<PAGE>   1

                                                                   EXHIBIT 10.45




                                INDUSTRIAL LEASE
                              (SINGLE TENANT; NET)


                                     BETWEEN


                               THE IRVINE COMPANY


                                       AND


                     DISCOVERY PARTNERS INTERNATIONAL, INC.




<PAGE>   2

                            INDEX TO INDUSTRIAL LEASE
                              (Single Tenant; Net)


ARTICLE I. BASIC LEASE PROVISIONS

ARTICLE II. PREMISES
    Section 2.1. Leased Premises.
    Section 2.2. Acceptance of Premises.
    Section 2.3. Building Name and Address.
    Section 2.4. Landlord's Responsibilities.

ARTICLE III. TERM
    Section 3.1. General.
    Section 3.2. Delay in Possession.
    Section 3.3. Right to Extend this Lease.

ARTICLE IV. RENT AND OPERATING EXPENSES
    Section 4.1. Basic Rent.
    Section 4.2. Operating Expenses.
    Section 4.3. Security Deposit.
    Section 4.4. Letter of Credit.

ARTICLE V. USES
    Section 5.1. Use.
    Section 5.2. Signs.
    Section 5.3. Hazardous Materials.

ARTICLE VI. COMMON AREAS; SERVICES
    Section 6.1. Utilities and Services.
    Section 6.2. Operation and Maintenance of Common Areas.
    Section 6.3. Use of Common Areas.
    Section 6.4. Parking.
    Section 6.5. Changes and Additions by Landlord.

ARTICLE VII. MAINTAINING THE PREMISES
    Section 7.1. Tenant's Maintenance and Repair.
    Section 7.2. Landlord's Maintenance and Repair/Tenant's "Self-Help".
    Section 7.3. Alterations.
    Section 7.4. Mechanic's Liens.
    Section 7.5. Entry and Inspection.

ARTICLE VIII. TAXES AND ASSESSMENTS ON TENANT'S PROPERTY

ARTICLE IX. ASSIGNMENT AND SUBLETTING
    Section 9.1. Rights of Parties.
    Section 9.2. Effect of Transfer.
    Section 9.3. Sublease Requirements.
    Section 9.4. Certain Transfers.

ARTICLE X. INSURANCE AND INDEMNITY
    Section 10.1. Tenant's Insurance.
    Section 10.2. Landlord's Insurance.
    Section 10.3. Joint Indemnity.
    Section 10.4. Landlord's Nonliability.
    Section 10.5. Waiver of Subrogation.

ARTICLE XI. DAMAGE OR DESTRUCTION
    Section 11.1. Restoration.
    Section 11.2. Lease Governs.

ARTICLE XII. EMINENT DOMAIN
    Section 12.1. Total or Partial Taking.
    Section 12.2. Temporary Taking.
    Section 12.3. Taking of Parking Area.

ARTICLE XIII. SUBORDINATION; ESTOPPEL CERTIFICATE; FINANCIALS
    Section 13.1. Subordination.
    Section 13.2. Estoppel Certificate.
    Section 13.3. Financials.

ARTICLE XIV. DEFAULTS AND REMEDIES
    Section 14.1. Tenant's Defaults.
    Section 14.2. Landlord's Remedies.


                                      (i)
<PAGE>   3

    Section 14.3. Late Payments.
    Section 14.4. Right of Landlord to Perform.
    Section 14.5. Default by Landlord.
    Section 14.6. Expenses and Legal Fees.
    Section 14.7. Waiver of Jury Trial.
    Section 14.8. Satisfaction of Judgment.
    Section 14.9. Limitation of Actions Against Landlord.

ARTICLE XV. END OF TERM
    Section 15.1. Holding Over.
    Section 15.2. Merger on Termination.
    Section 15.3. Surrender of Premises; Removal of Property.

ARTICLE XVI. PAYMENTS AND NOTICES

ARTICLE XVII. RULES AND REGULATIONS

ARTICLE XVIII. BROKER'S COMMISSION

ARTICLE XIX. TRANSFER OF LANDLORD'S INTEREST

ARTICLE XX. INTERPRETATION
    Section 20.1.  Gender and Number.
    Section 20.2.  Headings.
    Section 20.3.  Joint and Several Liability.
    Section 20.4.  Successors.
    Section 20.5.  Time of Essence.
    Section 20.6.  Controlling Law.
    Section 20.7.  Severability.
    Section 20.8.  Waiver and Cumulative Remedies.
    Section 20.9.  Inability to Perform.
    Section 20.10. Entire Agreement.
    Section 20.11. Quiet Enjoyment.
    Section 20.12. Survival.

ARTICLE XXI. EXECUTION AND RECORDING
    Section 21.1.  Counterparts.
    Section 21.2.  Corporate and Partnership Authority.
    Section 21.3.  Execution of Lease; No Option or Offer.
    Section 21.4.  Recording.
    Section 21.5.  Amendments.
    Section 21.6.  Executed Copy.
    Section 21.7.  Attachments.

ARTICLE XXII. MISCELLANEOUS
    Section 22.1.  Nondisclosure of Lease Terms.
    Section 22.2.  Guaranty.
    Section 22.3.  Changes Requested by Lender.
    Section 22.4.  Mortgagee Protection.
    Section 22.5.  Covenants and Conditions.
    Section 22.6.  Security Measures.
    Section 22.7.  JAMS


EXHIBITS
    Exhibit A     Description of the Premises
    Exhibit B     Environmental Questionnaire
    Exhibit C     Landlord's Disclosures
    Exhibit D     Insurance Requirements
    Exhibit E     Rules and Regulations
    Exhibit F     Irrevocable Standby Letter of Credit
    Exhibit X     Work Letter
    Exhibit X-1   Outline Specifications
    Exhibit       Project Site Plan


                                      (ii)
<PAGE>   4

                                INDUSTRIAL LEASE
                              (SINGLE TENANT; NET)

        THIS LEASE is made as of the 17th day of February, 1999, by and between
THE IRVINE COMPANY, hereafter called "Landlord," and DISCOVERY PARTNERS
INTERNATIONAL, INC., a California corporation, hereinafter called "Tenant."

                        ARTICLE I. BASIC LEASE PROVISIONS

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

1.      Premises: The Premises are more particularly described in Section 2.1,
        and include all of the floor area within the building located at 9640
        Towne Center Drive, San Diego, CA 92121

2.      Project Description: Eastgate Technology Park

3.      Use of Premises: General office, light assembly, research & development
        and laboratory consistent with SR zoning

4.      Estimated Commencement Date: July 1, 1999

5.      Lease Term: Eighty-four (84) months, plus such additional days as may be
        required to cause this Lease to terminate on the final day of the
        calendar month.

6.      Basic Rent: Fifty Thousand One Hundred Eighty-Seven-Dollars ($50,187.00)
        per month, based on $1.45 per rentable square foot.

        Basic Rent is subject to adjustment as follows:

        Commencing on the first day of the thirteenth (13th) month of the Term,
        the Basic Rent shall be Fifty One Thousand Five Hundred Seventy-Two
        Dollars ($51,572.00) per month, based on $1.49 per rentable square foot.

        Commencing on the first day of the twenty-fifth (25th) month of the
        Term, the Basic Rent shall be Fifty Two Thousand Nine Hundred Fifty-Six
        Dollars ($52,956.00) per month, based on $1.53 per rentable square foot.

        Commencing on the first day of the thirty-seventh (37th) month of the
        Term, the Basic Rent shall be Fifty Four Thousand Three Hundred
        Forty-One Dollars ($54,341.00) per month, based on $1.57 per rentable
        square foot.

        Commencing on the first day of the forty-ninth (49th) month of the Term,
        the Basic Rent shall be Fifty Five Thousand Seven Hundred Twenty-Five
        Dollars ($55,725.00) per month, based on $1.61 per rentable square foot.

        Commencing on the first day of the sixty-first (61st) month of the Term,
        the Basic Rent shall be Fifty Seven Thousand One Hundred Ten Dollars
        ($57,110.00) per month, based on $1.65 per rentable square foot.

        Commencing on the first day of the seventy-third (73rd) month of the
        Term, the Basic Rent shall be Fifty Eight Thousand Four Hundred
        Ninety-Four Dollars ($58,494.00) per month, based on $1.69 per rentable
        square foot.

7.      Guarantor(s): None

8.      Floor Area of Premises: approximately 34,612 rentable square feet

9.      Security Deposit: $64,343.00 (See Section 4.3)

10.     Broker(s): Irving Hughes Group/CB Richard Ellis

11.     Additional Insureds: Insignia\ESG of California, Inc.


                                       1
<PAGE>   5

12.     Address for Payments and Notices:

          LANDLORD                                      TENANT

INSIGNIA\ESG OF CALIFORNIA, INC.          DISCOVERY PARTNERS INTERNATIONAL, INC.
1 Ada, Suite 270                          9640 Towne Centre Drive
Irvine, CA 92618                          San Diego, CA 92121

With a copy of notices to:                With a copy of notices to:

IRVINE INDUSTRIAL COMPANY
P.O. Box 6370                             THE IRVING HUGHES GROUP, INC.
Newport Beach, CA 92658-6370              501 West Broadway, Suite 2020
Attn: Vice President,                     San Diego, CA 92101
      Industrial Operations               Attn: David B. Marino, Executive
                                                Vice President

                                          and to:

                                          BROBECK, PHLEGER & HARRISON LLP
                                          550 West "C" Street, Suite 1200
                                          San Diego, CA 92101
                                          Attn: W. Scott Biel, Esq.


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

14.     Vehicle Parking Spaces: One Hundred Thirty-Six (136) spaces within the
        Common Area of the Project based on four (4) spaces per 1,000 rentable
        square feet of the Premises area.

15.     Plan Approval Date: February 17, 1999


                                       2
<PAGE>   6

                              ARTICLE II. PREMISES

        SECTION 2.1. LEASED PREMISES. Landlord leases to Tenant and Tenant
leases from Landlord the premises shown in Exhibit A (the "Premises"), including
the building identified in Item 1 of the Basic Lease Provisions (which together
with the underlying real property, is called the "Building"), and containing
approximately the floor area set forth in Item 8 of the Basic Lease Provisions.
The Premises is a portion of the project shown in Exhibit Y (the "Project").
Landlord shall have no right to relocate Tenant from the Premises at any time
during the Term of this Lease or any extension.

        SECTION 2.2. ACCEPTANCE OF PREMISES. Tenant acknowledges that, except as
expressly provided in this Lease, neither Landlord nor any representative of
Landlord has made any representation or warranty with respect to the Premises or
the Building or the suitability or fitness of either for any purpose, including
without limitation any representations or warranties regarding zoning or other
land use matters, and that neither Landlord nor any representative of Landlord
has made any representations or warranties regarding (i) what other tenants or
uses may be permitted or intended in the Building and the Project, or (ii) any
exclusivity of use by Tenant with respect to its permitted use of the Premises
as set forth in Item 3 of the Basic Lease Provisions. Tenant further
acknowledges that neither Landlord nor any representative of Landlord has agreed
to undertake any alterations or additions or construct any improvements to the
Premises except as expressly provided in this Lease. The taking of possession or
use of the Premises by Tenant for any purpose other than construction shall
conclusively establish that the Premises and the Building were in satisfactory
condition and in conformity with the provisions of this Lease in all respects,
except for (i) those matters which Tenant shall have brought to Landlord's
attention on a written punch list, which list shall be limited to any items
required to be accomplished by Landlord under the Work Letter attached as
Exhibit X, and (ii) Landlord's other obligations specifically provided in this
Lease, including without limitation, the responsibilities contained in Section
2.4 hereof. After the Tenant Improvements to the Premises are substantially
completed (excepting punch list items) and prior to the Commencement Date,
Landlord shall cause the General Contractor to Inspect the Premises with the
Tenant's representative and complete a punch list of unfinished or incorrect
items of the Tenant Improvements. Authorized representatives for the Landlord
and Tenant shall execute said punch list to indicate their approval thereof not
later than thirty (30) days from and after the Commencement Date. The items
listed on such punch list shall be completed by the Landlord within thirty (30)
days after the approval of such punch list or as soon thereafter as reasonably
practicable. Nothing contained in this Section shall affect the commencement of
the Term or the obligation of Tenant to pay rent. Landlord shall diligently
complete all punch list items of which it is notified as provided above.

        SECTION 2.3. BUILDING NAME AND ADDRESS. Tenant shall not utilize any
name selected by Landlord from time to time for the Building and/or the Project
as any part of Tenant's corporate or trade name. Landlord shall have the right
to change the name, address, number or designation of the Building or Project
without liability to Tenant; provided, however, if the address of the Building
and/or the Project is changed by Landlord, Landlord agrees to provide Tenant
with no less than sixty (60) days prior written notice and to reimburse Tenant
for all expenses reasonably incurred by Tenant in conjunction with such address
change (including, without limitation, the cost of changing Tenant's stationery
and of notifying Tenant's clients and customers of Tenant's new address of the
Building and/or the Project), not to exceed Five Thousand Dollars ($5,000.00) in
the aggregate.

        SECTION 2.4. LANDLORD'S RESPONSIBILITIES.

               (a) Landlord shall correct, repair or replace, at Landlord's sole
cost and expense and not as a Building Cost, any failure of the structural
components of the roof, foundations, concrete subflooring, footings and
load-bearing walls of the Building. The foregoing obligation, however, shall not
apply to the extent any such failure is caused by the negligence or improper use
of such structural components by Tenant, its employees, agents, contractors,
licensees or invitees, in which case Tenant shall be responsible for the
reasonable costs of such corrections, repairs and/or replacements. The
corrections, repairs or replacements required of Landlord or of Tenant in the
preceding sentences of this Section 2.4(a) shall be made promptly following
notice from the other party.

               (b) Landlord shall correct, repair or replace, at Landlord's sole
cost and expense and not as a Building Cost, any non-compliance of the Building
exterior, the Tenant Improvements and the Common Areas with all applicable
building permits and codes in effect as of the Commencement Date, including
without limitation, the provisions of Title III of the Americans With
Disabilities Act ("ADA") in effect as of the Commencement Date. Said costs of
compliance shall be Landlord's sole cost and shall not be part of Building
Costs. Landlord shall correct, repair or replace any non-compliance of the
Building exterior, the Tenant Improvements and the Common Areas, with any
revisions or amendments to the ADA in effect after the Commencement Date,
provided that the amortized cost of such repairs or replacements (amortized over
the useful life thereof using a market cost of funds reasonably determined by
Landlord) shall be included as Building Costs payable by Tenant. All other ADA
compliance issues which pertain to the Premises, including without limitation,
in connection with Tenant's construction of any alterations or other
improvements in the Premises (and any resulting ADA compliance requirements in
the Common Areas) and the operation of Tenant's business and employment
practices in the Premises, shall be the responsibility of Tenant at its sole
cost and expense. The repairs, corrections or replacements required of Landlord
or of Tenant under the foregoing provisions of this Section 2.4(b) shall be made
promptly following notice of non-compliance from any applicable governmental
agency.

               (c) Landlord shall deliver the Premises to Tenant on the
Commencement Date clean and free of debris with all items of Landlord's Work,
including without limitation, the installation of the Tenant Improvements
completed in accordance with the terms of EXHIBIT X. Landlord warrants to Tenant
that the roof, plumbing, fire sprinkler system, lighting, heating, ventilation
and air conditioning systems and electrical systems in the Premises, shall be in
good operating condition on the Commencement Date and during the initial twelve
(12) months of the Term. In the event of a non-compliance with such warranty,
Landlord shall, except as otherwise provided in this


                                       3
<PAGE>   7

Lease, promptly after receipt of written notice from Tenant setting forth the
nature and extent of such non-compliance, rectify same at Landlord's cost and
expense. Further, in connection with the construction of the shell Building and
the Tenant Improvements pursuant to the Work Letter, Landlord shall obtain
customary warranties and guaranties from the contractor(s) performing such work
and/or the manufacturers of equipment installed therein, but shall be under no
obligation to incur additional expense in order to obtain or extend such
warranties. If Tenant is required to make repairs to any component of the
Premises or any of its systems not covered by the Landlord's warranty contained
in this Section 2.4 but for which Landlord has obtained a contractor's or
manufacturer's warranty, then Landlord shall, upon request by Tenant, use its
good faith efforts to pursue its rights under any such warranties for the
benefit of Tenant. Tenant's acceptance of the Premises shall be subject to the
foregoing and to the provisions of this Lease regarding delivery of possession
and completion by Landlord of all punch-list items.

                                ARTICLE III. TERM

        SECTION 3.1. GENERAL. The term of this Lease (the "Term") shall be for
the period shown in Item 5 of the Basic Lease Provisions. Subject to the
provisions of Section 3.2 below, the Term shall commence ("Commencement Date")
on the earlier to occur of: (i) the date that Landlord notifies Tenant of the
"Substantial Completion" of the construction of the Tenant Improvements (as
hereinafter defined), or (ii) the date Tenant occupies the Premises for the
purposes of the operation of its business therein. "Substantial Completion" of
the Tenant Improvements shall occur when: (i) a certificate of occupancy
(permanent or temporary) has been issued by the City of San Diego, (ii) all
Building systems are in good operating condition and (iii) the Tenant
Improvements have been substantially completed in accordance with the Work
Letter attached hereto as Exhibit X, except for minor punch list items which do
not preclude or materially impair Tenant from conducting its business from the
Premises. Possession of the Premises shall be tendered to Tenant on the
Commencement Date. Within ten (10) days after the Commencement Date has
occurred, the parties shall memorialize a form provided by Landlord the actual
Commencement Date and the expiration date ("Expiration Date") of this Lease.
Tenant's failure to execute that form shall not affect the validity of
Landlord's determination of those dates.

        SECTION 3.2. DELAY IN POSSESSION. If Landlord, for any reason
whatsoever, cannot deliver possession of the Premises to Tenant on or before the
Estimated Commencement Date, this Lease shall not be void or voidable nor shall
Landlord be liable to Tenant for any resulting loss or damage. However, Tenant
shall not be liable for any rent and the Commencement Date shall not occur until
Landlord delivers possession of the Premises and all conditions to the
Commencement Date specified in Section 3.1 above have been satisfied, except
that if Landlord's failure to so deliver possession on the Estimated
Commencement Date, or the failure of any of the conditions to the Commencement
Date specified in Section 3.1 above, are attributable to any action or inaction
by Tenant (including without limitation any Tenant Delay described in the Work
Letter attached to this Lease), then the Commencement Date shall not be advanced
to the date on which possession of the Premises is tendered to Tenant, and
Landlord shall be entitled to full performance by Tenant (including the payment
of rent) from the date Landlord would have been able to deliver the Premises to
Tenant but for Tenant's delay(s). If for reasons other than "Tenant Delays" as
defined in the Work Letter attached hereto as EXHIBIT X or matters beyond
Landlord's reasonable control, the Commencement Date has not occurred by
December 31, 1999 ("Outside Date"), then Tenant shall have the right to
terminate this Lease upon thirty (30) days prior written notice to Landlord
delivered at any time following the Outside Date and prior to Landlord's
delivery of the Premises to Tenant in the condition required under EXHIBIT X,
and this Lease shall terminate thirty (30) days after such notice unless
Landlord shall so deliver the Premises to Tenant within said thirty (30) days.

        SECTION 3.3. RIGHT TO EXTEND THIS LEASE. Provided that Tenant is not in
default of any monetary covenant of this Lease (including, without limitation,
the obligation to pay Basic Rent and/or Tenant's Share of Operating Expenses) or
any material non-monetary covenant, following written notice and the expiration
of the applicable cure period, either at the time of exercise of the extension
right granted herein or at the time of the commencement of such extension, and
provided further that Tenant (and/or a "Tenant Affiliate") is occupying not less
than fifty percent (50%) of the floor area of the Premises and that Tenant has
not assigned its interest in this Lease except to a "Tenant Affiliate," then
Tenant may extend the Term of this Lease for two (2) successive periods of sixty
(60) months each. Tenant shall exercise its right to extend the Term by and only
by delivering to Landlord, not less than eight (8) months or more than twelve
(12) months prior to the expiration date of the Term, Tenant's irrevocable
written notice of its commitment to extend (the "Commitment Notice"). The Basic
Rent payable under the Lease during any extension of the Term shall be
determined as provided in the following provisions.

        If Landlord and Tenant have not by then been able to agree upon the
Basic Rent for the extension of the Term, then within one hundred twenty (120)
and ninety (90) days prior to the expiration date of the Term, Landlord shall
notify Tenant in writing of the Basic gent that would reflect the prevailing
market rental rate for a 60-month renewal of comparable space in the Project
(together with any increases thereof during the extension period) as of the
commencement of the extension period ("Landlord's Determination"). Should Tenant
disagree with the Landlord's Determination, then Tenant shall, not later than
twenty (20) days thereafter, notify Landlord in writing of Tenant's
determination of those rental terms ("Tenant's Determination"). Within ten (10)
days following delivery of the Tenant's Determination, the parties shall attempt
to agree on an appraiser to determine the fair market rental. If the parties are
unable to agree in that time, then each party shall designate an appraiser
within ten (10) days thereafter. Should either party fail to so designate an
appraiser within that time, then the appraiser designated by the other party
shall determine the fair market rental. Should each of the parties timely
designate an appraiser, then the two appraisers so designated shall appoint a
third appraiser who shall, acting alone, determine the fair market rental for
the Premises. Any appraiser designated hereunder shall have an MAI certification
with not less than five (5) years experience in the valuation of commercial
industrial buildings in San Diego County, California.

        Within thirty (30) days following the selection of the appraiser and
such appraiser's receipt of the Landlord's Determination and the Tenant's
Determination, the appraiser shall determine whether the rental rate


                                       4
<PAGE>   8

determined by Landlord or by Tenant more accurately reflects the fair market
rental rate for the 60-month renewal of the Lease for the Premises, as
reasonably extrapolated to the commencement of the extension period.
Accordingly, either the Landlord's Determination or the Tenant's Determination
shall be selected by the appraiser as the fair market rental rate for the
extension period. At any time before the decision of the appraiser is rendered,
either party may, by written notice to the other party, accept the rental terms
submitted by the other party, in which event such terms shall be deemed adopted
as the agreed fair market rental. The fees of the appraiser(s) shall be borne
entirely by the party whose determination of the fair market rental rate was not
accepted by the appraiser.

        Within twenty (20) days after the determination of the fair market
rental, Landlord shall prepare an appropriate amendment to this Lease for the
extension period, and Tenant shall execute and return same to Landlord within
twenty (20) days. Should the fair market rental not be established by the
commencement of the extension period, then Tenant shall continue paying rent at
the rate in effect during the last month of the initial Term, and a lump sum
adjustment shall be made promptly upon the determination of such new rental.

        If Tenant fails to timely comply with any of the provisions of this
paragraph, Tenant's right to extend the Term shall be extinguished and the Lease
shall automatically terminate as of the expiration date of the Term, without any
extension and without any liability to Landlord. Any attempt to assign or
transfer any right or interest created by this paragraph shall be void from its
inception. Tenant shall have no other right to extend the Term beyond the two
(2) successive extension periods of sixty (60) months each created by this
paragraph. Unless agreed to in a writing signed by Landlord and Tenant, any
extension of the Term, whether created by an amendment to this Lease or by a
holdover Of the Premises by Tenant, or otherwise, shall be deemed a part of, and
not in addition to, any duly exercised extension period permitted by this
paragraph.

                     ARTICLE IV. RENT AND OPERATING EXPENSES

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

        SECTION 4.2. OPERATING EXPENSES.

               (a) Tenant shall pay to Landlord, as additional rent, Tenant's
Share of "Building Costs" and "Property Taxes," as those terms are defined
below, incurred by Landlord in the operation of the Building and Project. For
convenience of reference, Property Taxes and Building Costs shall be referred to
collectively as "Operating Expenses". The term "Tenant's Share" means that
portion of an Operating Expense determined by multiplying the cost of such item
by a fraction, the numerator of which is the floor area of the Premises and the
denominator of which is the total square footage of the floor area within all
buildings in the Project to which such Operating Expenses relate, as of the date
on which the computation is made. The rentable square footage of the Project may
be adjusted from time to time in the event new buildings are constructed within
or incorporated within the Project. For the initial Expense Recovery Period of
this Lease, "Tenant's Share" of Operating Expenses for the Project shall be
17.66%.

               (b) Commencing prior to the start of the first full "Expense
Recovery Period" (as defined below) of the Lease, and prior to the start of each
full or partial Expense Recovery Period thereafter, Landlord shall give Tenant a
written estimate of Tenant's Share of the amount of Operating Expenses for the
Expense Recovery Period. Tenant shall pay the estimated amounts to Landlord in
equal monthly installments, in advance, with Basic Rent. If Landlord has not
furnished its written estimate for any Expense Recovery Period by the time set
forth above, Tenant shall continue to pay cost reimbursements at the rates
established for the prior Expense Recovery Period, if any; provided that when
the new estimate is delivered to Tenant, Tenant shall, at the next monthly
payment date, pay any accrued cost reimbursements based upon the new estimate.
For purposes hereof, "Expense Recovery Period" shall mean every twelve month
period during the Term (or portion thereof for the first and last lease year)
commencing July 1 and ending June 30.

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


                                       5
<PAGE>   9

                      Landlord agrees that it will maintain complete and
accurate records of all costs, expenses and disbursements paid or incurred by
Landlord, its employees, agents and/or contractors, with respect to the
Operating Expenses in accordance with generally accepted accounting principles,
consistently applied. Such records shall be kept until one (1) year after the
termination of this Lease. Landlord shall provide in reasonable detail the
calculation of Tenant's Share of the Operating Expenses. Provided Tenant is not
then in default of any monetary covenant of this Lease (including, without
limitation, the obligation to pay Basic Rent and/or Tenant's Share of Operating
Expenses), or any material non-monetary covenant, following written notice and
the expiration of the applicable cure period, then Tenant shall have the right
to have Tenant's financial officer or a certified public accountant audit
Landlord's Operating Expenses, subject to the terms and conditions hereof. In no
event, however, shall such auditor be compensated by Tenant on a "contingency"
basis, or on any other basis tied to the results of said audit. Tenant shall
give notice to Landlord of Tenant's intent to audit within one hundred twenty
(120) days following delivery of Landlord's expense statement for each of the
Expense Recovery Periods. Following at least ten (10) business days notice to
Landlord, such audit shall be conducted at a mutually agreeable time during
normal business hours at the office of Landlord or its management agent where
the records are maintained in San Diego County, California. Landlord agrees to
make such personnel available to Tenant as is reasonably necessary for Tenant's
employees and agents, to conduct such audit. Landlord shall make such records
available to Tenants employees and agents, for inspection during normal business
hours. Tenant's employees and agents shall be entitled to make photostatic
copies of such records, provided Tenant bears the expense of such copying, and
further provided that Tenant keeps such copies in a confidential mariner and
does not discuss, display or distribute such copies to any other third party. If
Tenant's audit determines that actual Operating Expenses have been overstated by
more than four percent (4%), then subject to Landlord's right to review and/or
contest the audit results, Landlord shall reimburse Tenant for the reasonable
out-of-pocket costs of such audit. Tenant's Basic Rent shall be appropriately
adjusted to reflect any overstatement in Operating Expenses. In the event of a
dispute between Landlord and Tenant regarding the results of such audit, such
dispute shall be submitted to and resolved by JAMS as provided in Section 22.7
of this Lease.

                      All of the information obtained by Tenant and/or its
auditor in connection with such audit, as well as any compromise, settlement, or
adjustment reached between Landlord and Tenant as a result thereof, shall be
held in strict confidence and, except as may be required pursuant to litigation
and, except for inadvertent disclosures despite Tenant's reasonable efforts to
keep the disclosed information confidential, shall not be disclosed to any third
party, directly or indirectly, by Tenant or its auditor or any of their
officers, agents or employees. Landlord may require Tenant's auditor to execute
a separate confidentiality agreement affirming the foregoing as a condition
precedent to any audit.

               (d) Even though the Lease has terminated and the Tenant has
vacated the Premises, when the final determination is made of Operating Expenses
for the Expense Recovery Period in which the Lease terminates, Tenant shall upon
notice pay the entire increase of Tenant's Share of said Operating Expenses due
over the estimated expenses paid. Conversely, any overpayment made in the event
expenses decrease shall be rebated promptly by Landlord to Tenant.

               (e) If, at any time during any Expense Recovery Period, any one
or more of the Operating Expenses are increased to a rate(s) or amount(s) in
excess of the rate(s) or amount(s) used in calculating the estimated expenses
for the year, then the estimate of Operating Expenses shall be increased for the
month in which such rate(s) or amount(s) becomes effective and for all
succeeding months by an amount equal to Tenant's Share of the increase. Landlord
shall give Tenant written notice of the amount or estimated amount of the
increase, the month in which the increase will become effective, and the month
for which the payments are due. Tenant shall pay the increase to Landlord as a
pan of Tenant's monthly payments of estimated expenses as provided in paragraph
(b) above commencing with the month in which effective.

               (f) The term "Building Costs" shall include all expenses of
operation and maintenance of the Building and of the Building's proportionate
share of the Project, if applicable (determined as the rentable square footage
of the Building divided by the rentable square footage of all space in the
Project), to the extent such expenses are not billed to and paid directly by
Tenant, and shall include the following charges by way of illustration but not
limitation: water and sewer charges; insurance premiums or reasonable premium
equivalents should Landlord elect to self-insure any risk that Landlord is
authorized to insure hereunder (provided that: (i) in no event shall Tenant be
responsible for deductibles associated with earthquake or flood insurance
premiums in excess of Ten Thousand Dollars ($10,000.00) per year on an amortized
basis over the useful life of the "capitalized" repairs or replacements
resulting from the casualty giving rise to the payment of said deductibles
[calculated at a market cost of funds, all as determined by Landlord using
generally accepted accounting principles consistently applied] for each
remaining year of useful life during the Term, and (ii) in the event that
Landlord shall spread the cost of premiums or premium equivalents for earthquake
and/or flood insurance other than on a straight per square foot basis over its
leased portfolio throughout the State of California, then Landlord shall
reasonably determine the geographic risks of its leased portfolio for insurance
and flood insurance purposes and shall spread the costs of such coverage
accordingly; license, permit, and inspection fees; heat; light; power; air
conditioning; supplies; materials; equipment; tools; the reasonable cost of any
environmental, insurance, tax or other consultant utilized by Landlord in
connection with the Building and/or Project; establishment of reasonable
reserves for replacements and/or repair of Common Area improvements (if
applicable), equipment and supplies; costs incurred in connection with
compliance of any laws or changes in laws applicable to the Building or the
Project; the cost of any capital investments (other than tenant improvements for
specific tenants) to the extent of the amortized amount thereof over the useful
life of such capital investments calculated at a market cost of finds, all as
determined by Landlord using generally accepted accounting principles
consistently applied, for each such year of useful life during the Term; costs
associated with the procurement and maintenance of an intrabuilding network
cable service agreement for any intrabuilding network cable telecommunications
lines within the Project, and any other installation, maintenance, repair and
replacement costs associated with such lines; labor; reasonably allocated wages
and salaries, fringe


                                       6
<PAGE>   10

benefits, and payroll taxes for administrative and other personnel directly
applicable to the Building and/or Project, including both Landlord's personnel
and outside personnel; any expense incurred pursuant to Sections 6.1, 6.2, 6.4,
7.2, and 10.2; and a reasonable overhead/management fee for the professional
operation of the Building and Project. Notwithstanding anything to the contrary
contained herein, the amount of such overhead/management fee to be charged to
Tenant shall be determined by multiplying the actual fee charged (which from
time to time may be with respect to the entire Project, a portion of the Project
only, the Building only, or the Project together with other properties owned by
Landlord and/or its affiliates) by a fraction, the numerator of which is the
floor area of the Premises (as set forth in Item No. 8 of the Basic Lease
Provisions) and the denominator of which is the total square footage of space
charged with such fee actually leased to tenants (including Tenant). It is
understood that Building Costs shall include competitive charges for direct
services provided by any subsidiary or division of Landlord.

                      Notwithstanding the provisions of this Section 4.2 to the
contrary, Operating Expenses shall not include any cost or expense identified as
the responsibility of Landlord and not an Operating Expense by the express terms
of this Lease, and shall not include any of the following:

                             (1) Leasing commissions, attorneys' fees, costs,
disbursements and other expenses incurred by Landlord or its agents in
connection with negotiations for leases with tenants, other occupants or
prospective tenants or other occupants of the Project, and similar costs
incurred in connection with disputes with and/or enforcement of any lease with
tenants, other occupants, or prospective tenants or other occupants of the
Project;

                             (2) "Tenant allowances," "tenant concessions," work
letter payments, and other costs or expenses (including permit, license and
inspection fees) incurred in completing, fixturing, furnishing, renovating or
otherwise improving, decorating or redecorating space for other tenants or
occupants of the Project, or vacant, leasable space in the Project, including
space planning/interior design fees for same;

                             (3) Depreciation and other "non-cash" expense
items;

                             (4) Services, items and benefits for which Tenant
or any other tenant or occupant of the Project specifically reimburses Landlord
or for which Tenant or any other tenant or occupant of the Project pays third
persons or services, items or benefits which are not generally made available to
Tenant as an occupant of the Building or the Project;

                             (5) Costs or expenses (including fines, penalties
and legal fees) incurred due to the violation by Landlord of any terms and
conditions (other than by Tenant) of this Lease or of the leases of other
tenants in the Project, that would not have incurred but for such violation by
Landlord;

                             (6) Penalties for late payment of any Operating
Expenses by Landlord, including, without limitation, with respect to taxes,
equipment leases, etc.;

                             (7) Payments in respect of overhead and/or profit
to any subsidiary or Affiliate (hereinafter defined) of Landlord, as a result of
a non-competitive selection process for services (other than the management fee)
on or to the Project, or for goods, supplies or other materials, to the extent
that the costs of such services, goods, supplies or materials exceed the costs
that would have been paid if the services, goods, supplies or materials had been
provided by parties unaffiliated with Landlord, of similar skill, competence and
experience, on a competitive basis;

                             (8) Payments of principal, finance charges or
interest on debt or amortization on any deed of trust or other debt encumbering
the Project, and rental payments (or, increases in same) under any ground or
underlying lease or leases encumbering the Project (except to the extent the
same may be made to pay or reimburse, or may be measured by Property Taxes);

                             (9) Except for a management fee which is reasonable
and commercially competitive for similar projects in the area of the Project,
costs of Landlord's general overhead and general administrative expenses
(individual, partnership or corporate, as the case may be) and wages, salaries
and other compensation and benefits (as well as adjustments thereto) for all
employees and personnel of Landlord above the level of manager for the Project,
which costs would not be chargeable to Operating Expenses in accordance with
generally accepted accounting principles, consistently applied;

                             (10) Rentals and other related expenses, if any,
incurred in leasing air conditioning systems or other equipment ordinarily
considered to be of a capital nature, except equipment which is used in
providing janitorial services and which is not affixed to the Project and
equipment which is leased on a temporary basis in emergency situations;

                             (11) Advertising and promotional expenses;

                             (12) Costs or expenses for the acquisition of
sculpture, paintings or other works of art, but not the reasonable expenses of
maintaining, repairing and insuring same;

                             (13) Costs for which Landlord is compensated
through or reimbursed by insurance;

                             (14) Contributions to operating expense reserves
(including tax reserves), except for reasonable reserves for the roof of the
Building and as specifically set forth in Section 4.4 hereof;


                                       7
<PAGE>   11

                             (15) Contributions to political or charitable
organizations;

                             (16) Costs incurred in removing the property of
former tenants and/or other occupants of the Project;

                             (17) The costs of any "tap fees" or one-time lump
sum sewer, water or other utility connection fees for the Project;

                             (18) Costs or fees relating to the defense of
Landlord's title to or interest in the Building and/or the Project, or any part
thereof,

                             (19) Any other expense which, under generally
accepted accounting principles, consistently applied, would not be considered to
be a normal maintenance or operating expense of the Building and/or the Project;

                             (20) Costs for which Landlord is actually
reimbursed by any recovery of insurance proceeds; and

                             (21) All costs of the "shell" Building work (as
defined in the Work Letter attached hereto), including without limitation,
initial construction costs of parking lots and landscaping within the Common
Areas.

                      As used herein, the term "Affiliate" shall mean and refer
to any person or entity controlling, controlled by, or under common control with
another such person or entity. "Control," as used herein, shall mean the
possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of such controlled person or entity; the ownership,
directly or indirectly, of at least fifty-one percent (51%) of the voting
securities of, or possession of the right to vote, in the ordinary direction of
its affairs, at least fifty-one percent (51%) of the voting interest in, any
person or entity shall be presumed to constitute such control. In the case of
Landlord, the term "Affiliate" shall include any person or entity controlling or
controlled by or under common control with any general partner of Landlord or
any general partner of Landlord's general partner.

               (g) The term "Property Taxes" as used herein shall include the
following: (i) all real estate taxes or personal property taxes, as such
property taxes may be reassessed from time to time; and (ii) other taxes,
charges and assessments which are levied with respect to this Lease or to the
Building and/or the Project, and any improvements and fixtures located in the
Building and/or the Project, except that general net income and franchise taxes
imposed against Landlord shall be excluded; and (iii) all assessments and fees
for public improvements, services, and facilities and impacts thereon, including
without limitation arising out of any Community Facilities Districts, "Mello
Roos" districts, similar assessment districts, and any traffic impact mitigation
assessments or fees; (iv) any tax, surcharge or assessment which shall be levied
in addition to or in lieu of real estate or personal property taxes, other than
taxes covered by Article VIII; and (v) costs and expense incurred in contesting
the amount or validity of any Property Tax by appropriate proceedings.

        SECTION 4.3. SECURITY DEPOSIT. Concurrently with Tenant's delivery of
this Lease, Tenant shall deposit with Landlord the sum, if any, stated in Item 9
of the Basic Lease Provisions, to be held by Landlord as security for the full
and faithful performance of Tenant's obligations under this Lease (the "Security
Deposit"). Subject to the last sentence of this Section, the Security Deposit
shall be understood and agreed to be the property of Landlord upon Landlord's
receipt thereof, and may be utilized by Landlord in its discretion towards the
payment of all prepaid expenses by Landlord for which Tenant would be required
to reimburse Landlord under this Lease, including without limitation brokerage
commissions and Tenant Improvement costs. Upon any default by Tenant, including
specifically Tenant's failure to pay rent or to abide by its obligations under
Sections 7.1 and 15.3 below, whether or not Landlord is informed of or has
knowledge of the default, the Security Deposit shall be deemed to be
automatically and immediately applied, without waiver of any rights Landlord may
have under this Lease or at law or in equity as a result of the default, as a
setoff for full or partial compensation for that default. If any portion of the
Security Deposit is applied after a default by Tenant, Tenant shall within five
(5) days after written demand by Landlord deposit cash with Landlord in an
amount sufficient to restore the Security Deposit to its original amount.
Landlord shall not be required to keep this Security Deposit separate from its
general funds, and Tenant shall not be entitled to interest on the Security
Deposit. If Tenant fully performs its obligations under this Lease, 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 in this Lease) after the
expiration of the Term, provided that Landlord may retain the Security Deposit
to the extent and until such time as all amounts due from Tenant in accordance
with this Lease have been determined and paid in full.

        SECTION 4.4. LETTER OF CREDIT. In addition to the Security Deposit and
as security hereunder, Tenant shall deliver to Landlord, concurrently with
Tenant's execution of this Lease, a letter of credit in the amount of Seven
Hundred Thousand Dollars ($700,000.00). Said letter of credit shall be in form
and with the substance of Exhibit F attached hereto, and issued by Bank of
America. The letter of credit shall provide for automatic yearly renewals
throughout the Term of this Lease. Upon any default by Tenant which has not been
cured within the applicable time period, including specifically Tenant's failure
to pay rent or to abide by its obligations under Sections 7.1 and 15.3 below,
Landlord shall be entitled to draw upon said letter of credit in the amount of
the default(s) by the issuance of Landlord's sole written demand to the issuing
financial institution. Any such draw shall be without waiver of any rights
Landlord may have under this Lease or at law or in equity as a result of the
default. If any portion of the letter of credit is drawn after a default by
Tenant, Tenant shall within five (5) days after written demand by Landlord
restore the letter of credit. In the event that (i) Tenant has not been in
default under the Lease (beyond the expiration of any applicable cure period) at
any time during the Term hereof, and


                                       8
<PAGE>   12

(ii) Tenant has not at any time been more than five (5) days late with respect
to any payments of rent due under the Lease more than twice during the Term,
then upon the written request of Tenant, Landlord shall authorize in writing
consecutive reductions to the principal amount of the letter of credit, each of
such reductions in the amount of One Hundred Thousand Forty Dollars
($140,000.00), upon the expiration of the twelfth (12th), twenty-fourth (24th),
thirty-sixth (36th), forty-eighth (48th), and the sixtieth (60th) months during
the Term. In the event that: (A) Tenant has not been in default under the Lease
(beyond the expiration of any applicable cure period) at any time during the
Term hereof, (B) Tenant has not at any time been more than five (5) days late
with respect to any payments of rent due under the Lease more than twice during
the Term, and (C) Tenant shall demonstrate by the delivery to Landlord of its
audited financial Statements that Tenant has a current annual net income of at
least Three Million Dollars ($3,000,000.00), and total current net worth of not
less than Fifteen Million Dollars ($15,000,000.00) (as determined by generally
accepted accounting principles, consistently applied, then, upon written request
of Tenant, Landlord shall authorize a full exoneration and release of the letter
of credit.

                                 ARTICLE V. USES

        SECTION 5.1. USE. Tenant shall use the Premises only for the purposes
stated in Item 3 of the Basic Lease Provisions, all in accordance with
applicable laws and restrictions and pursuant to approvals to be obtained by
Tenant from all relevant and required governmental agencies and authorities. The
parties agree that any contrary use shall be deemed to cause material and
irreparable harm to Landlord and shall entitle Landlord to injunctive relief in
addition to any other available remedy. Tenant, at its expense, shall procure,
maintain and make available for Landlord's inspection throughout the Term, all
governmental approvals, licenses and permits required for the proper and lawful
conduct of Tenant's permitted use of the Premises. Tenant shall not do or permit
anything to be done in or about the Premises which will in any way unreasonably
interfere with the rights of other occupants of the Building or the Project, or
use or allow the Premises to be used for any unlawful purpose, nor shall Tenant
permit any nuisance or commit any waste in the Premises or the Project. Tenant
shall not do or permit to be done anything which will invalidate or increase the
cost of any insurance policy(ies) covering the Building, the Project and/or
their contents, and shall comply with all applicable insurance underwriters
rules and the requirements of the Pacific Fire Rating Bureau or any other
organization performing a similar function (to the extent such rules and
regulations are provided to Tenant). Tenant shall comply at its expense with all
present and future laws, ordinances, restrictions, regulations, orders, rules
and requirements of all governmental authorities that pertain to Tenant or its
use of the Premises, including without limitation all federal and state
occupational health and safety requirements, whether or not Tenant's compliance
will necessitate expenditures or interfere with its use and enjoyment of the
Premises. Tenant shall comply at its expense with all present covenants,
conditions, easements or restrictions now affecting or encumbering the Building
and/or Project, including without limitation the payment by Tenant of any
periodic or special dues or assessments charged against the Premises or Tenant
which may be allocated to the Premises or Tenant in accordance with the
provisions thereof, and any amendments or modifications thereto which do not
materially derogate the rights of Tenant or materially increase the obligations
of Tenant hereunder. Tenant shall promptly upon demand reimburse Landlord for
any additional insurance premium charged by reason of Tenant's failure to comply
with the provisions of this Section, and shall indemnify Landlord from any
liability and/or expense resulting from Tenant's noncompliance.

        SECTION 5.2. SIGNS. Provided Tenant continues to occupy the entire
Premises, Tenant shall have the exclusive right to two (2) "Building top"
exterior signs on the exterior facade of the Building, subject to Landlord's
right of prior approval that such exterior signage is in compliance with the
Signage Criteria (defined below). Except as provided in the foregoing or as
otherwise approved in writing by Landlord, in its sole discretion, Tenant shall
have no right to maintain identification signs in any location in, on or about
the Premises, the Building or the Project and shall not place or erect any
signs, displays or other advertising materials that are visible from the
exterior of the Building. The size, design, graphics, material, style, color and
other physical aspects of any permitted sign shall be subject to Landlord's
written approval prior to installation (which approval may not be unreasonably
withheld), any covenants, conditions or restrictions encumbering the Premises,
Landlord's signage program for the Project, as in effect from time to time and
approved by the City in which the Premises are located ("Signage Criteria"), and
any applicable municipal or other governmental permits and approvals. Tenant
acknowledges having received and reviewed a copy of the current Signage Criteria
for the Project. Tenant shall be responsible for the cost of any permitted sign,
including the fabrication, installation, maintenance and removal thereof. If
Tenant fails to maintain its sign, or if Tenant fails to remove same upon
termination of this Lease and repair any damage caused by such removal, Landlord
may do so at Tenant's expense.

        SECTION 5.3. HAZARDOUS MATERIALS.

               (a) For purposes of this Lease, the term "Hazardous Materials"
includes (i) any "hazardous materials" as defined in Section 25501(n) of the
California Health and Safety Code, (ii) any other substance or matter which
results in liability to any person or entity from exposure to such substance or
matter under any statutory or common law theory, and (iii) any substance or
matter which is in excess of permitted levels set forth in any federal,
California or local law or regulation pertaining to any hazardous or toxic
substance, material or waste.

               (b) Except for those Hazardous Materials identified on the
Environmental Questionnaire approved by Landlord prior to the execution of this
Lease, Tenant shall not cause or knowingly permit any Hazardous Materials to be
brought upon, stored, used, generated, released or disposed of on, under, from
or about the Premises (including without limitation the soil and groundwater
thereunder) without the prior written consent of Landlord. Notwithstanding the
foregoing, Tenant shall have the right, without obtaining prior written consent
of Landlord, to utilize within the Premises standard office products that may
contain Hazardous Materials (such as photocopy toner, "White Out," and the
like), provided, however, that (i) Tenant shall maintain such products in their
original retail packaging, shall follow all instructions on such packaging with
respect to the storage, use and disposal of such products, and shall otherwise
comply with all applicable laws with respect to such products, and (ii) all of


                                       9
<PAGE>   13

the other terms and provisions of this Section 5.3 shall apply with respect to
Tenant's storage, use and disposal of all such products. Landlord may, in its
sole discretion, place such conditions as Landlord deems appropriate with
respect to any such Hazardous Materials, and may further require that Tenant
demonstrate that any such Hazardous Materials are necessary or useful to
Tenant's business and will be generated, stored, used and disposed of in a
manner that complies with all applicable laws and regulations pertaining thereto
and with good business practices. Tenant understands that Landlord may utilize
an environmental consultant to assist in determining conditions of approval in
connection with the storage, generation, release, disposal or use of Hazardous
Materials by Tenant on or about the Premises, and/or to conduct periodic
inspections of the storage, generation, use, release and/or disposal of such
Hazardous Materials by Tenant on and from the Premises, and Tenant agrees that
any costs reasonably incurred by Landlord in connection therewith shall be
reimbursed by Tenant to Landlord as additional rent hereunder upon demand;
however, Tenant shall have no obligation to reimburse Landlord for any costs
incurred in connection with any environmental consultant retained by Landlord
pursuant to this Section unless Tenant shall be in default under this Section
5.3 and such costs are covered by Tenant's indemnity contained in this Section
5.3.

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

               (d) Landlord and its agents shall have the right, but not the
obligation, to inspect, sample and/or monitor the Premises and/or the soil or
groundwater thereunder at any time to determine whether Tenant is complying with
the terms of this Section 5.3, and in connection therewith Tenant shall provide
Landlord with full access to all relevant facilities, records and personnel. If
Tenant is not in compliance with any of the provisions of this Section 5.3, or
in the event of a release of any Hazardous Material on, under or about the
Premises caused or permitted by Tenant, its agents, employees, contractors,
licensees or invitees, Landlord and its agents shall have the right, but not the
obligation, without limitation upon any of Landlord's other rights and remedies
under this Lease, to immediately enter upon the Premises without notice and to
discharge Tenant's obligations under this Section 5.3 at Tenant's expense,
including without limitation the taking of emergency or long-term remedial
action. Landlord and its agents shall endeavor to minimize interference with
Tenant's business in connection therewith, but shall not be liable for any such
interference. In addition, Landlord, at Tenant's expense, shall have the right,
but not the obligation, to join and participate in any legal proceedings or
actions initiated in connection with any claims arising out of the storage,
generation, use, release and/or disposal by Tenant or its agents, employees,
contractors, licensees or invitees of Hazardous Materials on, under, from or
about the Premises.

               (e) If the presence of any Hazardous Materials on, under, from or
about the Premises or the Project caused or permitted by Tenant or its agents,
employees, contractors, licensees or invitees results in (i) injury to any
person, (ii) injury to or any contamination of the Premises or the Project, or
(iii) injury to or contamination of any real or personal property wherever
situated, Tenant, at its expense, shall promptly take all actions necessary to
return the Premises and the Project and any other affected real or personal
property owned by Landlord to the condition existing prior to the introduction
of such Hazardous Materials and to remedy or repair any such injury or
contamination, including without limitation, any cleanup, remediation, removal,
disposal, neutralization or other treatment of any such Hazardous Materials.
Notwithstanding the foregoing, Tenant shall not, without Landlord's prior
written consent (not to be unreasonably withheld), take any remedial action in
response to the presence of any Hazardous Materials on, under or about the
Premises or the Project or any other affected real or personal property owned by
Landlord or enter into any similar agreement, consent, decree or other
compromise with any governmental agency with respect to any Hazardous Materials
claims; provided however, Landlord's prior written consent shall not be
necessary in the event that the presence of Hazardous Materials on, under or
about the Premises or the Project or any other affected real or personal
property owned by Landlord (i) imposes an immediate threat to the health, safety
or welfare of any individual or (ii) is of such a nature that an immediate
remedial response is necessary and it is not possible to obtain Landlord's
consent before taking such action. To the fullest extent permitted by law,
Tenant shall indemnify, hold harmless, protect and defend (with attorneys
acceptable to Landlord) Landlord and any successors to all or any portion of
Landlord's interest in the Premises and the Project and any other real or
personal property owned by Landlord from and against any and all liabilities,
losses, damages, diminution in value, judgments, fines, demands, claims,
recoveries, deficiencies, costs and expenses (including without limitation
attorneys' fees, court costs and other professional expenses), whether
foreseeable or unforeseeable, arising directly or indirectly out of the use,
generation, storage, treatment, release, on- or off-site disposal or
transportation of Hazardous Materials on, into, from, under or about the
Premises, the Building and the Project and any other real or personal property
owned by Landlord caused or permitted by Tenant, its agents, employees,
contractors, licensees or invitees, specifically including without limitation
the cost of any required or necessary repair, restoration, cleanup or
detoxification of the Premises, the Building and the Project and any other real
or personal property owned by Landlord, and the preparation of any closure or
other required plans, whether or


                                       10
<PAGE>   14

not such action is required or necessary during the Term or after the expiration
of this Lease. If Landlord at any time discovers that Tenant or its agents,
employees, contractors, licensees or invitees may have caused or permitted the
release of a Hazardous Material on, under, from or about the Premises or the
Project or any other real or personal property owned by Landlord, Tenant shall,
at Landlord's request, immediately prepare and submit to Landlord a
comprehensive plan, subject to Landlord's approval, specifying the actions to be
taken by Tenant to return the Premises or the Project or any other real or
personal property owned by Landlord to the "Condition Substantially Existing"
(as hereinafter defined) prior to the introduction of such Hazardous Materials.
Upon Landlord's approval of such cleanup plan, Tenant shall, at its expense, and
without limitation of any rights and remedies of Landlord under this Lease or at
law or in equity, immediately implement such plan and proceed to cleanup such
Hazardous Materials in accordance with all applicable laws and to return the
Premises, Project and/or other real or personal property owned by Landlord, as
applicable, to the Condition Substantially Existing prior to the introduction of
such Hazardous Materials, as required by such plan and this Lease. As used
herein, the term "Condition Substantially Existing" shall mean that condition of
the Project, Premises and/or other real or personal property owned by Landlord,
as applicable, which is both: (i) in compliance with all applicable laws, rules,
regulations and/or the agreement, consent, decree or other compromise of, or
with, a governmental agency having jurisdiction with respect to such Hazardous
Materials, and (ii) allows Landlord to market, re-lease, sell and/or finance and
refinance the Project, Premises and/or such real or personal property owned by
Landlord, as applicable, without a material devaluation thereof as, and assuming
no substantial change in use thereof from, a first-class business project. The
provisions of this subsection (e) shall expressly survive the expiration or
sooner termination of this Lease.

               (f) If the release of any Hazardous Materials on, under, from or
about the Premises or the Project caused by Landlord, its authorized agents or
employees, and not introduced by Tenant, its agents, employees, contractors,
licensees, or invitees results in (i) injury to any person, or (ii) injury to or
any contamination, of the Premises or the Project at levels which require
clean-up or remediation under applicable laws, Landlord, at its expense (which
shall not be included in Operating Expenses), shall promptly take all actions
necessary to return the Premises and the Project to the condition existing prior
to the introduction of such Hazardous Materials, or to such condition as is
satisfactory to all governmental agencies asserting jurisdiction, and to remedy
or repair any such injury or contamination, including, without limitation, any
clean-up, remediation, removal, disposal, neutralization or other treatment of
any such Hazardous Materials. The foregoing obligation on the part of Landlord
shall include the reasonable costs (including, without limitation, reasonable
attorney's fees) of defending Tenant (with attorneys reasonably acceptable to
Tenant) from and against any legal action or proceeding instituted by any
governmental agency in connection with such clean-up, remediation, removal,
disposal, neutralization or other treatment of such conditions, provided that
Tenant promptly tenders such defense to Landlord. Tenant agrees to notify its
agents, employees, Contractors, licensees, and invitees of any exposure or
potential exposure to Hazardous Materials at the Premises that Landlord brings
to Tenant's attention.

               (g) Landlord hereby discloses to Tenant, and Tenant hereby
acknowledges, certain facts relating to Hazardous Materials at the Project known
by Landlord to exist as of the date of this Lease, as more particularly
described in Exhibit C attached hereto. Tenant shall have no liability or
responsibility with respect to the Hazardous Materials facts described in
Exhibit C, nor with respect to any Hazardous Materials which Tenant proves were
not caused or permitted by Tenant, its agents, employees, contractors, licensees
or invitees. Notwithstanding the preceding two sentences, Tenant agrees to
notify its agents, employees, contractors, licensees, and invitees of any
exposure or potential exposure to Hazardous Materials at the Premises that
Landlord brings to Tenant's attention. Except as disclosed in this Section
5.3(g) (and/or as may otherwise be disclosed to Tenant in writing), Landlord
represents that, to the best of its actual knowledge without duty of inquiry or
investigation whatsoever, there are no Hazardous Materials in or about the
Premises which are in violation of any applicable federal, state or local law,
ordinance or regulation.

               (h) The obligations on the part of Landlord contained in Section
5.6(g) above are personal to Landlord and shall not be binding on, nor inure
against any successor in interest to Landlord as of the owner of the Premises,
including without limitation, any lender acquiring the Premises by foreclosure
of its mortgage or deed of trust or deed in lieu of foreclosure. The obligations
on the part of Landlord contained in Section 5.3(f) above shall be binding on
Landlord and each successor-in-interest to Landlord as of owner of the Premises
(including without limitation, any lender acquiring the Premises by foreclosure
of its mortgage or deed of trust or deed in lieu of foreclosure) only to the
extent of releases of Hazardous Materials caused by Landlord and any
successor-in-interest to Landlord during their respective periods of ownership
of the Premises.

                       ARTICLE VI. COMMON AREAS; SERVICES

        SECTION 6.1. UTILITIES AND SERVICES. Tenant shall be responsible for and
shall pay promptly, directly to the appropriate supplier, all charges for water,
gas, electricity, sewer, heat, light, power, telephone, refuse pickup,
janitorial service, interior landscape maintenance and all other utilities,
materials and services furnished directly to Tenant or the Premises or used by
Tenant in, on or about the Premises during the Term, together with any taxes
thereon; provided, however, Tenant shall not be obligated to pay directly for
any utilities, water, gas, electricity, sewer, heat, light, power, janitorial
service, landscape maintenance, etc. to the extent such costs are billed to
Tenant as Operating Expenses for the Project. Landlord shall not be liable for
damages or otherwise for any failure or interruption of any utility or other
service furnished to the Premises, and except as expressly provided in the next
succeeding paragraph of this Section 6.1, no such failure or interruption shall
be deemed an eviction or entitle Tenant to terminate this Lease or withhold or
abate any rent due hereunder. Landlord shall at all reasonable times have free
access to all electrical and mechanical installations of Landlord. In exercising
Landlord's right of free access to all mechanical and electrical installations,
Landlord shall not unreasonably interfere with Tenant's use and enjoyment of the
Premises.


                                       11
<PAGE>   15
        Notwithstanding the foregoing, if as a result of the actions of
Landlord, its authorized agents or employees, for more than three (3)
consecutive business days following written notice to Landlord there is no HVAC
or electricity services to all or a portion of the Premises, or such an
interruption of other essential utilities and building services, such as fire
protection or water, so that all or a portion of the Premises cannot be used by
Tenant, then Tenant's Basic Rent (or an equitable portion of such Basic Rent to
the extent that less than all of the Premises are affected) shall thereafter be
abated until the Premises are again usable by Tenant; provided, however, that if
Landlord is diligently pursuing the repair of such utilities or services and
Landlord provides substitute services reasonably suitable for Tenant's purposes,
as for example, bringing in portable air-conditioning equipment, then there
shall not be an abatement of Basic Rent. Any disputes concerning the foregoing
shall be submitted to and resolved by JAMS arbitration pursuant to Section 22.7
of this Lease. The foregoing provisions shall not apply in case of damage to, or
destruction of, the Premises, which shall be governed by the provisions of
Article XI of the Lease.

        SECTION 6.2. OPERATION AND MAINTENANCE OF COMMON AREAS. During the Term,
Landlord shall operate all Common Areas within the Project. The term "Common
Areas" shall mean all areas which are not held for exclusive use by persons
entitled to occupy space, and all other appurtenant areas and improvements
provided by Landlord for the common use of Landlord and tenants and their
respective employees and invitees, including without limitation parking areas
and structures, driveways, sidewalks, landscaped and planted areas, hallways and
interior stairwells not located within the premises of any tenant, common
electrical rooms and roof access entries, common entrances and lobbies,
elevators, and restrooms not located within the premises of any tenant. Subject
to the express provisions of this Lease, Tenant shall have access to the
Premises twenty-four (24) hours per day, three hundred sixty-five (365) days per
year and, subject to Landlord's assessment of a reasonable charge therefore
which takes into consideration factors such as, but not limited to, the
increased wear and tear or the HVAC equipment itself, HVAC service in the
Building shall be available to Tenant twenty-four (24) hours per day, three
hundred sixty-five (365) days per year. Any disputes concerning the foregoing
shall be submitted to and resolved by JAMS arbitration pursuant to Section 22.7
of this Lease. Landlord's operation, maintenance and repair of the Common Areas
shall not unreasonably interfere with Tenant's use and enjoyment of the
Premises.

        SECTION 6.3. USE OF COMMON AREAS. The occupancy by Tenant of the
Premises shall include the use of the Common Areas in common with Landlord and
with all others for whose convenience and use the Common Areas may be provided
by Landlord, subject, however, to compliance with all rules and regulations as
are prescribed from time to time by Landlord. Landlord shall operate and
maintain the Common Areas consistent with other first-class business projects in
the area of the Project, in the manner Landlord may determine to be appropriate.
All costs incurred by Landlord for the maintenance and operation of the Common
Areas shall be included in Building Costs, unless any particular cost incurred
should be charged to a specific tenant of the Project in Landlord's reasonable,
good faith judgment, in which case such cost shall be so charged. Landlord shall
at all times during the Term have exclusive control of the Common Areas, and may
restrain any use or occupancy, except as authorized by Landlord's rules and
regulations. Tenant shall keep the Common Areas clear of any obstruction or
unauthorized use related to Tenant's operations. Nothing in this Lease shall be
deemed to impose liability upon Landlord for any damage to or loss of the
property of, or for any injury to, Tenant, its invitees or employees. Landlord
may temporarily close any portion of the Common Areas for repairs, remodeling
and/or alterations, to prevent a public dedication or the accrual of
prescriptive rights, or for any other reason deemed sufficient by Landlord,
without liability to Landlord. Tenant shall not be required to comply with any
rules and regulations for the Project other than those attached to this Lease
unless such rules and regulations are commercially reasonable and
nondiscriminatory in content and application. Landlord's exclusive control,
operation, maintenance and repair of the Common Area shall be subject to
Tenant's parking rights contained in Section 6.4 below and to all other
limitations contained in this Lease. Landlord agrees that any temporary closure
of any portion of the Common Areas shall not unreasonably interfere with
Tenant's intended use of the Premises, nor its reasonable access to or parking
for the Premises.

        SECTION 6.4. PARKING. Tenant shall be entitled to the number of vehicle
parking spaces set forth in Item 14 of the Basic Lease Provisions, which spaces
shall be unreserved and unassigned, on those portions of the Common Areas
designated by Landlord for parking. Landlord will designate five (5) of such
spaces for "visitor" parking. Tenant shall not use more parking spaces than such
number. All parking spaces shall be used only for parking by vehicles no larger
than full size passenger automobiles or pickup trucks. Tenant shall not permit
or allow any vehicles that belong to or are controlled by Tenant or Tenant's
employees, suppliers, shippers, customers or invitees to be loaded, unloaded or
parked in areas other than those designated by Landlord for such activities. If
Tenant permits or allows any of the prohibited activities described above, then
Landlord shall have the right, without notice, in addition to such other rights
and remedies that Landlord may have, to remove or tow away the vehicle involved
and charge the costs to Tenant. Parking within the Common Areas shall be limited
to striped parking stalls, and no parking shall be permitted in any driveways,
access ways or in any area which would prohibit or impede the free flow of
traffic within the Common Areas. There shall be no overnight parking of any
vehicles of any kind unless otherwise authorized by Landlord, and vehicles which
have been abandoned or parked in violation of the terms hereof may be towed away
at the owner's expense. Nothing contained in this Lease shall be deemed to
create liability upon Landlord for any damage to motor vehicles of visitors or
employees, for any loss of property from within those motor vehicles, or for any
injury to Tenant, its visitors or employees, unless ultimately determined to be
caused by the sole active negligence or willful misconduct of Landlord, its
agents, servants and employees. Landlord shall have the right to establish, and
from time to time amend, and to enforce against all users all reasonable rules
and regulations (including the designation of areas for employee parking) that
Landlord may deem necessary and advisable for the proper and efficient operation
and maintenance of parking within the Common Areas. Landlord shall have the
right to construct, maintain and operate lighting facilities within the parking
areas; to change the area, level, location and arrangement of the parking areas
and improvements therein; to restrict parking by tenants, their officers, agents
and employees to employee parking areas; after the expiration of the initial
eighty-four (84)-month Term of this Lease, to enforce parking charges (by
operation of or otherwise); and to do and perform such other acts in and to the
parking areas and improvements therein as, in the of good business judgment,


                                       12
<PAGE>   16
Landlord shall determine to be advisable. Any person using the parking area
shall observe all directional signs and arrows and any posted speed limits. In
no event shall Tenant interfere with the use and enjoyment of the parking area
by other tenants of the Project or their employees or invitees. Parking areas
shall be used only for parking vehicles. Washing, waxing, cleaning or servicing
of vehicles, or the storage of vehicles for 24-hour periods, is prohibited
unless otherwise authorized by Landlord. Tenant shall be liable for any damage
to the parking areas caused by Tenant or Tenant's employees, suppliers,
shippers, customers or invitees, including without limitation damage from excess
oil leakage. Tenant shall have no right to install any fixtures, equipment or
personal property in the parking areas. Landlord agrees to enforce all parking
rights and restrictions and rules and regulations for the Project on an equal
and non-discriminatory basis. Tenant shall have no liability for non-compliance
with the provisions of the Lease regarding parking other than with respect to
Tenant's officers, directors and employees or persons under the control of
Tenant, except for Landlord's towing rights herein provided.

        SECTION 6.5. CHANGES AND ADDITIONS BY LANDLORD. Landlord reserves the
right to make alterations or additions to the Project, or to the attendant
fixtures, equipment and Common Areas. Landlord may at any time relocate or
remove any of the various buildings (other than the Building), parking areas,
and other Common Areas, and may add buildings and areas to the Project from time
to time. No change shall entitle Tenant to any abatement of rent or other claim
against Landlord, provided that the change does not deprive Tenant of reasonable
access to or use of the Premises or the Common Areas, including parking
facilities.

                      ARTICLE VII. MAINTAINING THE PREMISES

        SECTION 7.1. TENANT'S MAINTENANCE AND REPAIR. Tenant at its sole expense
shall comply with all applicable laws and governmental regulations governing the
Premises and make all repairs necessary to keep the Premises in the condition as
existed on the Commencement Date (or on any later date that the improvements may
have been installed), excepting ordinary wear and tear, including without
limitation the electrical and mechanical systems, any air conditioning,
ventilating or heating equipment which serves the Premises, all walls, glass,
windows, doors, door closures, hardware, fixtures, electrical, plumbing, fire
extinguisher equipment and other equipment; provided, however, Tenant shall have
no obligation to repair, maintain or replace the roof, foundations, footings,
structural systems, exterior glass, sky lights, sky light seals, window seals
and vents, electrical, plumbing, sewer and other utility lines outside the
Premises, landscaping, walkways, fencing, parking areas, exterior lighting or
exterior surfaces of exterior walls of the Building, and washing of exterior
windows, all of which obligations shall be the sole responsibility of Landlord
as provided in Section 7.2 below, subject to the terms of said Section 7.2
(including, without limitation, the provisions for "pass through" of such
expenses as Building Costs as therein provided). Any damage or deterioration of
the Premises shall not be deemed ordinary wear and tear if the same could have
been prevented by good maintenance practices by Tenant. As part of its
maintenance obligations hereunder, Tenant shall, at Landlord's request, provide
Landlord with copies of all maintenance schedules, reports and notices prepared
by, for or on behalf of Tenant. Tenant shall obtain preventive maintenance
contracts from a licensed heating and air conditioning contractor to provide for
regular inspection at maintenance of the heating, ventilating and air
conditioning systems servicing the Premises, all subject to Landlord's approval.
All repairs shall be at least equal in quality to the original work, shall be
made only by a licensed contractor approved in writing in advance by Landlord
and shall be made only at the time or times approved by Landlord. Any contractor
utilized by Tenant shall be subject to Landlord's standard requirements for
contractors, as modified from time to time. Landlord shall have the right at all
times to inspect Tenant's maintenance of all equipment (including without
limitation air conditioning, ventilating and heating equipment), and may impose
reasonable restrictions and requirements with respect to repairs, as provided in
Section 7.3, and the provisions of Section 7.4 shall apply to all repairs.
Alternatively, Landlord may elect to make any repair or maintenance required
hereunder on behalf of Tenant and at Tenant's expense, and Tenant shall promptly
reimburse Landlord for all reasonable costs incurred upon submission of an
invoice. Landlord agrees not-to unreasonably withhold its approval of any
preventive maintenance contracts or licensed contractors selected by tenant with
respect to Tenant's maintenance and repair obligations.

        SECTION 7.2. LANDLORD'S MAINTENANCE AND REPAIR/TENANT'S "SELF-HELP".
Subject to Section 7.1 and Article XI, Landlord shall provide service,
maintenance and repair with respect to the roof, foundations, and footings of
the Building, all landscaping, walkways, parking areas, Common Areas, exterior
lighting, and the exterior surfaces of the exterior walls and windows of the
Building, except that Tenant at its expense shall make all repairs which
Landlord deems reasonably necessary as a result of the act or negligence of
Tenant, its agents, employees, invitees, subtenants or contractors. Landlord
shall have the right to employ or designate any reputable person or firm,
including any employee or agent of Landlord or any of Landlord's affiliates or
divisions, to perform any service, repair or maintenance function. Landlord need
not make any other improvements or repairs except as specifically required under
this Lease, and nothing contained in this Section shall limit Landlord's right
to reimbursement from Tenant for maintenance, repair costs and replacement costs
as provided elsewhere in this Lease. Tenant understands that it shall not make
repairs at Landlord's expense or by rental offset. Tenant further understands
that Landlord shall not be required to make any repairs to the roof, foundations
or footings unless and until Tenant has notified Landlord in writing of the need
for such repair and Landlord shall have a reasonable period of time thereafter
to commence and complete said repair, if warranted. Except as expressly provided
in Sections 2.4 and 4.2(f) above, all reasonable costs of any maintenance and
repairs on the part of Landlord provided hereunder shall be considered part of
Building Costs.

        If Landlord shall fail to perform any repair obligations required under
this Lease within thirty (30) days following Tenant's written request for such
repairs, or if Landlord shall fail to perform any repairs required under this
Lease of an emergency condition within forty-eight (48) hours' written notice
from Tenant, then Tenant may elect to make such repairs at Landlord's expense by
complying with the following provisions. Before making any such repair, Tenant
shall deliver to Landlord a notice for the need for such repair ("Self-Help
Notice"), which notice shall specifically advise Landlord that Tenant intends to
exercise its self-help right hereunder. Should Landlord fail


                                       13
<PAGE>   17

within ten (10) days following receipt of the Self-Help Notice (or within
twenty-four (24) hours following notice in the event of necessary emergency
repairs), to commence the necessary repair or to make other arrangements
reasonably satisfactory to Tenant, then Tenant shall have the right to make such
repair on behalf of Landlord. Landlord shall reimburse Tenant for the reasonable
costs of such repairs within thirty (30) days following receipt of Tenant's
invoice for such costs, provided that in no event shall Tenant have the right to
offset Basic Rent or any other charges payable by Tenant hereunder against such
costs. It is understood that such reimbursement obligation shall be personal to
Landlord, and in no event shall any lender or other deed of trust holder
succeeding to Landlord be liable for payment of any such amount. In the event
that the work could affect the Building's structural, mechanical, electrical,
heating, ventilating, air conditioning, life safety or plumbing components or
systems, then Tenant shall use only those contractors whose names are furnished
by Landlord for such work. If those contractors are unwilling or unable to
perform the work, or if Landlord fails to furnish the names of its contractors
to Tenant prior to the commencement of the work by Tenant, Tenant shall retain
the services of qualified, reputable and licensed, bonded contractors with like
Experience in similar building systems. Tenant shall be responsible for
obtaining any necessary governmental permits before commencing the repair work.
Tenant shall be liable for any damage, loss or injury resulting from said work
to the extent of Tenant's or its agent's, employee's or contractor's negligence.
Any disputes regarding these self-help provisions shall be submitted to and
resolved by JAMS arbitration pursuant to Section 22.7 of this Lease.

        SECTION 7.3. ALTERATIONS. Tenant shall make no alterations, additions or
improvements to the Premises without the prior written consent of Landlord,
which consent may be given or withheld in Landlord's sole discretion.
Notwithstanding the foregoing: (A) Landlord shall not unreasonably withhold its
consent to any alterations, additions or improvements to the Premises which cost
less than One Dollar ($1.00) per square foot of the improved portions of the
Premises (excluding warehouse square footage) and do not (i) affect the exterior
of the Building or outside areas (or be visible from adjoining sites), or (ii)
affect or penetrate any of the structural portions of the Building, including
but not limited to the roof, or (iii) require any change to the basic floor plan
of the Premises, any change to any structural or mechanical systems of the
Premises, or any governmental permit as a prerequisite to the construction
thereof, or (iv) interfere in any manner with the proper functioning of or
Landlord's access to any mechanical, electrical, plumbing or HVAC systems,
facilities or equipment located in or serving the Building, or (v) diminish the
value of the Premises; and (B) Landlord shall not unreasonably withhold its
consent to an upgrade of the Building's electrical system and the installation
of a freight elevator and double doors for light shipping and receiving
functions in the Building. Landlord may impose, as a condition to its consent,
any requirement that Landlord in its reasonable discretion may deem reasonable
or desirable, including but not limited to a requirement that all work be
covered by a lien and completion bond satisfactory to Landlord (not to exceed
one hundred fifty percent (150%) of the cost of the work), and requirements as
to the manner, time, and contractor for performance of the work. Tenant shall
obtain all required permits for the work and shall perform the work in
compliance with all applicable laws, regulations and ordinances, all covenants,
conditions and restrictions affecting the Project, and the Rules and Regulations
(hereafter defined). Tenant understands and agrees that Landlord shall be
entitled to a supervision fee in the amount of three percent (3%) of the cost of
such work requiring a permit from the City of San Diego. If any governmental
entity requires, as a condition to any proposed alterations, additions or
improvements to the Premises by Tenant, that improvements be made to the Common
Areas, and if Landlord consents to such improvements to the Common Areas, then
Tenant shall, at Tenant's sole expense, make such required improvements to the
Common Areas in such manner, utilizing such materials, and with such contractors
(including, if required by Landlord, Landlord's contractors) as Landlord may
require in its sole discretion, Under no circumstances shall Tenant make any
improvement which incorporates any Hazardous Materials, including without
limitation asbestos-containing construction materials into the Premises. Any
request for Landlord's consent shall be made in writing and shall contain
architectural plans describing the work in detail reasonably satisfactory to
Landlord. Unless Landlord otherwise agrees in writing, all alterations,
additions or improvements affixed to the Premises (excluding moveable trade
fixtures and furniture) shall become the property of Landlord and shall be
surrendered with the Premises at the end of the Term, except that Landlord may,
by notice to Tenant, require Tenant to remove by the Expiration Date, or sooner
termination date of this Lease, all or any alterations, decorations, fixtures,
additions, improvements and the like installed either by Tenant or by Landlord
at Tenant's request and to repair any damage to the Premises arising from that
removal. Except as otherwise provided in this Lease or in any Exhibit to this
Lease, should Landlord make any alteration or improvement to the Premises for
Tenant, Landlord shall be entitled to prompt reimbursement from Tenant for all
costs incurred.

        As of the expiration or earlier termination of the Term, Landlord shall
have the right to require Tenant to remove any subsequent alterations, additions
or improvements, whether or not Landlord's consent was required, but only if
Landlord's written consent was obtained and if, at the time of providing its
consent following a written request by Tenant as to whether or not Landlord
would require such removal, Landlord notified Tenant in writing that Tenant
would have to remove such items upon the expiration of the Lease Term. Landlord
and Tenant agree that Tenant shall have the right, upon expiration or
termination of this Lease, to remove any and all phone systems, furniture,
fixtures and other personal property which are not permanently affixed to the
Premises or which may be removed without significant change to the Premises
(including floor coverings, draperies, and/or removable shelves) that are
installed in the Premises at Tenant's sole expense; provided, however, that
Tenant shall, at its sole cost, repair any damage caused by such removal,
reasonable wear and tear excepted.

        SECTION 7.4. MECHANIC'S LIENS. Tenant shall keep the Premises free from
any liens arising out of any work performed, materials furnished, or obligations
incurred by or for Tenant. Upon request by Landlord, Tenant shall promptly cause
any such lien to be released by posting a bond in accordance with California
Civil Code Section 3143 or any successor statute. In the event that Tenant shall
not, within thirty (30) days following the imposition of any lien, cause the
lien to be released of record by payment or posting of a proper bond, Landlord
shall have, in addition to all other available remedies, the right to cause the
lien to be released by any means it deems proper, including payment of or
defense against the claim giving rise to the lien. All reasonable and actual
expenses so incurred by Landlord, including Landlord's reasonable attorneys'
fees, and any foreseeable consequential or other damages incurred by Landlord
proximately caused by such lien, shall be reimbursed by Tenant promptly
following


                                       14
<PAGE>   18

Landlord's demand, together with interest from the date of payment by Landlord
at the maximum rate permitted by law until paid. Tenant shall give Landlord no
less than twenty (20) days' prior notice in writing before commencing
construction of any kind on the Premises so that Landlord may post and maintain
notices of nonresponsibility on the Premises.

        SECTION 7.5. ENTRY AND INSPECTION. Landlord shall at all reasonable
times, upon at least twenty-four (24) hours' prior written or oral notice
(except in emergencies, when no notice shall be required) have the right to
enter the Premises to inspect them, to supply services in accordance with this
Lease, to protect the interests of Landlord in the Premises, and to submit the
Premises to prospective or actual purchasers or encumbrance holders (or, during
the last one hundred and eighty (180) days of the Term or when an uncured Tenant
default exists, to prospective tenants), all without being deemed to have caused
an eviction of Tenant and without abatement of rent except as provided elsewhere
in this Lease. Landlord shall have the right, if desired, to retain a key which
unlocks all of the doors in the Premises, excluding Tenant's vaults and safes,
and Landlord shall have the right to use any and all means which Landlord may
deem proper to open the doors in an emergency in order to obtain entry to the
Premises, and any entry to the Premises obtained by Landlord shall not under any
circumstances be deemed to be a forcible or unlawful entry into, or a detainer
of, the Premises, or any eviction of Tenant from the Premises.

            ARTICLE VIII. TAXES AND ASSESSMENTS ON TENANT'S PROPERTY

        Tenant shall be liable for and shall pay all taxes and assessments
levied against all personal property of Tenant located in the Premises, against
all improvements to the Premises made by Landlord or Tenant which are above
Landlord's Project standard in quality and/or quantity for comparable space
within the Project ("Above Standard Improvements"), and against any alterations,
additions or like improvements made to the Premises by or on behalf of Tenant.
When possible Tenant shall cause its personal property, Above Standard
Improvements and alterations to be assessed and billed separately from the real
property of which the Premises form a part. If any taxes on Tenant's personal
property, Above Standard Improvements and/or alterations are levied against
Landlord or Landlord's property and if Landlord pays the same, or if the
assessed value of Landlord's property is increased by the inclusion of a value
placed upon the personal property, Above Standard Improvements and/or
alterations of Tenant and if Landlord pays the taxes based upon the increased
assessment, Tenant shall pay to Landlord the taxes so levied against Landlord or
the proportion of the taxes resulting from the increase in the assessments In
calculating what portion of any tax bill which is assessed against Landlord
separately, or Landlord and Tenant jointly, is attributable to Tenant's Above
Standard Improvements, alterations and personal property, Landlord's reasonable
determination shall be conclusive.

                      ARTICLE IX. ASSIGNMENT AND SUBLETTING

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

               (b) If Tenant desires to transfer an interest in this Lease, it
shall first notify Landlord of its desire and shall submit in writing to
Landlord: (i) the name and address of the proposed transferee; (ii) the nature
of any proposed subtenant's or assignee's business to be carried on in the
Premises; (iii) the terms and provisions of any proposed sublease or assignment,
including a copy of the proposed assignment or sublease form; (iv) evidence of
insurance of the proposed assignee or subtenant complying with the requirements
of Exhibit D hereto; (v) a completed Environmental Questionnaire from the
proposed assignee or subtenant; and (vi) any other information reasonably
requested by Landlord and reasonably related to the transfer. Except as provided
in Subsection (e) of this Section, Landlord shall not unreasonably withhold its
consent, provided: (1) the use of the Premises will be consistent with the
provisions of this Lease; (2) the proposed assignee or subtenant has not been
required by any prior landlord, lender or governmental authority to take
remedial action in connection with Hazardous Materials contaminating a property
arising out of the proposed assignee's or subtenant's actions or use of the
property in question and is not subject to any enforcement order issued by any
governmental authority in connection with the use, disposal or storage of a
Hazardous Material; (3) at Landlord's election, insurance requirements shall be
brought into conformity with Landlord's then current leasing practice; (4) any
proposed subtenant or assignee demonstrates that it is financially responsible
by submission to Landlord of all information as Landlord may reasonably request
concerning the proposed subtenant or assignee, including, but not limited to, a
balance sheet of the proposed subtenant or assignee as of a date within ninety
(90) days of the request for Landlord's consent and statements of income or
profit and loss of the proposed subtenant or assignee for the two-year period
preceding the request for


                                       15
<PAGE>   19

Landlord's consent, and/or a certification signed by the proposed subtenant or
assignee that it has not been evicted or been in arrears in rent at any other
leased premises for the 3-year period preceding the request for Landlord's
consent; (5) any proposed subtenant or assignee demonstrates to Landlord's
reasonable satisfaction a record of successful experience in business; (6) the
proposed assignee or subtenant is not an existing tenant of the Project or a
prospect with whom Landlord is negotiating to become a tenant at the Project;
and (7) the proposed transfer will not impose additional burdens or adverse tax
effects on Landlord. Tenant's exterior signage rights described in Section 5.2
of this Lease may be assigned in connection with an assignment of the Lease, but
only if the name proposed for such Exterior Signage will not materially devalue
the Project in Landlord's sole and absolute discretion.

                      If Landlord consents to the proposed transfer, Tenant may
within ninety (90) days after the date of the consent effect the transfer upon
the terms described in the information furnished to Landlord; provided that any
material change in the terms shall be subject to Landlord's consent as set forth
in this Section. Landlord shall approve or disapprove any requested transfer
within fifteen (15) business days following receipt of Tenant's written request,
the information set forth above, and the fee set forth below.

               (c) Notwithstanding the provisions of Subsection (b) above, in
lieu of consenting to a proposed assignment of this Lease or to any proposed
subletting of an entire floor (or more than an entire floor) of the Premises,
Landlord may elect to (i) sublease the Premises (or the portion proposed to be
subleased), or take an assignment of Tenant's interest in this Lease, upon the
same as offered to the proposed subtenant or assignee (excluding terms relating
to the purchase of personal property, the use of Tenant's name or the
continuation of Tenant's business), or (ii) terminate this Lease as to the
portion of the Premises proposed to be subleased or assigned with a
proportionate abatement in the rent payable under this Lease, effective on the
date that the proposed sublease or assignment would have become effective.
Landlord may thereafter, at its option, assign or re-let any space so recaptured
to any third party, including without limitation the proposed transferee of
Tenant.

               (d) Tenant agrees that fifty percent (50%) of any amounts paid by
the assignee or subtenant, however described, in excess of (i) the Basic Rent
payable by Tenant hereunder, or in the case of a sublease of a portion of the
Premises, in excess of the Basic Rent reasonably allocable to such portion, plus
(ii) Tenant's direct out-of-pocket costs such as tenant improvement or moving
costs and brokerage commissions which Tenant certifies to Landlord have been
paid to provide occupancy related services to such assignee or subtenant of a
nature commonly provided by landlords of similar space, shall be the property of
Landlord and such amounts shall be payable directly to Landlord by the assignee
or subtenant or, at Landlord's option, by Tenant. At Landlord's request, a
written agreement shall be entered into by and among Tenant, Landlord and the
proposed assignee or subtenant confirming tile requirements of this subsection.

               (e) Tenant shall pay to Landlord a fee of Five Hundred Dollars
($500.00) if and when any transfer hereunder is requested by Tenant. Such fee is
hereby acknowledged as a reasonable amount to reimburse Landlord for its costs
of review and evaluation of a proposed assignee/sublessee, and Landlord shall
not be obligated to commence such review and evaluation unless and until such
fee is paid.

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

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

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

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


                                       16
<PAGE>   20

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

        SECTION 9.4. CERTAIN TRANSFERS. The sale of all or substantially all of
Tenant's assets (other than bulk sales in the ordinary course of business) or,
if Tenant is a corporation, an unincorporated association, or a partnership, the
transfer, assignment or hypothecation of any stock or interest in such
corporation, association, or partnership in the aggregate of fifty percent (50%)
(except for publicly traded shares of stock constituting a transfer of fifty
percent (50%) or more in the aggregate, so long as no change in the controlling
interest of Tenant occurs as a result thereof) shall be deemed an assignment
within the meaning and provisions of this Article. Notwithstanding the
foregoing, Landlord's consent shall not be required for the assignment of this
Lease to any entity controlling or under common control with Tenant, or as a
result of a merger, acquisition, consolidation or reorganization by or of Tenant
with or into another entity (any of the foregoing successor entities being
herein referred to as a "Tenant Affiliate"), so long as (i) the net worth of the
successor entity after such assignment is at least equal to the greater of the
net worth of Tenant as of the execution of this Lease by Landlord or the net
worth of Tenant immediately prior to the date of such assignment, evidence of
which, satisfactory to Landlord, shall be presented to Landlord prior to such
assignment, (ii) Tenant shall provide to Landlord, prior to such assignment,
written notice of such assignment documentation and other information as
Landlord may request in connection therewith, and (iii) all of the other terms
and requirements of this Article shall apply with respect to such assignment,
except for the terms and requirements of Section 9.1 which shall not apply to
such assignment.

                       ARTICLE X. INSURANCE AND INDEMNITY

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

        SECTION 10.2. LANDLORD'S INSURANCE. Landlord shall provide the following
types of insurance, in amounts and coverages as may be determined by Landlord in
its reasonable discretion provided such amounts, coverages and deductibles are
reasonable and comparable to coverages maintained on comparable properties in
the area: "all risk" property insurance, subject to standard exclusions covering
the Building and the Project, and commercial general liability coverage in
amounts of not less than Two Million Dollars ($2,000,000.00) on an "occurrence"
basis. Further, Landlord may, in its sole and absolute discretion, obtain
coverage for such other risks as Landlord or its mortgagees may from time to
time deem appropriate, including without limitation, coverage for leasehold
improvements and/or earthquake and flood (provided, however, that the cost of
earthquake and flood insurance shall not be included as an Operating Expense
unless Landlord elects or is required to carry such coverage on the entire
Project). Landlord shall not be required to carry insurance of any kind on
Tenant's property, including leasehold improvements, trade fixtures,
furnishings, equipment, plate glass, signs and all other items of personal
property, and shall not be obligated to repair or replace that property should
damage occur. All proceeds of insurance maintained by Landlord upon the Building
and Project shall be the property of Landlord, whether or not Landlord is
obligated to or elects to make any repairs. At Landlord's option, Landlord may
self-insure all or any portion of the risks for which Landlord elects to provide
insurance hereunder, provided, however, that in the event that Landlord
transfers its fee interest in the Project including the Premises (other than to
an entity affiliated with, controlled, controlling or under common control with
Landlord, or in which Landlord retains an interest), such transferee shall
demonstrate a financial net worth of at least Fifty Million Dollars
($50,000,000.00), and in the absence of such financial net worth, such
transferee shall instead maintain insurance coverage as required by this Section
10.2 from third-party insurance carrier(s).

        SECTION 10.3. JOINT INDEMNITY.

               (a) To the fullest extent permitted by law, but subject to the
express limitations on liability contained in Section 10.5 of this Lease, Tenant
shall defend, indemnify, protect, save and hold harmless Landlord, its agents,
and any and all affiliates of Landlord, including, without limitation, any
corporations or other entities controlling, controlled by or under common
control with Landlord, from and against any and all claims, liabilities, costs
or expenses arising either before or after the Commencement Date from Tenant's
use or occupancy of the Premises, or from the conduct of its business, or from
any activity, work, or thing done, permitted or suffered by Tenant or its
agents, employees, invitees or licensees in or about the Premises, or from any
negligence or willful misconduct of Tenant or its agents, employees, visitors,
patrons, guests, invitees or licensees. In cases of alleged negligence asserted
by third parties against Landlord which arise out of, are occasioned by, or in
any way attributable to Tenant's, its agents, employees, contractors, licensees
or invitees use and occupancy of the Premises, or from the conduct of its
business or from any activity, work or thing done, permitted or suffered by
Tenant or its agents, employees, invitees or licensees on Tenant's part to be
performed under this Lease, or from any negligence or willful misconduct of
Tenant, its agents, employees, licensees or invitees, Tenant shall accept any
tender of defense for Landlord and shall, notwithstanding any allegation of
negligence or willful misconduct on the part of the Landlord (but subject to the
reimbursement provisions hereinafter provided), defend Landlord and protect and
hold Landlord harmless and pay all costs, expenses and attorneys' fees incurred
in connection with such litigation, provided that Tenant shall not be liable for
any such injury or damage, and Landlord shall reimburse Tenant for the
reasonable attorney's fees and costs for the attorney representing both parties,
all to the extent and in the proportion that such injury or damage is ultimately
determined by a court of competent jurisdiction (or in connection with any


                                       17
<PAGE>   21

negotiated settlement agreed to by Landlord) to be attributable to the
negligence or willful misconduct of Landlord. Upon Landlord's request, Tenant
shall at Tenant's sole cost and expense, retain a separate attorney selected by
Landlord and reasonably acceptable to Tenant to represent Landlord in any such
suit if Landlord reasonably determines that the representation of both Tenant
and Landlord by the same attorney would cause a conflict of interest; provided,
however, that to the extent and in the proportion that the injury or damage
which is the subject of the suit is ultimately determined by a court of
competent jurisdiction (or in connection with any negotiated settlement agreed
to by Landlord) to be attributable to the negligence or willful misconduct of
Landlord, Landlord shall reimburse Tenant for the reasonable legal fees and
costs of the separate attorney retained by Tenant. The provisions of this
Subsection 10.3(a) shall expressly survive the expiration or sooner termination
of this Lease.

               (b) To the fullest extent permitted by law, but subject to the
express limitations on liability contained in this Lease (including, without
limitation, the provisions of Sections 10.4, 10.5 and 14.8 of this Lease),
Landlord shall defend, indemnify, protect, save and hold harmless Tenant, its
agents and any and all affiliates of Tenant, including, without limitation, any
corporation, or other entities controlling, controlled by or under common
control with Tenant, from and against any and all claims, liabilities, costs or
expenses arising either before or after the Commencement Date from the
operation, maintenance or repair of the Common Areas, the Project and/or the
Building by Landlord or its employees or authorized agents. In cases of alleged
negligence asserted by third parties against Tenant which arise out of, are
occasioned by, or in any way attributable to the maintenance or repair of the
Common Areas, the Project or the Building by Landlord or its authorized agents
or employees, Landlord shall accept any tender of defense for Tenant and shall,
notwithstanding any allegation of negligence or willful misconduct on the part
of Tenant (but subject to the reimbursement provisions hereinafter provided),
defend Tenant and protect and hold Tenant harmless and pay all cost, expense and
attorneys' fees incurred in connection with such litigation, provided that
Landlord shall not be liable for any such injury or damage, and Tenant shall
reimburse Landlord for the reasonable attorney's fees and costs for the attorney
representing both parties, all to the extent and in the proportion that such
injury or damage is ultimately determined by a court of competent jurisdiction
(or in connection with any negotiated settlement agreed to by Tenant) to be
attributable to the negligence or willful misconduct of Tenant. Upon Tenant's
request, Landlord shall at Landlord's sole cost and expense, retain a separate
attorney selected by Tenant and reasonably acceptable to Landlord to represent
Tenant in any such suit if Tenant Reasonably determines that the representation
of both Tenant and Landlord by the same attorney would cause conflict of
interest; provided, however, that to the extent and the proportion that the
injury or damage which is the subject of the suit is ultimately determined by a
court of competent jurisdiction (or in connection with any negotiated settlement
agreed to by Tenant) to be attributable to the negligence or willful misconduct
or Tenant, Tenant shall reimburse Landlord for the reasonable legal fees and
costs of the separate attorney retained by Landlord. The provisions of this
Subsection 10.3(b) shall expressly survive the expiration or sooner termination
of this Lease.

        SECTION 10.4. LANDLORD'S NONLIABILITY. Subject to the express indemnity
obligations contained in Section 10.3(b) of this Lease, Landlord shall not be
liable to Tenant, its employees, agents and invitees, and Tenant hereby waives
all claims against Landlord for loss of or damage to any property or personal
injury, or any other loss, cost, damage, injury or liability whatsoever
resulting from fire, explosion, failing plaster, steam, gas, electricity, water
or rain which may leak or flow from or into any part of the Premises or from the
breakage, leakage, obstruction or other defects of the pipes, sprinklers, wires,
appliances, plumbing, air conditioning, electrical works or other fixtures in
the Building, whether the damage or injury results from conditions arising in
the Premises or in other portions of the Building. Notwithstanding any provision
of this Lease to the contrary, including, without limitation, the provisions of
Section 10.3(b) of this Lease, Landlord shall in no event be liable to Tenant,
its employees, agents, and invitees, and Tenant hereby waives all claims against
Landlord, for loss or interruption of Tenant's business or income (including,
without limitation, any consequential damages and lost profit or opportunity
costs), or any other loss, cost, damage, injury or liability resulting from, but
not limited to, Acts of God (except with respect to restoration obligations
pursuant to Article XI below), acts of civil disobedience or insurrection, acts
or omissions (criminal or otherwise) of any third parties (other than Landlord's
employees or authorized agents), including without limitation, any other tenants
within the Project or their agents, employees, contractors, guests or invitees.
It is understood that any such condition may require the temporary evacuation or
closure of all or a portion of the Building. Except as provided in Sections 11.1
and 12.1 below, there shall be no abatement of rent and no liability of Landlord
by reason of any injury to or interference with Tenant's business (including
without limitation consequential damages and lost profit or opportunity costs)
arising from the making of any repairs, alterations or improvements to any
portion of the Building, including repairs to the Premises, nor shall any
related activity by Landlord constitute an actual or constructive eviction;
provided, however, that in making repairs, alterations or improvements, Landlord
shall interfere as little as reasonably practicable with the conduct of Tenant's
business in the Premises. Neither Landlord nor its agents shall be liable for
interference with light or other similar intangible interests. Tenant shall
immediately notify Landlord in case of fire or accident in the Premises, the
Building or the Project and of defects in any improvements or equipment.

        SECTION 10.5. WAIVER OF SUBROGATION. Landlord and Tenant each hereby
waives all rights of recovery against the other and the other's events on
account of loss and damage occasioned to the property of such waiving party to
the extent only that such loss or damage is required to be insured against under
any "all risk" property insurance policies required by this Article X; provided
however, that (i) the foregoing waiver shall not apply to the extent of Tenant's
obligations to pay deductibles under any such policies and this Lease, and (ii)
if any loss is due to the act, omission or negligence or willful misconduct of
Tenant or its agents, employees, contractors, guests or invitees, Tenant's
liability insurance shall be primary and shall cover all losses and damages
prior to any other insurance hereunder. By this waiver it is the intent of the
parties that neither Landlord nor Tenant shall be liable to any insurance
company (by way of subrogation or otherwise) insuring the other party for any
loss or damage insured against under any "all-risk" property insurance policies
required by this Article, even though such loss or damage might be occasioned by
the negligence of such party, its agents, employees, contractors, guests or
invitees. The provisions of this Section shall not limit the indemnification
provisions elsewhere contained in this Lease.


                                       18
<PAGE>   22

                        ARTICLE XI. DAMAGE OR DESTRUCTION

        SECTION 11.1. RESTORATION.

               (a) If the Building is damaged, Landlord shall diligently repair
that damage as soon as reasonably possible, at its expense, unless: (i) Landlord
reasonably determines that the cost of repair is not covered by Landlord's fire
and extended coverage insurance (or, if Landlord is self-insuring, would not be
covered by a standard all-risk policy, subject to standard exclusions), plus
such additional amounts Tenant elects, at its option, to contribute, excluding
however the deductible (for which Tenant shall be responsible for Tenant's
proportionate share); (ii) Landlord reasonably determines that the Premises
cannot, with reasonable diligence, be fully repaired by Landlord (or cannot be
safely repaired because of the presence of hazardous factors, including without
limitation Hazardous Materials, earthquake faults, and other similar dangers)
within two hundred seventy (270) days after the date of the damage; (iii) an
event of default by Tenant has occurred and is continuing beyond any applicable
cure period at the time of such damage; or (iv) the damage occurs during the
final twelve (12) months of the Term. Should Landlord elect not to repair the
damage for one of the preceding reasons, Landlord shall so notify Tenant in
writing within sixty (60) days after the damage occurs and this Lease shall
terminate as of the date of that notice.

               (b) Unless Landlord elects to terminate this Lease in accordance
with subsection (a) above, this Lease shall continue in effect for the remainder
of the Term; provided that so long as Tenant is not in default under this Lease
beyond any applicable cure period, if the damage is so extensive that Landlord
reasonably determines that the Premises cannot, with reasonable diligence, be
repaired by Landlord (or cannot be safely repaired because of the presence of
hazardous factors, earthquake faults, and other similar dangers) so as to allow
Tenant's substantial use and enjoyment of the Premises within two hundred
seventy (270) days after the date of damage, then Tenant may elect to terminate
this Lease by written notice to Landlord within the sixty (60) day period stated
in subsection (a).

               (c) Commencing on the date of any damage to the Building, and
ending on the sooner of the date the damage is repaired or the date this Lease
is terminated, the rental to be paid under this Lease shall be abated in the
same proportion that the floor area of the Building that is rendered unusable by
the damage from time to time bears to the total floor area of the Building, but
only to the extent that any rental abatement insurance proceeds are received by
Landlord therefor from Tenant's insurance described in Exhibit D.

               (d) Notwithstanding the provisions of subsections (a), (b) and
(c) of this Section, and subject to the provisions of Section 10.5 above, the
cost of any repairs shall be borne by Tenant, and Tenant shall not be entitled
to rental abatement or termination rights, if the damage is due to the fault or
neglect of Tenant or its employees, subtenants, invitees or representatives. In
addition, the provisions of this Section shall not be deemed to require Landlord
to repair any improvements or fixtures that Tenant is obligated to repair or
insure pursuant to any other provision of this Lease.

               (e) Tenant shall fully cooperate with Landlord in removing
Tenant's personal property and any non-structural debris from the Premises to
facilitate all inspections of the Premises and the making of any repairs.
Notwithstanding anything to the contrary contained in this Lease, if Landlord in
good faith believes there is a risk of injury to persons or damage to property
from entry into the Building or Premises following any damage or destruction
thereto, Landlord may restrict entry into the Building or the Premises by
Tenant, its employees, agents and contractors in a non-discriminatory manner,
without being deemed to have violated Tenant's rights of quiet enjoyment to, or
made an unlawful detainer of, or evicted Tenant from, the Premises. Upon
request, Landlord shall consult with Tenant to determine if there are safe
methods of entry into the Building or the Premises solely in order to allow
Tenant to retrieve files, data in computers, and necessary inventory, subject
however to all indemnities and waivers of liability from Tenant to Landlord
contained in this Lease and any additional indemnities and waivers of liability
which Landlord may require. If damage or destruction rendering the Premises
unusable occurs during the final twelve (12) months of the Lease Term or the
final twelve (12) months of any extension period which cannot be repaired within
sixty (60) days following such damage or destruction, Tenant shall have the
option to terminate the Lease by providing Landlord written notification of
Tenant's election to terminate within thirty (30) days after the damage occurs.
For all purposes of this Section 11.1, damage to Tenant's parking areas and
access to the Premises shall be deemed damage to the Building.

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

                           ARTICLE XII. EMINENT DOMAIN

        SECTION 12.1. TOTAL OR PARTIAL TAKING. If all or a material portion of
the Premises which materially impairs Tenant's ability to conduct business from
the Premises is taken by any lawful authority by exercise of the right of
eminent domain, or sold to prevent a taking, either Tenant or Landlord may
terminate this Lease effective as of the date possession is required to be
surrendered to the authority. In the event title to a portion of the Premises is
taken or sold in lieu of taking, and if Landlord elects to restore the Premises
in such a way as to alter the Premises materially, either party may terminate
this Lease, by written notice to the other party, effective on the date of
vesting of title. In the event neither party has elected to terminate this Lease
as provided above, then Landlord shall promptly, after receipt of a sufficient
condemnation award, proceed to restore the Premises to substantially their
condition prior to the taking, and a proportionate allowance shall be made to
Tenant for the rent corresponding to the time during which, and to the part of
the Premises of which, Tenant is deprived on account of the taking and
restoration. In the event of a taking, Landlord shall be entitled to the entire
amount of the condemnation award without deduction for any estate or interest of
Tenant; provided that nothing in this Section shall be deemed to jive Landlord
any interest in, or prevent Tenant from seeking any award against the


                                       19
<PAGE>   23

taking authority for, the taking of personal property and fixtures belonging to
Tenant or for relocation or business interruption expenses recoverable from the
taking authority.

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

        SECTION 12.3. TAKING OF PARKING AREA. In the event there shall be a
taking of the parking area such that Landlord can no longer provide sufficient
parking to comply with this Lease, Landlord may substitute reasonably equivalent
parking in a location reasonably close to the Building; provided that if
Landlord fails to make that substitution within ninety (90) days following the
taking and if the taking materially impairs Tenant's use and enjoyment of the
Premises, Tenant may, at its option, terminate this Lease by written notice to
Landlord. If this Lease is not so terminated by Tenant, there shall be no
abatement of rest and this Lease shall continue in effect.

          ARTICLE XIII. SUBORDINATION; ESTOPPEL CERTIFICATE; FINANCIALS

        SECTION 13.1. SUBORDINATION. At the option of Landlord, this Lease shall
be either superior or subordinate to all ground or underlying leases, mortgages
and deeds of trust, if any, which may hereafter affect the Premises, and to all
renewals, modifications, consolidations, replacements and extensions thereof,
provided, that so long as Tenant is not in default under this Lease beyond any
applicable cure period, this Lease shall not be terminated or Tenant's quiet
enjoyment of the Premises disturbed in the event of termination of any such
ground or underlying lease, or the foreclosure of any such mortgage or deed of
trust, to which Tenant has subordinated this Lease pursuant to this Section. Any
such subordination instrument presented for Tenant's signature shall be in form
reasonably acceptable to Tenant and shall contain nondisturbance provisions for
Tenant's benefit substantially in accordance with the provisions for Tenant's
benefit set forth in this Section. In the event of a termination or foreclosure,
Tenant shall become a tenant of and attorn to the successor-in-interest to
Landlord upon the same terms and conditions as are contained in this Lease, and
shall execute any instrument reasonably required by Landlord's successor for
that purpose. Tenant shall also, upon written request of Landlord, execute and
deliver all instruments as may be required from time to time to subordinate the
rights of Tenant under this Lease to any ground or underlying lease or to the
lien of any mortgage or deed of trust (provided that such instruments include
the nondisturbance and attornment provisions set forth above in form reasonably
acceptable to Tenant), or, if requested by Landlord, to subordinate, in whole or
in part, any ground or underlying lease or the lien of any mortgage or deed of
trust to this Lease. Landlord represents and warrants to Tenant that, as of the
execution of this Lease by Landlord, there is no ground or underlying lease or
mortgage lien or deed of trust encumbering the Premises.

        SECTION 13.2. ESTOPPEL CERTIFICATE.

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

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

        SECTION 13.3. FINANCIALS.

               (a) Tenant shall deliver to Landlord, prior to the execution of
this Lease and thereafter at any time upon Landlord's request, Tenant's current
tax returns and financial statements, certified true, accurate and complete by
the chief financial officer of Tenant, including a balance sheet and profit and
loss statement for the most recent prior year (collectively, the "Statements"),
which Statements shall accurately and completely reflect the financial condition
of Tenant. Landlord agrees that it will keep the Statements confidential, except
that Landlord shall have the right to deliver the same to any proposed purchaser
of the Building or Project (provided that any such purchaser shall agree to keep
said Statements confidential), and to any encumbrancer of all or any portion of
the Building or Project (provided that Landlord shall request that any such
encumbrancer keep said Statements confidential).

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

                       ARTICLE XIV. DEFAULTS AND REMEDIES

        SECTION 14.1. TENANT'S DEFAULTS. In addition to any other event of
default set forth in this Lease, the occurrence of any one or more of the
following events shall constitute a default by Tenant:


                                       20
<PAGE>   24

               (a) The failure by Tenant to make any payment of rent or
additional rent required to be made by Tenant, as and when due, where the
failure continues for a period of three (3) days after written notice from
Landlord to Tenant; provided, however, that any such notice shall be in lieu of,
and not in addition to, any notice required under California Code of Civil
Procedure Section 1161 and 116l(a) as amended. For purposes of these default and
remedies provisions, the term "additional rent" shall be deemed to include all
amounts of any type whatsoever other than Basic Rent to be paid by Tenant
pursuant to the terms of this Lease.

               (b) Assignment, sublease, encumbrance or other transfer of the
Lease by Tenant, either voluntarily or by operation of law, whether by judgment,
execution, transfer by intestacy or testacy, or other means, without the prior
written consent of Landlord (except as provided under the express provisions of
Article IX above).

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

               (d) The failure of Tenant to timely and fully provide any
subordination agreement, estoppel certificate or financial statements in
accordance with the requirements of Article XIII, where the failure continues
for a period of three (3) days after written notice from Landlord to Tenant.

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

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

        SECTION 14.2. LANDLORD'S REMEDIES.

               (a) In the event of any default by Tenant, or in the event of the
abandonment of the Premises by Tenant, then in addition to any other remedies
available to Landlord, Landlord may exercise the following remedies:

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

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

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

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

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

                             (5) At Landlord's election, all other amounts in
addition to or in lieu of the foregoing as may be permitted by law. The term
"rent" as used in this Lease shall be deemed to mean the Basic Rent and all
other sums required to be paid by Tenant to Landlord pursuant to the terms of
this Lease. Any sum, other than Basic Rent, shall be computed on the basis of
the average monthly amount accruing during the twenty-four (24) month period
immediately prior to default, except that if it becomes necessary to compute
such rental


                                       21
<PAGE>   25

before the twenty-four (24) month period has occurred, then the computation
shall be on the basis of the average monthly amount during the shorter period.
As used in subparagraphs (1) and (2) above, the "worth at the time of award"
shall be computed by allowing interest at the rate of ten percent (10%) per
annum. As used in subparagraph (3) above, the "worth at the time of award" shall
be computed by discounting the amount at the discount rate of the Federal
Reserve Bank of San Francisco at the time of award plus one percent (1%).

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

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

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

        SECTION 14.3. LATE PAYMENTS.

               (a) Any rent due under this Lease that is not received by
Landlord within five (5) days of the date when due shall bear interest at the
rate of ten percent (10%) per annum not to exceed the maximum rate permitted by
law from the date due until fully paid. The payment of interest shall not cure
any default by Tenant under this Lease. In addition, Tenant acknowledges that
the late payment by tenant to Landlord of rent will cause Landlord to incur
costs not contemplated by this Lease, the exact amount of which will be
extremely difficult and impracticable to ascertain. Those costs may include, but
are not limited to, administrative, processing and accounting charges, and late
charges which may be imposed on Landlord by the terms of any ground lease,
mortgage or trust deed governing the Premises. Accordingly, if any rent due from
Tenant shall not be received by Landlord or Landlord's designee within five (5)
days after the date due, then Tenant shall pay to Landlord, in addition to the
interest provided above, a late charge in a sum equal to the greater of five
percent (5%), of the amount overdue or Two Hundred Fifty Dollars ($250.00) for
each delinquent payment, provided that such late charge shall be waived for the
initial late payment of any rent as and when due from Tenant. Acceptance of a
late charge by Landlord shall not constitute a waiver of Tenant's default with
respect to the overdue amount, nor shall it prevent Landlord from exercising any
of its other rights and remedies.

               (b) Following the third installment of rent that is not paid
within five (5) days following notice of nonpayment from Landlord, Landlord
shall have the option (i) to require that beginning with the first payment of
rent next due, rent shall no longer be paid in monthly installments but shall be
payable quarterly three (3) months in advance and/or (ii) to require that Tenant
increase the amount, if any, of the Security Deposit by one hundred percent
(100%). Should Tenant deliver to Landlord, at any time during the Term, two (2)
or more insufficient checks, the Landlord may require that all monies then and
thereafter due from Tenant be paid to Landlord by cashier's check.

        SECTION 14.4. RIGHT OF LANDLORD TO PERFORM. All covenants and agreements
to be performed by Tenant under this Lease shall be performed at Tenant's sole
cost and expense and without any abatement of rent or right of set-off. If
Tenant fails to pay any sum of money, other than rent, or fails to perform any
other act on its part to be performed under this Lease, and the failure
continues beyond any applicable grace period set forth in Section 14.1, then in
addition to any other available remedies, Landlord may, at its election make the
payment or perform the other act on Tenant's part. Landlord's election to make
the payment or perform the act on Tenant's part shall not give rise to any
responsibility of Landlord to continue making the same or similar payments or
performing the same or similar acts. Tenant shall, promptly upon demand by
Landlord, reimburse Landlord for all sums paid by Landlord and all necessary
incidental costs, together with interest at the maximum rate permitted by law
from the date of the payment by Landlord. Landlord shall have the same rights
and remedies if Tenant fails to pay those amounts as Landlord would have in the
event of a default by Tenant in the payment of rent. Landlord


                                       22
<PAGE>   26

shall provide Tenant with written notice and the appropriate cure period
provided in the Lease before performing any act on behalf of Tenant and will
provide Tenant with written request for any reimbursement payable under this
Section 14.4.

        SECTION 14.5. DEFAULT BY LANDLORD. Landlord shall not be deemed to de in
default in the performance of any obligation under this Lease unless and until
it has failed to perform the obligation within thirty (30) days after written
notice by Tenant to Landlord specifying in reasonable detail the nature and
extent of the failure; provided, however, that if the nature of Landlord's
obligation is such that more than thirty (30) days are required for its
performance, then Landlord shall not be deemed to be in default if it commences
performance within the thirty (30) day period and thereafter diligently pursues
the cure to completion. If Landlord shall default in the performance of any of
its obligations under the Lease (after notice and an opportunity to cure as
provided herein), Tenant shall have the right to pursue any and all remedies
available to it as set forth in this Lease, at law, or in equity, subject to the
express limitations contained in this Lease.

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

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

        SECTION 14.8. SATISFACTION OF JUDGMENT. The obligations of Landlord do
not constitute the personal obligations of the individual partners, trustees,
directors, officers or shareholders of Landlord or its constituent partners.
Should Tenant recover a money judgment against Landlord, such judgment shall be
satisfied only out of the proceeds of sale received upon execution of such
judgment and levied thereon against the right, title and interest of Landlord in
the Project and out of the rent or other income from such property receivable by
Landlord or out of consideration received by Landlord from the sale or other
disposition of all or any part of Landlord's right, title or interest in the
Project, and no action for any deficiency may be sought or obtained by Tenant.

        SECTION 14.9. LIMITATION OF ACTIONS AGAINST LANDLORD. Any claim, demand
or right of any kind by Tenant which is based upon or arises in connection with
this Lease shall be barred unless Tenant commences an action thereon within
twelve (12) months after the date that the act, omission, event or default upon
which the claim, demand or right arises, has occurred. The foregoing provisions,
however, shall not be applicable to any claim, demand or right of Tenant arising
from or related to any obligation on Landlord's part contained in Section 5.3
and/or 10.3(b) of this Lease.

                             ARTICLE XV. END OF TERM

        SECTION 15.1. HOLDING OVER. This Lease shall terminate without further
notice upon the expiration of the Term, and any holding over by Tenant after the
expiration shall not constitute a renewal or extension of this Lease, or give
Tenant any rights under this Lease, except when in writing signed by both
parties. If Tenant holds over for any period after the expiration (or earlier
termination) of the Term without the prior written consent of Landlord, such
possession shall constitute a tenancy at sufferance only; such holding over with
the prior written consent of Landlord shall constitute a month-to-month tenancy
commencing on the first (1st) day following the termination of this Lease. In
either of such events, possession shall be subject to all of the terms of this
Lease, except that the monthly Basic Rent shall be the greater of (a) one
hundred fifty percent (150%) of the Basic Rent for the month immediately
preceding the date of termination for the initial two (2) months of holdover,
and two hundred percent (200%) of the Basic Rent for the in the immediately
preceding the date of termination for each month of holdover thereafter, or (b)
the then currently scheduled Basic Rent for comparable space in the Project. If
Tenant fails to surrender the Premises upon the expiration of this Lease despite
demand to do so by Landlord, Tenant shall indemnify and hold Landlord harmless
from all loss or liability, including without limitation, any claims made by any
succeeding tenant relating to such failure to surrender. Acceptance by Landlord
of rent after the termination shall not constitute a consent to a holdover or
result in a renewal of this Lease. The foregoing provisions of this Section are
in addition to and do not affect Landlord's right of re-entry or any other
rights of Landlord under this Lease or at law.

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


                                       23
<PAGE>   27

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

                        ARTICLE XVI. PAYMENTS AND NOTICES

        All sums payable by Tenant to Landlord shall be paid, without deduction
or offset, in lawful money of the United States to Landlord at its address set
forth in item 12 of the Basic Lease Provisions, or at any other place as
Landlord may designate in writing. Unless this Lease expressly provides
otherwise, as for example in the payment of rent pursuant to Section 4.1, all
payments shall be due and payable within five (5) days after demand. All
payments requiring proration shall be prorated on the basis of a thirty (30) day
month and a three hundred sixty (360) day year. Any notice, election, demand,
consent, approval or other communication to be given or other document to be
delivered by either party to the other may be delivered in person or by courier
or overnight delivery service to the other party, or may be deposited in the
United States mail, duly registered or certified, postage prepaid, return
receipt requested, and addressed to the other party at the address set forth in
Item 12 of the Basic Lease Provisions, or if to Tenant, at that address or, from
and after the Commencement Date, at the Premises (whether or not Tenant has
departed from, abandoned or vacated the Premises), or may be delivered by
telegram, telex or telecopy, provided that receipt thereof is telephonically
confirmed. Either party may, by written notice to the other, served in the
manner provided in this Article, designate a different address. If any notice or
other document is sent by mail, it shall be deemed served or delivered
twenty-four (24) hours after mailing. If more than one person or entity is named
as Tenant under this Lease, service of any notice upon any one of them shall be
deemed as service upon all of them. Unless the Lease expressly provides
otherwise, all payments shall be due and payable within ten (10) days of demand.

                       ARTICLE XVII. RULES AND REGULATIONS

        Tenant agrees to observe faithfully and comply strictly with the Rules
and Regulations attached as Exhibit E, and any reasonable and nondiscriminatory
amendments, modifications and/or additions as may be adopted and published by
written notice to tenants by Landlord for the safety, care, security, good
order, or cleanliness of the Premises, and Project and Common Areas (if
applicable). Landlord shall not be liable to Tenant for any violation of the
Rules and Regulations or the breach of any covenant or condition in any lease by
any other tenant or such tenant's agents, employees, contractors, quests or
invitees. One or more waivers by Landlord of any breach of the Rules and
Regulations by Tenant or by any other tenant(s) shall not be a waiver of any
subsequent breach of that rule or any other. Tenant's failure to keep and
observe the Rules and Regulations shall constitute a default under this Lease.
In the case of any conflict between the Rules and Regulations and this Lease,
this Lease shall be controlling. Tenant's agreement to abide by, keep and
observe all reasonable rules and regulations which Landlord may make shall be
limited to those rules and restrictions which are consistently applied by
Landlord to all tenants of the Project in a non-discriminatory manner.

                       ARTICLE XVIII. BROKER'S COMMISSION

        The parties recognize as the broker(s) who negotiated this Lease the
firm(s), if any, whose name(s) is (are) stated in Item 10 of the Basic Lease
Provisions, and agree that Landlord shall be responsible for the payment of
brokerage commissions to those broker(s) unless otherwise provided in this
Lease. Tenant warrants that it has had no dealings with any other real estate
broker or agent in connection with the negotiation of this Lease, and Tenant
agrees to indemnify and hold Landlord harmless from any cost, expense or
liability (including reasonable attorneys' fees) for any compensation,
commissions or charges claimed by any other real estate broker or agent employed
or claiming to represent or to have been employed by Tenant in connection with
the negotiation of this Lease. The foregoing agreement shall survive the
termination of this Lease. If Tenant fails to take possession of the Premises or
if this Lease otherwise terminates prior to the Expiration Date as the result of
failure of performance by Tenant, Landlord shall be entitled to recover from
Tenant the unamortized portion of any brokerage commission funded by Landlord in
addition to any other damages to which Landlord may be entitled.

                  ARTICLE XIX. TRANSFER OF LANDLORD'S INTEREST

        In the event of any transfer of Landlord's interest in the Premises, the
transferor shall thereupon be automatically relieved of all obligations on the
part of Landlord accruing under this Lease from and after the date of the
transfer (but shall not be relieved of all such obligations accruing during its
period of ownership of the Premises), provided that: (i) any funds held by the
transferor in which Tenant has an interest (including, without limitation, the
Security Deposit) shall be turned over by credit to the purchase price or
otherwise, subject to that interest, to the transferee and Tenant is notified of
the transfer as required by law, and (ii) any such transferee shall assume, in
writing, all non-accrued obligations of Landlord under this Lease.
Notwithstanding the foregoing, no


                                       24
<PAGE>   28

holder of a mortgage and/or deed of trust to which this Lease is or may be
subordinate, and no landlord under a so-called sale-leaseback, shall be
responsible in connection with the Security Deposit, unless the mortgagee or
holder of the deed of trust or the landlord actually receives the Security
Deposit. It is intended that the covenants and obligations contained in this
Lease on the part of Landlord shall, subject to the foregoing, be binding on
Landlord, its successors and Assigns, only during and in respect to their
respective successive periods of ownership.

                           ARTICLE XX. INTERPRETATION

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

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

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

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

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

        SECTION 20.6. CONTROLLING LAW. This Lease shall be governed by and
interpreted in accordance with the laws of the State of California.

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

        SECTION 20.8. WAIVER AND CUMULATIVE REMEDIES. One or more waivers by
Landlord or Tenant of any breach of any term, covenant or condition contained in
this Lease shall not be a waiver of any subsequent breach of the same or any
other term, covenant or condition. Consent to any act by one of the parties
shall not be deemed to render unnecessary the obtaining of that party's consent
to any subsequent act. No breach by Tenant of this Lease shall be deemed to have
been waived by Landlord unless the waiver is in a writing signed by Landlord.
The rights and remedies of Landlord under this Lease shall be cumulative and in
addition to any and all other rights and remedies which Landlord may have. The
failure of Tenant or Landlord to seek redress for violation of, or to insist
upon the strict performance of, any term, covenant or condition of the Lease
shall not be deemed a waiver of such violation or prevent a subsequent act which
would have originally, constituted a violation from having all the force and
effect of the original violation, nor shall any custom or practice which may
become established between the parties in the administration of the terms hereof
be deemed a waiver of, or in any way affect, the right of a party to insist upon
the performance by the other party of its obligations in strict accordance with
said terms. Any payment of rents or other sums hereunder by Tenant shall not, in
and of itself, be deemed a waiver of any preceding breach by Landlord, of any
term, covenant or condition of this Lease, regardless of Tenant's knowledge of
such preceding breach at the time of payment of such rent or other sums.

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

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

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


                                       25
<PAGE>   29

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

                      ARTICLE XXI. EXECUTION AND RECORDING

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

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

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

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

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

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

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

                           ARTICLE XXII. MISCELLANEOUS

        SECTION 22.1. NONDISCLOSURE OF LEASE TERMS. Tenant acknowledges and
agrees that the terms of this Lease are confidential and constitute proprietary
information of Landlord. Disclosure of the terms could adversely affect the
ability of Landlord to negotiate other leases and impair Landlord's relationship
with other tenants. Accordingly, Tenant agrees that it, and its partners,
officers, directors, employees and attorneys, shall not intentionally and
voluntarily disclose the terms and conditions of this Lease to any other tenant
or apparent prospective tenant of the Project, either directly or indirectly,
without the prior written consent of Landlord, provided, however, that Tenant
may disclose the terms to prospective subtenants or assignees under this Lease,
in conjunction with any public offering of Tenant's stock or if required by law
to do so.

        SECTION 22.2. GUARANTY. [INTENTIONALLY OMITTED].

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

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

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


                                       26
<PAGE>   30

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

        SECTION 22.7. JAMS ARBITRATION.

               (a) All claims or disputes between Landlord and Tenant arising
out of, or relating to the Lease which either party is expressly authorized by a
provision hereof to submit to arbitration, shall be decided by the
JAMS/ENDISPUTE, or its successor, in Orange, California ("JAMS"), unless the
parties mutually agree otherwise. Within ten (10) business days following
submission to JAMS, JAMS shall designate three arbitrators and each party may,
within five (5) business days thereafter, veto one of the three persons so
designated. If two different designated arbitrators have been vetoed, the third
arbitrator shall hear and decide the matter. Any arbitration pursuant to this
Section 22.7 shall be decided within thirty (30) days of submission of JAMS. The
decision of the arbitrator shall be final and binding on the parties. All costs
associated with arbitration shall be awarded to the prevailing party as
determined by the arbitrator.

               (b) Notice of the demand for arbitration by either party to the
Lease shall be filed in writing with the other party to the Lease and with JAMS
and shall be made within a reasonable time after the dispute has arisen. The
award rendered by the arbitrators shall be final, and judgment may be entered
upon it in accordance with applicable law in any court having jurisdiction
thereof. Except by written consent of the person or entity sought to be joined,
no arbitration arising out of or relating to the Lease shall include, by
consolidation, joinder or in any other manner, any person or entity not a party
to the Lease under which such arbitration is filed if (1) such person or entity
is substantially involved in a common question of fact or law, (2) the presence
of such person or entity is required if complete relief is to be accorded in the
arbitration, or (3) the interest or responsibility of such person or entity in
the matter is not insubstantial.

               (c) The agreement herein among the parties to the Lease and any
other written agreement to arbitrate referred to herein shall be specifically
enforceable under prevailing law.

LANDLORD:                                    TENANT:

THE IRVINE COMPANY                           DISCOVERY PARTNERS INTERNATIONAL,
                                             INC., a California corporation

By: /s/ Richard G. Sim                       By: /s/ Jack Fitzpatrick
    --------------------------------------       -------------------------------
    Richard G. Sim,                              Name: Jack Fitzpatrick
    Executive Vice President                     Title: CFO

By: /s/ Clarence W. Barker                   By: /s/ Riccardo Pigliucci
    --------------------------------------       -------------------------------
    Clarence W. Barker,                          Name: Riccardo Pigliucci
    President, Irvine Industrial Company,        Title: CEO
    a division of The Irvine Company



                                       27