<PAGE>   1
                                                                   Exhibit 10.1



                                INDUSTRIAL LEASE
                               (MULTI-TENANT; NET)


                                     BETWEEN


                              WW&LJ GATEWAYS, LTD.


                                       AND


                              IMMERSION CORPORATION




<PAGE>   2

                                 INDEX TO LEASE

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

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

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
  Section 7.3    Alterations
  Section 7.4    Mechanic's Liens
  Section 7.5    Entry and Inspection
  Section 7.6    [Intentionally deleted]

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   Tenant's 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


                                       (i)

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


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


                                      (ii)

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                                INDUSTRIAL LEASE
                               (MULTI-TENANT; NET)

        THIS LEASE is made as of the 11th day of January, 2000, by and between
WW&LJ GATEWAYS, LTD., a California limited partnership, hereafter called
"Landlord," and IMMERSION CORPORATION, a Delaware corporation, hereinafter
called "Tenant."

                        ARTICLE I. BASIC LEASE PROVISIONS

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

1.      Premises: 801 Fox Lane, San Jose, CA 95131 (the Premises are more
        particularly described in Section 2.1).

        Address of Building: 801 - 821 Fox Lane, San Jose, CA 95131

2.      Project Description (if applicable): 801 Fox Lane/821 Fox Lane

3.      Use of Premises: Office, Research & Development, Manufacturing,
        Distribution, Assembly, Storage and Other Legal Related Uses.

4.      Estimated Commencement Date: February 1, 2000

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

6.      Basic Rent: Sixty Six Thousand Seven Hundred Thirty-Five Dollars
        ($66,735.00) per month, based on $1.40 per rentable square foot.

        Basic Rent is subject to adjustment as follows:

        Commencing twelve (12) months following the Commencement Date, the Basic
        Rent shall be Sixty Eight Thousand Six Hundred Forty-Two Dollars
        ($68,642.00) per month, based on $1.44 per rentable square foot.

        Commencing twenty-four (24) months following the Commencement Date, the
        Basic Rent shall be Seventy One Thousand Twenty-Five Dollars
        ($71,025.00) per month, based on $1.49 per rentable square foot.

        Commencing thirty-six (36) months following the Commencement Date, the
        Basic Rent shall be Seventy Two Thousand Nine Hundred Thirty-Two Dollars
        ($72,932.00) per month, based on $1.53 per rentable square foot.

        Commencing forty-eight (48) months following the Commencement Date, the
        Basic Rent shall be Seventy Five Thousand Three Hundred Fifteen Dollars
        ($75,315.00) per month, based on $1.58 per rentable square foot.

7.      Guarantor(s): None

8.      Floor Area of Premises: Approximately 47,668 rentable square feet

9.      Security Deposit: $82,847.00

10.     Broker(s): Cornish & Carey

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

12.     Address for Payments and Notices:

        LANDLORD                                            TENANT

        INSIGNIA/ESG OF CALIFORNIA, INC.              IMMERSION CORPORATION
        160 West Santa Clara Street, Suite 1350       801 Fox Lane
        San Jose, CA  95113                           San Jose, CA  95131


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        with a copy of notices to:
        IRVINE INDUSTRIAL COMPANY
        P.O. Box 6370
        Newport Beach, CA 92658-6370
        Attn: Vice President, Industrial Operations

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

14.     Vehicle Parking Spaces: 180 unreserved parking spaces

15.     Plan Approval Date: January 31, 2000



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                              ARTICLE II. PREMISES


    SECTION 2.1. LEASED PREMISES. Landlord leases to Tenant and Tenant leases
from Landlord the premises shown in Exhibit A (the "Premises"), containing
approximately the floor area set forth in Item 8 of the Basic Lease Provisions
and known by the suite number identified in Item 1 of the Basic Lease
Provisions. The Premises are located in the building identified in Item 1 of the
Basic Lease Provisions (which together with the underlying real property, is
called the "Building"), and is a portion of the project shown in Exhibit Y (the
"Project"). Tenant understands that the floor area set forth in Item 8 of the
Basic Lease Provisions may include, at Landlord's option, a factor approximating
the total square footage of any common lobby or internal common features of the
Building times the ratio of the actual square footage of the Premises to the
total square footage of the Building. If, upon completion of the space plans for
the Premises, Landlord's architect or space planner determines that the rentable
square footage of the Premises differs from that set forth in the Basic Lease
Provisions, then Landlord shall so notify Tenant and the Basic Rent (as shown in
Item 6 of the Basic Lease Provisions) shall be promptly adjusted in proportion
to the change in square footage. Within five (5) days following Landlord's
request, the parties shall memorialize the adjustments by executing an amendment
to this Lease prepared by Landlord, provided that the failure or refusal by
either party to execute the amendment shall not affect its validity.

    SECTION 2.2. ACCEPTANCE OF PREMISES. Tenant acknowledges that neither
Landlord nor any representative of Landlord has made any representation or
warranty with respect to the Premises 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
those matters which Tenant shall have brought to Landlord's attention on a
written punch list. The list shall be limited to any items required to be
accomplished by Landlord under the Work Letter attached as Exhibit X, and shall
be delivered to Landlord within thirty (30) days after the term ("Term") of this
Lease commences as provided in Article III below. If no items are required of
Landlord under the Work Letter, by taking possession of the Premises Tenant
accepts the improvements in their existing condition, and waives any right or
claim against Landlord arising out of the condition of the Premises. 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.

                                ARTICLE III. TERM

    SECTION 3.1. GENERAL. 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 of (a) the date upon
which all relevant governmental authorities have approved the Tenant
Improvements in accordance with applicable building codes, as evidenced by
written approval thereof in accordance with the building permits issued for the
Tenant Improvements or issuance of a temporary or final certificate of occupancy
for the Premises, or (b) the date Tenant acquires possession or commences use of
the Premises for any purpose other than construction of Tenant Improvements by
Tenant under the Work Letter. Within ten (10) days after possession of the
Premises is tendered to Tenant, the parties shall memorialize on 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 the Premises are in fact available for
Tenant's occupancy with any Tenant Improvements that have been approved as per
Section 3.1(a) above, except that if Landlord's failure to so deliver possession
on the Estimated Commencement Date is 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


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Tenant but for Tenant's delay(s).

    SECTION 3.3 RIGHT TO EXTEND THIS LEASE. Provided that Tenant is not in
default under any provision of this Lease, 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 is occupying the entire Premises and
has not assigned or sublet any of its interest in this Lease, Tenant may extend
the Term of this Lease for one (1) period of sixty (60) months. Tenant shall
exercise its right to extend the Term by and only by delivering to Landlord, not
less than six (6) months or more than nine (9) 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 Rent 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"). In no event, however, shall Landlord's
Determination or Tenant's Determination be less than the Basic Rent payable by
Tenant during the final month of the initial Term. 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 the vicinity of the Project.

    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 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. In making
such determination, the appraiser shall consider rental comparables for the
Project (provided that if there are an insufficient number of comparables within
the project, the appraiser shall consider rental comparables for similarly
improved space within the vicinity of the Project with appropriate adjustment
for location and quality of project), but the appraiser shall not attribute any
factor for market tenant improvement allowances or brokerage commissions in
making its determination of the fair market rental rate. 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 single
sixty (60) month extension period 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, 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


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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
"Operating Expenses", as defined below, incurred by Landlord in the operation of
the Building and Project. 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, as of the date on which the
computation is made, to be charged with such Operating Expense.

        (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 the amount of Tenant's Share 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 years) 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 the actual Tenant's Share as shown by the annual statement. Any delay or
failure by Landlord in delivering any statement hereunder shall not constitute a
waiver of Landlord's right to require Tenant to pay Tenant's Share of Operating
Expenses pursuant hereto. Any amount due Tenant shall be credited against
installments next coming due under this Section 4.2, and any deficiency shall be
paid by Tenant together with the next installment. 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 sixty (60) 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.

        Provided Tenant is not then in default under this Lease beyond any
applicable notice and cure periods, Tenant shall have the right to have an
independent certified public accountant audit Landlord's Operating Expenses,
subject to the terms and conditions hereof. The cost of the audit shall be borne
by Tenant; provided, however, in no event 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 written notice to Landlord of Tenant's intent to
audit Operating Expenses, if at all, within sixty (60) days following delivery
of Landlord's expense statement for the Expense Recovery Period in question.
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 records are maintained in Santa
Clara County, California. Landlord shall in good faith cooperate with Tenant
during any such audit. All information obtained by Tenant and/or its auditor in
connection with any audit, as well as any compromise, settlement or adjustment
reached between Landlord and Tenant as a result thereof, shall be held in strict
confidence by Tenant and its auditor and, except as may be required pursuant to
any litigation or as may otherwise be required by law, shall not be disclosed to
any third party, directly or indirectly, by Tenant or its auditor or any of
their respective 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. If, following Landlord's review of
Tenant's audit, Landlord disputes the same, Landlord shall have the right, upon
written notice to Tenant within a reasonable time following its receipt of the
audit, to contest such audit by demanding binding arbitration with JAMS
Endispute in Santa Clara County, California ("JAMS"). Tenant agrees to submit to
such arbitration upon such written notice from Landlord. Within ten (10)
business days following submission of the dispute by Landlord to JAMS, JAMS
shall designate three (3) arbitrators and each party may, within five (5)
business days thereafter, veto one (1) of the three (3) persons so designated.
If two (2) different designated arbitrators have been vetoed, the third
arbitrator shall hear and decide the matter. Any arbitration pursuant to this
paragraph shall be decided within thirty (30) days of submission to JAMS. The
decision of the arbitrator shall be final and binding on the parties. The award
rendered by the arbitrator 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 under this paragraph shall include, by consolidation, joinder or in
any other manner, any person or entity not a party to this Lease unless (i) such
person or entity is substantially involved in a common question of fact or law,
(ii) the presence of such person or entity is required if complete relief is to
be accorded in the arbitration, or (iii) the interest or responsibility of such
person or entity in the matter in not insubstantial. All costs associated with
the arbitration (excluding the cost of the audit) shall be awarded to the


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prevailing party as determined by the arbitrator. The foregoing agreement to
arbitrate shall be specifically enforceable under prevailing law.

        (d) Even though the Lease has terminated and the Tenant has vacated the
Premises, when the final determination is made of Tenant's Share of Operating
Expenses for the Expense Recovery Period in which the Lease terminates, Tenant
shall upon notice pay the entire increase due over the estimated expenses paid.
Conversely, any overpayment made in the event expenses decrease shall be rebated
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 Tenant's Share 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, Tenant's
Share thereof and the month for which the payments are due. Tenant shall pay the
increase to Landlord as a part of Tenant's monthly payments of estimated
expenses as provided in paragraph (b) above, commencing with the month in which
effective.

        (f) The term "Operating Expenses" shall mean and include all "Project
Costs" (as hereafter defined) and "Property Taxes" (as hereafter defined).

        (g) The term "Project Costs" shall include all expenses of operation and
maintenance of the Building and the Project, together with all appurtenant
Common Areas (as defined in Section 6.2), and shall include the following
charges by way of illustration but not limitation: water and sewer charges;
insurance premiums or reasonable premium equivalents should Landlord elect to
self-insure any risk that Landlord is authorized to insure hereunder; license,
permit, and inspection fees; heat; light; power; janitorial services to any
interior Common Areas; air conditioning; supplies; materials; equipment; tools;
the cost of any environmental, insurance, tax or other consultant utilized by
Landlord in connection with the Building and/or Project; establishment of
reasonable reserves for replacements and/or repair of the Building and/or Common
Area improvements, 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 funds, all as
determined by Landlord, for each such year of useful life during the Term; costs
associated with the procurement and maintenance of an air conditioning, heating
and ventilation service agreement, and 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 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 Project.
Notwithstanding anything to the contrary herein, Tenant's Share of any such
property management fees shall be determined by multiplying the actual property
management fee charged (which from time to time may be with respect to the
Building only, a portion of the Project only, the entire Project, 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 8 of the Basic Lease Provisions contained in the Lease), and the
denominator of which is the total square footage of space charged with such
management fee actually leased to tenants (including Tenant). It is understood
that Project Costs shall include competitive charges for direct services
provided by any subsidiary or division of Landlord.

        (h) 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, fixtures and equipment and
other property of Landlord 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 expenses 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


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<PAGE>   10

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 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.


                                 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 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
perform any work or conduct any business whatsoever in the Project other than
inside the Premises. 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. Tenant
shall comply at its expense with all present and future laws, ordinances,
restrictions, regulations, orders, rules and requirements of all governmental
authorities that pertain to Tenant or its use of the Premises, including without
limitation all federal and state occupational health and safety requirements,
whether or not Tenant's compliance will necessitate expenditures or interfere
with its use and enjoyment of the Premises. Tenant shall comply at its expense
with all present and future covenants, conditions, easements or restrictions now
or hereafter affecting or encumbering the Building and/or Project, and any
amendments or modifications thereto, including without limitation the payment by
Tenant of any periodic or special dues or assessments charged against the
Premises or Tenant which may be allocated to the Premises or Tenant in
accordance with the provisions thereof. Tenant shall promptly upon demand
reimburse Landlord for any additional insurance premium charged by reason of
Tenant's failure to comply with the provisions of this Section, and shall
indemnify Landlord from any liability and/or expense resulting from Tenant's
noncompliance.

    SECTION 5.2 SIGNS. Except as approved in writing by Landlord, in its sole
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 be
withheld in Landlord's discretion), 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) Tenant shall not cause or permit any Hazardous Materials to be
brought upon, stored, used, generated, released or disposed of on, under, from
or about the Premises (including without limitation the soil and groundwater
thereunder) without the prior written consent of Landlord. 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


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<PAGE>   11

packaging with respect to the storage, use and disposal of such products, and
shall otherwise comply with all applicable laws with respect to such products,
and (ii) all of the other terms and provisions of this Section 5.3 shall apply
with respect to Tenant's storage, use and disposal of all such products.
Landlord may, in its sole 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 incurred by Landlord in connection therewith shall be reimbursed
by Tenant to Landlord as additional rent hereunder upon demand.

        (c) Prior to the execution of this Lease, Tenant shall complete, execute
and deliver to Landlord an Environmental Questionnaire and Disclosure Statement
(the "Environmental Questionnaire") in the form of Exhibit B attached hereto.
The completed Environmental Questionnaire shall be deemed incorporated into this
Lease for all purposes, and Landlord shall be entitled to rely fully on the
information contained therein. On each anniversary of the Commencement Date
until the expiration or sooner termination of this Lease, Tenant shall disclose
to Landlord in writing the names and amounts of all Hazardous Materials which
were stored, generated, used, released and/or disposed of on, under or about the
Premises for the twelve-month period prior thereto, and which Tenant desires to
store, generate, use, release and/or dispose of on, under or about the Premises
for the succeeding twelve-month period. In addition, to the extent Tenant is
permitted to utilize Hazardous Materials upon the Premises, Tenant shall
promptly provide Landlord with complete and legible copies of all the following
environmental documents relating thereto: reports filed pursuant to any
self-reporting requirements; permit applications, permits, monitoring reports,
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, 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


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<PAGE>   12

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 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 existing prior to the introduction of such Hazardous Materials. Upon
Landlord's approval of such cleanup plan, Tenant shall, at its expense, and
without limitation of any rights and remedies of Landlord under this Lease or at
law or in equity, immediately implement such plan and proceed to cleanup such
Hazardous Materials in accordance with all applicable laws and as required by
such plan and this Lease. The provisions of this subsection (e) shall expressly
survive the expiration or sooner termination of this Lease.

        (f) Landlord hereby discloses to Tenant, and Tenant hereby acknowledges,
certain facts relating to Hazardous Materials at the 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.


                       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. If any utilities or services are not separately metered or assessed to
Tenant, Landlord shall make a reasonable determination of Tenant's proportionate
share of the cost of such utilities and services and Tenant shall pay such
amount to Landlord, as an item of additional rent, within ten (10) days after
receipt of Landlord's statement or invoice therefor. Alternatively, Landlord may
elect to include such cost in the definition of Building Costs in which event
Tenant shall pay Tenant's proportionate share of such costs in the manner set
forth in Section 4.2. Landlord shall not be liable for damages or otherwise for
any failure or interruption of any utility or other service furnished to the
Premises, and no such failure or interruption shall be deemed an eviction or
entitle Tenant to terminate this Lease or withhold or abate any rent due
hereunder; provided, however, if any such failure or interruption is due to the
sole active negligence or willful misconduct of Landlord, its employees or
authorized agents (a "Landlord-Caused Service Interruption") and is not restored
by Landlord within five (5) business days following written notice by Tenant of
the Landlord-Caused Service Interruption in question, then Tenant shall be
entitled to an abatement of Basic Rent reasonably allocable to that portion of
the Premises that Tenant is prevented from using by reason of such
Landlord-Caused Service Interruption, which abatement shall commence on the
sixth (6th) business day following Tenant's notice of the Landlord-Caused
Service Interruption in question and shall continue for the balance of the
period during which Tenant is so prevented from using the affected portion of
the Premises. The foregoing abatement provisions shall be the sole and exclusive
remedy of Tenant with respect to any Landlord-Caused Service Interruption.
Landlord shall at all reasonable times have free access to all electrical and
mechanical installations of Landlord.

    SECTION 6.2. OPERATION AND MAINTENANCE OF COMMON AREAS. During the Term,
Landlord shall operate all Common Areas within the Building and the Project. The
term "Common Areas" shall mean all areas within the exterior boundaries of the
Building and other buildings in the Project 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.

    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 in the manner Landlord may determine to be appropriate. All
costs incurred by Landlord for the maintenance and operation of the


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<PAGE>   13

Common Areas shall be included in Project Costs unless any particular cost
incurred can be charged to a specific tenant of the Project. 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.

    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, on those
portions of the Common Areas designated by Landlord for parking, on an
unreserved and unassigned basis. 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. Landlord shall have the right to establish, and from
time to time amend, and to enforce against all users all reasonable rules and
regulations (including the designation of areas for employee parking) that
Landlord may deem necessary and advisable for the proper and efficient operation
and maintenance of parking within the Common Areas. Landlord shall have the
right to construct, maintain and operate lighting facilities within the parking
areas; to change the area, level, location and arrangement of the parking areas
and improvements therein; to restrict parking by tenants, their officers, agents
and employees to employee parking areas; to enforce parking charges (by
operation of meters or otherwise); and to do and perform such other acts in and
to the parking areas and improvements therein as, in the use of good business
judgment, Landlord shall determine to be advisable. Any person using the parking
area shall observe all directional signs and arrows and any posted speed limits.
In no event shall Tenant interfere with the use and enjoyment of the parking
area by other tenants of the Building 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.

    SECTION 6.5. CHANGES AND ADDITIONS BY LANDLORD. Landlord reserves the right
to make alterations or additions to the Building or the Project, or to the
attendant fixtures, equipment and Common Areas. Landlord may at any time
relocate or remove any of the various buildings, 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.


                      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, all glass, windows, doors,
door closures, hardware, fixtures, electrical, plumbing, fire extinguisher
equipment and other equipment. Any damage or deterioration of the Premises shall
not be deemed ordinary wear and tear if the same could have been prevented by
good maintenance practices by Tenant. As part of its maintenance obligations
hereunder, Tenant shall, at Landlord's request, provide Landlord with copies of
all maintenance schedules, reports and notices prepared by, for or on behalf of
Tenant. All repairs 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 (which approval shall not be unreasonably withheld) 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 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 such repair on behalf of Tenant and at Tenant's expense,
and Tenant shall promptly


                                       10
<PAGE>   14

reimburse Landlord for all costs incurred upon submission of an invoice, except
for those costs incurred by Landlord in connection with the performance of its
obligations under Section 7.2 below.

    SECTION 7.2. LANDLORD'S MAINTENANCE AND REPAIR. Subject to Section 7.1 and
Article XI, Landlord shall provide service, maintenance and repair with respect
to the roof, foundations, and footings of the Building, all landscaping,
walkways, parking areas, Common Areas, exterior lighting, the air conditioning,
ventilating or heating equipment servicing the Premises, and the exterior
surfaces of the exterior walls 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, footings, structural,
electrical or mechanical systems unless and until Tenant has notified Landlord
in writing of the need for such repair and Landlord shall have a reasonable
period of time thereafter to commence and complete said repair, if warranted.
All costs of any maintenance and repairs on the part of Landlord provided
hereunder shall be considered part of Project Costs.

    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, 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. Landlord may impose, as a condition to its consent, any
requirements that Landlord in its 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 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 five percent (5%) of the cost of the work. 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.

    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 expenses so incurred by
Landlord, including Landlord's attorneys' fees, and any consequential or other
damages incurred by Landlord arising out of such lien, shall be reimbursed by
Tenant promptly following 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.


                                       11
<PAGE>   15

    SECTION 7.5. ENTRY AND INSPECTION. Landlord shall at all reasonable times,
upon written or oral notice (except in emergencies, when no notice shall be
required) have the right to enter the Premises to inspect them, to supply
services in accordance with this Lease, to 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.

    SECTION 7.6. [INTENTIONALLY DELETED].


            ARTICLE VIII. TAXES AND ASSESSMENTS ON TENANT'S PROPERTY


    Tenant shall be liable for and shall pay, at least ten (10) days before
delinquency, all taxes and assessments levied against all personal property of
Tenant located in the Premises, 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 assessment. In calculating what portion of any tax bill which is assessed
against Landlord separately, or Landlord and Tenant jointly, is attributable to
Tenant's 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 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 requested by Landlord and
reasonably related to the transfer. Except as provided in Subsection (c) of this
Section,


                                       12
<PAGE>   16

Landlord shall not unreasonably withhold its consent, provided: (1) the use of
the Premises will be consistent with the provisions of this Lease and with
Landlord's commitment to other tenants of the Building and Project; (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 reasonable information as Landlord may 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, statements of income or profit and loss of
the proposed subtenant or assignee for the two-year period preceding the request
for 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 Building or
Project or a prospect with whom Landlord is negotiating to become a tenant at
the Building or Project; and (7) the proposed transfer will not impose
additional burdens or adverse tax effects on Landlord. If Tenant has any
exterior sign rights under this Lease, such rights are personal to Tenant and
may not be assigned or transferred to any assignee of this Lease or subtenant of
the Premises without Landlord's prior written consent, which may be withheld 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 ten
(10) 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 or subletting, 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 terms 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 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 the 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


                                       13
<PAGE>   17

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.

        (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 twenty-five percent
(25%) (except for publicly traded shares of stock constituting a transfer of
twenty-five percent (25%) or more in the aggregate, so long as no change in the
controlling interest of Tenant occurs as a result thereof) 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 as a result of a merger by Tenant with or into another entity, so
long as (i) the net worth of the successor entity after such merger is at least
equal to the greater of the net worth of Tenant as of the execution of this
Lease by Landlord or the net worth of Tenant immediately prior to the date of
such merger, evidence of which, satisfactory to Landlord, shall be presented to
Landlord prior to such merger, (ii) Tenant shall provide to Landlord, prior to
such merger, written notice of such merger and 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.


                       ARTICLE X. INSURANCE AND INDEMNITY


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

    SECTION 10.2. LANDLORD'S INSURANCE. Landlord may, at its election, provide
any or all of the following types of insurance, with or without deductible and
in amounts and coverages as may be determined by Landlord in its discretion:
"all risk" property insurance, subject to standard exclusions, covering the
Building or Project, and such other risks as Landlord or its mortgagees may from
time to time deem appropriate, including leasehold improvements made by
Landlord, and commercial general liability coverage. 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.

    SECTION 10.3. TENANT'S INDEMNITY. To the fullest extent permitted by law,
Tenant shall defend, indemnify, protect, save and hold harmless Landlord, its
agents, and any and all affiliates of Landlord, including, without limitation,
any corporations or other entities controlling, controlled by or under common
control with Landlord, from and against any and all claims, liabilities, costs
or expenses arising either before or after the Commencement Date from Tenant's
use or occupancy of the Premises, the Building or the Common Areas, or from the
conduct of its business, or from any activity, work, or thing done, permitted or
suffered by Tenant or its agents, employees, invitees or licensees in or about
the Premises, the Building or the Common Areas, or from any default in the
performance of any obligation on Tenant's part to be performed under this Lease,
or from any act or negligence


                                       14
<PAGE>   18

of Tenant or its agents, employees, visitors, patrons, guests, invitees or
licensees. Landlord may, at its option, require Tenant to assume Landlord's
defense in any action covered by this Section through counsel satisfactory to
Landlord. The provisions of this Section shall expressly survive the expiration
or sooner termination of this Lease.

    SECTION 10.4. LANDLORD'S NONLIABILITY. Landlord shall not be liable to
Tenant, its employees, agents and invitees, and Tenant hereby waives all claims
against Landlord for loss of or damage to any property, or loss or interruption
of business or income, or any other loss, cost, damage, injury or liability
whatsoever (including without limitation any consequential damages and lost
profit or opportunity costs) resulting from, but not limited to, Acts of God,
acts of civil disobedience or insurrection, acts or omissions of other tenants
within the Project or their agents, employees, contractors, guests or invitees,
fire, explosion, falling plaster, steam, gas, electricity, water or rain which
may leak or flow from or into any part of the Premises or from the breakage,
leakage, obstruction or other defects of the pipes, sprinklers, wires,
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 unless caused by the sole
active negligence or willful misconduct of Landlord, its employees or authorized
agents (provided, however, Landlord shall in no event be liable to Tenant, its
employees, agents, or invitees, and Tenant hereby waives all claims against
Landlord, for (i) loss or interruption of Tenant's business or income
(including, without limitation, any consequential damages and lost profit or
opportunity costs), and/or (ii) any other loss, cost, damage, injury or
liability whatsoever resulting from the acts or omissions (criminal or
otherwise) of any third parties (other than the sole active negligence or
willful misconduct of Landlord's employees or authorized agents), including,
without limitation, any other tenants of 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 agents on account of
loss and damage occasioned to the property of such waiving party to the extent
only that such loss or damage is required to be insured against 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.


                        ARTICLE XI. DAMAGE OR DESTRUCTION


    SECTION 11.1. RESTORATION.

        (a) If the Building of which the Premises are a part is damaged,
Landlord shall 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 plus such
additional amounts Tenant elects, at its option, to contribute, excluding
however the deductible (for which Tenant shall be responsible for Tenant's
Share); (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 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, 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


                                       15
<PAGE>   19

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

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


                           ARTICLE XII. EMINENT DOMAIN


    SECTION 12.1. TOTAL OR PARTIAL TAKING. If all or a material portion of the
Premises is taken by any lawful authority by exercise of the right of eminent
domain, or sold to prevent a taking, either Tenant or Landlord may terminate
this Lease effective as of the date possession is required to be surrendered to
the authority. In the event title to a portion of the Building or Project, other
than the Premises, is taken or sold in lieu of taking, and if Landlord elects to
restore the Building 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
give Landlord any interest in, or prevent Tenant from seeking any award against
the taking authority for, the taking of personal property and fixtures belonging
to Tenant or for relocation or business interruption expenses recoverable from
the taking authority.

    SECTION 12.2. TEMPORARY TAKING. No temporary taking of the Premises shall
terminate this Lease or give Tenant any right to abatement of rent, and any
award specifically attributable to a temporary taking of the Premises shall
belong entirely to Tenant. A temporary taking shall be deemed to be a taking of
the use or occupancy of the Premises for a period of not to exceed one hundred
eighty (180) 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 sixty (60) days following the taking and if the
taking materially impairs Tenant's use and enjoyment of the Premises, Tenant
may, at its option, terminate this Lease by written notice to Landlord. If this
Lease is not so terminated by Tenant, there shall be no abatement of rent and
this Lease shall continue in effect.


                                       16
<PAGE>   20

          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 Building, and to all
renewals, modifications, consolidations, replacements and extensions thereof;
provided, that so long as Tenant is not in default under this Lease, 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. 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), 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.

    SECTION 13.2. ESTOPPEL CERTIFICATE.

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

        (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 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, and to any encumbrancer of all or any portion of the Building or
Project.

        (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:

        (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 1161(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


                                       17
<PAGE>   21

written consent of Landlord.

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

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

        (e) The 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 reletting, including necessary repair,
the unamortized portion of any tenant improvements and brokerage commissions
funded by Landlord in connection with this Lease, reasonable attorneys' fees,
and any other reasonable costs; and

               (5) At Landlord's election, all other amounts in addition to or
in lieu of the foregoing as may be permitted by law. 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 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


                                       18
<PAGE>   22

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 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 covering 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. 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 each second consecutive 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


                                       19
<PAGE>   23

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.

    SECTION 14.5. DEFAULT BY LANDLORD. Landlord shall not be deemed to be 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.

    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.


                             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 or (b) the then currently scheduled Basic Rent
for comparable space in the Building. 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.


                                       20
<PAGE>   24

    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, 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 (or such other address as
Tenant may designate provided Tenant gives Landlord at least sixty (60) days
prior written notice of such other address), 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.


                       ARTICLE XVII. RULES AND REGULATIONS


    Tenant agrees to observe faithfully and comply strictly with the Rules and
Regulations, attached as Exhibit E, and any reasonable and nondiscriminatory
amendments, modifications and/or additions as may be adopted and published by
written notice to tenants by Landlord for the safety, care, security, good
order, or cleanliness of the Premises, Building, Project and Common Areas.
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, guests 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.


                       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.


                                       21
<PAGE>   25

                  ARTICLE XIX. TRANSFER OF LANDLORD'S INTEREST


    In the event of any transfer of Landlord's interest in the Premises, the
transferor shall be automatically relieved of all obligations on the part of
Landlord accruing under this Lease from and after the date of the transfer,
provided that any funds held by the transferor in which Tenant has an interest
shall be turned over, subject to that interest, to the transferee and Tenant is
notified of the transfer as required by law. No 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.

    SECTION 20.9. INABILITY TO PERFORM. In the event that either party shall be
delayed or hindered in or prevented from the performance of any work or in
performing any act required under this Lease by reason of any cause beyond the
reasonable control of that party, 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


                                       22
<PAGE>   26

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.

    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 Building or 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 and as may be otherwise required by law.

    SECTION 22.2. GUARANTY. As a condition to the execution of this Lease by
Landlord, the obligations, covenants and performance of the Tenant as herein
provided shall be guaranteed in writing by the Guarantor(s) listed in Item 7 of
the Basic Lease Provisions, if any, on a form of guaranty provided by Landlord.


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<PAGE>   27

    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 Building whose
address has been furnished to Tenant and (b) such beneficiary is afforded a
reasonable opportunity to cure the default by Landlord (which in no event shall
be less than sixty (60) days), including, if necessary to effect the cure, time
to obtain possession of the Building by power of sale or judicial foreclosure
provided that such foreclosure remedy is diligently pursued. Tenant agrees that
each beneficiary of a deed of trust or mortgage covering the Building is an
express third party beneficiary hereof, Tenant shall have no right or claim for
the collection of any deposit from such beneficiary or from any purchaser at a
foreclosure sale unless such beneficiary or purchaser shall have actually
received and not refunded the deposit, and Tenant shall comply with any written
directions by any beneficiary to pay rent due hereunder directly to such
beneficiary without determining whether 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.

    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 Project Costs.


LANDLORD:                                       TENANT:

WW&LJ GATEWAYS, LTD.,                           IMMERSION CORPORATION,
A CALIFORNIA LIMITED PARTNERSHIP                A DELAWARE CORPORATION

BY:  THE IRVINE COMPANY,
     AS ATTORNEY-IN-FACT FOR
     WW&LJ GATEWAYS, LTD.
     AND NOT ON ITS OWN BEHALF


     By /s/ RICHARD G. SIM                      By /s/ VICTOR VIEGAS
       --------------------------------           ------------------------------
       Richard G. Sim, Executive Vice           Name  Victor Viegas
       President of The Irvine Company             ----------------------------
                                                Title Chief Financial Officer
                                                     ---------------------------



     By /s/ ROBERT E. WILLIAMS, JR.             By /s/ LOUIS B. ROSENBERG
       --------------------------------           ------------------------------
       Robert E. Williams, Jr., President       Name Louis B. Rosenberg
       Irvine Industrial Company,                   ----------------------------
       a division of The Irvine Company         Title Chief Executive Officer
                                                     ---------------------------


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