections are for
convenience only and shall not be deemed to limit, construe, affect or alter the
meaning of such Articles and Sections.

         29.6     Time of Essence. Time is of the essence of this Lease and each
of its provisions.

         29.7     Partial Invalidity. If any term, provision or condition
contained in this Lease shall, to any extent, be invalid or unenforceable, the
remainder of this Lease, or the application of such term, provision or condition
to persons or circumstances other than those with respect to which it is invalid
or unenforceable, shall not be affected thereby, and each and every other term,
provision and condition of this Lease shall be valid and enforceable to the
fullest extent possible permitted by law.

         29.8     No Warranty. In executing and delivering this Lease, Tenant
has not relied on any representations, including, but not limited to, any
representation as to the amount of any item comprising Additional Rent or the
amount of the Additional Rent in the aggregate or that Landlord is furnishing
the same services to other tenants, at all, on the same level or on the same
basis, or any warranty or any statement of Landlord which is not set forth
herein or in one or more of the exhibits attached hereto.



                                      -25-
<PAGE>   31
         29.9     Child Care Facilities. Tenant acknowledges that any child care
facilities located in the Project (the "Child Care Facilities") which are
available to Tenant and Tenant's employees are provided by a third party (the
"Child Care Provider") which is leasing space in the Project, and not by
Landlord. If Tenant or its employees choose to use the Child Care Facilities,
Tenant acknowledges that Tenant and Tenant's employees are not relying upon any
investigation which Landlord may have conducted concerning the Child Care
Provider or any warranties or representation with respect thereto, it being the
sole responsibility of Tenant and the individual user of the Child Care
Facilities to conduct any and all investigations of the Child Care Facilities
prior to making use thereof. Accordingly, Landlord shall have no responsibility
with respect to the quality or care provided by the Child Care Facilities, or
for any acts or omissions of the Child Care Provider. Furthermore, Tenant, for
Tenant and for Tenant's employees, hereby agrees that Landlord, its members and
their respective partners, subpartners, officers, agents, servants, employees,
and independent contractors shall not be liable for, and are hereby released
from any responsibility for any loss, cost, damage, expense or liability, either
to person or property, arising from the use of the Child Care Facilities by
Tenant or Tenant's employees. Tenant hereby covenants that Tenant shall inform
all of Tenant's employees of the provisions of this Section 29.9 prior to such
employees' use of the Child Care Facilities.

         29.10    Entire Agreement. It is understood and acknowledged that there
are no oral agreements between the parties hereto affecting this Lease and this
Lease supersedes and cancels any and all previous negotiations, arrangements,
brochures, agreements and understandings, if any, between the parties hereto or
displayed by Landlord to Tenant with respect to the subject matter thereof, and
none thereof shall be used to interpret or construe this Lease. This Lease and
any side letter or separate agreement executed by Landlord and Tenant in
connection with this Lease and dated of even date herewith, contain all of the
terms, covenants, conditions, warranties and agreements of the parties relating
in any manner to the rental, use and occupancy of the Premises and shall be
considered to be the only agreements between the parties hereto and their
representatives and agents. None of the terms, covenants, conditions or
provisions of this Lease can be modified, deleted or added to except in writing
signed by the parties hereto.

         29.11    Right to Lease. Landlord reserves the absolute right to effect
such other tenancies in the Project as Landlord in the exercise of its sole
business judgment shall determine to best promote the interests of the Building
or Project. Tenant does not rely on the fact, nor does Landlord represent, that
any specific tenant or type or number of tenants shall, during the Lease Term,
occupy any space in the Building or Project.

         29.12    Force Majeure. Any prevention, delay or stoppage due to
strikes, lockouts, labor disputes, acts of God, inability to obtain services,
labor, or materials or reasonable substitutes therefor, governmental actions,
civil commotions, fire or other casualty, and other causes beyond the reasonable
control of the party obligated to perform, except with respect to the
obligations imposed with regard to Rent and other charges to be paid by Tenant
pursuant to this Lease (collectively, the "Force Majeure"), notwithstanding
anything to the contrary contained in this Lease, shall excuse the performance
of such party for a period equal to any such prevention, delay or stoppage and,
therefore, if this Lease specifies a time period for performance of an
obligation of either party, that time period shall be extended by the period of
any delay in such party's performance caused by a Force Majeure.

         29.13    Notices. All notices, demands, statements, designations,
approvals or other communications (collectively, "Notices") given or required to
be given by either party to the other hereunder shall be in writing, shall be
sent by United States certified or registered mail, postage prepaid, return
receipt requested, or delivered personally (i) to Tenant at the appropriate
address set forth in Section 11 of the Summary, or to such other place as Tenant
may from time to time designate in a Notice to Landlord; or (ii) to Landlord at
the following addresses, or to such other firm or to such other place as
Landlord may from time to time designate in a Notice to Tenant:

                  J.P. Morgan Investment Management, Inc.
                  522 Fifth Avenue
                  12th Floor
                  New York, New York 10036
                  Attention:  Mr. David Chen, Vice-President

                  and



                                      -26-
<PAGE>   32
                  Trammell Crow Company
                  2425 Olympic Boulevard
                  Suite 520-East
                  Santa Monica, California  90404
                  Attention:  Building Manager

                  With a copy to:

                  Allen, Matkins, Leck, Gamble & Mallory
                  1999 Avenue of the Stars, Suite 1800
                  Los Angeles, California 90067
                  Attn:  Anton N. Natsis, Esq.

Any Notice will be deemed given on the date it is mailed as provided in this
Section 29.13 or upon the date personal delivery is made. If Tenant is notified
of the identity and address of the holder of any deed of trust or ground or
underlying lessor, Tenant shall give to such mortgagee or ground or underlying
lessor written notice of any default by Landlord under the terms of this Lease
by registered or certified mail, and such mortgagee or ground or underlying
lessor shall be given a reasonable opportunity to cure such default prior to
Tenant's exercising any remedy available to Tenant.

         29.14    Joint and Several. If there is more than one Tenant, the
obligations imposed upon Tenant under this Lease shall be joint and several.

         29.15    Authority. If Tenant is a corporation or partnership, each
individual executing this Lease on behalf of Tenant hereby represents and
warrants that Tenant is a duly formed and existing entity qualified to do
business in California and that Tenant has full right and authority to execute
and deliver this Lease and that each person signing on behalf of Tenant is
authorized to do so.

         29.16    Governing Law. This Lease shall be construed and enforced in
accordance with the laws of the State of California.

         29.17    Submission of Lease. Submission of this instrument for
examination or signature by Tenant does not constitute a reservation of or an
option for lease, and it is not effective as a lease or otherwise until
execution and delivery by both Landlord and Tenant.

         29.18    Brokers. Landlord and Tenant hereby warrant to each other that
they have had no dealings with any real estate broker or agent in connection
with the negotiation of this Lease, excepting only the real estate brokers or
agents specified in Section 10 of the Summary (the "Brokers"), whose commissions
shall be the responsibility of Landlord pursuant to a separate written
agreement, and that they know of no other real estate broker or agent who is
entitled to a commission in connection with this Lease. Each party agrees to
indemnify and defend the other party against and hold the other party harmless
from any and all claims, demands, losses, liabilities, lawsuits, judgments, and
costs and expenses (including without limitation reasonable attorneys' fees)
with respect to any leasing commission or equivalent compensation alleged to be
owing on account of any dealings with any real estate broker or agent, other
than the Brokers, occurring by, through, or under the indemnifying party.

         29.19    Independent Covenants. This Lease shall be construed as though
the covenants herein between Landlord and Tenant are independent and not
dependent and Tenant hereby expressly waives the benefit of any statute to the
contrary and agrees that if Landlord fails to perform its obligations set forth
herein, Tenant shall not be entitled to make any repairs or perform any acts
hereunder at Landlord's expense or to any setoff of the Rent or other amounts
owing hereunder against Landlord; provided, however, that the foregoing shall in
no way impair the right of Tenant to commence a separate action against Landlord
for any violation by Landlord of the provisions hereof so long as notice is
first given to Landlord and any holder of a mortgage or deed of trust covering
the Building or Project or any portion thereof, whose address has theretofore
been given to Tenant, and an opportunity is granted to Landlord and such holder
to correct such violations as provided above.

         29.20    Project or Building Name and Signage. Landlord shall have the
right at any time to change the name of the Project or Building and to install,
affix and maintain any and all signs




                                      -27-
<PAGE>   33
on the exterior and on the interior of the Project or Building as Landlord may,
in Landlord's sole discretion, desire. Tenant shall not use the name of the
Project or Building or use pictures or illustrations of the Project or Building
in advertising or other publicity, without the prior written consent of
Landlord.

         29.21    Transportation Management. Tenant shall fully comply with all
present or future programs intended to manage parking, transportation or traffic
in and around the Project or Building, and in connection therewith, Tenant shall
take responsible action for the transportation planning and management of all
employees located at the Premises by working directly with Landlord, any
governmental transportation management organization or any other
transportation-related committees or entities. Such programs may include,
without limitation: (i) restrictions on the number of peak-hour vehicle trips
generated by Tenant; (ii) increased vehicle occupancy; (iii) implementation of
an in-house ridesharing program and an employee transportation coordinator; (iv)
working with employees and any Project, Building or area-wide ridesharing
program manager; (v) instituting employer-sponsored incentives (financial or
in-kind) to encourage employees to rideshare; and (vi) utilizing flexible work
shifts for employees.

         29.22    No Discrimination. Landlord and Tenant each covenants by and
for itself, its respective heirs, executors, administrators and assigns, and all
persons claiming under or through each of them, and this Lease is made and
accepted upon and subject to the following conditions: that there shall be no
discrimination against or segregation of any person or group of persons, on
account of race, color, creed, sex, religion, marital status, ancestry or
national origin in the leasing, subleasing, transferring, use, or enjoyment of
the Premises, and neither Landlord nor Tenant shall itself, or any person
claiming under or through either Landlord or Tenant, establish or permit such
practice or practices of discrimination or segregation with reference to the
selection, location, number, use or occupancy, of tenants, lessees, sublessees,
subtenants or vendees in the Premises.

         29.23    Hazardous Material. As used herein, the term "Hazardous
Material" means any hazardous or toxic substance, material or waste which is or
becomes regulated by, or is dealt with in, any local governmental authority, the
State of California or the United States Government. Tenant acknowledges that
Landlord may incur costs (A) for complying with laws, codes, regulations or
ordinances relating to Hazardous Material, or (B) otherwise in connection with
Hazardous Material including, without limitation, the following: (i) Hazardous
Material present in soil or ground water; (ii) Hazardous Material that migrates,
flows, percolates, diffuses or in any way moves onto or under the Project; (iii)
Hazardous Material present on or under the Project as a result of any discharge,
dumping or spilling (whether accidental or otherwise) on the Project by other
tenants of the Project or their agents, employees, contractors or invitees, or
by others; and (iv) material which becomes Hazardous Material due to a change in
laws, codes, regulations or ordinances which relate to hazardous or toxic
material, substances or waste. Tenant agrees that the costs incurred by Landlord
with respect to, or in connection with, the Project for complying with laws,
codes, regulations or ordinances relating to Hazardous Material shall be an
Operating Expense, unless the cost of such compliance, as between Landlord and
Tenant, is made the responsibility of Tenant under this Lease. To the extent any
such Operating Expense relating to Hazardous Material is subsequently recovered
or reimbursed through insurance, or recovery from responsible third parties, or
other action, Tenant shall be entitled to a proportionate share of such
Operating Expense to which such recovery or reimbursement relates.

         29.24    Development of the Project.

                  29.24.1    Subdivision. Tenant acknowledges that the
Project has been subdivided. Landlord reserves the right to further subdivide
all or a portion of the buildings and Common Areas in the Project. Tenant agrees
to execute and deliver, upon demand by Landlord and in the form requested by
Landlord, any additional documents needed to conform this Lease to the
circumstances resulting from a subdivision and any all maps in connection
therewith. Notwithstanding anything to the contrary set forth in this Lease, the
separate ownership of any buildings and/or Common Areas of the Project by an
entity other than Landlord shall not affect the calculation of Project Expenses
or Tenant's payment of Tenant's Share of Project Expenses.

                  29.24.2     The Other Improvements. If portions of the Project
or property adjacent to the Project (collectively, the "Other Improvements") are
owned by an entity other than Landlord, Landlord, at its option, may enter into
an agreement with the owner or owners of any of the Other Improvements to
provide (i) for reciprocal rights of access, use and/or




                                      -28-
<PAGE>   34
enjoyment of the Project and the Other Improvements, (ii) for the common
management, operation, maintenance, improvement and/or repair of all or any
portion of the Project and all or any portion of the Other Improvements, (iii)
for the allocation of a portion of the Project Expenses to the Other
Improvements and the allocation of a portion of the operating expenses and taxes
for the Other Improvements to the Project, (iv) for the use or improvement of
the Other Improvements and/or the Project in connection with the improvement,
construction, and/or excavation of the Other Improvements and/or the Project,
and (v) for any other matter which Landlord deems necessary. Nothing contained
herein shall be deemed or construed to limit or otherwise affect Landlord's
right to sell all or any portion of the Project or any other of Landlord's
rights described in this Lease.

                  29.24.3     Construction of Project and Other Improvements.
Tenant acknowledges that portions of the Project and/or the Other Improvements
may be under construction following Tenant's occupancy of the Premises, and that
such construction may result in levels of noise, dust, obstruction of access,
etc. which are in excess of that present in a fully constructed project. Tenant
hereby waives any and all rent offsets or claims of constructive eviction which
may arise in connection with such construction.

                  29.25       Tenant's ERISA Representation. Tenant hereby
represents and warrants to Landlord that none of the assets of Tenant are "plan
assets" as that term is defined in 29 C.F.R. Section 2509.75-2 or Section
2510.3-101.

                  29.26       Landlord Exculpation. It is expressly understood
and agreed that notwithstanding anything in this Lease to the contrary, and
notwithstanding any applicable law to the contrary, the liability of Landlord
hereunder (including any successor landlord hereunder) and any recourse by
Tenant against Landlord shall be limited solely and exclusively to the interest
of Landlord in and to the Building. Neither Landlord, nor any of the Landlord
Parties shall have any personal liability therefor, and Tenant hereby expressly
waives and releases such personal liability on behalf of itself and all persons
claiming by, through or under Tenant. The limitations of liability contained in
this Section 29.26 shall inure to the benefit of Landlord's and the Landlord
Parties' present and future partners, beneficiaries, officers, directors,
trustees, shareholders, agents and employees, and their respective partners,
heirs, successors and assigns. Under no circumstances shall any present or
future partner of Landlord (if Landlord is a partnership), or trustee or
beneficiary (if Landlord or any partner of Landlord is a trust), have any
liability for the performance of Landlord's obligations under this Lease.
Notwithstanding any contrary provision herein, neither Landlord nor the Landlord
Parties shall be liable under any circumstances 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, in each case, however occurring.

         IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be
executed the day and date first above written.

                                   "Landlord":

                                   WATER GARDEN COMPANY L.L.C.,
                                   a Delaware Limited Liability Company

                                   By:  /S/ David Chen
                                        _______________________________________
                                        David Chen
                                        Vice President

                                   "Tenant":

                                   INTEGRATED INFORMATION SYSTEMS, INC.,
                                   a Delaware corporation

                                   By: /s/ Illegible
                                        _______________________________________

                                        Its: VP & Corp. Counsel
                                              _________________________________

                                   By:  _______________________________________

                                        Its:  _________________________________




                                      -29-
<PAGE>   35

                                    EXHIBIT A


                                THE WATER GARDEN

                               OUTLINE OF PREMISES


                                   [GRAPHIC]



                                   EXHIBIT A
                                       -1-
<PAGE>   36
                                    EXHIBIT B


                                THE WATER GARDEN

                           NOTICE OF LEASE TERM DATES


To: ______________________
    ______________________
    ______________________

    Re: Office Lease dated _________________, 20___ between WATER GARDEN
COMPANY L.L.C., a Delaware Limited Liability Company ("Landlord"), and
___________________________________, a _______________________ ("Tenant")
concerning Suite ______ on floor(s) __________ of the office building located at
_______________________________, Santa Monica, California.


Gentlemen:

         In accordance with the referenced Office Lease (the "Lease"), we wish
to advise you and/or confirm as follows:

         1. The Substantial Completion of the Premises has occurred, and the
Lease Term shall commence on or has commenced on _________________ for a term of
______________________ ending on __________________.

         2. Rent commenced to accrue on ____________________, in the amount of
___________________.

         3. If the Lease Commencement Date is other than the first day of the
month, the first billing will contain a pro rata adjustment. Each billing
thereafter, with the exception of the final billing, shall be for the full
amount of the monthly installment as provided for in the Lease.

         4. Your rent checks should be made payable to
____________________________ at _________________________.

         5. The exact number of rentable square feet within the Premises is
_________ square feet.

         6. Tenant's Share as adjusted based upon the exact number of rentable
square feet within the Premises is _________%.

         Pursuant to the terms of Article 2 of your Lease, you are required to
return an executed copy of this Notice to ________________ within five (5) days
following your receipt hereof, and thereafter the statements set forth herein
shall be conclusive and binding upon you. Your failure to timely execute and
return this Notice shall constitute your acknowledgment that the statements
included herein are true and correct, without exception.


                                   "Landlord":

                                   WATER GARDEN COMPANY L.L.C.,
                                   a Delaware Limited Liability Company

                                   By:  _______________________________________

                                        Its:  _________________________________


                                   EXHIBIT B
                                       -1-
<PAGE>   37
Agreed to and Accepted as
of _______________, 20___.

"Tenant":
__________________________,
a ________________________

By: ______________________

    Its:__________________

By: ______________________

    Its:__________________






                                    EXHIBIT B
                                       -2-
<PAGE>   38
                                    EXHIBIT C


                                THE WATER GARDEN

                              RULES AND REGULATIONS



         Tenant shall faithfully observe and comply with the following Rules and
Regulations. Landlord shall not be responsible to Tenant for the nonperformance
of any of said Rules and Regulations by or otherwise with respect to the acts or
omissions of any other tenants or occupants of the Project. Landlord shall
enforce said Rules and Regulations in a consistent, non-discriminatory manner.

         1.       Tenant shall not alter any lock or install any new or
additional locks or bolts on any doors or windows of the Premises without
obtaining Landlord's prior written consent. Tenant shall bear the cost of any
lock changes or repairs required by Tenant. Two keys will be furnished by
Landlord for the Premises, and any additional keys required by Tenant must be
obtained from Landlord at a reasonable cost to be established by Landlord.

         2.       All doors opening to public corridors shall be kept closed at
all times except for normal ingress and egress to the Premises.

         3.       Landlord reserves the right to close and keep locked all
entrance and exit doors of the Building during such hours as are customary for
comparable buildings in the greater Los Angeles area. Tenant, its employees and
agents must be sure that the doors to the Building are securely closed and
locked when leaving the Premises if it is after the normal hours of business for
the Building. Any tenant, its employees, agents or any other persons entering or
leaving the Building at any time when it is so locked, or any time when it is
considered to be after normal business hours for the Building, may be required
to sign the Building register. Access to the Building may be refused unless the
person seeking access has proper identification or has a previously arranged
pass for access to the Building. The Landlord and his agents shall in no case be
liable for damages for any error with regard to the admission to or exclusion
from the Building of any person. In case of invasion, mob, riot, public
excitement, or other commotion, Landlord reserves the right to prevent access to
the Building or the Project during the continuance thereof by any means it deems
appropriate for the safety and protection of life and property.

         4.       No furniture, freight or equipment of any kind shall be
brought into the Building without prior notice to Landlord. All moving activity
into or out of the Building shall be scheduled with Landlord and done only at
such time and in such manner as Landlord designates. No service deliveries
(other than messenger services) will be allowed between hours of 4:00 p.m. to
6:00 p.m., Monday through Friday. Landlord shall have the right to prescribe the
weight, size and position of all safes and other heavy property brought into the
Building and also the times and manner of moving the same in and out of the
Building. Safes and other heavy objects shall, if considered necessary by
Landlord, stand on supports of such thickness as is necessary to properly
distribute the weight. Landlord will not be responsible for loss of or damage to
any such safe or property in any case. Any damage to any part of the Building,
its contents, occupants or visitors by moving or maintaining any such safe or
other property shall be the sole responsibility and expense of Tenant.

         5.       No furniture, packages, supplies, equipment or merchandise
will be received in the Building or carried up or down in the elevators, except
between such hours and in such specific elevator as shall be designated by
Landlord.

         6.       Any requests of Tenant shall be directed to the management
office for the Project or at such office location designated by Landlord.
Employees of Landlord shall not perform any work or do anything outside their
regular duties unless under special instructions from Landlord.

         7.       Tenant shall not disturb, solicit, or canvass any occupant of
the Project and shall cooperate with Landlord and its agents to prevent such
activities.

                                   EXHIBIT C
                                       -1-
<PAGE>   39
         8.       The toilet rooms, urinals, wash bowls and other apparatus
shall not be used for any purpose other than that for which they were
constructed, and no foreign substance of any kind whatsoever shall be thrown
therein. The expense of any breakage, stoppage or damage resulting from the
violation of this rule shall be borne by the tenant who, or whose employees or
agents, shall have caused it.

         9.       Tenant shall not overload the floor of the Premises, nor mark,
drive nails or screws, or drill into the partitions, woodwork or plaster or in
any way deface the Premises or any part thereof without Landlord's consent first
had and obtained.

         10.      Except for vending machines intended for the sole use of
Tenant's employees and invitees, no vending machines other than fractional
horsepower office machines shall be installed, maintained or operated upon the
Premises without the written consent of Landlord.

         11.      Tenant shall not use or keep in or on the Premises, the
Building, or the Project any kerosene, gasoline or other inflammable or
combustible fluid or material.

         12.      Tenant shall not without the prior written consent of Landlord
use any method of heating or air conditioning other than that supplied by
Landlord.

         13.      Tenant shall not use, keep or permit to be used or kept, any
foul or noxious gas or substance in or on the Premises, or permit or allow the
Premises to be occupied or used in a manner offensive or objectionable to
Landlord or other occupants of the Project by reason of noise, odors, or
vibrations, or interfere in any way with other tenants or those having business
therein.

         14.      Tenant shall not bring into or keep within the Project, the
Building or the Premises any animals, birds, bicycles or other vehicles.

         15.      No cooking shall be done or permitted on the Premises, nor
shall the Premises be used for the storage of merchandise, for lodging or for
any improper, objectionable or immoral purposes. Notwithstanding the foregoing,
Underwriters' laboratory-approved equipment and microwave ovens may be used in
the Premises for heating food and brewing coffee, tea, hot chocolate and similar
beverages for employees and visitors, provided that such use is in accordance
with all applicable federal, state and city laws, codes, ordinances, rules and
regulations.

         16.      Landlord will approve where and how telephone and telegraph
wires are to be introduced to the Premises. No boring or cutting for wires shall
be allowed without the consent of Landlord. The location of telephone, call
boxes and other office equipment affixed to the Premises shall be subject to the
approval of Landlord.

         17.      Landlord reserves the right to exclude or expel from the
Project any person who, in the judgment of Landlord, is intoxicated or under the
influence of liquor or drugs, or who shall in any manner do any act in violation
of any of these Rules and Regulations.

         18.      Tenant, its employees and agents shall not loiter in the
entrances or corridors, nor in any way obstruct the sidewalks, lobby, halls,
stairways or elevators, and shall use them only as a means of ingress and egress
for the Premises.

         19.      Tenant shall not waste electricity, water or air conditioning
and agrees to cooperate fully with Landlord to ensure the most effective
operation of the Building's heating and air conditioning system, and shall
refrain from attempting to adjust any controls.

         20.      Tenant shall store all its trash and garbage within the
interior of the Premises. No material shall be placed in the trash boxes or
receptacles if such material is of such nature that it may not be disposed of in
the ordinary and customary manner of removing and disposing of trash and garbage
in Santa Monica, California without violation of any law or ordinance governing
such disposal. All trash, garbage and refuse disposal shall be made only through
entry-ways and elevators provided for such purposes at such times as Landlord
shall designate.

         21.      Tenant shall comply with all safety, fire protection and
evacuation procedures and regulations established by Landlord or any
governmental agency.

                                   EXHIBIT C
                                       -2-
<PAGE>   40
         22.      Tenant shall assume any and all responsibility for protecting
the Premises from theft, robbery and pilferage, which includes keeping doors
locked and other means of entry to the Premises closed.

         23.      No awnings or other projection shall be attached to the
outside walls of the Building without the prior written consent of Landlord. No
curtains, blinds, shades or screens shall be attached to or hung in, or used in
connection with, any window or door of the Premises without the prior written
consent of Landlord. All electrical ceiling fixtures hung in offices or spaces
along the perimeter of the Building must be fluorescent and/or of a quality,
type, design and bulb color approved by Landlord. Tenant shall abide by
Landlord's regulations concerning the opening and closing of window coverings
which are attached to the windows in the Premises, if any, which have a view of
any interior portion of the Building or Building Common Areas.

         24.      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 Building shall not be covered or obstructed by Tenant, nor shall
any bottles, parcels or other articles be placed on the windowsills.

         25.      Tenant must comply with the State of California "NO-SMOKING"
law set forth in California Labor Code Section 6404.5, and any local
"No-Smoking" ordinance which may be in effect from time to time and which is not
superseded by such State law.

         Landlord reserves the right at any time to change or rescind any one or
more of these Rules and Regulations, or to make such other and further
reasonable Rules and Regulations as in Landlord's judgment may from time to time
be necessary for the management, safety, care and cleanliness of the Premises,
Building, the Common Areas and the Project, and for the preservation of good
order therein, as well as for the convenience of other occupants and tenants
therein. Tenant shall be deemed to have read these Rules and Regulations and to
have agreed to abide by them as a condition of its occupancy of the Premises.
Landlord may waive any one or more of these Rules and Regulations for the
benefit of any particular tenants, but no such waiver by Landlord shall be
construed as a waiver of such Rules and Regulations in favor of any other
tenant, nor prevent Landlord from thereafter enforcing any such Rules or
Regulations against any or all tenants of the Project.




                                   EXHIBIT C
                                       -3-
<PAGE>   41
                                    EXHIBIT D


                                THE WATER GARDEN

                      FORM OF TENANT'S ESTOPPEL CERTIFICATE

         The undersigned as Tenant under that certain Office Lease (the "Lease")
made and entered into as of ___________, 200__ by and between
______________________________ as Landlord, and the undersigned as Tenant, for
Premises on the __________ floor(s) of the office building located at
______________________, Santa Monica, California ___________, certifies as
follows:

         1.       Attached hereto as Exhibit A is a true and correct copy of the
Lease and all amendments and modifications thereto. The documents contained in
Exhibit A represent the entire agreement between the parties as to the Premises.

         2.       The undersigned currently occupies the Premises described in
the Lease.

         3.       The Lease Term commenced on _________, and the Lease Term
expires on ____________.

         4.       Base Rent became payable on _________________.

         5.       The Lease is in full force and effect and has not been
modified, supplemented or amended in any way except as provided in Exhibit A.

         6.       Tenant has not transferred, assigned, or sublet any portion of
the Premises nor entered into any license or concession agreements with respect
thereto except as follows:







         7.       Tenant shall not modify the documents contained in Exhibit A
without the prior written consent of the holder of the first deed of trust on
the Premises.

         8.       All monthly installments of Base Rent, all Additional Rent and
all monthly installments of estimated Additional Rent have been paid when due
through ______________. The current monthly installment of Base Rent is
$_________.

         9.       All conditions of the Lease to be performed by Landlord
necessary to the enforceability of the Lease have been satisfied and Landlord is
not in default thereunder.

         10.      The current amount of the Security Deposit held by Landlord is
$__________.

         11.      No rental has been paid more than thirty (30) days in advance
and no security has been deposited with Landlord except as provided in the
Lease.

         12.      As of the date hereof, there are no existing defenses or
offsets that the undersigned has against Landlord nor have any events occurred
that with the passage of time or the giving of notice, or both, would constitute
a default on the part of Landlord under the Lease.

         13.      The undersigned acknowledges that this Estoppel Certificate
may be delivered to Landlord or to a prospective mortgagee, or a prospective
purchaser, and acknowledges that said prospective mortgagee or prospective
purchaser will be relying upon the statements contained herein in making the
loan or acquiring the property of which the Premises are a part and that receipt
by it of this certificate is a condition of making of such loan or acquisition
of such property.

         14.      If Tenant is a corporation or partnership, each individual
executing this Estoppel Certificate on behalf of Tenant hereby represents and
warrants that Tenant is a duly formed and existing entity qualified to do
business in California and that Tenant has full right and authority

                                   EXHIBIT D
                                       -1-
<PAGE>   42
to execute and deliver this Estoppel Certificate and that each person signing on
behalf of Tenant is authorized to do so.

Executed at __________________ on the ____ day of _________, 20__.



                                    "Tenant":

                                     _________________________________________,
                                     a ________________________________________

                                     By:  _____________________________________

                                          Its:  _______________________________

                                     By:  _____________________________________

                                          Its:  _______________________________





                                   EXHIBIT D
                                       -2-
<PAGE>   43
                                    EXHIBIT E

                                THE WATER GARDEN

                               TENANT WORK LETTER

         This Tenant Work Letter shall set forth the terms and conditions
relating to the construction of the tenant improvements in the Premises. This
Tenant Work Letter is essentially organized chronologically and addresses the
issues of the construction of the Premises, in sequence, as such issues will
arise during the actual construction of the Premises. All capitalized terms used
but not defined herein shall have the meanings given such terms in this Lease.
All references in this Tenant Work Letter to Articles or Sections of "this
Lease" shall mean the relevant portion of Articles 1 through 29 of this Lease to
which this Tenant Work Letter is attached as Exhibit E and of which this Tenant
Work Letter forms a part, and all references in this Tenant Work Letter to
Sections of "this Tenant Work Letter" shall mean the relevant portion of
Sections 1 through 6 of this Tenant Work Letter.

                                    SECTION 1

                 LANDLORD'S INITIAL CONSTRUCTION IN THE PREMISES

         1.1      Base, Shell and Core of the Premises as Constructed by
Landlord. Landlord shall construct, at its sole cost and expense, the base,
shell, and core (i) of the Premises and (ii) of the floor of the Building on
which the Premises is located (collectively, the "Base, Shell, and Core") in
accordance with the plans and specifications for the Base, Shell, and Core and
on an unoccupied basis (the "Plans"). The Base, Shell and Core shall include
only the following items.

                1.1.1      Core Improvements.

                           1.1.1.1  Toilet Rooms.  The men's and women's toilets
shall be complete with countertops, ceramic tile walls and floors, lavatory
mirrors, lighting, ceilings, toilet partitions, toilet accessories, and high
quality plumbing fixtures.

                           1.1.1.2  Passenger Elevator Lobby.  The Passenger
elevator lobby shall be complete with (i) finished ceiling, finished lighting,
and floor coverings, (ii) fire/smoke doors, which will be finished recessed
double solid-core wood doors installed complete with hardware, (iii) walls,
completed with wall coverings and base, and (iv) elevator doors and frames,
which will be painted metal, and call button and hall lantern face plates, which
will be stainless steel.

                           1.1.1.3  Janitor's Closet, Telephone Room, and
Electrical Room. The janitor's closet shall be complete with painted walls,
floor coverings and resilient base. The telephone and electrical rooms are
unfinished and will include a telephone backboard and electrical distribution
panelboards, respectively, for each full floor Tenant occupies (to the extent
Tenant partially occupies a floor, only a portion of such distribution
electrical panel board on such floor, based upon the proportionate amount of
area on such floor occupied by Tenant, shall be available to Tenant).

                           1.1.1.4  Lifesafety.  All required alarm and
communication systems within the janitor's closet, telephone and electrical
rooms, service elevator lobby area, the stairwells, the passenger elevator lobby
area, and toilet rooms.

                           1.1.1.5  HVAC.  The main distribution loop duct and
heating hot water supply and return lines (including valves) for the heating,
ventilation and air conditioning system.

                           1.1.1.6  Sprinkler.  The sprinkler system, which
shall include only the main floor shut-off valves, alarms, primary loop piping,
distribution piping, and heads installed with deflectors.

                           1.1.1.7  Service Elevator Lobby.  The service
elevator lobby complete with floor covering, resilient base, painted walls,
ceiling, lighting, and elevator door and frame, which will be painted metal.


                                   EXHIBIT E
                                       -1-
<PAGE>   44
                           1.1.1.8  Balance of Core.  All exposed core doors
shall be completed with painted hollow metal frames, finished solid core wood
doors or finished hollow metal doors, and hardware, and all exterior/exposed
wall surfaces of the core shall be drywall, taped, floated, and sanded ready for
paint. The balance of the core shall also include exit signs and fire
extinguishers as required by applicable building code (the "Code") for
unoccupied space.

                1.1.2 Base and Shell Improvements. The structural frame of the
Building shall be complete, including fireproofing and finished slab ready for
floor coverings.

                1.1.3 Items Relating to the Public Corridor (only as to that
portion of the Premises, if any, which occupies only a portion of a floor,
rather than an entire floor, of the Building). The following items relating to
the public corridor: the wall coverings (finished corridor side only) on
corridor and core walls, the floor covering, lighting, HVAC system, finished
ceiling, appropriate signage, alarm and communication systems, and the sprinkler
systems.

         1.2      Landlord Work. Landlord shall, at Tenant's sole cost and
expense, cause the construction, installation and/or stockpiling (as set forth
below in this Section 1.2) of the following items on the floor of the Building
containing the Premises (collectively, the "Landlord Work"), which Landlord Work
(as well as the Base, Shell and Core work and Building standard mechanical and
electrical engineering, and lifesafety work) shall be installed or constructed
in compliance with the Plans, and shall, unless otherwise indicated, be
installed and constructed in compliance with, and only to the extent required
by, Code and on an unoccupied basis.

                1.2.1 Window Coverings. Building window coverings (the "Window
Coverings"), to be charged at the rate of $0.31 per usable square foot of the
Premises.

                1.2.2 Intentionally Omitted.

                1.2.3 Perimeter Wall/Exterior Wall/Column Covers. The inside
face of perimeter wall (nonglass surfaces) and the perimeter and interior column
covers shall be drywall, taped, floated and sanded ready for paint, to be
charged at the rate of $0.88 per usable square foot of the Premises.

                1.2.4 Public Corridor (only as to that portion of the Premises,
if any, which occupies only a portion of a floor, rather than an entire floor,
of the Building). Except as set forth in Section 1.1.3 above, the actual public
corridor wall, the standard tenant entries and exits including doors, frames,
hardware, and sidelight (if any), and standard tenant entry signage and exit
lights, to be charged at the rate of $0.73 per usable square foot of the
Premises.

                1.2.5 Demising Walls Between Tenants (only as to that portion of
the Premises, if any, which occupies only a portion of a floor, rather than an
entire floor, of the Building). The demising partitions between tenants shall
include studs, acoustical insulation and dry wall ready for finish on tenant
side only and any necessary penetrations, fire dampers and sound traps, to be
charged at the rate of $17.65 per linear foot of partition.

                                    SECTION 2

                               TENANT IMPROVEMENTS

         2.1      Tenant Improvement Allowance. Tenant shall be entitled to a
one-time tenant improvement allowance (the "Tenant Improvement Allowance") in
the amount of $61,785.00 for the costs relating to the initial design and
construction of Tenant's improvements, including the Landlord Work, which are
permanently affixed to the Premises (the "Tenant Improvements"). In no event
shall Landlord be obligated to make disbursements pursuant to this Tenant Work
Letter in a total amount which exceeds the Tenant Improvement Allowance.
Further, in no event shall Landlord be obligated to perform any work relating to
the Tenant Improvements or make any disbursements pursuant to this Tenant Work
Letter until Tenant has delivered to Landlord the Letter of Credit, as required
under Section 21.2 of the Lease. All Tenant Improvements for which the Tenant
Improvement Allowance has been made available shall be deemed Landlord's
property under the terms of Section 8.5 of this Lease.

         2.2      Disbursement of the Tenant Improvement Allowance. Except as
otherwise set forth in this Tenant Work Letter, the Tenant Improvement Allowance
shall be disbursed by


                                   EXHIBIT E
                                       -2-
<PAGE>   45
Landlord (each of which disbursements shall be made pursuant to Landlord's
disbursement process) only for the following items and costs (collectively, the
"Tenant Improvement Allowance Items"):

                2.2.1 Payment of the fees of the "Architect" and the
"Engineers," as those terms are defined in Sections 3.1 of this Tenant Work
Letter, which payment shall, notwithstanding anything to the contrary contained
in this Tenant Work Letter, not exceed an aggregate amount equal to $6.50 per
usable square foot of the Premises, 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, not to exceed
$3.50 per rentable square foot of the Premises;

                2.2.2 The payment of plan check, permit and license fees
relating to construction of the Tenant Improvements;

                2.2.3 The cost of construction of the Tenant Improvements,
including, without limitation, testing and inspection costs, freight elevator
usage, hoisting and trash removal costs, and contractors' fees and general
conditions;

                2.2.4 The cost of any changes in the Base, Shell and Core work
or the Landlord Work when such changes are required by the Construction Drawings
(including if such changes are due to the fact that such work is prepared on an
unoccupied basis), such cost to include all direct architectural and/or
engineering fees and expenses incurred in connection therewith;

                2.2.5 The cost of any changes to the Construction Drawings,
Tenant Improvements or Landlord's Work required by Code;

                2.2.6 Sales and use taxes and Title 24 fees;

                2.2.7 The cost of the Landlord Work;

                2.2.8 "Landlord's Supervision Fee", as that term is defined in
Section 4.3.2 of this Tenant Work Letter; and

                2.2.9 All other costs to be expended by Landlord in connection
with the construction of the Tenant Improvements.

         2.3      Standard Tenant Improvement Package. Landlord has established
specifications (the "Specifications") for some of the Building standard
components to be used in the construction of the Tenant Improvements in the
Premises and the Landlord Work (collectively, the "Standard Improvement
Package"). The quality of Tenant 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 Tenant Improvements to comply with certain
Specifications. Landlord may make changes to the Specifications for the Standard
Improvement Package from time to time.

                                    SECTION 3

                              CONSTRUCTION DRAWINGS

         3.1      Selection of Architect/Construction Drawings. Tenant shall
retain an architect/space planner (the "Architect") which will be either (i)
Landlord's architect/space planner, or (ii) an architect/space planner approved
by Landlord, which approval shall not be unreasonably withheld by Landlord, to
prepare the "Construction Drawings", as that term is defined in this Section
3.1. Tenant shall retain Landlord's engineering consultants (the "Engineers") to
prepare all plans and engineering working drawings relating to the structural,
mechanical, electrical, plumbing, HVAC, lifesafety, and sprinkler work in the
Premises, which work is not part of the Base, Shell and Core work or Landlord
Work. 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 Landlord's drawing format and
specifications. 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


                                   EXHIBIT E
                                       -3-
<PAGE>   46
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, and Tenant's
waiver and indemnity set forth in Section 10.1 of this Lease shall specifically
apply to the Construction Drawings. Furthermore, Tenant and Architect shall
verify, in the field, the dimensions and conditions as shown on the relevant
portions of the Plans, and Tenant and Architect shall be solely responsible for
the same, and Landlord shall have no responsibility in connection therewith.

         3.2      Final Space Plan. On or before the date set forth in Schedule
1, Tenant and the Architect shall prepare the final space plan for Tenant
Improvements in the Premises, shall receive preliminary plan check approval for
the same from the Department of Building and Safety of the City of Santa Monica
(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 and proof of receipt of preliminary plan check approval to Landlord
for Landlord's approval.

         3.3      Non-Standard Improvement Package Items. On or before the date
set forth in Schedule 1, (i) Tenant shall submit to Landlord, for Landlord's
approval, all necessary architectural and engineering design, details, and
specifications to allow Landlord to immediately prepare an appropriate "Partial
Cost Proposal," as that term is defined below in Section 4.2 of this Tenant Work
Letter, for all materials necessary to the construction of (A) the structural
portions of any interior stairway or dumbwaiter, and the openings (and required
structural support areas) necessary to accommodate the placement of such
interior stairways or dumbwaiters in the Premises and (B) all other structural
supports and reinforcements necessary to the construction of the Tenant
Improvements (collectively, the "Structural Items"); and (ii) Tenant shall
provide Landlord, for Landlord's approval, with complete specifications, details
and architectural and engineering drawings to allow Landlord to immediately
prepare a Partial Cost Proposal for all materials, components, finishes,
equipment, and improvements which are not part of the Standard Improvement
Package.

         3.4      Final Working Drawings. On or before the date set forth in
Schedule 1, Tenant, 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,
to obtain all applicable permits, and to subsequently construct the work
(collectively, the "Final Working Drawings") and shall submit the same to
Landlord for Landlord's approval.

         3.5      Permits.

                3.5.1 Structural Permits. Simultaneously with Tenant's submittal
of the items described in Sections 3.3(i)(A) and 3.3(i)(B), above, Tenant shall
use its best, good faith, efforts and all due diligence to cooperate with
Architect, the Engineers, Landlord and "Contractor," as that term is defined in
Section 4.1, below, to do all acts necessary, including cooperation in the
preparation of shop drawings, if necessary, to obtain permits (the "Structural
Permits") for the immediate construction of the Structural Items, and Tenant
acknowledges that in connection therewith Landlord and/or Contractor, as opposed
to Tenant, on behalf of Tenant and as Tenant's agent, may be the appropriate
party to obtain such permits.

                3.5.2 Other Permits. After the approval of the Final Working
Drawings by Landlord (the "Approved Working Drawings"), Tenant shall immediately
submit same to the City of Santa Monica for all applicable building permits
(except the Structural Permits to the extent the same have already been received
pursuant to the terms of Section 3.5.1, above) necessary to allow Contractor to
commence and fully complete the construction of the Tenant Improvements (the
"Permits"), and, in connection therewith, Tenant shall coordinate with Landlord
in order to allow Landlord, at its option, to take part in all phases of the
permitting process, and shall supply Landlord, as soon as possible, with all
plan check numbers and dates of submittal.

                3.5.3 Other Terms. Notwithstanding anything to the contrary set
forth in this Section 3.5, Tenant hereby agrees that neither Landlord nor
Landlord's consultants shall be responsible for obtaining any building permit or
certificate of occupancy for the Premises and


                                   EXHIBIT E
                                       -4-
<PAGE>   47
that the obtaining of the same shall be Tenant's responsibility (even as to the
Structural Permits); provided, however, that Landlord shall, in any event,
cooperate with Tenant in executing permit applications and performing other
ministerial acts reasonably necessary to enable Tenant to obtain any such permit
or certificate of occupancy. No changes, modifications or alterations in the
Approved Working Drawings may be made without the prior written consent of
Landlord, provided that Landlord may withhold its consent, in its sole
discretion, to any change in the Approved Working Drawings, if such change would
directly or indirectly delay the Substantial Completion of the Premises.

         3.6      Time Deadlines. Tenant shall use its best, good faith, efforts
and all due diligence to cooperate with 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 soon as possible after the execution of the Lease, and, in that
regard, shall meet with Landlord on a weekly basis to discuss Tenant's progress
in connection with the same. The applicable dates for approval of items, plans
and drawings and selection of a contractor 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 TENANT IMPROVEMENTS

         4.1      Contractor. A contractor retained by Landlord, shall construct
the Tenant Improvements. Such contractor ("Contractor") shall be selected by
Tenant from a list of general contractors supplied by Landlord, and Tenant shall
deliver notice of its selection of the Contractor to Landlord on or before the
date set forth in Schedule 1.

         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 Tenant Improvement Allowance
Items to be incurred by Tenant in connection with the construction of the Tenant
Improvements (the "Cost Proposal"). Notwithstanding the foregoing, portions of
the cost of the Tenant Improvements may be delivered to Tenant as such portions
of the Tenant Improvements are priced by Contractor (on an individual
item-by-item or trade-by-trade basis), even before the Approved Working Drawings
are completed (the "Partial Cost Proposal") for purposes of facilitating the
early purchase of items and construction of the same. Tenant shall approve and
deliver the Cost Proposal to Landlord within five (5) business days of the
receipt of the same, or, as to a Partial Cost Proposal within two (2) business
days of 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
or Partial Cost Proposal, as the case may be, and to commence the construction
relating to such items. The date by which Tenant must approve and deliver the
Cost Proposal or the last Partial Cost Proposal to Landlord, as the case may be,
shall be known hereafter as the "Cost Proposal Delivery Date". The total of all
Partial Cost Proposals, if any, shall be known as the Cost Proposal.

         4.3      Construction of Tenant Improvements by Landlord's Contractor
under the Supervision of Landlord.

                4.3.1 Over-Allowance Amount. On the Cost Proposal Delivery Date,
Tenant shall deliver to Landlord cash in an amount (the "Over-Allowance Amount")
equal to the difference between (i) the amount of the Cost Proposal and (ii) the
amount of the Tenant 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 Tenant Improvement Allowance, and such disbursement shall be pursuant to the
same procedure as the Tenant Improvement Allowance. In the event that, after the
Cost Proposal Date, any revisions, changes, or substitutions shall be made to
the Construction Drawings or the Tenant 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.


                                   EXHIBIT E
                                       -5-
<PAGE>   48
                4.3.2 Landlord's Retainment of Contractor. After Tenant selects
the Contractor, Landlord shall independently retain Contractor to construct the
Tenant 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) ten
percent (10.0%) and (ii) an amount equal to the Tenant Improvement Allowance
plus the Over-Allowance Amount (as such Over-Allowance Amount may increase
pursuant to the terms of this Tenant Work Letter).

                4.3.3 Contractor's Warranties and Guaranties. Landlord hereby
assigns to Tenant all warranties and guaranties by Contractor relating to the
Tenant Improvements, and Tenant hereby waives all claims against Landlord
relating to, or arising out of the construction of, the Tenant Improvements.
Such warranties and guaranties of Contractor shall guarantee that the Tenant
Improvements shall be free from any defects in workmanship and materials for a
period of not less than one (1) year from the date of completion thereof, and
Contractor shall be responsible for the replacement or repair, without
additional charge, of the Tenant Improvements that shall become defective within
one (1) year after Substantial Completion of the Premises. The correction of
such work shall include, without additional charge, all additional expenses and
damages in connection with such removal or replacement of all or any part of the
Tenant Improvements.

                4.3.4 Tenant's Covenants. Tenant hereby indemnifies Landlord for
any loss, claims, damages or delays arising from the actions of Architect on the
Premises or in the Project. Within ten (10) days after completion of
construction of the Tenant Improvements, Tenant shall cause Contractor and
Architect to cause a Notice of Completion to be recorded in the office of the
Recorder of the County of Los Angeles in accordance with Section 3093 of the
Civil Code of the State of California or any successor statute and furnish a
copy thereof to Landlord upon recordation, failing which, Landlord may itself
execute and file the same on behalf of Tenant as Tenant's agent for such
purpose. In addition, immediately after the Substantial Completion of the
Premises, Tenant shall have prepared and delivered to the Project management
office a copy of the "as built" plans and specifications (including all working
drawings) for the Tenant Improvements.

                                    SECTION 5

                     COMPLETION OF THE TENANT IMPROVEMENTS;
                             LEASE COMMENCEMENT DATE

         Except as provided in this Section 5, the Lease Commencement Date shall
occur as set forth in Article 2 of this Lease. If there shall be a delay or
there are delays in the Substantial Completion of the Premises or in the
occurrence of any of the other conditions precedent to the Lease Commencement
Date, as set forth in Article 2 of this Lease, as a direct, indirect, partial,
or total result of:

         5.1      Tenant's failure to comply with the Time Deadlines;

         5.2      Tenant's failure to timely approve any matter requiring
 Tenant's approval;

         5.3      A breach by Tenant of the terms of this Tenant Work Letter or
the Lease;

         5.4      Changes in any of the Construction Drawings after disapproval
of the same by Landlord or because the same do not comply with Code or other
applicable laws;

         5.5      Tenant's request for changes in the Approved Working Drawings;

         5.6      Tenant's requirement for materials, components, finishes or
improvements which are not available in a commercially reasonable time given the
anticipated date of Substantial Completion of the Premises, as set forth in the
Lease, or which are different from, or not included in, the Standard Improvement
Package;

         5.7      Changes to the Base, Shell and Core work or Landlord Work
required by the Approved Working Drawings; or

         5.8      Any other acts or omissions of Tenant, or its agents, or
employees;


                                   EXHIBIT E
                                       -6-
<PAGE>   49
then, notwithstanding anything to the contrary set forth in the Lease or this
Tenant Work Letter and regardless of the actual date of the Substantial
Completion of the Premises, the Lease Commencement Date shall be deemed to be
the date the Lease Commencement Date would have occurred if no Tenant delay or
delays, as set forth above, had occurred.

                                    SECTION 6

                                  MISCELLANEOUS

         6.1      Tenant's Entry Into the Premises Prior to Substantial
Completion. Provided that Tenant and its agents do not interfere with
Contractor's work in the Project and the Premises, Contractor shall allow Tenant
access to the Premises prior to the Substantial Completion of the Premises (but
if such access is to be prior to the issuance of the Temporary Certificate of
Occupancy for the Building, then such access shall be only as allowed by the
City of Santa Monica) for the purpose of Tenant installing overstandard
equipment or fixtures (including Tenant's data and telephone equipment) in the
Premises. Prior to Tenant's entry into the Premises as permitted by the terms of
this Section 6.1, Tenant shall submit a schedule to Landlord and Contractor, for
their approval, which schedule shall detail the timing and purpose of Tenant's
entry. Tenant shall hold Landlord harmless from and indemnify, protect and
defend Landlord against any loss or damage to the Project or Premises and
against injury to any persons caused by Tenant's actions pursuant to this
Section 6.1.

         6.2      Freight Elevators. Landlord shall, consistent with its
obligations to other tenants of the Building, and subject to the needs of
Landlord with respect to the construction of the Base, Shell and Core of the
Building, make the freight elevator reasonably available to Tenant in connection
with initial decorating, furnishing and moving into the Premises.

         6.3      Tenant's Representative. Tenant has designated Rick Krieger 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.

         6.4      Landlord's Representative. Landlord has designated Brenda
Tiefenthaler as its sole 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.

         6.5      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. In all instances where Tenant is required to approve or
deliver an item, if no written notice of approval is given or the item is not
delivered within the stated time period, at Landlord's sole option, at the end
of such period the item shall automatically be deemed approved or delivered by
Tenant and the next succeeding time period shall commence.

         6.6      Tenant's Lease Default. Notwithstanding any provision to the
contrary contained in this Lease, if an event of default as described in Section
19.1 of this Lease, or a default by Tenant under this Tenant Work Letter, has
occurred at any time on or before the Substantial Completion of the Premises,
then (i) in addition to all other rights and remedies granted to Landlord
pursuant to the Lease, Landlord shall have the right to withhold payment of all
or any portion of the Tenant Improvement Allowance and/or Landlord may cause
Contractor to cease the construction of the Premises (in which case, Tenant
shall be responsible for any delay in the Substantial Completion of the Premises
caused by such work stoppage as set forth in Section 5.3 of this Tenant Work
Letter), and (ii) all other obligations of Landlord under the terms of this
Tenant Work Letter shall be forgiven until such time as such default is cured
pursuant to the terms of the Lease.





                                   EXHIBIT E
                                       -7-
<PAGE>   50
                             SCHEDULE 1 TO EXHIBIT E

                                 TIME DEADLINES


Dates of Actions to be Performed

         A.       March 21, 2000:  Tenant to deliver Final Working Drawings to
Landlord.

         B.       April 4, 2000: Landlord to deliver complete Cost Proposal to
Tenant.

         C.       April 13, 2000: Tenant to approve all or a portion of Cost
Proposal and deliver all or a portion of Cost Proposal to Landlord, as
applicable.

         D.       April 17, 2000: Tenant selection of Contractor; Landlord to
release Contractor to commence work.











                                 SCHEDULE 1 TO
                                   EXHIBIT E
                                       -1-
<PAGE>   51
                                    EXHIBIT F


                            FORM OF LETTER OF CREDIT

                       (Letterhead of a money center bank
                           acceptable to the Landlord)

_________________, 2000

WATER GARDEN COMPANY L.L.C.
2425 Olympic Boulevard
Suite 520-East
Santa Monica, California  90404
Attention:  Building Manager

Ladies and Gentlemen:

         We hereby establish our Irrevocable Letter of Credit and authorize you
to draw on us at sight for the account of Integrated Information Systems, Inc.,
a Delaware corporation ("Integrated"), the aggregate amount of Two Hundred
Thirty Thousand and No/100 Dollars ($230,000.00).

         Funds under this Letter of Credit are available to the beneficiary
hereof as follows:

         Any or all of the sums hereunder may be drawn down at any time and from
time to time from and after the date hereof by any two officers with the title
of vice president or above, or Water Garden Company L.L.C., a Delaware limited
liability company ("Beneficiary"), or Trammel Crow Company, when accompanied by
this Letter of Credit and a written statement signed by a representative of
Beneficiary, certifying that such moneys are due and owing to Beneficiary, and a
sight draft executed and endorsed by a representative of Beneficiary.

         This Letter of Credit is transferable in its entirety. Should a
transfer be desired, such transfer will be subject to the return to us of this
advice, together with written instructions.

         The amount of each draft must be endorsed on the reverse hereof by the
negotiating bank. We hereby agree that this Letter of Credit shall be duly
honored upon presentation and delivery of the certification specified above.

         This Letter of Credit shall expire on ______________.

         Notwithstanding the above expiration date of this Letter of Credit, the
term of this Letter of Credit shall be automatically renewed for successive,
additional one (1) year periods unless, at least thirty (30) days prior to any
such date of expiration, the undersigned shall give written notice to each of
the parties listed in Section 29.13 of that certain Lease dated March ___, 2000,
between Integrated and Beneficiary, by certified mail, return receipt requested
and at the addresses set forth in such Section 29.13, or at such other address
as may be given to the undersigned by Beneficiary, that this Letter of Credit
will not be renewed.

         This Letter of Credit is governed by the Uniform Customs and Practice
for Documentary Credits (1983 Revision), International Chamber of Commerce
Publication 400.

                                Very truly yours,
                                (Name of Issuing Bank)


                                 By:__________________________________







                                   EXHIBIT F
                                       -1-